Teaching at an international school affords me the privilege of encountering and learning from truly unique and diverse individuals. Last week, my Economics classes were lucky to have as a guest speaker one very interesting and inspirational young man named Andrew Cunningham. Andrew, originally from Vermont, graduated from Duke University in 2008 and has helped co-found a non-governmental organization (NGO) focused on promoting grassroots strategies for economic development. WISER (Women’s Institute for Secondary Education and Research) serves a community of 35,000 in Kenya’s Muhuru Bay, an area where the per capita income is around $1 a day and 38% of the population is HIV positive.

Traditionally, less than 5% of young girls complete primary school in Muhuru Bay. In the town’s history, only ONE girl has ever gone to university (she would become the only Muhuru Bay native to complete her PhD and would eventually co-found WISER with Andrew). A combination of tradition, culture, and most importantly poverty had prevented improvements in the plight of woman in this poor corner of Africa. What was needed, decided Andrew and his founding partners, was an all-girls boarding school where opportunities for young women were promoted and academic achievement encouraged and fostered. WISER opened the community’s first all-girls secondary school in 2010 to 130 local girls who had made it through primary school.

Beyond female education, WISER have embarked on several other development projects in the last year and a half. In his visit to our IB Economics class, Andrew told the story of human development in Muhuru Bay as occurring primarily in three realms.

• Education, 
• health, and 
• entrepreneurship.

I will briefly summarize the three main development strategies WISER has employed in Muhuru Bay, starting with education.

Education as a development strategy:

Education is a primary and fundamental strategy for eradicating poverty. A nation’s human capital is its most vital resource, and the road to prosperity requires an effective education system that does not discriminate based on race, gender, or socioeconomic status. In Muhuru Bay, which is 14 hours by car across un-paved roads from Kenya’s capitol, the education system had failed to achieve meaningful results, both for boys and girls. Student performance on national examinations across the primary grade levels had historically averaged around 11% passing rates. Boys out-performed girls, but as a whole only about one in ten Muhuru Bay children passed the examination required for admittance to secondary school in Kenya.

WISER wished to improve this dismal statistic. If they were going to build a secondary school for girls, they would need to first get girls to pass the national exam for entrance to secondary school, or else their new building would be full of empty desks.

Andrew first talked to my class about the traditional development community (think World Bank, UNICEF, USAID) approach to promoting education in Africa. You are probably thinking the way to help these kids is to give them resources to improve their education. Build better schools, give them textbooks and school supplies, maybe uniforms, build a library, electricity in the classroom, chalk boards, heck, how about we give them laptop computers! All of these ideas represent the traditional development community’s approach to improving education in poor countries. The problem is that these strategies focus only on the inputs into education, and completely fail to look at the output.

Inputs and outputs are common topics of discussion in any Economics class. To produce anything, three resources are required: land, labor, and capital. The traditional approach to improving education in Africa focused primarily on the land and capital. Things such as pens, notebooks, laptops, and new libraries are great, but they have little actual impact on what gets learned in a school. The neglected factor was the labor (i.e. the teachers!) In Muhuru Bay, teachers were paid so miserably and worked in such dismal conditions that the incentive to actually improve their students’ results was just too weak! With passing rates at 11% on national exams, WISER set about figuring out how to use incentives to improve the outputs of education in Muhuru Bay.

A simple and relatively low-cost plan was put into action. Teachers were told that if their students’ scores increased by only 15% on the exams, they would receive a 100% increase in their salary. Andrew and WISER worked with the national education ministry to develop interim exams that could be given quarterly to help the teachers measure their students’ improvement before the annual national examination.

With only minimal investments on the land and capital resources (i.e. textbooks and classroom materials) in Muhuru Bay schools, and by spending less than $10,000 on teacher raises, the passing rate among Muhuru Bay schools increased in one year from 11% to 36%. Hundreds of students, boys and girls, who would not have been able to enter secondary school the previous year, instead passed the exam and were eligible for a secondary education, a crucial step towards a better future!

The teachers’ incentive pay program was such a success in Muhuru Bay last year that the state government has taken notice and intends to implement it in other rural communities throughout Kenya. By focusing on the outputs (student learning), rather than the inputs (classroom resources) WISER has assured that when their all-girls school opens in January, its seats will be filled with qualified students who successfully completed their primary education.

Health as a development strategy:

The second topic of Andrew’s discussion with my IB Economics classes focused on health and sanitation, specifically solving the problem of open defecation (“OD” is a technical term used in the development community referring to the fact that in many poor communities basic latrines are non-existent, and therefore people shit in the open). OD in Muhuru Bay contributed to the poor health and low life expectancy of locals; According to Andrew an estimated 60 people were dying each year of cholera, a disease spread via human waste.

In the health realm of traditional economic development programs, the same basic dilemma between focusing on the inputs or the outputs had stymied previous attempts to reduce OD in Muhuru Bay. Recently, an outside aid organization had made loans to the community to build 30 public latrines. Within a year, however, the latrines had fallen into disrepair and were essentially useless. When Andrew and his team asked the community members why they had let the latrines fall into such a poor state, their answer was predictable. These were not their latrines, they belonged to the aid organization that had built the latrines. If they were broken, the aid organization could fix them! Such logic reflects a common problem in economics, that of the tragedy of the commons. Because the latrines were public, no one owned them. Because no one owned them, no one cared for them. When the latrines fell out of repair, people quickly reverted back to OD, and instances of cholera and other diseases increased once more.

