Partially developed residential project in Florida. Image from Google Maps via The Boston Globe's The Big Picture.
Two poignant intersections of the foreclosure crisis and art came to my attention recently. One is the series of aerial photos of Floridian real estate developments that never came to fruition. The other, an article on photographers who document the insides of foreclosed homes.
Both are moving in very different ways. The former in showing unfulfilled potential (although there is a good argument that many areas should never have been developed in the first place), and the latter in illustrating the debris of dreams that were broken.
NPR’s On the Media has a fascinating interview with Paul Reyes, a reporter who’s covered the foreclosure photographers. Reyes points out that while there can be a certain aesthetic that makes for striking photography, the real poignancy, particularly in these examples, comes from knowing the tragic back-story behind the images.
Figure 1. The ultimate vehicle. Produced in round 3 of the capitalisim simulation, this vehicle was carefully designed to match the preferences of the consumer. It earned 5 out of the 10 dollars spent in that round.
Abstract
The power of capitalism lies in the system’s ability to adapt to the needs of people. It does so by giving preferential rewards to those who best meet those needs as expressed in the market. As part his spring Independent Research Project, middle school student, Mr. Ben T., came up with a simulation game that demonstrates this advantage of capitalist systems over a communal systems that pays the same wage irrespective of the output.
Background
In either the fall or the spring term I require students to include some type of original work in their Independent Research Project (IRP). Most often students take this to mean a natural science experiment, but really it’s open to any subject. Last term one of my students, Ben T., came up with a great simulation game to compare capitalism and socialism. With his and his parent’s consent I’m writing it up here because I hope to be able to use it later this year when we study economic systems and other teachers might find it interesting and useful.
Procedure
The simulation was conducted with six students (all 7th graders because the 8th graders were in Spanish class at the time) who represented the producers in the system, and one student, Ben, who represented the consumers.
Simulating Capitalism
In the first stage, representing capitalism, the producers were told that the consumer would like a car or cars (at least a drawing to represent the cars) and the consumer would pay them based on the drawing. The producers were free to work independently or in self-selected teams, but only one pair of students chose to team up.
Producers were given three minutes to draw their cars, which they then brought to “market” and the consumer “bought” their drawings. The consumer had limited funds, 10 “dollars”, and had to decide how much to pay for each drawing. Producers were free to either accept the offered payment and give the drawing to the consumer or keep their drawing.
This procedure was repeated three times, each turn allowed the producers to refine their drawings from the previous round, particularly if it had not sold, or create new drawings. Since all drawings were offered in an open market, everyone could see which drawings sold best and adapt their drawings to the new information.
Simulating Socialism
Socialism was simulated by offering equal pay to all the producers no matter what car/drawing they produced. Otherwise the procedure was the same as for the capitalism simulation: students were told that they could work together or in teams; they brought their production to market; the consumer could take what they liked or reject the product, but everyone was still paid the same.
Assessment
At the end of the simulations consumer students were asked:
How did you change your car in response to the market?
Did it make the car better?
What do you think of a socialist system?
Which [system] do you prefer?
Results
Students showed markedly different behaviors in each simulation, behaviors that were almost stereotypes capitalist and communistic systems.
Capitalism simulation
Producers in the capitalist simulation started with fairly simple cars in the initial round. One production team drew a single car. Another made four cars with flames on the sides, while another went with horns (as in bulls’ horns rather than instruments that made noise) and yet another drew. When brought to market, despite the fact that almost all drawing were paid for, it quickly became obvious that the consumer had a preference for the more “interesting” drawings. The producer who drew six cars with baskets on top got paid the most.
Figure 2. Rocket launchers and shields were an important innovation in Round 2 of the capitalism simulation. It earned 4 of 10 dollars and influence all cars in the subsequent round.
In the second round one innovator came up with the idea of adding a rocket launcher (Figure 2) and was amply rewarded. In response, in the third round, the market responded to this information with enthusiasm, however, all the rocket launchers were trumped by a tank shooting fire out its back with, “Ben 4 Prez!” written on the side (Figure 1).
Figure 3a. Evolution of cars in response to consumer preferences. Example from paired producers: Capitalism. Round 1.Figure 3b. Round 2. This set of producers go with multiple cars.Figure 3c. Round 3. Train and cars with rocket launchers developed in response to the market's favorable response to weaponization in Round 2 (see Figure 2).
The producers responded the the preferences of the consumer. The best example of this was the work of the couple students who decided to pair-up.
Their first car was simple and straightforward and it only garnered one “dollar” (Figure 3a). In the second round they chose to go with quantity, producing a lot of cars (Figure 3b) as that had been a fairly successful strategy of another producer in Round 1. Their reasoning was that since there were two of them they would be able to outproduce the others. By the final round they had developed a train with rocket launchers in addition to a set of cars with rocket launchers (Figure 3c). Again, market pressures had an enormous influence on the final vehicles, but the individual philosophy of the producers also showed through in the vehicle production choices.
