I became a teacher in order to help make the world a more rational place by educating our youth. I choose to teach middle school and high school students so as to have a chance to give them the right tools with which to handle reality early rather than attempting to re-educate them at the university level after their minds have been misguided or neglected from middle school. I also fervently believe that most students are capable of learning most of what is currently reserved for high school while in middle school and what is currently reserved for undergraduate university while in high school. As a teacher, I can only reach 120 or so students per year. At that rate, it will take a long time to educate the world.
Wouldn't it be marvelous if there were an organization to "promote excellence in economic education by helping teachers of economics become more effective educators?" Wouldn't it be even better if such an organization were to train teachers around the country for FREE?
There is such an organization...
I couldn't fully believe it to be true until I actually attended such a course this summer. I took a week-long course entitled Economics for Leaders (http://fte.org/teachers/programs/efl/) and it was absolutely free. It is now my intent to attend every course offered by the Foundation for Teaching Economics (http://fte.org/) at my earliest opportunity. It is an extraordinary organization with a mission that matches my own. They also offer online courses.
Most of their programs are for teachers, but some of them are also for rising high school seniors. I highly recommend FTE programs to any motivated students or teachers who qualify.
26 October 2005
15 October 2005
Long Live Globalization!
Our family outing to IKEA today sparked introspection on the numerous benefits of globalization and successful domestic businesses. There can be a good deal of charm in a local mom & pop business that is friendly and well-run, but when a local shop becomes popular and successful enough to grow into a regional, national or international conglomerate, many other people can benefit from that business in addtion to the local neighbourhood of the first store.
It is bewildering to me that there is so much animosity towards successful large coprorations. Organizations like Walmart -- that started as a well-run local Arkensas store -- now bring economies of scale, excellent customer service, low prices and jobs to literally millions of people around the world. We don't have to hope that our local merchant is as efficient as Sam Walton, we can have one of Sam's own stores on our street. Whether local workers labour for Joe's local food store or the local Walmart, they still have a good job. In fact, they can likely get better benefits by working for Walmart because it can negociate better deals with health insurance providers due to its size.
We sometimes forget that these big corporations are really just groups of normal people like ourselves who want to buy a little house, have a family, send their kids to good schools and maybe even go to church on Sundays. The nature of the workers doesn't change with the size of the company for which they work. Each Starbucks, for example, has an ambiance heavily influenced by the workers therein. Further, anybody can be an part-owner of such businesses and share in profits by simply buying shares of their stock. In fact, many of us own shares of Walmart indirectly through the investment holdings of our retirement savings plans.
There is often particular antipathy toward foreign companies and products made abroad. That foreigner, however, is a normal human being like the rest of us. If you met him on a train, you might even become close friends, but somehow when a product he made is anonymously labelled as being from a foreign country, it is somehow less desireable than a locally made product. Political borders are arbitrary and often ephemeral. To take a simple example, it might be far more "local" geographically for somebody in Alaska to trade with British Columbia or Yukon Territory, but those are 'foreigners' because arbitrary events in history caused Alaska to become part of the U.S. rather than Canada.
The favoritism for locally produced items is perhaps the most absurd when taken to their logical extreme. Why settle for products from your state or country as being 'sufficiently local' when you could insist on products from your town or street. How many cars or bananas are produced on your street? Personally, I would be sceptical of buying coffee or bananas produced locally here in Glasgow, Scotland.
In short, it is as arbitrary as being racist to choose products based on the proximity of their origin to your place of residence or the nationality of their producer rather than their quality or price. When such preferences for local goods become enforced by government in some form of legal protectionism, it results in inefficiency, encouraging locals to produce inefficiently what could be far mroe efficiently produced elsewhere and exchanged for products in which your region has a competitive advantage. Can you imagine what would happen to the population of Hong Kong, if the government mandated that all food consumed in Hong Kong could not be imported from outside the city?
