August 9, 2007
Don’t panic. But pay attention.
Here’s something students in economics courses should be discussing, from London’s Telegraph.com:
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
On so many levels, that discussion offers opportunities for students of economics to understand how markets, finance, and borrowing work. This news report alone could be the foundation for a couple of weeks of lesson plans on international finance, the Federal Reserve system, government spending, and general operation of markets.
Two officials at leading Communist Party bodies have given interviews in recent days warning – for the first time – that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.
Shifts in Chinese policy are often announced through key think tanks and academies.
Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.
Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing’s foreign reserves should be used as a “bargaining chip” in talks with the US.
Could China afford to try such a move? Would it sink their economy, too? How could the U.S. try to mitigate such a move? Does this mean the U.S. needs to seriously control trade with China, or would that kind of interference in free markets do more damage by itself?
The Dow dropped 387 points in trading on the New York Stock Exchange today. News analysts ascribe it to concerns over sub-prime mortgage lender troubles, which caused a panic in French markets today. The credit-crunch “ripples around the world,” according to a PBS reporter.
One blogger at Telegraph.com says not to worry; Ambrose Evans-Pritchard says the dollar will not collapse:
Disregard all hysteria. The ailing Greenback will not collapse this year, not in ten years, not in twenty years, not in half a century. There is no credible currency against which it can collapse. (Unless you count gold). None of the world’s rival power blocs have the economic and demographic depth to challenge American dominance.
That view is shared by a lot of the more pragmatic and successful investment advisors.
What do your local newspapers say? How can you use this to weave together a coherent narrative for your economics curriculum, starting in a week or two?
Sources to beef up your classroom presentations:
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Posted by Ed Darrell
August 1, 2007
While the law [of competition] may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest in every department. We accept and welcome, therefore, as conditions to which we must accommodate ourselves, great inequality of environment, the concentration of business, industrial and commercial, in the hands of a few, and the law of competition between these, as being not only beneficial, but essential for the future progress of the race.
— Andrew Carnegie (1835-1919), “Wealth,” in the North American Review, June 1889.
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Posted by Ed Darrell
July 31, 2007
David Parker notes this wonderful event. It makes me hopeful for the nation, really.
David: Did you ask the guy if your students can interview him?
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Posted by Ed Darrell
July 29, 2007
Leo Rosten writes clearly, concisely, and often with great humor. Consequently, his essays make good fodder for classroom use.
Rosten is probably most famous for the introduction he once gave to the comedian W. C. Fields, a spur-of-the-moment bon mots that so exactly described Fields comedian persona that it is often listed as a line Fields himself wrote: “Any man who hates dogs and children can’t be all bad.”
That story also tells us that Rosten looks at Adam Smith coolly, through no rose-colored glass.
The Adam Smith Institute carries Rosten’s essay on Smith in its entirety. Go read it:
It is a clumsy, sprawling, elephantine book. The facts are suffocating, the digressions interminable, the pace as maddening as the title is uninviting: An Inquiry into the Nature and Causes of the Wealth of Nations. But it is one of the towering achievements of the human mind: a masterwork of observation and analysis, of ingenious correlations, inspired theorizings, and the most persistent and powerful cerebration. Delightful ironies break through its stodgy surface:
“The late resolution of the Quakers [to free] their Negro slaves may satisfy us that their number cannot be very great …”
“The chief enjoyment of riches consists in the parade of riches.”
“To found a great empire for the sole purpose of raising customers [is] unfit for a nation of shopkeepers, but extremely fit for a nation whose government is influenced by shopkeepers.”
So comprehensive is its range, so perceptive its probings, that it can dance, within one conceptual scheme, from the diamond mines of Golconda to the price of Chinese silver in Peru; from the fisheries of Holland to the plight of Irish prostitutes in London. It links a thousand apparently unrelated oddities into unexpected chains of consequence. And the brilliance of its intelligence “lights up the mosaic of detail,” says Schumpeter, “heating the facts until they glow.” Sometimes.
Adam Smith published The Wealth of Nations in 1776 – not as a textbook, but as a polemical cannon aimed at governments that were subsidizing and protecting their merchants, their farmers, their manufacturers, against “unfair” competition, at home or from imports. Smith set out to demolish the mercantilist theory from which those politics flowed. He challenged the powerful interests who were profiting from unfree markets, collusive prices, tariffs and subsidies, and obsolete ways of producing things.
[More at the site of the Adam Smith Institute, including the continuation of this essay.]