[UPDATE 5/17/2012]: The capitalism part of the simulation produces winners and losers, and a good follow-up is to do the distribution of wealth exercise to see just how much wealth is concentrated at the top in the U.S.. The second time I ran the simulation — with a different class — the students were quite put out by the economic disparity that resulted and ended up trying to stage a socialist revolution (which precipitated a counter-revolution from the jailed oligarchs).
Socialism Simulation
Figure 4. Cars produced under conditions of equal pay to all producers regardless of work.
Although three rounds were intended, time constraints limited the socialism simulation to a single round, however the results of that single round were sufficient for students to identify the main challenges with communal rewards for production. The producers decided that they would work together and produced two sets of basic cars (Figure 4). Half of the students did not even contribute, they spent their time just standing around. It was the stereotypical road construction crew scene.
Figure 5. Industrious capitalists very focused on their work.Figure 7. Socialists slacking off.
Survey Responses
All students who responded to the question preferred capitalism, the primary reason being injustice “… cause [during the socialism simulation] some people do nothin’ [and] other people do something.”
Discussion and Conclusion
Using only one consumer reduces the time needed for the simulation but limits students from seeing that markets can be segmented and different producers can fill different niches. It would be very interesting to see the outcome of the same simulation in a larger class.
The small class size also allowed the simulation to take place in less than half an hour. Most of the post processing of the information gained was done by the student who ran the simulation since it was part of his Individual Research Project. While he did a great job presenting his results at the end of the term, when I use this simulation as part of the lesson on economic systems I would like to try doing a group discussion at the end.
I’m also curious to find out how much more the cars would evolve if given a few more rounds. Which brings up an interesting point for consideration. Since some students have already done the simulation, it may very well influence their actions when I do it again this year. It would probably be useful to make sure that there are more than one consumers, or that there consumer has very different preferences compared to Ben T.. A mixed gender pair of students might make the best set of consumers.
Catastrophic failure of one of our ovens! Last year when we started up the bread business, we bought two counter-top ovens within a couple of weeks of each other. They needed to be extra-large to fit two loaves of bread each, which made them a little hard to find. We got a EuroPro oven first, and when we found that it worked pretty well, we went back to try to get another. But just a week later, the store was out of stock and that type of oven could not be found in the city of Memphis or its environs.
Instead we got a GE model. The price was about the same, as was the capacity. We quickly realized that the GE was quite the inferior product. The temperature in the oven was never the same as what was set on the dial. Our bread supervisor at the time ran a calibration experiment, the results of which you can see above, so we still managed to use the oven. Only this year, three weeks into the term, it conked out.
We sold at least one underdone loaf before we realized what had happened, and received a detailed letter in response (which our current bread supervisor handled wonderfully in his own well worded letter). Fortunately, we have found a newer version of our EuroPro oven, which seems to work quite well.
I like the oven calibration exercise. It was a nice application of the scientific process to solve an actual problem we had with the business. Though I know it’s not quite the same, I like the idea of doing annual oven calibrations just to check the health of our equipment and help students realize that the scientific process is a powerful way of looking at the world, not just something you do in science.
Sally, our school’s business manager, was kind enough to come in last month to help the financial department of the student run business organize its books. It was long overdue. We’d been improving our record keeping over the last couple years, but now we have much more detailed records of our income and expenses.
This is great for a number of reasons, the first of which is that students get some good experience working with spreadsheets. We use Excel, which in my opinion is far and away Microsoft’s best product (I’ve been using OpenOffice predominantly for the last year or so because, it improved quite a bit recently, and I’m a glutton for certain kinds of punishment.) I’ve been surprised by how many students get into college unable to do basic tables and charts, but hopefully this is changing.
The second reason is that the Finance committee can now use the data to give regular reports; income, expenses, profit, loss, all on a weekly basis. I expect the Bread division to benefit the most, since it has regular income and expenses, offering students frequent feedback on their progress. We’re now collecting a long-term, time-series data-set that will be very nice when we get to working on statistics in math later on.
In fact, we should be able to use this data to make simple financial projections. Linear projections of how much money we’ll have for our end-of-year trip will tie into algebra quite nicely, and, if we’re feeling ambitious, we can also get into linear regressions and the wave-like properties of the time series of data.
I pitched the jobs trading idea to the class today over lunch. Ever since our first immersion, when couldn’t figure out how to sit down together for dinner, I’ve been working on getting them to think of mealtimes as a time for community building. Yesterday and today we had group discussions while we ate, which actually worked quite well for having a civil conversation.
I set up the basic jobs table for the next two weeks and established that the jobs supervisor would be the only person with the ability to authorize trades. We’re using the whiteboard above, which I like because it’s a bit like the Iraqi stock exchange right after the invasion.
My biggest concern was about how students would try to game the system. Fortunately, before I could even finish my pitch one student offered another a dollar to do their job for them, so I could go into great, loving detail that the rule is that the only commodity that can be traded are the jobs.