WISER decided to tackle this problem using a similar approach as the one used to fix primary education in Muhuru Bay, by focusing on the output, rather than the inputs. In this case, the goal was simple: create incentives for people to build their OWN latrines, which they would then have an incentive to take care of and use. The strategy for promoting personal latrines they decided to employ is one that has been successfully implemented throughout the developing world, and is now funded by UNICEF, which trains facilitators to go into a community and in a very short time, and at a very low cost, incentivize the locals to take sanitation into their own hands and build their own latrines.

Community Led Total Sanitation (CLTS) is a mind-blowing and shockingly blunt way to promote sanitation. Rather than spending thousands of dollars to build public latrines, the CLTS approach brings community members together for an afternoon of discussion and education about sanitation issues. Locals are asked to take an index card and go to “where they shit” and collect a sample of their own waste. A large pile of human waste is placed on a table in front of a room full of locals right next to a large selection of delicious foods. The facilitator then goes about discussing basic facts related to OD in the community, such as “If you added up all the shit your community produces in a year, how many donkeys would it weigh as much as?” or, “How many bags of rice would you have to eat to create this much shit?” In the mean time, of course, hundreds of flies have descended on the pile of waste in the front of the room, and the community members look on in utter disgust as the flies jump from the feces to the food and back again.

At the end of the lecture, the facilitator turns to the food and says, “Well, it’s time for lunch, who’s hungry?” In utter disgust, the locals ask the facilitator if he has gone mad. The lesson, of course, is that the food and water the community consumes is most likely being contaminated by the waste they produce and deposit in the open around their village. Within a few weeks of the CLTS project in Muhuru Bay, 256 new latrines were built by the community members themselves. Whereas previously, only around 15% of the locals used latrines regularly, after the CLTS project around 75% had access to the “facilities”.

The total cost of the CLTS sanitation project? Around $55, a tiny fraction of the cost of building the public latrines that had previously been neglected by the community. By focusing on the outputs rather than the inputs, real development in the health of the community was achieved at a very low financial cost.

Entrepreneurship and micro-lending as a development strategy:

The final approach to human development in Muhuru Bay Andrew discussed with my classes focused on the economic empowerment of community entrepreneurs. Micro-lending is a much talked about and widely used development strategy that provides financial credit or technology loans to entrepreneurs in poor communities to create small businesses, ideally ones with a socially beneficial purpose. Watch the first 12 minutes of the video below to get a better idea of the history and purpose of micro-finance as a strategy for achieving economic development.

In Muhuru Bay, the micro-lending scheme Andrew has pioneered involved not financial capital, but physical capital (i.e. technology).

WISER was able to secure several technology donations, including a copy machine, several laptop computers with cellular internet connections, a foot pump for water, and a digital LCD projector. WISER then solicited loan requests from several “young entrepreneurs”. Young men and women wrote business plans outlining how they would use the technology loans to generate income for themselves and the community, and provide services that would benefit others in the Muhuru Bay community. The technology would not be donated to the recipients; rather they would be required to pay back the value of the capital through their business revenues.

It is simply amazing how a few pieces of second-hand technology, items that we in the rich North would take for granted as relatively common and thus of very little social or economic value, can completely change a poor community in Africa for the better. Here’s how some of the capital Andrew and WISER loaned to young entrepreneurs were put to use to achieve meaningful development in Muhuru Bay:

• The copy machine was installed and powered by a generator. It was the first such machine ever installed in Muhuru Bay. Local businesses, students, job seekers and other could now, for a few cents, photo-copy their documents locally, avoiding the two hour drive previously required for such a service.
• The laptops were installed in an internet café and made available to local students and businesses. Farmers and fisherman could check product prices in the cities hours away, increasing efficiency and bargaining positions when middle-men came to town to buy their produce. Job openings in the city newspapers’ classifieds could be printed and posted for the local community to see, improving information symmetry between the poor countryside and the cities where job opportunities existed. The cost of access to these services was cheap, yet the entrepreneurs who were granted the laptop loan were able to pay back the cost of the technology in no time at all, and the community as a whole benefited from their existence.
• My favorite entrepreneurial venture involved the LCD projector. This piece of technology, which now hangs from the ceiling of thousands of classrooms around the rich world, had never before been seen in Muhuru Bay. You may think it ended up in a classroom or in an office building, but no; the entrepreneurs who received the projector hooked it up to a satellite dish which captured and projected English Premier League football matches onto the wall of a large room in a local building. The business was to sell tickets to local football fans who were more than happy to pay to watch English football matches in full color on a wall-sized screen. Before the projector, dozens would have huddled around a tiny television with poor reception to watch football matches. The “football theater” business was the most successful of all, and paid back its loan fastest.

All three of these entrepreneurial endeavors were very low cost, using donated technologies. The reason for their successes, however, must be attributed to the model for implementation. They were not simply “given” to the community. Such a strategy would certainly have led to the same “tragedy of the commons” experienced when the outside aid organization funded the construction of public latrines. The capital would have been neglected and fallen into disrepair. By lending the technology to businesses, however, the incentive for innovative and socially beneficial ventures was created, and a business model was developed to best utilize the resources in a profit-earning, sustainable manner. With very little inputs, fantastic outputs were achieved, enriching not only the entrepreneurs, but the entire Muhuru Bay community.