Leo Rosten
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Posted by Ed Darrell
July 15, 2007
Immigrants’ Contribution to Economic Growth
“The pace of recent U.S. economic growth would have been impossible without immigration. Since 1990, immigrants have contributed to job growth in three main ways: They fill an increasing share of jobs overall, they take jobs in labor-scarce regions, and they fill the types of jobs native workers often shun. The foreign-born make up only 11.3 percent of the U.S. population and 14 percent of the labor force. But amazingly, the flow of foreign-born is so large that immigrants currently account for a larger share of labor force growth than natives (Chart 1).”
Foreign-born share of U.S. Labor Force and Labor Force Growth; Orrenius, Dallas FRB
—Pia M. Orrenius, senior economist in the Research Department of the Federal Reserve Bank of Dallas, Southwest Economy, Issue 6, November/December 2003, Federal Reserve Bank of Dallas
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Posted by Ed Darrell
June 30, 2007
Texas standards for economics require students to learn the history of money.
Jennifer Dorman, writing at Cliotech, points to an on-line article by economist Robert Samuelson, “The Cashless Society Has Arrived,” and then she adds a series of links to other valuable articles covering the history of money, and she strings it together in a coherent story that will give you a couple of moments of worry about where our economy is headed.
Go beef up your links, and get the ideas for the lesson plan that will knock the kids’ socks off.
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Posted by Ed Darrell
June 23, 2007
The Fifth Amendment is an old friend and a good friend. It is one of the great landmarks in man’s struggle to be free of tyranny, to be decent and civilized. It is our way of escape from the use of torture.
William O. Douglas, “An Almanac of Liberty,” 1954.
Douglas served longer on the Supreme Court than any other justice, from 1939 to 1975.
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Posted by Ed Darrell
May 30, 2007
Commenter Bernarda sent a link to a Washington Post story by Robert Kaiser about Finland, a nation who redesigned its education system with rather dramatic, beneficial results. Among other things, the Finns treat teachers as valuable members of society, with high pay, great support, and heavy training.
Finland is a leading example of the northern European view that a successful, competitive society should provide basic social services to all its citizens at affordable prices or at no cost at all. This isn’t controversial in Finland; it is taken for granted. For a patriotic American like me, the Finns present a difficult challenge: If we Americans are so rich and so smart, why can’t we treat our citizens as well as the Finns do?
Why not? Why can’t we treat our citizens as well as the Finns? Their system boosts their economy and leads to great social progress — which part of that do we not want?
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Posted by Ed Darrell
May 22, 2007
European Union rules require member states to do something about indoor air pollution. European states are banning smoking in public places. Gone soon will be days when we can joke about Britons and their Player’s cigarettes, or the French and their Galois habits.
Every once in a while as I recount the great Tobacco/Health Wars, my kids remind me that they never saw a cigarette commercial on television. Once, we caught a showing of past ads, and I was truck nostalgic by Fred Flintstone’s testimony for Winston cigarettes — the kids gasped: “Fred Flintstone used to smoke!”
Everybody smoked, once upon a time, it seemed. 1940s and 1950s magazines have ads in which doctors and athletes claim cigarette smoking is either unharmful, sheer pleasure, or even health promoting. Got a cigarette cough? Switch to menthol cigarettes! Mouth burns? Try a filter cigarette.
Today, kids wonder why Virginia did so well selling tobacco to Britain — who in their right mind would have smoked? they ask.
The Internet Archive has an abundance of film material on tobacco. The films come from the University of California – San Francisco: Read the rest of this entry »
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Posted by Ed Darrell
April 16, 2007
Uh-oh. Running behind.
One of the reasons I list various carnivals is to make sure I have a note of the good ones somewhere easy to find. Busy-ness in the last week just kept me away from the keyboard.
Carnivals you ought to check out:
Oekologie 4.1: Over at Behavioral Ecology. Lots on climate change, of course, and some very nice bird photos.
Carnival of the Godless at Neural Gourmet has a good run down of the Blog Against Theocracy, and complaints about it, too.
Carnival of the Liberals #36 is up at Truth in Politics. Well, that’s an obvious pairing. Free speech, the president and the Constitution, tyranny in the Middle East, and quite a bit more.
Carnival of Education #114 is back at The Education Wonks. State legislatures may be wrapping up their sessions, but education issues are heating up.
Skeptics’ Circle #58 finds a hangout at Geek Counterpoint, with several posts that get at how we know what is true — good stuff for historians and economists to ponder.
This is as good a time as any to remind you that that Fiesta de Tejas! #2 is coming up on May 2 — deadline for post nominations April 30. You may e-mail entries to me (edarrellATsbcglobalDOTnet), or submit them at the Blog Carnival portal to the Fiesta.
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Posted by Ed Darrell
April 3, 2007
It would be an oxymoron, were it a material carnival — but it’s a virtual carnival, right?
The Boring Made Dull hosts the XXXVIIth Carnival of Economics and Social Policy.
