Order the DVD - Two Million Minutes

Just how flat is the world? I was chatting with a friend from my youth via Facebook’s new chat feature last night. We went to Carmel High School together in the upscale suburbs of Indianapolis, Indiana, until I moved to Kuala Lumpur, Malaysia during my sophomore year. It has been 12 years since I had chatted with this friend. It turns out she’s become an elementary school teacher herself in Indianapolis, and she was surprised and excited to hear that I’d become a teacher and was working here in Shanghai.

Sarah directed my attention to a film she had just seen that she thought I might be interested in. I am posting the trailer here, because I’m dying to know if anyone out there has seen this film. I am particularly interested in it because it features students from both Carmel High School, where I did my first year and a half of my own “2 million minutes” (the name of the film refers to the number of minutes in the four years it takes to get through high school) before moving overseas as a 10th grader, as well as students here in Shanghai and Bangalore, India. The theme appears to be the vast divide in the content covered in the US vs. in developing countries with whom tomorrow’s graduates will be competing in the global economy.

Here’s the trailer. If anyone’s seen this film, please leave your comments here. I am ordering the DVD myself as I write this!

Two Million Minutes Trailer

FT.com / World / Americas - US economy threatens Dominican Republic

Trade based on comparative advantage… the theory originally articulated by Adam Smith, later fine-tuned by David Ricardo, the theory that suggests that if each nation specializes its economic activity on the products for which it faces the lowest opportunity cost, then trades with its neighbors, total world output and efficiency can be maximized: today this theory represents the philosophical underpinning of all free trade agreements signed between and among the nations of the world.

Through trade, countries can exchange their extra output with other nations for the goods specialized in by others, enabling all nations to enjoy a level of consumption beyond what they’d be able to achieve if they tried to produce all goods domestically.

For many developing countries, with their abundance of either land or labor, comparative advantages tend to lie in either agricultural goods or low-skilled manufactured goods. Since global prices for food are highly unstable and dependency on healthy harvests, good weather, and stable rainfall are all highly risky endeavors for a poor country, developing nations prefer to foster the growth of manufacturing sectors in their path towards economic development.

Strategies for economic growth available to developing nations include export-oriented and inward-oriented growth. A country like the Dominican Republic, the largest economy in the Caribbean, has pursued a predominantly export-oriented growth strategy, promoting through “free zones” the growth of a textile industry aimed at producing goods for consumers in developed countries, primarily the US.

To the Domincans, producing textiles for export to America has successfully given the people of this poor nation a grip on a rung of the ladder towards economic development. The import of capital has taken previously unproductive workers out of agriculture and put them into an industry where productivity, thus income, has risen, leading to improvements in living standards. Export-led growth, however, runs some serious risks of its own, as is being realized by the people of the Dominican Republic today.

It had been clear for some time that Luis Caraballo’s textile factory, in one of the Dominican Republic’s largest “free zones”, was struggling.

Finally, last December, he closed the factory gates for the last time: cut-throat competition from China and Vietnam, a weakening US dollar and unsustainable costs had become too much.

Once a hot destination for American companies looking for a cheap place to “off-shore” production of labor intensive textiles, the Dominican Republic today faces new competition, and is finding its comparative advantage slip slowly away from textiles…

The Dominican Republic depends heavily on the US, which is the destination of more than 85 per cent of exports. But textile exports – these days accounting for less than a third of total exports – fell by 32 per cent over 2007.

Although other countries in the Caribbean are also suffering from Asian competition – with Chinese textile exports to the US tripling between 2000 and 2005, while Vietnam’s multiplied almost 117 times – the Dominican Republic has been worst hit.

Here’s the thing: a nation’s comparative advantage may shift over time (from land to labor to capital intensive goods) as the structure of the global economy evolves. Once an economy like the Dominican Republic’s has undergone a period of structural adjustment, away from agriculture and towards industry, the flow of low wage workers from farm to factory begins to slow to a trickle, leading to rising wages and increased competition from countries with more abundant supplies of cheap labor.

The challenge for policy makers is to manage the structural changes as they come, minimizing the deleterious impact such global shifts of productive resources has on the citizens of a country like the D.R. Clearly, it is in the country’s interest to prepare its citizens for a “new economy”, one in which skilled labor will play a larger role. The problem is, this requires a solid education system, which the D.R., it turns out, does not yet have:

There is widespread acceptance of the need to develop a better-educated workforce, but so far education spending has been inadequate.

“The government simply doesn’t have enough resources,” said Mr Montás. About 40 per cent of its budget goes on debt obligations and another 15 per cent is dished out through subsidies. Just 1.5 per cent goes towards education.