Economic Development the WISER Way:

Andrew’s visit to Zurich International School was eye-opening in many ways. He brought to light both the successes of WISER and other community projects in rural Kenya, but also shined a light on the failures of the traditional development community’s agenda. When I think about the hundreds of billions of dollars that have been committed to economic development in Africa over the past decades, and on into future decades, I wonder whether the diplomats and the politicians in the “aid community” have any idea how much has been accomplished on the ground in places like Muhuru Bay thanks to community-based organization like WISER.

With so little, so much can be accomplished. The poor of Africa and the world need resources, but more importantly they need education, health and sanitation, and business opportunities so that they can enjoy the benefits of development from the bottom up. Development aid, as it has traditionally been distributed, comes from the top down, funneled through national governments. Waste and corruption are rampant, and typically only a fraction of what has been given ends up on the ground in places like Muhuru Bay. Even when it does, the tragedy of the commons often results in inefficiency and waste, as the “inputs” are managed and distributed from the top down, leading to uncertainty of ownership and misaligned incentives once the resources are on the ground.

Perhaps aid from the outside is still needed, but Andy’s visit showed me and my students that something much more basic lies at the core of successful economic development. Education focusing on outputs rather than inputs, sanitation focusing on outputs rather than inputs, and entrepreneurship that empowers business leadership, have improved the lives of thousands in one Kenyan community. What could such a re-thinking of development strategies do for the rest of Africa and the developing world?

Related posts:

1. Does economic growth = economic development? Not for China’s rural poor…
2. The “bottom billion”, aid, and strategies for achieving economic development
3. Introduction to Economic Development – Myths about Development, debunked

I was thinking about the great students that I teach and wondering what they should be doing today to increase their odds of not being one of the future unemployed in our country’s unemployment statistics. But before I give that advice, let’s first look at the composition of the unemployed using the official unemployment statistics as reported by the BLS for the most recent October 2010 monthly report:

The current 9.6% national unemployment rate consists of the following:

• 4.7% unemployment for those with a college degree or advanced degree
• 8.5% unemployment for those with some college, but not a bachelor degree
• 10.1% unemployment for those with a high school degree, but no college
• 15.3% unemployment for those with less than a high school degree

It is easy to see from the above trend that one should get as much education as you can! The jobs in today’s advanced economies are clearly biased towards those with advanced skills, advanced degrees in the form of a master’s degree or better, and education is the clearest path to get those 21st century skills!

Besides teaching Economics, I also teach Personal Finance. When learning about careers in Personal Finance, I suggest to my students that they should be concerned more about majoring in “LIFE”, rather than majoring in Marketing, History, Education, Economics, or Political Science. Moreover, they should even be more concerned about majoring in LIFE than in whether they should apply to Virginia Tech, William & Mary, Duke, or Georgetown. By majoring in LIFE they are more apt to have the best college experience and career possible, and increase their likelihood of never being structurally, or even cyclically, unemployed.

So, you might be asking, what exactly is this LIFE major?

I’m glad you asked!

LIFE is an acronym for what I, and many others, consider the 4 key skill sets to thrive in 21^st Century future careers, which will include a rate of technological, social, and global change never seen before. Those four employment key skill sets for the future are:

Leadership

Interpersonal skills

Flexibility

Emerging technology mastery

Leadership

Are you thinking about how you will learn to become more optimistic (not pessimistic and sarcastic) and a confident initiative taker? Having been a member of management for many years, the companies I worked for were always quicker to lay off (made unemployed) those that lacked initiative (“it’s not my job!”). Very often, we would somehow find a new job for the employee whose job was going away if they were strong in leadership and initiative. Often, “initiative” hurts, as it causes one to work harder with more stress, which is why so many workers do not have it!

Interpersonal Skills

Tomorrow’s career “winners” will need to combine their leadership skills and be better at teaming with others more so than ever before. The rate of specialization is increasing at an increasing rate which necessitates the need to collaborate more effectively than ever to get any job done. Consider reading Thomas Friedman’s The World Is Flat to learn about how specialization and collaboration will continue to increase in any future career. Continue to work on your flexibility and your ability to team successfully with others in all that you do. Don’t be the person who has 5 reasons on why it won’t work, but rather, be the person that can explain to the team the 5 reasons why it will work!

Flexibility

Those that are not “lifetime learners” or those that do not embrace constant learning will soon be unemployed as the rate of constant change in our globalized world will leave them behind. Assess your own tolerance to setbacks and your personal reaction to the need to continuously change directions. If you get “bent out of shape” too easily when your plans go awry, or when you are faced with unforeseen obstacles, it is time to start now, while in high school to change your levels of patience, perserverence, and commitment to success. Flexibility and patience can be learned; it is not genetic and is not linked to toilet training.

Emerging Technology Mastery

Embrace, love, and continuously pursue and integrate the latest in technology into your daily life and education. Tomorrow’s employment and career winners will have “in their blood” the ability to be a technology step ahead from the average worker. Start immediately as it is delusional to avoid being an early adopter today and think you will become an early adopter in the future. Be sure to take a computer science course in your freshman year of college, consistently use your laptop in planning and course work, and be sure to be the one that other students go to for application and technology help.

