Brief Interlude

I'm going to be away from computer access for a couple of days - Take a look at and comment on the existing posts and I'll try to stir something up later this week.

Sunday Randomness

It's Sunday and my brain is tired. So here for your viewing pleasure are three bits of random Balthrop information:

I love Broadway musicals, and I generally listen to the Broadway channel on my XM radio. Les Miserables is my all-time favorite.

I'm a big-time Mac guy, and dread going back to school and having to use Windows.

I have a huge sweet tooth, and my favorite candy is Cherry Sours.

More Balthrop randomness next Sunday.

School and Education Question - Reading and Homework

At the high school level, especially teaching advanced classes to primarily Seniors (12th grade), the material I teach can not be fully understood and mastered with only the exposure to what we do in the classroom. Besides the distractions of texting, sleeping, doodling, and daydreaming, there isn't enough time to cover it all. For those sensitive to bias, it also by definition limits the student to only being exposed to one point of view. Some of the things we cover in economics and nearly everything we do in Statistics must be practiced in order to be mastered. I've got a ping pong table - I have to actually play to get better; I can't just sit here at my computer and watch YouTube videos on how to play and hope to get better. Whether you realize it or not, the same is true of academic subjects.

So, dear former students, how does a caring, dedicated teacher devise a system that would have you actually read a textbook, ideally on a timely basis? How do we come up with a system that would create the proper incentives to get you to read and to do assigned homework problems? Graded? Completion? Daily? Weekly? By Unit? Extra Credit on tests or separate grades?

The best approach would be the one they get to use in college - you don't do the work at an acceptable level, you fail. As you all probably realize that is not realistic in our high school environment for reasons of administration policies, parental pressures, student's college admission needs, etc. But since I probably can't get away with failing the majority of my students because they have "Senioritis" and I desperately want them to learn and master my subjects, what am I to do?

Help!

Inflation or Deflation? Pick your Poison.

The Wall Street Journal today has an article titled "Global Deflation Pandemic Begins to Brew". It talks about falling price levels in Europe and even in China. The article concludes by saying:

"But if deflation does take root, it could prove devastating for investors. Deflation can cause stock prices to decline as companies are unable to boost prices; corporate bonds also suffer from rising bankruptcies.

Behind a global deflation virus is a collapse of demand in the U.S. Unless the economic engine in the U.S. can get cranking again, deflation could keep spreading."
As I was told once at the Federal Reserve Bank, "inflation bad, deflation badder." Could we really be facing a worldwide deflation? And if so, what would that mean to our decisions to spend and save? What about mortgages on houses that lose value? If you didn't like what has been called the bursting of the housing bubble and that is a key cause of our current recession, what becomes of the US and world economy when it expands and spreads?

On the other hand, look at this graph:



This is scary. If inflation can be caused by increasing amounts of money chasing a constant amount of goods, and if our national production levels are not increasing, we're building a tremendous monetary pressure that seems to have the possibility of causing hyperinflation. This almost looks like a Zimbabwe situation shaping up.

I wish I had the answers. I just know I get to teach a fascinating subject now and for the next few years, even if none of my theories work anymore.

Granholm Flunks Econ 101

This in from National Review Online's "The Corner":

Granholm Flunks Econ 101

Shared via AddThis

Global Warming? Cap and Trade?

As many of you might recall, I am something of a global warming/climate change skeptic. While I agree that the climate does change, and I agree that human behavior has some effects on climate, I do not accept the sometimes claimed "consensus" that we are experiencing problematical global warming (hence the change in terminology to the more generic and less restrictive "climate change") or that the major cause of the change is human activity. This is simply too complex for these simplistic approaches, and there is legitimate scientific evidence that there are other, many times naturally-occurring, causes for the reported climate changes.

Today, I ran across the following: A study challenging the "consensus" and an estimate of how much money we have spent so far on this issue. And we face the potential of even more costs through the costs of the Cap and Trade legislation passed by the House and still on the legislative agenda.

Complex issues deserve careful, serious, deliberate thought; let's be sure we know the problem before we try to fix it in an expensive manner.

Update: And India, after Secretary of State Clinton apologized for America's contribution to global warming, shows it is not impressed: Financial Times says India Widens Climate Rift with West.

You've Got a Raise!

One of today's news stories is that the federal minimum wage increases today to $7.25. Here's one of many links to this story: http://www.ajc.com/business/minimum-wage-hike-kicks-99639.html?cxntlid=homepage_tab_newstab The increase has been scheduled since 2007, and minimum wages are always open to economic debate. Do they help low income workers? Do they lead to layoffs and cut backs in hours? The simple analysis suggests that when the price of labor increases, the quantity supplied will increase. But as the price increases the quantity demanded will decrease, leading to a surplus of low-income labor and layoffs or firings. Then as the higher "bottom wage" increases other wages will have to rise as well, leading to more problems. The current discussion and projections from the government seem to suggest that the higher wages received (by those who are fortunate enough to keep their jobs) will generate so much additional revenue that consumer spending will increase, jobs will be created, and there will be little negative effects from this increase.