It also turns out that this is a balance of payments story:

Mr Montás calculated that for every percentage point the US economy contracted, the Dominican Republic’s GDP would shrink by 0.4 per cent.

Not only will exporters be hit, but also the huge tourism sector and remittance flows…

One possible result of the decline in exports and flows of remittances from the US will be a depreciation of the D.R. peso, as demand for pesos by Americans falls. A weaker peso might make the country’s exports attractive once again, assuming the exchange rate is allowed to adjust on foreign exchange markets. A weaker peso should help slow the decline in the D.R.’s exports to the US, at least until new competition emerges, perhaps elsewhere in Asia, maybe even from Africa or other Latin American countries.

In all likelihood, given the increased competition from Asian textile manufacturers, continued economic growth in the Dominican Republic will depend on the country’s ability to educate and train its workforce to adapt to a more capital, technology and information-based economy, which, if successful, will eventually lead to rising incomes and higher standards of living for the people of the this rising Caribbean nation.

Comparative advantages evolve with the emergence of new competition among developing and developed countries. The negative impacts this evolution has on a particular economy can be managed if wise policy actions are taken to assure a country’s workforce is educated and trained to participate in tomorrow’s economy, rather than yesterday’s or today’s.

EARCOS Global Issues Network Conference

I’m sitting in the theater at the Western Academy of Beijing about to listen to Jane Goodall address about 400 students from 35 schools around the EARCOS (East Asian Regional Council of Overseas Schools). The purpose of this conference is to bring young people together to learn from experts and from each other about the major global issues faced by the world today and begin brainstorming action plans needed to make the world a better place.

I just wanted to post a quick message here about this amazing weekend event. It kicked off last night with keynotes by the following global leaders:

• Maurice Strong
• Jean-François Rischard
• Hafsat Abiola

Maurice Strong has a long history working for the United Nations. He has acted as the Secretary General of the UN Earth Summit, the Conference on the Human Environment. He represented UN General Secretary Kofi Annan as an envoy to North Korea on human rights in the early part of this decade, and currently advised the Chinese government on human rights and environmental issues. Strong’s keynote to the GIN Conference brought into perspective the broad scope of the challenge currently faced by today’s society in the realm of environment, economy, human welfare, and development.

Jean-Francois Rischard is a former vice-president of the World Bank and the author of an influential book, “20 Global Problems and 20 Years to Solve Them”, in which he proposes creating networks of experts from around the world whose task it is to address the world’s most dire social, environmental, economic and human welfare issues.

The most amazing keynote on day 1 was, however, Hafsat Abiola, daughter of Nigeria’s first democratically elected president, human rights and democracy activist, and inspirational speaker. While she was a student at Harvard, her father was thrown in prison by a military coup, and she became involved in activism after stumbling upon a group of students from Amnesty International petitioning for her own father’s release on Harvard’s campus.

On her way to New York to speak to some city officials about divesting from firms doing business with Nigeria’s military government, Hafsat received word that her mother had been gunned down in the streets back home. From that day forward Hafsat devoted her life to the struggle for womens’ and human rights in Africa.

**interjection: a Shanghai American School freshman, Hae Ju Kang, just asked Jane Goodall a question about water conservation over video conference. Way to go Hae Ju!!

The conference will continue over the next two days, with keynontes from other global activists like Jane Goodall, who is speaking to us at this very moment over video from Washington D.C.

I am finding myself incredibly inspired by not just the global leaders here this weekend, but the students themselves, who are fully embracing the movement for change in the 21st century. Check back here later for another update from the Global Issues Network Conference here in Beijing.

Check this out guys! Tonight I got a message on our Wiki from Antonio, an Econ professor from Africa. Here’s what he had to say:

Hi Jason,
I am Lecturer at the Economics Faculty in Maputo, Mozambique. I have recently come across your wiki and am really enjoying and learning a lot with it. I am creating my own wiki for my class, and your wiki provides a lot of insight. If you do not know Portuguese my wiki will not be of any use for you. In any case, I am the one who needs to learn with you. Thanks for the insights!
Best regards
Antonio

There’s globalization and education in the era of Web 2.0 at its best! International, teenage, Econ students living and going to school in Shanghai are helping African university professors and students learn economics. If you’re not convinced that the wiki’s effective, have a look at this. Here’s a map showing the last 100 visitors at Welker’s Wikinomics Wiki:

That’s right, guys, your wiki work is being seen, read, studied, and learned from all over the world! How amazing! Congratulations on all the great contributions you guys have made to the world on online economics education! You truly are teaching the world economics! 