I’ve ignored economics a bit on this blog lately. For you Texas high school economics teachers, the kids who need to pass economics have just realized they can graduate, and they’re going to get a little frantic thinking economics is hard and may stand in the way of their graduation march. Perhaps you can find something in the carnival that will help you make the dismal science, less dismal for them.
For example, start with a good warm-up exercise that ought to fill one of the requirements on personal finance that is new this year: 10 Ways Retailers Make You Pay More. It’s at the bottom of the carnival listings. The others cover the housing bubble, health care, nutrition, philanthropy, and the Fed. You’ll find something there you can use.
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Posted by Ed Darrell
March 21, 2007
President Harry S Truman shows a headline from the Chicago Tribune, a headline incorrectly calling the previous day’s election for Truman’s opponent.
If textbook fights, school curricula litigation and constant internet sniping got you thinking the clash between science and religion is a tough problem to work on, you should look at the clash between news gathering organizations and their financiers who argue that economics says news should be dead.
Not all should be doom and gloom in the news biz. Tim J. McGuire, dean of the Cronkite School of Journalism at Arizona State University, argues that the delivery of the news still needs newspapers, and that newspaper economics show that profits can be produced by good, mainstream news outlets: “Writing off newspapers is premature, irresponsible.”
McGuire doesn’t ignore the bad news:
The circulation declines are undeniable. Some metropolitan newspapers have lost 10 percent of their circulation in the past three years. Classified revenues at some big newspapers are off by $50 million to $100 million in the same period. Layoffs and news-hole reductions are breathtaking. Short-sighted corporations are trying to cut their way to better profit margins.
He points to a different view: Read the rest of this entry »
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Posted by Ed Darrell
March 19, 2007
Winston Churchill delivering the “Iron Curtain” speech, Westminster College, Fulton, Missouri, March 5, 1946 – Photo by George Skadding
“From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and Sofia, all these famous cities and the populations around them lie in what I must call the Soviet sphere, and all are subject in one form or another, not only to Soviet influence but to a very high and, in many cases, increasing measure of control from Moscow.”
Sir Winston S. Churchill, in a speech at Westminster College, Fulton, Missouri, on March 5, 1946, titled “The Sinews of Peace.”
Some historians mark the beginning of the Cold War from this speech, in which a respected world leader first spelled out the enormous stakes at issue, and also pointed out that Russian, communist totalitarian governments were replacing more democratic governments in nations only recently freed from the spectre of Nazi rule, in World War II.
Oh, why not: Below the fold is the speech in its entirety, from the transcript at the Churchill Centre. Read the rest of this entry »
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Posted by Ed Darrell
March 16, 2007
This morning at 6:00 a.m. local time (GMT), the last shift finished work at the H. J. Heinz Co.’s plant in Birmingham, England, closing production in England of its famous HP Sauce. Production will be shifted to a plant in the Netherlands.
About 125 Britons will lose jobs.
HP is a vinegar-based sauce, used primarily on breakfast dishes if I understand it correctly. It is not available in the U.S. under that name, or at least, not available widely. I have been unable to get a description of what it tastes like.
HP was registered as a trademark before 1900, in what appears to be a reference to “Houses of Parliament,” where, the creator of the sauce said, it was quite popular. For a time it was called “Wilson’s sauce” after British Prime Minister Harold Wilson. According to a BBC story:
The closure has been opposed by unions and civic leaders but US owners Heinz decided the factory was not viable.
Businesses near to the factory launched a Save Our Sauce campaign and protests were held in Birmingham and outside the American Embassy in London in a bid to get the company to change its plans.
Birmingham City Council leaders met with Heinz managers to try to draw up fresh plans and MPs tried to get HP banned from tables inside the Houses of Parliament as it was no longer “a symbol of Britishness”, but all to no avail.
Production team leader Danny Lloyd, who has worked at the factory for 18 years, said it was “like the bottom had fallen out” of the workers’ worlds.
Heinz markets Heinz 57 sauce in the U.S, primarily intended for beef dishes, and competing with A.1. Sauce, a product now owned by Kraft Food, another monster, conglomerate food marketing organization. Heinz also owns the Lea & Perrins brand, which is famous in the U.S. for British-invented Worcerstershire sauce.
A high school class could make quite a meal of branded foods and sauces once made by small, local companies, now owned by large, global conglomerates.
Tip of the old scrub brush to Groves Media. Photo from BBC.
Update, March 16, 2007: How big is this thing? Courtesy of Paul Groves, check out this link: www.brownsauce.org
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Posted by Ed Darrell
Undated photograph of John Reed (1880-1927) at this typewriter, 
Millard Fillmore's Bathtub 