Globalization translates to better, cheaper products, made easily available to more people. When I walk into IKEA, I can purchase products designed by a skilled foreigner and produced in economies of scale from every corner of the earth (we purchased two bowls today, identical in every way but color; one came from Portugal while the other is from Turkey). Thanks to IKEA having sufficient size, efficiency, and global production facilities, I can buy a host of things to make my life far easier or more comfortable that would simply not be available or would be prohibitively expensive if everything had to be produced in Scotland. I gleefully traded with producers in a dozen different countries during my single visit to IKEA. If those producers could only sell to their local market, we would all be the worse off for it. When two traders of any origin voluntarily come together -- even indirectly through merchants like IKEA or Starbucks -- to trade, both sides benefit, otherwise the trade would not occur.
The next time you hear demonstrations against globalization, ask yourself what those demonstrators would be wearing, driving and drinking for breakfast if they had to produce everything they consume themselves, for that is the ultimate outcome of non-trade. Does it make sense not to trade with somebody simply because he lives somewhere else?
I can hardly wait until more of my favourite shops like Trader Joes and Togos spread to other regions of the country and world.
It is bewildering to me that there is so much animosity towards successful large coprorations. Organizations like Walmart -- that started as a well-run local Arkensas store -- now bring economies of scale, excellent customer service, low prices and jobs to literally millions of people around the world. We don't have to hope that our local merchant is as efficient as Sam Walton, we can have one of Sam's own stores on our street. Whether local workers labour for Joe's local food store or the local Walmart, they still have a good job. In fact, they can likely get better benefits by working for Walmart because it can negociate better deals with health insurance providers due to its size.
We sometimes forget that these big corporations are really just groups of normal people like ourselves who want to buy a little house, have a family, send their kids to good schools and maybe even go to church on Sundays. The nature of the workers doesn't change with the size of the company for which they work. Each Starbucks, for example, has an ambiance heavily influenced by the workers therein. Further, anybody can be an part-owner of such businesses and share in profits by simply buying shares of their stock. In fact, many of us own shares of Walmart indirectly through the investment holdings of our retirement savings plans.
There is often particular antipathy toward foreign companies and products made abroad. That foreigner, however, is a normal human being like the rest of us. If you met him on a train, you might even become close friends, but somehow when a product he made is anonymously labelled as being from a foreign country, it is somehow less desireable than a locally made product. Political borders are arbitrary and often ephemeral. To take a simple example, it might be far more "local" geographically for somebody in Alaska to trade with British Columbia or Yukon Territory, but those are 'foreigners' because arbitrary events in history caused Alaska to become part of the U.S. rather than Canada.
The favoritism for locally produced items is perhaps the most absurd when taken to their logical extreme. Why settle for products from your state or country as being 'sufficiently local' when you could insist on products from your town or street. How many cars or bananas are produced on your street? Personally, I would be sceptical of buying coffee or bananas produced locally here in Glasgow, Scotland.
In short, it is as arbitrary as being racist to choose products based on the proximity of their origin to your place of residence or the nationality of their producer rather than their quality or price. When such preferences for local goods become enforced by government in some form of legal protectionism, it results in inefficiency, encouraging locals to produce inefficiently what could be far mroe efficiently produced elsewhere and exchanged for products in which your region has a competitive advantage. Can you imagine what would happen to the population of Hong Kong, if the government mandated that all food consumed in Hong Kong could not be imported from outside the city?
Globalization translates to better, cheaper products, made easily available to more people. When I walk into IKEA, I can purchase products designed by a skilled foreigner and produced in economies of scale from every corner of the earth (we purchased two bowls today, identical in every way but color; one came from Portugal while the other is from Turkey). Thanks to IKEA having sufficient size, efficiency, and global production facilities, I can buy a host of things to make my life far easier or more comfortable that would simply not be available or would be prohibitively expensive if everything had to be produced in Scotland. I gleefully traded with producers in a dozen different countries during my single visit to IKEA. If those producers could only sell to their local market, we would all be the worse off for it. When two traders of any origin voluntarily come together -- even indirectly through merchants like IKEA or Starbucks -- to trade, both sides benefit, otherwise the trade would not occur.
