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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Hip Heterodoxy

I just found a link to this long and interesting article about a fledgling field called “heterodox” economics. Heterodox is defined as “not in accordance with established or accepted doctrines or opinions, esp. in theology; unorthodox.”

In the case of heterodox economists, what they don’t believe is the
neoclassical model that anchors the economics profession. Classical
economics refers to the theories laid out by Adam Smith and David
Ricardo in the eighteenth and nineteenth centuries, which emphasized
the power of the “invisible hand” of the market to promote the division
of labor and economic growth. Smith famously summed up the recipe for
prosperity as “peace, easy taxes, and a tolerable administration of
justice,” with “all the rest being brought about by the natural course
of things.”

There’s a lot to digest in this five page article from the Nation. I think I’ll have to blog it in a few separate posts. This will also be a great article for use in my AP Econ course when we compare the neo-classical version of the vertical Aggregate Supply to the Keynesian horizontal AS curve, and the implications therein regarding use of monetary and fiscal policies to achieve macroeconomic stability.

One line that jumps out at me right now is:

Indeed, the cradle for much of our policy discussions can be found in
the first chapter of just about any introductory economics textbook,
where the basic precepts of the neoclassical framework are described
under the rubric of “thinking like an economist.”

Again, I continue to come across evidence that an education in Economics is absolutely crucial to understanding important issues in all realms of society today. As I continue digesting this important analysis and history of competing economic ideologies, I will continue to think about how to use this in my class next fall, and blog any ideas that come to mind. If you have the time and interest, give this article a read and post your comments here!

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Greg Mankiw’s Blog: Colleges vs Universities

A couple of days ago I had a conversation with one of my graduating seniors about whether or not she’d major in Economics at Wellesley next year. She wanted to know more about the department, so we went online, looked at the research being done by the professors, looked into their academic and professional backgrounds, and tried to get an idea of the caliber of the department there. I blogged about our conversation here. This morning I found this old post by Greg Mankiw recounting a conversation he had with former senator George McGovern about the difference between Harvard and Wellesley.

Here’s Mankiw’s advice:

The most important choice a high-school senior faces when choosing
where to be an undergrad is between research-oriented universities and
teaching-oriented colleges. If you go to a place like Harvard,
Princeton, or Yale, you get a famous faculty. But the first priority of
that faculty is their own research and writing (and blogging!?), and
they are more likely to shower attention on grad students than
undergrads. If you go to a place like Amherst, Swarthmore, or Williams,
you get a faculty whose first priority is undergraduate teaching. But
you do not have a menu of graduate courses to sample from, and you do
not have as vibrant a research atmosphere to experience. It is a tough
choice.

I’ve had this exact conversation with my AP and IB students who seek advice about where to go for college. I think Mankiw sums up my own views about the differences between large universities and smaller liberal arts colleges nicely. Personally, perhaps speaking as a teacher myself, I think the most important aspect for undergrads to consider is their access to professors, class sizes, and quality of teaching. Save the big name universities with famous faculties for graduate school, when you’ll get the attention you deserve.

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Environmental Economics: Teaching economics

University of Rhode Island Econ professor Stephen Swallow explains why basic economics should be taught:

I am not suggesting Econ 101 is wrong. It may need better teaching, more sensitive to the rising relevance of certain limitations in the basic principles …. But if understood clearly, I think the basic principles are powerful, positive (as in constructive) tools for making society better off. If there is a concern about equity, that concern should be dealt with via an explicit policy rather than attacking economics as irrelevant or wrong — basic principles indicate an efficient society may be better able to afford to address equity (that is, a more efficient economy, whatever the wealth distribution, has more to go around – even if through express, coercive wealth transfers). Some of those decisions are in the realm of politicians, and are not the responsibility of economics (although economics has long understood the implications of efficiency for being conditional on a distribution of wealth – which is often another area of misplaced accusation from demonizers).

If Econ 101 was wrong, it would not actually be taught (at least not as a science course). Helping students understand the principles is our duty. Our delivery may be imperfect, but there remains a socially valuable foundation. Telling students that economics is all wrong and always harmful – and, as is often done, pushing for moral rhetoric as a proposed approach – this, I believe, is harmful to society and the environment and misleads students. The better students may eventually figure out the logical consistency and limitations of good economic analysis, but this may only be after significant time – and lost productivity – getting stuck in what can be a cult of demonizers.

It would be most productive to help improve upon particular analyses and basic approaches, rather than just shooting the entire profession and (often) leaving students not only confused but also empty handed. Lots of sound empirical evidence suggests that moral rhetoric falls short on the masses, particularly when incentives and budget constraints bind. We need to fix imperfections rather than sling mud.

… it seems to me that demonizers of economics often are minimally as guilty of oversimplification as they claim economists to be. It remains for each of us to decide for ourselves where we fit into the balance of constructive research and teaching.

Thanks to John Whitehead at Environmental Economics blog

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Months ago I made a deal with my 35 AP Econ students. I vowed that at the end of the year, if they had decided that they would study economics in college, they would be rewarded with a small prize from Mr. Welker. My original intention was to get copies of my favorite “everyday” economics books and give a copy to everyone who intended to major in Econ in college, but then realized I would not have anyway of knowing how many students that would be. So, when I was in Bangkok a month ago, I picked up six copies (two each) of three of my favorite “fun” econ reads: Freakonomics, The Undercover Economist and Confessions of an Economic Hit Man.

As of this afternoon, eight students indicated their intention to major in Economics, so eight names went into the hat, and six came out. I’m proud to announce the winners:

• Heidi Chai and Chris Park won because they attended our Saturday review session before the AP Exams and were entered in a drawing there.
• Will Moeller (who will be returning to Michigan for his senior year next year) is the proud owner of Freakonomics.
• Vincent Lin (attending Johns Hopkins), Chris Eldred (Wharton Business School) and Helen Wu (Wellesley College) were the last three whose names came out of the hat. They’ll be given their books tomorrow at graduation!

Congratulations to you all. It’s been a great year and you’ll be missed! I hope you continue to enjoy your econ studies in college, and I hope you will keep in touch with your AP teacher in the great years ahead! -Mr. W