Let me end this blog by letting you in on a “dirty little secret” known by managers and industry leaders across the globe: when it is time for a promotion or when it is time to reduce the work force due to a slowing business, managers get very creative and are biased towards promoting, or not laying off, those that have majored in LIFE…whether you went to Virginia Tech, Duke, William & Mary, or Georgetown makes little difference in career success in the long run, although it certainly opens more doors in the short run. So sure, aim for that bachelor’s degree or higher in a specialized major that you are passionate about, but don’t forget to double major in LIFE!

Discussion Questions:

1. Does the above breakdown of unemployment by educational category surprise you? What message, if any, do you take away from these statistics?
2. Is the LIFE acronoym pursuit valid, in your opinion, as an early focus to help avoid unemployment? Do you think the LIFE major is a necessary, intentional focus/practice along with your college major or do you think the development of these LIFE skills will just progress naturally?
3. Which area of the LIFE acronym are you strongest at? Weakest?
4. What percent, based on 100%, do you think becoming unemployed is just “bad luck” or deteriorating business conditions, versus you can help ensure your own employed destiny by continued employment through focus on the LIFE major? Did my “dirty little secret” referenced above make common sense?

Related posts:

1. IB – Unemployment at 4.4% Is this below the NRU?
2. Unemployment and Flexicurity in Denmark
3. You can’t always get what you want… the tradeoff between unemployment and inflation

Next Test – Value of $125,000-a-Year Teachers – NYTimes.com

A New York City charter school is experimenting with paying teachers nearly triple the national average teacher salary of public schools. The article below describes the result:

So what kind of teachers could a school get if it paid them $125,000 a year?

An accomplished violist who infuses her music lessons with the neuroscience of why one needs to practice, and creatively worded instructions like, “Pass the melody gently, as if it were a bowl of Jell-O!”

A self-described “explorer” from Arizona who spent three decades honing her craft at public, private, urban and rural schools.

Two with Ivy League degrees. And Joe Carbone, a phys ed teacher, who has the most unusual résumé of the bunch, having worked as Kobe Bryant’s personal trainer.

“Developed Kobe from 185 lbs. to 225 lbs. of pure muscle over eight years,” it reads.

They are members of an eight-teacher dream team, lured to an innovative charter school that will open in Washington Heights in September with salaries that would make most teachers drop their chalk and swoon; $125,000 is nearly twice as much as the average New York City public school teacher earns, and about two and a half times as much as the national average for teacher salaries. They also will be eligible for bonuses, based on schoolwide performance, of up to $25,000 in the second year…

The school received 600 applications. Mr. Vanderhoek interviewed 100 in person.

It’s amazing to me that a school in NYC that pays $125,000 a year and expects teachers to work year round gets so much attention, while some international schools have been paying teachers nearly as much for decades to work a regular school year. Yet so many American teachers seem unaware of the career opportunities available at international schools! A salary of $100,000 is not unheard of in international schools, and often times that income is tax free (at least the majority of it, since it is considered “foreign earned income” by the IRS).

In economics we study how scarce resources are allocated by supply and demand in the market place. Demand for highly skilled, qualified teachers is huge in all kinds of schools, public, private, charter and international schools alike. But only once an American school like this New York charter school comes along and offers to pay teachers a salary more than double the national average (and then receives nearly a hundred applications for every opening) do we begin to read about teacher pay in the news and reflect on the roll it plays in attracting top notch, expert educators. From one economics teacher’s perspective, it should come as no surprise at all that when a school offers a higher salary it will attract better teachers and thereby improve the quality of the education it provides.

International schools have known this simple fact for years. Unlike the American public school system, which from state to state essentially resembles the “monopsonistic employer” model (meaning each state has a “monopoly” of sorts on the hiring of teachers), the market for international teachers is highly competitive. In most big cities, even, there are several international schools competing to attract the best educators from the limited supply available. And in a particular country, for instance China, there are dozens of private international schools, all seeking to offer the best quality education in order to increase demand for enrollment, competing against one another to hire the best teachers they can.

The result of the competition between international schools for student enrollment is increased competition for skilled, qualified teachers. Add to this the fact that year after year there end up being shortages of qualified international teachers and you end up with the perfect recipe for teachers like myself and all the colleagues I’ve worked with over the years, upward pressure on the salaries and benefits packages offered by international schools.

The lesson here is clear from my perspective. Increased competition among schools for student enrollment will lead to increased competition among schools for better teachers, and therefore better teacher pay. The NYC charter school set out with a clear vision in mind for achieving students success. Attract the best teachers and we’ll provide the best education. And in order to achieve this vision, it followed the most basic of economic principles, articulated so eloquently by Adam Smith himself:

Whoever offers to another a bargain of any kind, proposes to do this: Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of.

The bargain being offered to teachers in this case is an attractive salary, and all the schools in question are asking for in return is excellent teaching. “In this manner” schools obtain from teachers a commitment to excellence and teachers obtain from schools a salary that rewards them for this commitment. Society’s need for excellent education and teachers’ need for a living wage are met. But public schools go against this basic tenet of  market doctrine when the monoposony that is the state public school system pays teachers not based on their achievement, training, excellence or results but on their years of service. The lack of competition for student enrollment leads to a failure of the incentive system for attracting good teaches, and what schools find themselves with is a burnt out, underpaid, disgruntled work force and test scores and student achievement that you’d expect to follow.