The next time you hear demonstrations against globalization, ask yourself what those demonstrators would be wearing, driving and drinking for breakfast if they had to produce everything they consume themselves, for that is the ultimate outcome of non-trade. Does it make sense not to trade with somebody simply because he lives somewhere else?
I can hardly wait until more of my favourite shops like Trader Joes and Togos spread to other regions of the country and world.
04 September 2005
Making Poverty History...
Here in Glasgow, especially around the University, there is substantial support for the white "Make Poverty History" wrist band campaign. While the cause of wanting to reduce poverty is indeed noble, and one that I sincerely share, I fear that the efforts to reduce poverty through this program may have exactly the opposite effect.
Through the vast majority of human history, virtually all humans in all regions have lived in a squalid poverty that is hard for most of us to quite fully fathom. Suddenly, some 250 years ago, something happened to cause some countries to climb to unfathomable riches while others remained generally destitute. How did it happen? What enabled the western world to become so wealthy?
They didn't rob the poor, as the poor today are actually generally better off than 250 years ago. They didn't simply have access to resources, as even rocks like Hong Kong and Singapore became wealthy while their surrounding neighbours and soviet russia, teaming with resources, remained in relative poverty.
There is one, singularly important factor that has historically eradicated poverty: capitalism. Free markets, property rights, rule of law, stable currencies, and limited governments have allowed men to come out of the dark ages and rise towards their true potential by creating phenomenal amounts of wealth that simply didn't exist before.
Even today, we witness the wonders of capitalism in both directions. Countries that suppress it, like Zimbabwe, are facing famine. Countries that embrace it, like India and China, are rising in wealth at phenominal rates. Even natural disasters can be better contained in a relatively capitalist country as compared to a less-capitalistic one. Take, for example Hurricane Katrina vs. the Sumatra earthquake. The human casualties of Katrina are orders of magnitude smaller because American's wealth allows it to take action to minimize casualties. I cannot think of a single capitalist country that has had a famine, while non-capitalist countries have them relatively regularly.
If we truly want to reduce poverty around the world, there is a clear solution: promote worldwide capitalism and globalization. When we buy products from poor countries, we create jobs so that they can build their economy. Our factories in third world countries provide the valuable first steps for many children and young women to get out of the sex trade and into an honest job from which to support themselves. Too often we try to impose our level of luxury, where we can afford to not have our children working, on countries that are still at an earlier stage of development.
Instead of wearing bracelets, we should:
- encourage capitalistic instutions around the world
- buy products from poor countries at market prices
- build factories in poor countries when it makes economic sense
- encourage globalization
Alas, many of the bracelet-toting activists will do exactly the opposite, the the detriment of the poor. For those that care, the following economic analysis does a brilliant job of explaining the why capitalism is the best solution for the poor:
http://fte.org/capitalism/introduction/
For those who care to better understand the track record of capitalism, I suggest:
http://www.capmag.com/article.asp?ID=4333
Through the vast majority of human history, virtually all humans in all regions have lived in a squalid poverty that is hard for most of us to quite fully fathom. Suddenly, some 250 years ago, something happened to cause some countries to climb to unfathomable riches while others remained generally destitute. How did it happen? What enabled the western world to become so wealthy?
They didn't rob the poor, as the poor today are actually generally better off than 250 years ago. They didn't simply have access to resources, as even rocks like Hong Kong and Singapore became wealthy while their surrounding neighbours and soviet russia, teaming with resources, remained in relative poverty.
There is one, singularly important factor that has historically eradicated poverty: capitalism. Free markets, property rights, rule of law, stable currencies, and limited governments have allowed men to come out of the dark ages and rise towards their true potential by creating phenomenal amounts of wealth that simply didn't exist before.