Shanghai American School Habitat for Humanity - Lucena City, Philippines. October 2007

This afternoon my wife and I returned to Shanghai after an amazing week in the Philippinese where we led 16 students on a Habitat for Humanity house building project on the island of Luzon (see map here). While this experience is still fresh in my mind, I wanted to share a few comments about how my thinking about Habitat for Humanity evolved over the last eight days.

A week ago right now, the 18 of us from SAS were bouncing scarily southward along Luzon’s main north-south highway, which is only a highway in the western sense for about 30 km outside of Manila, beyond which it turns to a two-lane, pot-holed, multi-use thoroughfare shared by buses, three-wheeled motorcycle taxis, lorries, a handful of personal automobiles and thousands of jeepneys. Three hours of nerve and bone rattling travel brought us to our lovely guest house near the southern Luzon city of Lucena, where we would spend five days building a house in a community on the outskirts of the city. Continue Reading »

You can’t have one without the other.

Will schools be able to provide the level of education needed for American workers to keep up with the rapidly advancing technology of the modern economy? Tyler Cowen, an economics professor at George Mason University, looks at the
challenge America faces to provide the level of education needed to produce workers capable of dealing with a dynamic, technologically advanced economy.

Why Is Income Inequality in America So Pronounced? Consider Education - New York Times

Cowen suggests that the rising inequality in Americans’ incomes is not because of some corrupt failure of capitalism, rather it’s a simple problem of supply and demand. The new economy demands high skilled, well-educated workers, and at the same time our schools system has failed to produce such workers. In places like Silicon Valley, firms are turning to India and China for high skilled workers today; not because of cheap wages, rather because these countries are producing workers equipped with the skills to maneuver the technologically dynamic workplace of the 21st century.

The result of America’s schools’ failure to prepare students for the demanding university programs required to compete in this high tech economy: wages for highly educated individuals with an education in a technical field are rising, while wages of the majority of high school and college graduates are stagnating or even declining. Simply stated, the 21st century economy requires workers with 21st century skills. The problem is, schools are simply not preparing children to excel in such a technologically driven economy. According to Cowen:

…the evidence suggests that when additional higher education becomes available, it offers returns in the range of 10 to 14 percent per year of college, at least for the first newcomers to enroll.

Nonetheless it will, sooner or later, become increasingly difficult to deliver the gains from college — not to mention postgraduate study — to the entire population. Technology is advancing faster than our ability to educate. So even if inequality declines today, it may well intensify in the future. Even if American education improves at every level, the largely not-for-profit educational sector may simply be less dynamic than the progress of new technologies.

A pessimistic view, perhaps, but the message seems clear enough. Technology and education must go hand in hand now and in the future if our students are to be prepared for a career in the dynamic, technology driven environment that is our 21st century economy.

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Two heterodox economists respond to an article I blogged about last week, Hip Heterodoxy, published in the Nation, written by Chris Hayes.

Challenging Orthodox Economics – Part I | TPMCafe by Thomas Palley

Economics Outside the Mainstream | TPMCafe by David Ruccio

As our year winds down and we begin getting our materials and lessons in order for our next batch of AP Econ students, it’s unlikely we’ll pause to ask a rather important question: “Is the economics I’m teaching my students the correct and immutable truth?”

After all, isn’t economics still a young science? It’s only been a few generations since Smith, Riccardo and Locke laid the groundwork for what has become the mainstream, neo-classical/neo-Keynesian theory that makes up every major economics text and principles course out there. Who’s to say that in another one hundred years these views, products of the late 20th century themselves, will still be considered the correct solutions for dealing with the economic problem?

As mentioned in a previous post “Keynesian vs. Neo-classical Economics - and what is Heterodox Economics?”, the field loosely described as “heterodox economics” raises difficult questions of human behavior and thinking that challenges the neo-classical view of perfectly rational actors and the efficiency and perfectibility of free markets (the view that we teach in AP Economics). David Ruccio, econ professor at Notre Dame, laments on mainstream economists:

All reasonable arguments are accepted in the marketplace of ideas. Except they (mainstream economists) never read any heterodox economics, and have no idea how the hegemony of their favorite theory shuts out all other ideas…That’s the situation that heterodox economists are trying to change. By using economic theories other than those of the mainstream… By forming journals and associations apart from those of the mainstream (in which their ideas never get aired). And by challenging the mainstream conception of the discipline itself
(including its notions of what science is, and what it means to “think like an economist”).