I hope this charter school succeeds. I hope the students’ scores surpass those of their public school peers. I hope this not  because I like to see the old model of education fail, but because I would love to see a new model, based on the simple market principle that individuals respond to monetary incentives, succeed. I can say from experience that the competition among international schools for the limited supply of skilled teachers benefits all the stakeholders in question: teachers are paid better, the schools that pay the most attract the best teachers and thereby attract the greatest demand for enrollment. The market has worked! If the New York charter school succeeds, how can this be ignored. How can America’s other public schools not admit that to improve education, competition for students and teachers must be embraced.

Related posts:

1. Shanghai American School and the imperfectly competitive market for international teachers
2. If you pay them, they will come: teacher pay, incentives, and results
3. New tools for the Econ teacher and student: Social bookmarking Site, iPhone App and YouTube Review Videos

A week after the earthquake, the Haitian people now speak of day zero plus seven.  Day zero was the day when an earthquake rumbled and shook the shallow bay near Port-au-Prince and crumpled the many fragile houses, hospitals, churches and hotels. The quake did not discriminate against the rich and the poor, but in the months and years to come the world needs to ensure that the country gets a fair chance to rebuild.

Some consider the day of the quake, as the day a new nation began. As Economists we can offer insights about the path to improved living standards, through our understanding of what has worked, and not worked, in other countries.

Haiti has a history which is more turbulent than most.  In 1697 when Spain ceded control of Haiti to the French, much of the land was deforested and the ecology wrecked as sugar fields were planted. In 1804 the republic was founded, and later the dominant political figure was Dr. François Duvalier, and his son who reined as Presidents of the country from 1957 – 1972 (François) and his son till 1987. In 1990 the ruling military junta gave up power and President Clinton sent in 20,000 troops to a country ravaged by HIV and entrenched poverty. Hurricanes in 2004 and 2008 displace hundreds of thousands of Haitian’s and ruined existing infrastructure. But the recent earthquake might be the biggest challenge yet for most fragile and poorest nation in the Caribbean. On the Human Development Index, Haiti is classified as one of the least developed nations in the world at 149th of 182 countries (HDI Report, UN 2009).

After the mourning and eventual stabilisation, the government will need explain what the future holds for Haiti. This is a window of unfortunate opportunity that the government will never see again and mustn’t squander. The developed world has made promises of aid to support the reconstruction, but health care and education, skills and employment must be offered to the people to help the nation grow from the depths of this disaster in a sustainable way. From our learning about Development Economics we can explain strategies appropriate to Haiti.

Former President Bill Clinton who is the UN’s Special Envoy to Haiti, offered a good insight on the nations challenge in his excellent essay in last weeks Time Magazine.

Time Magazine – Jan 14 2010 – Bill Clinton: The Haiti Earthquake

We’ve got to all work together toward a common goal (for Haiti). We have to relentlessly focus on trying to build a model that will be sustainable, so we don’t plant a bunch of trees and then revert to deforestation, or adopt a program to bring power to the country that can’t be sustained, or adopt an economic strategy that is going to wither away in two years.

What the economic strategy will be for Haiti will likely be influenced by the trade agreement with USA called the Caribbean Initiative. This has recently provided an impetus for the clothing industry in Haiti. Hanes, which sells T-shirts throughout North America, produces part of their stock in Haiti in the factories, which are now being protected from looting. These labour intensive industries are important in a nation with approximately two-thirds of labour force unable to find work. The quake and eventual rebuild also offer opportunities to build on existing plans as Clinton explains,

Haiti isn’t doomed. Let’s not forget, the damage from the earthquake is largely concentrated in the Port-au-Prince area. That has meant a tragic loss of life, but it also means there are opportunities to rebuild in other parts of the island. So all the development projects, the agriculture, the reforestation, the tourism, the airport that needs to be built in the northern part of Haiti — everything else should stay on schedule. Then we should simply redouble our efforts once the emergency passes to do the right sort of construction in Port-au-Prince and use it to continue to build back better.

It is evident that Haiti can use this opportunity to develop the country as Clinton explains. In addition, there are many other ways that the country could improve the living standards of the Haitian people. These development and growth strategies could include;

• The development of Fair Trade schemes to improve Haiti producer’s access to world markets.
• Facilitating the provision of small loans through Micro Finance schemes
• Developing the export sector by investing in the transportation infrastructure to transport products.
• Exploring new trade agreements with nations.
• Promoting foreign direct investment in Haiti by multinational companies.

Nevertheless the task is daunting for Haiti. As a UN staff member recently explained to a New York Times reporter, the immediate recovery is complex. The future reconstruction and redevelopment will be difficult, and the road long.

“You’re talking about a country that pre-earthquake had limited resources and capability, and what resources it did have were concentrated in the capital,” said Kim Bolduc, who is coordinating the relief effort for the United Nations. “This context helps explain why this emergency is probably the most complex in history, more than the tsunami, more than the Pakistan earthquake” of 2005. Link

Here are some interesting facts about Haiti

• 40% of the population is under 14 years of age.
• The nations main exports are coffee, mango and other agricultural products.
• 66% of all Haitian’s work in the agricultural sector on small subsistence farms.
• Before the quake foreign aid made up a large proportion of national income. In 2004 over $1 billion was pledged by USA, World Bank and Canada and France. Partly in loans but also in direct assistance.
• In 2006 Haiti was ranked as the most corrupt nation in the world by Transparency International, followed by Burma and Iraq.