Even today, we witness the wonders of capitalism in both directions. Countries that suppress it, like Zimbabwe, are facing famine. Countries that embrace it, like India and China, are rising in wealth at phenominal rates. Even natural disasters can be better contained in a relatively capitalist country as compared to a less-capitalistic one. Take, for example Hurricane Katrina vs. the Sumatra earthquake. The human casualties of Katrina are orders of magnitude smaller because American's wealth allows it to take action to minimize casualties. I cannot think of a single capitalist country that has had a famine, while non-capitalist countries have them relatively regularly.
If we truly want to reduce poverty around the world, there is a clear solution: promote worldwide capitalism and globalization. When we buy products from poor countries, we create jobs so that they can build their economy. Our factories in third world countries provide the valuable first steps for many children and young women to get out of the sex trade and into an honest job from which to support themselves. Too often we try to impose our level of luxury, where we can afford to not have our children working, on countries that are still at an earlier stage of development.
Instead of wearing bracelets, we should:
- encourage capitalistic instutions around the world
- buy products from poor countries at market prices
- build factories in poor countries when it makes economic sense
- encourage globalization
Alas, many of the bracelet-toting activists will do exactly the opposite, the the detriment of the poor. For those that care, the following economic analysis does a brilliant job of explaining the why capitalism is the best solution for the poor:
http://fte.org/capitalism/introduction/
For those who care to better understand the track record of capitalism, I suggest:
http://www.capmag.com/article.asp?ID=4333
23 August 2005
Fair Trade Coffee: Unstable grounds...
Here in Glasgow's West End around the University of Glasgow, there is a strong "Fair Trade" coffee movement. Not only do many coffee shops prominently advertise their use of Fair Trade coffee, even many of the churches here flagrantly indulge in this movement. It is both sad and disconcerting that an upscale, intellectural neighbourhood surrounding Adam Smith's Alma Matter should so flagrantly ignore basic economic principles.
Prices are normally the primary feedback mechanism to inform producers of the relative changes in supply in demand. High prices suggest that they need to increase production. Low prices induce them to lower production. In the case of commodities like coffee, increases in production involve a delay of several years between the planting of new coffee trees and the first harvest. So, while supply does adjust to price changes, it does cannot do so quickly. Over the past decade, supply has increased substantially in response to high prices in the mid-1990's, and has become more efficient in many ways, lowering costs of production.
Grounds for Complaint:
http://www.adamsmith.org/pdf/groundsforcomplaint.pdf
By paying substantially more than market rates for fair trade coffee, the fair trade producers have incentive to produce MORE coffee, rather than cutting back production, as the world coffee price would suggest. In other words, by buying fair trade coffee, we encourage fair trade producers to increase the supply of coffee and thus depress the market price even further. Given that only about 1% of coffee produced is fair trade, the losers by the lower world market price far outnumber the winners who happily benefit from the fair trade subsidy.
Oxfam's Bitter Coffee:
http://oliverkamm.typepad.com/blog/2004/05/oxfams_bitter_c.html
It is precisely the poorest producers who cannot organize themselves or afford to pay for fair trade certification who suffer the most with the advent of fair trade coffee. By increasing demand for fair trade coffee, those tiny producers outside of fair trade have an even lower demand for their non-fair trade coffee, lowering the price.
If we truly want to help coffee growers, rather than just assuage our guilt, there are things we can do. By freeing up markets in other alternative commodities - like textiles - coffee farmers would have more options if the market price of coffee is too low for them to make a living. We should also stop subsidizing producers through organizations like the World Bank and IMF, which distorts market forces by reducing the relative costs of production of some farmers while others bear their full costs. We can also drink more coffee, hence increasing demand.
In short, the best cure for the poor around the world is not feel good activism like fair trade, but encouraging fewer international trade restrictions, thus allowing poor countries to sell us things they produce in order to improve their quality of life. See subsequent blog entry on Sweatshops. We can do far more for the world by learning and applying basic economic principles than by wearing coloured wrist bands.