We do heterodox economics, or what some refer to as political economy—as against economics (which, as Chris correctly argues, has become identified with a tiny number of theoretical approaches). We write about rates of exploitation and the role of power in increasing inequality and the existence of patriarchy and structural racism. Not only do we want to argue that economic actors are sometimes irrational or guided by norms and values; some of us also want to analyze economic institutions and events without even starting from individual actors. Or efficiency. Or constrained optimization.

So, do you feel guilty yet about teaching only the mainstream view in your course? Don’t fret, even Professor Ruccio has to teach his students the neo-classical approach; here’s how he deals with the status quo in his courses:

In all honesty, I mostly prefer not to read maintream economics these days. Either it says nothing of interest, or it gets me very angry. But I teach it, and I teach it in a way that is more rigorous than my mainstream colleagues. Because I teach its basic assumptions (and not as a kind of common sense) and because I present alternative views, heterodox economics. And then I read and do heterodox economics, independently of the mainstream. Because if we spend all our time worrying about mainstream economics, attempting to do mainstream economics (with a tweak here and a changed assumption there), we’ll never get around to developing alternatives.

Professor Ruccio makes an important point here. Before students can become agents of positive change, aware and capable of making the world a better place (and the field of economics a better science) they must first know what needs fixing. I know as much as any AP Econ teacher how rushed this course is, how little time is really left for discussions beyond the basic principles in the syllabus; but in the future, I think I’ll challenge myself and my students to take a little time and find out what alternative approaches to the economic problem are being researched, published, and put into action out there. Technology, the web, blogs: these are the tools that will enable us to easily connect our students to alternative, heterodox economics despite the hectic pace of our AP course. And if your school has access to online journal databases, here’s a few suggestions for economics publications that give a voice to heterodox economists like Professor Ruccio:

The Review of Income and Wealth, the Cambridge Journal of Economics, the European Journal of Comparative Economics, Research in Economic History, Industrial and Corporate Change, CES Ifo Economic Studies, the Eastern Economic Journal, the BNL Quarterly Review and The Economist’s Voice.

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Since I began blogging a few months ago, I’ve discovered that the blogosphere is full of teacher like me who are using this medium to communicate and connect with their students, each other, and the world beyond their classrooms! Several of the teachers who created the sites below I have been in touch with and notified that I’d be adding their link to my page.

I would love to create a forum through which high school Econ teachers could collaborate, communicate and share teaching ideas and resources with one another (besides the AP Econ listserve, which tends to be dominated by a small minority of very vocal and strong opinioned teachers who prefer to use it as a forum for voicing their own narrow views about the American economy). I’m thinking an AP Econ teacher Wiki. I’ve had a great experience with my class wiki, and can’t wait to have my students working on that from day one next fall. In the last couple of weeks I’ve found that I’m not alone, that there are many many Econ teachers in the world venturing into the blogosphere to broaden their students’ learning. If you’re one of these teachers, let’s try to figure out how we can harness the web in new ways to strengthen what we’re doing in our classes! Here’s I’ve found so far:

• AP Economics by Mr. Prudente for AP Econ students at Dulaney High School
• AP Macroeconomics- Orange High School. Lakewood, OH The Orange High School AP Macroeconomics blog — A forum that will provide you with various thoughts and comments related to the science of economics.
• Bonaconomics - East Hampton HS, NY For students of Economics at East Hapton HS
• Mikeroeconomics - Muscatine HS, Iowa This blog is for my application of economics to everyday topics.
• ORH AP Macroeconomics the AP Macroeconomics Blog for Mr. Rodriguez at Otay Ranch High School.
• Surrounded by Economics for AP Econ students at Linoln International School in Buenes Aires, Argentina
• The Circular Flow - Powell Center for Economic Literacy The Circular Flow is my take on world events and an attempt to get people to apply an “Economic Way of Thinking” to the news of the day.
• The World of AP Econ Fort Atkinson High School AP Microeconomics blog - a place where we can be together and talk about the higher learning of economics…well, actually a way to get discussion outside of class or answer questions that we may not have time for.
• Walker Economics Blog - The Walker School, Georgia A blog for my AP Economics class to discuss economics-related current issues and news.

