Forbes.com to Launch Business and Finance Blog Network - Forbes.com

A few weeks ago I received an invitation to join the Forbes.com Business and Finance Blog Network. The network is set to launch this month:

Today Forbes.com, home page for the world’s business leaders, announced the creation of a Business and Finance Blog Network, comprised of a community of pre-screened, influential business and financial blogs.

The Blog Network’s content will focus on senior business decision makers and high-net-worth investors. Topics will be relevant to the banking, trading, hedge fund management, affluent investing, and senior business decision-making communities. Participation in the network is by invitation only, and all blogs are vetted by Forbes.com editors for appropriate content, and to ensure that they are in keeping with the Forbes editorial brand.

I guess the folks at Forbes.com figured that even billionaire investors needed to be educated in the basic Economic concepts! So now Welker’s Wikinomics will cater to the following audiences:

• 17-18 year old IB and AP Economics students
• Teachers of IB and AP Economics
• University students in Principles of Economics courses
• Hedge fund managers
• Billionaire investors
• Warren Buffet

I’m honored to be a part of this network; and don’t worry, the blog will continue to focus on communicating Economics news in a way accessible and educationally appropriate for students in a principles of Economics course. After all, that is my comparative advantage!

BBC NEWS | Business | Q&A: Strong pound - winners and losers

Here’s another great article to help you understand the advantages and disadvantages of a strong currency. The British pound reached an all time high against the dollar late last year ($2.08 per pound, or 48 pence per dollar!!). So who are the winners and losers from a strong British pound, anyway?

Here’s a quick run-down… to read about why, click the link and read the article.

• Winners: Brits traveling and shopping in the US, US businesses, British airlines, British consumers, British drivers
• Losers: Americans traveling in Britain, small businesses in the UK, British exporting firms, British airlines, shareholders in certain companies.

Discussion Questions:

1. Why may British airlines benefit AND lose with a stronger British pound?
2. Who else will benefit from the strengthening pound that is not mentioned by the article? Refer to your notes from class.
3. Who else will be harmed by the stronger pound that is not mentioned?

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Yes, but it’s a bit more complicated than it might seem at first. This podcast looks at the impact of the falling dollar on the aerospace industry, in which manufacturing for the industry’s largest firms is sourced to hundreds of smaller companies each with factories in countless countries from North America to Europe to Asia.

The recent fluctuations in the US dollar exchange rate has wreaked havoc for firms located in the US and trying to compete in this competitive market. In some cases, the outcome has been positive, but as you’ll hear, not always.

Listen to this podcast then discuss the questions below:

 

 Weak Dollar Can Bode Well for Manufacturers [5:18m]: Play Now | Play in Popup | Download

Discussion Questions:

1. How has the weaker dollar helped the Connecticut firm Kamatics?
2. How has Kamatics been hurt by the weaker dollar?
3. Why do fluctuations in the dollar make “business more unstable”?
4. How does the impact of currency swings become more ambiguous “as the economies of the world become more intertwined”?
5. Why did EchoAir stop manufacturing products in Romania? What impact would a revaluation of the Chinese Yuan have on EchoAir’s current manufacturing decisions?

March, April, May: this is crunch time for students of IB and AP Economics. Exams are just around the corner, we’re wrapping up a long year (or two) of studies, and all the excitement of the end of the year is upon us. Just when we need it most, spring break is here!

I’ll be in Malaysia for the week diving, visiting old high school friends, and enjoying the country I lived in as a kid. Some of you may be here in Shanghai wishing you were someplace cool, looking for something useful to do. If this is you, then you should check out the “AP/IB Exam Prep” page on this blog, where you can find downloadable study guides for every unit in the AP courseup to this point and links to the wiki pages you’ve created throughout the year. Between these two resources, you probably don’t even need to open your textbook when reviewing for the AP and IB exams in May.

Have a great spring break. If you’re feeling like me right now, then this break has arrived at just the right time! Don’t expect much from me for the next 9 days, I’m not even bringing my computer to Malaysia with me, so this should be the last post until March 31!