Prices are normally the primary feedback mechanism to inform producers of the relative changes in supply in demand. High prices suggest that they need to increase production. Low prices induce them to lower production. In the case of commodities like coffee, increases in production involve a delay of several years between the planting of new coffee trees and the first harvest. So, while supply does adjust to price changes, it does cannot do so quickly. Over the past decade, supply has increased substantially in response to high prices in the mid-1990's, and has become more efficient in many ways, lowering costs of production.
Grounds for Complaint:
http://www.adamsmith.org/pdf/groundsforcomplaint.pdf
By paying substantially more than market rates for fair trade coffee, the fair trade producers have incentive to produce MORE coffee, rather than cutting back production, as the world coffee price would suggest. In other words, by buying fair trade coffee, we encourage fair trade producers to increase the supply of coffee and thus depress the market price even further. Given that only about 1% of coffee produced is fair trade, the losers by the lower world market price far outnumber the winners who happily benefit from the fair trade subsidy.
Oxfam's Bitter Coffee:
http://oliverkamm.typepad.com/blog/2004/05/oxfams_bitter_c.html
It is precisely the poorest producers who cannot organize themselves or afford to pay for fair trade certification who suffer the most with the advent of fair trade coffee. By increasing demand for fair trade coffee, those tiny producers outside of fair trade have an even lower demand for their non-fair trade coffee, lowering the price.
If we truly want to help coffee growers, rather than just assuage our guilt, there are things we can do. By freeing up markets in other alternative commodities - like textiles - coffee farmers would have more options if the market price of coffee is too low for them to make a living. We should also stop subsidizing producers through organizations like the World Bank and IMF, which distorts market forces by reducing the relative costs of production of some farmers while others bear their full costs. We can also drink more coffee, hence increasing demand.
In short, the best cure for the poor around the world is not feel good activism like fair trade, but encouraging fewer international trade restrictions, thus allowing poor countries to sell us things they produce in order to improve their quality of life. See subsequent blog entry on Sweatshops. We can do far more for the world by learning and applying basic economic principles than by wearing coloured wrist bands.
10 July 2005
A solution to public education...
Although I ideally believe that the government should not be involved in education in any manner, I wonder if I may have stumbled on a partial solution to public education's ills. If three simple laws were passed, they might allow public schools to eliminate many of the trouble makers, allowing the other students to learn more.
The three step solution:
a. Allow child labour at any age.
b. Allow public schools to expel / suspend any student.
c. Remove legal requirements for students to attend school.
When school is no longer a right, but a privalege, I believe that children and their parents will take it more seriously. By prividing the alternative of on-the-job learning and making it easy to expel misbehaving students from public schools, I wonder if it might improve the motivation and quality of public school students overall. Those that don't want to be in school can go to work instead, and those that do go to school are faced with the reality that if they don't behave properly, they will be involuntarily ejected, keeping them from disturbing the education of the motivated.
I realize, of course, that it is highly improbable that any or all of these three steps will ever be sufficiently socially acceptable, but I believe that they do provide a potential solution short of eliminating public education altogether. They embody some of the key motivating factors that make private schools successful.
The three step solution:
a. Allow child labour at any age.
b. Allow public schools to expel / suspend any student.
c. Remove legal requirements for students to attend school.
When school is no longer a right, but a privalege, I believe that children and their parents will take it more seriously. By prividing the alternative of on-the-job learning and making it easy to expel misbehaving students from public schools, I wonder if it might improve the motivation and quality of public school students overall. Those that don't want to be in school can go to work instead, and those that do go to school are faced with the reality that if they don't behave properly, they will be involuntarily ejected, keeping them from disturbing the education of the motivated.
I realize, of course, that it is highly improbable that any or all of these three steps will ever be sufficiently socially acceptable, but I believe that they do provide a potential solution short of eliminating public education altogether. They embody some of the key motivating factors that make private schools successful.
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