In fact, there are those in government already suggesting that the minimum wage needs to be raised and raised until it reaches the $10 per hour range. I wonder if this is a good time for such a move - there is still trouble on the unemployment front: http://www.google.com/hostednews/ap/article/ALeqM5iHJXWDtrvHB8s3w0SfjAJYB0ZVpQD99KA1OG0 This suggests that scheduling these increases to occur in the future without foreknowledge of economic conditions that will be in place is a risky way to pass laws. Who suspected in 2007 that we would be facing these economic conditions in 2009? If anyone did, they should have been able to profit handsomely!

Anybody directly affected by the increase? Did you get a raise? Did you get fired? Did your hours get cut? Too soon to tell? On a broader front, should we have a minimum wage law? Does the underground economy where people will work for less than the legal minimum tell us anything?

What Do We Teach?

A few times last year, I mentioned the difficulty of trying to teach economics, particularly macroeconomics, at a time when all of our theories were falling apart. Economics has always been difficult for many because it is so theoretical and so dependent on simplifying but often unrealistic assumptions. However, it was a subject where the theories worked and made general sense - I'm sure you remember me saying that economics is really all about common sense.

But what do we do when the common sense disappears from the system? What do we teach when none of our theories seem to apply and none of our tidy policy solutions seems to work? In many ways this is a fascinating time for economic study, because it is a time like the 1930's when failures of our theories are causing us to reevaluate and refine our analysis. Does Keynesian fiscal policy work in this environment? Did it really work in the 1930's New Deal, or was that an illusion when the true economic recovery was due to other causes? I often have said the National Debt of the United States seemed manageable and appropriate to the size of our economy - that was before the deficit ballooned to unheard of levels. The past decades gave us confidence in monetary policy solutions to our problems, but the Federal Reserve Bank may have prolonged and enhanced the Housing Bubble as it tried to stave off deflation, while misreading the economic indicators in the first place. How do you conduct expansionary monetary policy when real interest rates are near zero? If the Fed injects massive quantities of money into the money supply to cause the economy to expand, can we really trust them to prevent the inflation that is poised to occur if the economy recovers? Do the facts support a supply-side, neo-classical approach, or were the policies of the past 15 years merely "pseudo-supply-side" and thus not helpful to our analysis? Do the supply side policies lead to social issues and how do we weigh those issues in our cost-benefit framework?

I have a lot of thoughts and ideas, but I certainly don't have the answers. I'm sure that my perspective as a 52 year old is very different from those of you who are very much younger. As I said, I wasn't sure how to teach theories that seemed to be crumbling around me by the minute. The picture above is from the cover of the Economist magazine's July 18th issue. In that issue, it says: " . . . a broader change in mindset is still needed. Economists need to reach out from their specialized silos . . . . For in the end, economists are social scientists, trying to understand the real world. And the financial crisis has changed that world."

What do you guys think?

What's the Point?

For the past year, some of us who teach high school have been discussing the use of blogs, wikis, and other technological innovations to enhance our teaching efforts. In fact, I have already used podcasts and a Smartboard, although I do not use either of these tools to their true capacity. The school district which employs me is interested in expanding the use of some of these so-called "emerging technologies" in the classroom, although there is still fear, trepidation, and ignorance as to how to use them. I may use some of the district's tools to blog/discuss issues with students, but it may be set up in a way where anyone could read entries, but only enrolled students (controlled by the school district) could comment. I would like to have discussions with all my students, past and present, as well as friends, colleagues, and others who find this space and are interested in our discussions.

Please read, think, and comment. This is not meant to be a site where I write and you read. This is a site where ideas are tossed out and the discussion spins out from there. I teach economics and statistics (the "ics"), but topics of politics, mathematics (two more "ics"), philosophy, travel, law, technology, education, and just about anything else can be fair game. Invite your friends and acquaintances - the more people the more interesting our discussions will be. I'll try tossing out ideas, like I do in my class - and like class, some will click and be fun to discuss and others will thud to the ground like the stock market's famous "Dead Cat Bounce." Suggest topics, give your opinion, ask for mine. As many of you know, my classes have a way of wandering off-topic, and the challenge is to bring it back on track. Here there is no track, so we can wander all we want without syllabus, standardized tests, or school admnistrators to limit us.

Let's get started.