Utah lawmakers, fearing UN conspiracy, kill funds for International Baccalaureate program - Salt Lake Tribune

In Utah, law-makers fear the IB program, which they believe is a United Nations conspiracy to take over the minds of young, patriotic Americans and corrupt them with a global-perspective of the world.

Lawmakers decided against helping Utah schools pay for International Baccalaureate (IB) programs after one legislator called IB’s philosophy “anti-American” today.

“I’m not opposed to understanding the world,” Sen. Margaret Dayton, R-Orem, told members of the Senate Education Committee. “I’m opposed to the anti-American philosophy that’s somehow woven into all the classes as they promote the U.N. [United Nations] agenda.”

Remind me never to go teach in Utah. This is an absurd and frightening statement about America. I understand these legislators’ views don’t by any means represent any sort of consensus among Americans; in fact, the US graduates more IB Diploma students each year than any other country. That any law-maker would vote against a modest proposal to fund this program on the grounds that it “anti-American” puts on stark display for the world the insecurity, fear, and close-mindedness a certain, right-wing section of the American population.

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Welker’s Wikinomics - the Universe

AP/IB Exam Prep - Smartboard Study Guides

Exciting things are happening here at Welker’s Wikinomics. In February the blog and wiki had their first birthday; it was one year ago that I launched the wiki as a tool for extending the AP Economics program beyond the classroom and into the world of Web 2.0. What started as a small experiment in learning the wiki way has expanded into an online learning environment encompassing multiple Web 2.0 technologies.

Between the wiki and the blog Welker’s Wikinomics has welcomed over 70,000 visitors since June of 2007! Besides SAS students, the wiki and blog are visited by readers interested in economics from every continent!

Since September, two new exciting features have been added to the online learning environment here. First, the SAS Economists Blog, written by AP Econ students, which has seen dozens of posts, had thousands of readers, and enjoyed comments and feedback from people around the world.

Most recently, Welker’s Wikinomics Universe was launched using the Netvibes platform. This website, linked from the home page and in the menu bar above, is a resource for anyone who wants to read economics news and blogs, listen to econ podcasts, follow the progress of our student wiki and blogs, or find links to valuable resources for teaching economics. The page integrates RSS feeds to keep readers posted on the latest news stories, blog posts, and podcasts from leading media sources and economics bloggers. The site serves as an excellent research tool for students needing articles for their classes, or those simply interested in understanding how economics relates to the real world.

Finally, another technology I’ve been lucky to use here at SAS over the last year is the digital Smartboard, which has enabled me to save every lesson and lecture from each unit of the AP syllabus all year. Lately I’ve been refining these pages, and have created .pdf files for each unit from the AP syllabus, assembled them as a study guide, and uploaded them to make them available for all AP Econ students to use as review for the upcoming exams (2 months away!). These documents can be found in the “AP/IB Exam Prep” page, linked from the menu bar above. They are not intended as a stand-alone study guide, rather are meant to accompany the class wiki, which contains far more comprehensive information on the details of the AP Econ course.

I sincerely hope that the resources here in Welker’s Wikinomics World have proven useful for Econ students and teachers. I sense that students here at SAS seem to benefit from these tools, although I suppose we’ll know for sure when their exam results come back at the end of the summer! Good luck, students, in these final few weeks before your AP exams!

In recent years coffee consumers may have noticed more and more cafes are offering “fair trade” coffee as an option. Usually, for an extra 10 or 20 cents per cup, you can get a beverage made from beans that were grown by farmers earning living wages and working in safe and sustainable environments. In some cases, “fair trade” coffee is of higher standards, representing a higher quality product. The premium paid by consumers, in theory, will eventually result in better standards of living for coffee farmers and their families.

Mike Munger, chair of Duke University’s economics department, argues that “fair trade” products, while they may represent good intentions, probably don’t do much to help poor farmers. While the full podcast offers even more reasons, the clip below presents one clear explanation of why “fair trade” may actually make poor farmers worse off.

 

 Munger on fair trade [6:50m]: Play Now | Play in Popup | Download

Another interesting point Munger goes on to make relates to one of the models of economic growth we have been studying in IB Economics: the Lewis dual-sector model of structural change. According to the model, the path towards economic growth, which should create conditions that lead to economic development, requires the transition of workers from the low-productivity agricultural sector to the capital-intensive, high productivity manufacturing sector.