Sources:

http://www.nytimes.com/2004/07/21/world/1-billion-is-pledged-to-help-haiti-rebuild-topping-request.html

http://news.bbc.co.uk/2/hi/business/3522155.stm – Haiti: An economic basket-case.

http://news.bbc.co.uk/2/hi/business/6120522.stm – Transparency International

https://www.cia.gov/library/publications/the-world-factbook/geos/ha.html – Haiti – CIA World Factbook

http://www.flickr.com/photos/un_photo/ – UN Photo stream, Creative Commons

http://topics.nytimes.com/top/news/international/countriesandterritories/haiti/index.html – New York Times, Haiti News.

Discussion Questions:

1. In your opinion, what is Haiti’s most valuable resource endowment? Explain.
2. Choose two development or growth strategies and explain how these could be implemented in Haiti.
3. Evaluate the strengths and weaknesses of each strategy.
4. How could corruption be a barrier to the future development of Haiti?
5. What do you think Haiti will be like in 20 years?

No related posts.

I’ve recently added two new great tools for Econ teachers to this blog that I think can really benefit teachers who decide to use them. Both of the following resources can be found in the sidebar to the right of this blog.

First, I have created a Diigo Group for Econ Teachers that is open for anyone to join. A Diigo group essentially is a social network for people with shared interests. The Econ Teacher group will be a place where Econ teachers can share bookmarks to online resources for use in the classroom. More than just a bookmarking site, however, Diigo allows users to annotate, highlight and leave sticky notes on articles, blogs, and other websites posted to the group, which can then be seen by group members, and further annotated. A website such as the CIA World Factbook, the BLS, or BEA, or an article from the Financial Times or Wall Street Journal thus becomes a shared document for discussion and reflection amongst any and all teachers who find it useful.

Diigo groups also have discussion forum features, so the Econ Teacher Group will become a forum for sharing collective research and resource ideas, as well as a forum for discussing how technology and the web can be used to enrich economics education. Join the Econ Teacher Diigo Group now to help grow this new social network for Econ teachers! (Once you’ve joined Diigo, I recommend adding the Diigo toolbar to your browser to make bookmarking and annotating sites to the group easy!)

Secondly, I am happy to endorse my friend and colleague Mike Fladien’s entrepreneurial endeavor aimed at helping high school Economics students prepare for their exams, “EconExamCram”. EconExamCram is an iPhone or iTouch App for sale in the iTunes store for $1.99. From the app’s description:

This app is available for download on iTunes. I intended this to aid students in preparing for tests in microeconomics. It’s a comprehensive review of 80% of the concepts covered in a micro class.

I believe that students today want to learn using today’s technology. Today’s technology is iPods, Smart Boards, audience response systems, flash animation and more. When I developed this app, I developed it for the on-the-go student who values appearance too. The student I envisioned was one who had a challenging schedule and one or more after school activities. They will carry an iPod with them, but not a five pound textbook. The student I envisioned was one who studied in “micro sessions” of 10 or 15 minutes. The touch was a natural tool for these students.

Congratulations to Mike on developing this app and making it available to us and our students to help prepare for the AP and IB Exams. Do your kids a favor and give them all the link to this app so they can start reviewing for your tests on their phones today!

The last great resource I have added to my sidebar this week is an RSS feed to a YouTube channel I’ve recently discovered. Jacob Clifford, an AP Economics teacher in San Diego, has recently begun producing and publishing a series of review videos for the AP Economics student. He calls them “Economic Concepts in 60 Seconds”.

Jacob is an enthusiastic, energetic young Econ teacher whose lecture style is fast paced and easy to follow. An since the lectures are on YouTube, students (and teachers!) can watch them over and over until his explanations of econ concepts is clear. In each video, he illustrates the concepts on a whiteboard while clearly (and quickly) explaining them in a fun and entertaining way. So far he has only produced videos up through perfect competition in the AP Micro course, but he promises to keep adding more throughout the school year.

You’ll be able to follow Jacob’s latest video posts by checking the RSS feed on my sidebar when visiting the blog. I’m hoping to team up with Jacob somehow in the future to get his videos a wider audience through this blog or in some other collaborative way.

Related posts:

1. Review Lesson: Econ concepts in 60 seconds – Perfect Competition
2. AP Econ Blogs – the list begins
3. AP Economics in the blogosphere

Small Town Hall | Marketplace From American Public Media.

I love this! Marketplace Public Radio convened a “Small Townhall” with eight middle school aged kids to ask them questions about the economy. The idea is that the economic decisions made by today’s business leaders, policymakers, academics and grown-ups in general will have huge effects on today’s youth when they grow up, so why not ask them what they think of the big economic issues today? In my own classes, I often refer to the US national debt as a “teenager tax” since it will ultimately be paid back through higher taxes by income earners in the future. Well, these kids are those future income earners.