So we’ll see what happens. The market had its first trade this afternoon, though it might have just been for the novelty of the thing. It did become apparent that we need to post the details of the classroom jobs somewhere since the students are not yet familiar with the intricacies of each job. I plan on keeping track of the market volume to see how things develop. It would probably be interesting to survey the students in about a month to see what they think about the market, and if it achieved its objectives of making the classroom cleanup more efficient and enjoyable.
The Tragedy of the Commons has been on my mind of late, and something serendipitously popped up in class today that’s started me thinking of new ways to introduce some important economic concepts and make classroom jobs work better at the same time.
You see, one way of preventing abuse of shared resources is to assign the rights to the resource to someone, anyone really, and allow them to trade and regulate the use. Who gets control of the resource does not ultimately matter for conservation. As long as the owner and their rights are clearly defined they will try, in a rational world, to get the most for them, and make them last as long as possible, thus preventing overexploitation.
But what’s necessary for this to work is some form of goods or services that’s worth trading. The miracle of capitalism is that it allows people to do what they’re best at and trade with others for the other things they need (or don’t want to do). I’m not about to start letting students pay cash to each other, but I’m trying to think if there’s any reason to not let them trade their classroom jobs on a daily basis.
Say a student if done with their daily work and is feeling bored with a little time to kill at the end of the day. They take out the compost and clean up the microwave, their classroom job is done. Well, they could offer to do someone else’s job, someone who is, say, trying to finish up their math and don’t want to break away from it, and, in exchange, the student with the math work would do the microwave and compost job tomorrow while the first student takes a break. Everyone is happier!
In theory, as long as the rights and responsibilities for each job are clearly defined, then students will be able to come up with the most efficient trading schemes for themselves. Once trading starts I’m sure students will come up with some interesting agreements and contracts will need to be enforced (fortunately we already have judges built into the classroom constitution). But we might just need a special white-board that would make it easier to trade jobs. Tadah, we now have a market in the classroom that makes doing jobs a little easier for everyone and brings some important economic concepts directly into the classroom. Why have I not thought of this before?
I am quite enthused by the idea, but I’m really curious to see if anyone can come up with any downsides.
The essence of dramatic tragedy is not unhappiness. It resides in the solemnity of the remorseless working of things.
— Whitehead (1948) via Hardin (1968)
One of the greatest challenges in designing a cooperative environment is dealing with the potential for free-riding and abuse of shared resources. When dinner needs to be made but one member of the group will not participate everyone suffers, even those who contribute fully. Often, someone else or the rest of the group will step up and do the job of the free-rider, who has then achieved their objective. But what is the appropriate consequence? The social opprobrium of their peers is enough for some, others though seem unfazed.
Overuse of resources is a similar problem, which economists refer to as the tragedy of the commons (Hardin, 1968). When the extra-large bag of M&M’s is full, everyone can grab as many as they desire and everyone is happy. When resources are scarce, however, everyone grabbing is a recipe for disaster. Scarce resources need to be rationed in a way that everyone views as fair. Yet the rational behavior of the individual is to try to maximize their utility by taking as many as they need, regardless of the desires of everyone else, and especially if they’re first in line and no-one else is counting.
Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all. … The individual benefits as an individual from his ability to deny the truth even though society as a whole, of which he is a part, suffers.
— Hardin (1968)
The market solution to the commons problems is to make them not commons. This is usually done by assigning property rights to the previously common resource and allowing the owners to trade. This puts a price on what was once a “free” resource. Of course the price was always there; someone or someones had to go without when the M&M’s ran out (resource depletion). Unfortunately this is particularly difficult when you dealing with a non-currency economy, though I’m sure it could be done.
Reading through Hardin’s original Tragedy of the Commons article it seem that if the embarrassment of violating social norms is insufficient incentive for temperance then some sort of mutually agreed form of coercion is necessary. Interestingly, Hardin was arguing for population control, but the point still stands.
We’re due to have the small groups discuss how the worked together over the last cycle so we’ll see how that goes, but I think we’ll have to discuss the issue of the commons as a whole group when we next have our discussion of classroom issues. I’d like to raise the point that what happens in the classroom is a microcosm of larger society and get in a little environmental economics at the same time.
Education can counteract the natural tendency to do the wrong thing, but the inexorable succession of generations requires that the basis for this knowledge be constantly refreshed.
— Hardin (1968)
Another nice resource that provides neat graphs of real data that are easy for students to understand is Pollster.com. The graphs of survey results are constantly updated and, if you want to, you can go into how they were created (survey questions, averages etc.). They’re great for current event discussions and research projects.
In addition to the national polls, like the president’s job approval (see below), the site also has charts for state level races, like for governor, which are handy around election time.
Pollster.com aggregates polls, because, depending on how a question is phrased, each poll will have it’s own bias. However, since not all of the poll data is freely available to the public, the sites of the major polling organizations, like GALLUP, are also quite useful. The polling organizations tend to have a much wider variety of poll results available. Gallup in particular provides some very nice graphs.