China, in its own economic growth, has demonstrated the success of this model, which involved rural to urban migration, employment of surplus labor from the farming sector in the industrial sector, giving workers access to capital, increasing productivity, output, income, saving, and investment, putting an economy on a path towards growth and development.

According to Munger, “fair trade” premiums paid to poor farmers create a disincentive for a farmer to migrate to the higher productivity industrial sector that may be emerging in his country. In essence, coffee drinkers in the rich world are offering a subsidy to farmers in the poor world aimed at keeping them poor. If the path to wealth and prosperity requires the transition to a capital-intensive industrial economy, then subsidies to poor farmers are only reducing the likelihood that they’ll achieve significant increases in income and savings.

Munger’s views are compelling, if a bit hard for a socially conscious, well-intentioned coffee lover like myself to swallow. I like to think that I’m helping farmers in the developing world when I drink “fair trade” coffee. If anything, Munger has at least made me think a bit harder about the true impact of the premium I pay when I choose “fair trade” next time I walk into Starbucks.

For the full podcast, click here: Munger on Fair Trade and Free Trade - EconTalk with Russ Roberts

As we study economic development in year 2 IB Economics, we examine different models for economic growth. Growth in GDP is not the only determinant of economic development, which in order to be measured effectively must account for human welfare determinants such as life expectancy, literacy rates, child mortality rates, distribution of income, and so on. However, it has been shown throughout history that economic growth, or the increase in real output and income, correlates directly with improvements in development factors like those above.

Continue Reading »

Economics - Young Economist of the Year 2008

Want to have a chance at winning 1,000 GBP ($2000)? All you have to do is write an essay that answers the following question:

“Which economic idea or policy has the most power to improve our lives?”

The Royal Economics Society in the UK will select its recipient of the “Young Economist of the Year” Award based on the submission of a 1,000-2,000 word essay. This contest is open to all IB Econ students worldwide.

The Royal Economic Society and tutor2u are delighted to announce a competition to find the Young Economist of the Year 2008. This essay competition is open to all students studying for A Levels offered by UK Exam Boards (in any subject) or the International Baccalaureate. Entries from the UK and Overseas are encouraged. The RES is particularly keen to encourage students to enter the competition who are in the first year of their studies. In 2007 over 750 entries were submitted, with Zoe Hart from Colchester RGS taking the first prize.

Interested? Follow the link above for more details.

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Inspired by my two favorite Economics bloggers, the professors at “Environmental Economics”, I have decided to add a “AP and IB Economics Help Desk” to my blog.

The purpose is to give blog readers (mainly my students of course, although anyone is welcome to submit economics-related questions) the opportunity to submit questions relating to our AP or IB Economics course directly to me at any time, from school or from home.

Too many students end up never asking the questions they need to ask because they are shy, too busy, or just don’t think of the right questions before, during and after class. From now on, I will encourage students to submit their questions via the “Help Desk”, which can be found in the upper left corner of this blog at all times, under the “Pages” box.

I will make it a point to reply to questions within one day of their submission. Questions that I feel all students should hear the answer to will be posted to the blog and I will share the answer in an article for the world to read. Please take advantage of this feature, especially in the coming months as AP and IB exams approach! - Mr. W

Gapminder - Home

Hans Rosling, a Swedish professor of international health, has created a presentation that I would describe as the “Inconvenient Truth” of global poverty. Using software he developed to analyze data on human development called “Gapminder”, Rosling gives a mind-blowing presentation on the trends in economic and human welfare over the last thirty years, debunking several myths believed true by many in the first world about development and poverty.

The first video is from the 2006 TED Conference in Monteray, California. The second video is from 2007’s TED. Both have been viewed hundreds of thousands of times on the web. Watch and discuss…

2006 TED Conference:

2007 TED Conference:

Grinding poverty defies China’s boom - International Herald Tribune

Here at SAS my year two IB Econ students have started off the new year with a new unit: Economic Development. So far in the semester we’ve learned about what makes economic development different than economic growth. While gross domestic product may offer an indication of a country’s level of economic activity and output, it says little about the reality of life for the common person of developing countries.