The questions the kids are asked:

1. Should kids be allowed to have credit cards?
2. Do you know what the recession is?
3. What is the deficit?
4. Has the recession changed your dreams?
5. What do you think about debt?
6. Do you have any investment advice?
7. What do you think about saving money?

My favorite is the kid’s explanation of the current recession. If one of my 18 year old year two IB Economics students could explain the recession as well as this 12 year old, I’d be one proud teacher!

No related posts.

World Habitat Day – Social Media News Release.

On October 5th the world will celebrate World Habitat Day. The purpose of this day, declared by the United Nations, is to raise awareness about the dire need for adequate housing among hundreds of millions, even billions, of the world’s poor. According to Habitat for Humanity:

Worldwide, more than 2 million housing units per year are needed for the next 50 years to solve the present worldwide housing crisis. With our global population expanding, however, at the end of those 50 years, there would still be a need for another 1 billion houses. (UN-HABITAT: 2005)

Raising awareness and advocating for change are the first steps toward transforming systems that perpetuate the global plague of poverty housing. World Habitat Day serves as an important reminder that everyone must unite to ensure that everyone has a safe, decent place to call home.

The U.N. further states that both developed and developing countries, cities and towns are increasingly feeling the effects of climate change, resource depletion, food insecurity, population growth and economic instability.

Rapid rates of urbanization cause serious negative consequences – overcrowding, poverty, slums with many poorly equipped to meet the service demands of ever growing urban populations.

With over half of the world’s population currently living in urban areas the U.N. believes there is no doubt that the “urban agenda” will increasingly become a priority for governments, local authorities and their non-governmental partners everywhere.

Global poverty facts

• By the year 2030, an additional 3 billion people, about 40 percent of the world’s population, will need access to housing. This translates into a demand for 96,150 new affordable units every day and 4,000 every hour. (UN-HABITAT: 2005)
• One out of every three city dwellers – nearly a billion people – lives in a slum. (Slum indicators include: lack of water, lack of sanitation, overcrowding, non-durable structures and insecure tenure.) (UN-HABITAT: 2006)
• UN-Habitat has reported that because of poor living conditions, women living in slums are more likely to contract HIV/AIDS than their rural counterparts, and children in slums are more likely to die from water-borne and respiratory illness. (UN-HABITAT: 2006)
• Housing formation generates non-housing related expenditures that help drive the economy. (Kissick, et al: 2006)
• Investing in housing expands the local tax base. (Kissick, et al: 2006)

The facts are undeniable. Housing for the poor is one of the basic necessities that is simply not being met, both in developed and developing countries.

Today I live in Switzerland, but during my first several years as a teacher, as well as during my own high school life, I lived in Asia, where poverty is far more visible than here in Europe. At my last school, I was able to participate in a Habitat for Humanity trip myself, to Lucena City in the Philippines. The week I spent building a house with my 20 students was one of the greatest weeks of my career as a teacher. Below is the album from that amazing week in a small village in the Philippines:

Shanghai American School, Habitat Philippinese 2007 – Lucena City

In Bangkok, where I had my first teaching job, the problem of urban poverty was visible on every street corner. As part of a senior course I taught on Service Learning, I used to take upper class international school students into Bangkok’s poorest slums to learn about the challenges faced by the city’s poor. The most obvious challenge, visible everywhere in the city of 12 million, was lack of adequate housing. I made the video below to document my students’ “Urban Plunge” into the Bangkok slums, and to raise awareness of the issues faced by Thailand’s poor:

In a few days the world will acknowledge World Habitat Day. Take a moment, follow the link at the top of this post. Read about the issues faced by nearly a third of the world’s population, and see how you can get involved. Oh, and if you have the chance to participate in a Habitat build through your school or community, do it! I promise you, the experience will change your life, but more importantly, it will help improve the life of someone in need of one of life’s most basic necessities, safe shelter, a HOME!

Related posts:

1. Habitat for Humanity, Philippines: a Reflection
2. Kiva.org – how YOU can be a banker for the world’s poor
3. “Creative Capitalism”: Harnessing the power of markets to serve the poor – by Bill Gates

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

No related posts.

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.

Related posts:

1. SAS Economists Podcast #10: Perfect competition and comparative advantage in… the World of Warcraft!
2. Comparative advantage, plain and simple
3. Comparative advantage as the basis for trade – oh, what a beautiful concept!

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.

Related posts:

1. Our Wiki – SAS Econ students help Mozambiquean Econ students learn!
2. AP students to major in Economics

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! 

Related posts:

1. The Wiki is spotted by Wetpaint VP… Cool!
2. Our wiki WINS the EduBlog Award for “Best Educational Wiki”
3. Our Wiki is spotted by one of my favorite Econ professors!

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.

During the bumpy drive, I got to thinking a lot about this, my first, Habitat trip, and the whole concept of Habitat for Humanity, which brings people from the rich world great distances at a great expense to poor countries to help construct affordable housing to get families out of unsafe and unsanitary situations into stable and clean houses. I calculated that between the 16 students I was chaperoning this week, their total expenses for the seven day trip totaled around $19,200, including airfare, transport, accommodation, food, and a contribution to the local Habitat office. I could not help but think to myself on that first night: wouldn’t $19,000 go a lot further and have a much greater impact on the people of the Philippines if it were simply given as a cash donation to a community? I mean, how could the benefits of this trip really outweigh the incredibly high costs?