NCEE | EconomicsAmerica® | National Standards

A CRITIQUE OF “STANDARDS OF ECONOMICS” from the URPE

What is Heterodox Economics? Perhaps it’s easier to start by saying what it is NOT. Heterodox Economics is NOT what we teach in Advanced Placement Economics. It is not what most major universities and colleges teach in their undergraduate and graduate economics courses. It is not widely accepted as a mainstream view in the field of professional economics. Its economists are not widely published in the top five economic journals. It is not neo-classical in its views that “humans are rational, utility-maximizing agents with fixed preferences, that they make decisions “at the margins” and that the mechanisms of supply and demand (operating free of government interference) will lead to a general equilibrium whereby resources are allocated efficiently.” In other words, heterodox economics challenges the widely accepted view that free markets and free individuals acting in their own self interest will perfectly allocate resources and achieve a general equilibrium where resources are put to their most efficient uses and goods and services are distributed efficiently among individuals in society. Markets are imperfect, and human institutions should offer Adam Smith’s “invisible hand” a helping hand when it comes to allocation of resources and output.

The National Council for Economics Education (NCEE, which publishes the widely used workbook “Advanced Placement Economics”) released in 2000 its National Standards on Economic Education, based on the “essential principles of economics”. High school economics courses, including AP, are rooted in these standards, which themselves are rooted in neo-classical theory originating with Adam Smith and carrying on to Milton Friedman and today’s mainstream economists whose work receives the most acclaim in top economic journals.

On the other end of the spectrum from the NCEE is the Union for Radical Political Economics (URPE), originally founded in the 1960’s by heterodox economics with the following goals:

First, to promote a new interdisciplinary approach to political economy which
includes also relevant themes from political science, sociology and social psychology.
Secondly, to develop new courses and research areas which reflect the urgencies of the day
and a new value premise. Such areas include the economics of the ghetto, poverty,
imperialism, interest groups, and the military-industry complex. And thirdly, political
economics should be sensitive to the needs of the social movements of our day, and have
more group research, with an approach that links all issues to a broad framework of
analysis.

To better understand the differences between heterodox economics and mainstream, neo-classical economics, it may help to examine the heterodox critique of the NCEE’s 20 Standards on Economic Education. The links above will take you to the full critique, but here’s a short excerpt that I think illustrates rather clearly the differing philosophies of these two modern schools of economic thought. The NCEE standards are in bold, the URPE’s critique is italicized:

1 and 2. Resources are limited so people cannot have all they want.
This is the traditional “starting point” of neo-classical economics which focuses our attention on how to allocate scare resources. The focus is on efficiency, which is understood to mean maximizing total production. Thus the central question is how to CHOOSE – how to trade-off one thing for another. Classical economists, such as Adam Smith, looked not only at total production but at how it was distributed between classes (landlords, capitalists and workers), and Marx viewed the appropriation of surplus production (over and above what was necessary for working people) as “theft” by the ruling classes. A total “disinterest” in distribution is one of the defining characteristics of neoclassical economics. An alternative focus for economics would be how to insure a decent standard of living for the people of the world..

3. People choose different methods of allocation of goods and services.
Note throughout the use of terms such as “people” and “individuals” with no distinction between capitalists and workers. Thus “people” choose their economic systems. The assumption here is that the “choice” is merely a matter of the level at which government decisions are made rather than any disagreement about a system which relies on profit-making as the motive force behind the private provision of goods and services, Thus the “command economy” (which is implicitly identified with communism) is presented as one in which the market plays no role, and there is absolutely no mention of the communists’ abolition of the capitalism class, and subsequent end to distribution on the basis of ownership of property.

4 and 5. People respond to incentives and voluntary exchange is beneficial.
There is not reference here to the starting point of this “voluntary exchange. The poverty-stricken will take starvation wages and even sell themselves or their children into slavery – this is, of course, “voluntary” in one sense but a more comprehensive approach recognizes that “they have no choice.”

The list goes on. It’s very interesting to compare the reasonable critique offered by heterodox economists to the “truths” of economics that we teach in our principles courses. It also frustrates me that in our limited time in the AP course we are unable to further explore these alternative, yet very valid and important approaches to understanding economic behavior and policy. I will encourage my students to seek courses in university that challenge the neo-classical view taught in AP Economics. The field of heterodox economic, while it has not yet achieved mainstream status, surely will play a crucial role in the evolution of this science in the decades to come, as social unrest, political turmoil, conflict, scarcity, environmental and social ills continue to plague our ever-changing world.

While adherents of heterodoxy may not yet be widely accepted in the mainstream field, their “human” approach to the “economic problem” will surely gain appeal as growth continues to broaden the divide between rich and poor, haves and have nots, urban and rural. Bright young students who have been exposed first hand to the challenges and downsides of economic growth (such as those faced by the millions o poor migrant workers here in Shanghai) are just the kind of students who can go on to make valuable contributions to heterodox economics.

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