To offer a more rounded figure for determining the level of economic development, the United Nations Development Program has created an alternative to GDP, the Human Development Index. The HDI accounts for the GDP per capita, the average level of primary and secondary education attained, literacy rates, and the life expectancy of citizens, to offer a glimpse into the reality of not just material wealth, but health and education in developing countries.

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It’s been a month since my last post; the longest I’ve gone since starting this blog without writing. My guilt is mounting, although three weeks of skiing in the Pacific Northwest has mitigated the guilt of not blogging somewhat, it’s now time to get back to work!

Here’s what’s coming up in the next quarter in my AP and IB Economics courses. First let’s start with AP:

• We’re 90% done with the Micro component of the course. Since we do both micro and macro here, the micro component requires about two weeks more than macro, since we teach the “basic economic concepts” unit first thing in the year. For that reason, we’ll carry over into the first week of the 2nd semester to finish up our final unit of micro, which is…
• Market Failure and the Role of Government. This is my favorite unit in microeconomics, although regretfully it is also the shortest. Only about 12% (6-8 questions) on the AP exam will cover market failure. In this unit we’ll learn about the misallocation of resources that results due to the existence of public goods and externalities (both negative and positive). This unit provides a brief introduction to the broad and quickly developing field of environmental economics. For students interested in learning more about this fascinating field, there’s a great blog written by Tim Haab and John Whitehead, two of America’s leading academic environmental economics, found here.
• In just a couple of weeks we’ll begin an entirely new course in economics, where we’ll focus on the macro side of the economy. Most of second semester will be spent learning about topics such as inflation, unemployment, economic growth, international trade, the money supply, the federal reserve and other big topics in macroeconomics.
• The AP exam date is officially set for May 15. All my students will sit for both the micro and the macroeconomics exams on the morning and afternoon of May 15.

Meanwhile, in IB Economics, my eleven higher level students have begun their final unit of this two year course. For the next 9 weeks we will focus our studies on development, including:

• The sources and consequences of economic growth and development,
• Barriers to economic development,
• Strategies for economic development, and
• the evaluation of economic development strategies.

Around March we’ll wrap up this final unit, and spend the 7 or 8 weeks before our May exam to review the concepts going back to our first IB unit from the beginning of last year, and review all our units up to this point, including:

• Basic economic principles
• Microeconomics,
• Macroeconomics,
• International Economics, and
• Development Economics.

Lots of exciting things will be going on in the world of Welker’s Wikinomics this year. In addition to all the topics we’ll be learning in AP and IB Economics, I personally have begun looking forward to the new teaching position I have accepted for the 2008-2009 school year. I’ll be leaving the hustle and bustle of Shanghai behind for the relative tranquility of the Swiss Alps, where I’ll be teaching both IB and AP Economics at Zurich International School next year.

In the mean time, hope you readers stay tuned to this blog, the wiki my students maintain as they progress through their studies, and the student blog, “SAS Economists”, for the latest from the world of AP and IB Economics here at Shanghai American School!

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Managing Globalization » Business Blog » International Herald Tribune » Blog Archive » Here’s that silver lining, finally

In IB Economics we’ve been studying concepts relating to balance of trade and exchange rates. The Marshall-Lerner Condition and the J-curve are two concepts that explain the relationship between a the exchange rate for a nation’s currency and the country’s balance of trade. (click on the graph to see a larger version)

Common sense might indicate that if a country’s currency (let’s say the US dollar) depreciates relative to other currencies, then this should lead to an improvement in the country’s balance of trade (economists call this the current account). The reasoning goes as such: a weaker dollar means foreigners will have to give up less of their money in order to get one dollar’s worth of American output. At the same time, since the dollar is worth less in foreign currency, imports become more expensive, as Americans have to fork over more dollars for a certain amount of another country’s output; hence, imports should decrease.

Fewer imports and more exports means an improvement in the country’s balance of trade, right? Well, not necessarily. What matters is not whether a country is importing less and exporting more, rather, whether the increase in income from exports exceeds the decrease in expenditures on imports. Here is where the Marshall-Lerner Condition can be applied. Continue Reading »