I will admit, I was a bit skeptical as to the motives and ethics of a program like that which we were about to embark on. If helping poor communities was our goal, then surely a cash donation could do a lot more for a community than 18 inexperienced builders over five days. In fact, in a discussion with our local host, Rudy, I gleaned that the raw material and labor costs of a Habitat house usually come to around $1,500 in the Philippines. That means that a cash donation equal to the amount paid by our 16 students for their trips could have built around 15 houses! Assuming our group would build one house, how could this possibly be a worthwhile program given the opportunity cost of 14 houses that could have been built had we simply donated the cash instead of coming to the island ourselves? My initial cost/benefit analysis seemed to indicate that the idea of a Habitat trip was somewhat flawed and, economically speaking, irrational given the narrow goal of helping get poor people into quality homes. It was with this pessimistic calculation in my head that I showed up to Saint Dominic Village on the morning of October 1, work gloves on, ready to build.

Over the next five days the 18 of us, along with many local high school kids who came to volunteer and the guidance of three professional builders, literally built a house from the ground up! When we arrive Monday morning, there was little more than a 6 by 6 meter square marked off with fishing line on a sloping hillside covered with mud and brush. The first day consisted of nothing more than digging through Luzon’s rock-filled soil a trench in which we would build the foundation walls.

By the end of day 2 we had built walls up to waist height, and with the help of 20 volunteers from a local high school, we had filled the foundation with 12 cubic meters of dirt using the highly technical method of “bucket-passing”. Our goal for the end of day 2 was to have the foundation filled and the dirt compacted, ready to poor the concrete floor the next morning. Question: What’s the best way to compact a 6 by 6 meter square foundation filled with 12 cubic meters of dirt in a village with 200 children? Answer: DANCE PARTY! With the boom box blasting and the children screaming with glee, day 2 concluded with our house’s first dance party, attended by about 50 of the coolest, hippest cats in Saint Dominic Village, all bouncing to the rhythm of the music, successfully compacting the foundation for the next day’s concrete poor.

This meant we had two and a half days to build the walls of our house, a task which by mid-day on Friday, we had successfully accomplished. By the time we finished our work, all that was left was the roof beams, a corrugated tin roof, a layer of plaster, and Tivo to make the house liveable! What an accomplishment! 16 students who barely knew the difference between a nail and a screw (inside joke), had actually built a house from mud to roof beams!

Over the five days of our Habitat build, I came to settle my misgivings regarding the costs and benefits of the program. I realized that Habitat for Humanity is not only about helping the poor by building them houses to help them live affordably and safely. It dawned on me by the end of the week that the humanity we’re helping does not only refer to the poor villagers, or the Filipino people, or the people of the developing world in general; rather, the humanity at stake exists within the builders themselves.

Humanity has two definitions: one refers to “humans as a group; the human race”. The other refers to “the quality of being humane; benevolence”. I used to think Habitat for Humanity was about the first definition, that it was mainly about building houses for poor people. Now I know that the program is also, and perhaps most importantly, about the second type of humanity, that it’s just as much about building humaneness, benevolence, empathy and an appreciation for others within the volunteers, the locals, and all people involved in the program, rich and poor alike.

The growth I saw among the students this week was greater than simply an improvement in carpentry skills. They became more humane and caring individuals. That’s what they were paying for, and for that reason, my economic critique of one week ago needs to be reconsidered. The opportunity cost of not simply donating $19,000 to the Philippines may indeed by 14 houses. But the opportunity cost of not going to the Philippines with students, not experiencing the humanity and love of a community like Saint Dominic Village, of not building something with our own bare hands to make others’ lives a little bit easier, and the subsequent growth and strengthening of the humanity within the 16 students (and two lucky chaperones) themselves, outweighs any other considerations of costs.

In other words, the benefits of a Habitat trip are bestowed not only on the village where the house is built, but within the communities to which each of the volunteers belongs now and forever in the future. The tranformation within the builders is the greatest benefit; because of their experience this week, these students will forever be better people, more willing and able to act humanely in their communities in a way that makes the world a better place for all people. My conclusion is therefore that the intrinsic and implicit benefits of Habitat for Humanity far outweigh the explicit costs. For that reason, my wife and I have already decided we can’t wait to lead another Habitat trip.

It was truly a blessed and transformational week for everyone. The village itself (especially its 200 children) was touched by the humanity and love of our students, as were the students by the village. Please follow the link at the top of this post to see the pictures from this amazing week. And if you haven’t already, consider joining a Habitat for Humanity trip in your own country; trust me, the benefits far outweigh the costs!

Related posts:

1. World Habitat Day – Raising awareness of the dire need for affordable adequate housing among the world’s poor!
2. Meet Jasper – a snapshot of poverty in Southeast Asia

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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Related posts:

1. Amazing innovation in cargo ship technology – WIND powered vessels!
2. Is the market for public education in the US allocatively inefficient?
3. Unforseen consequences of weaker dollar – fewer immigrants!

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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Related posts:

1. Keynesian vs. Neo-classical Economics – and what is Heterodox Economics?
2. More on Heterodox Economics
3. Keynesian/Classical debate enters the realm of hip hop

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.

Related posts:

1. AP Econ Blogs – the list begins
2. AP Economics in the blogosphere
3. Welcome to my 2008-2009 Economics students