Tuesday, December 27, 2016

Mark Twain, Economist?

Twain supposedly said that "free traders win the arguments and the protectionists win the votes."

Marc-William Palen, a lecturer in imperial history at the University of Exeter, wrote an article titled How Mark Twain Became a Free Trader. Click here to go to Palen's page.

Here is an excerpt, where Palen discusses a part of A Connecticut Yankee in King Arthur’s Court. After that, I have another quote from the book that also shows Twain's support for free trade.
"The culture of free trade also manifested itself in the writing of Mark Twain.

Famed satirist Twain had been a supporter of the Republican protectionist policy up until Cleveland’s 1887 tariff message. It was at this point that Twain became a convert to free trade and gave Cleveland his endorsement.

Twain’s newfound antipathy for protectionism found outlet in A Connecticut Yankee in King Arthur’s Court (1889).

In it, Twain’s protagonist, Hank Morgan of Hartford, Connecticut, awakens to find himself transported to sixth-century England.

As Hank traipses across the land, he comes across a smith by the name of Dowley. Hank and Dowley immediately begin discussing “matters of business and wages” over dinner.

The sixth-century tributary kingdom in which Dowley abides appears at first glance quite prosperous in comparison to Hank’s Hartford.

“They had the ‘protection’ system in full force here,” Hank explains, “whereas we were working along down toward free-trade, by easy stages,” a veiled reference to Cleveland’s speech and the Democrats’ proposed lower tariff bill of 1888.

The others at the Dark Age dinner table listened “hungrily” as Dowley began to question Hank on the rate of wages in Gilded Age America.

“In your country, brother,” asked Dowley, “what is the wage of a master bailiff, master hind, carter, shepherd, swineherd?”

Upon hearing Hank’s reply of a quarter cent, “the smith’s face beamed with joy…. ‘With us they are allowed the double of it!…. ‘Rah for protection—to Sheol with free-trade!’”

To which Hank, unmoved, “rigged up” his “pile-driver” to drive the smith “into the earth—drive him all in—drive him in till not even the curve of his skull should show above ground.”

Hank replies to Dowley that, while the wages in the smith’s land were indeed double those of Connecticut, late-19th-century Americans could buy goods at prices well less than half what Dowley and his countrymen paid, making the high wage argument superfluous.

Hank thought he had scored a point against the blacksmith and had “tied him hand and foot.”

But Dowley “didn’t grasp the situation at all, didn’t know he had walked into a trap… I could have shot him, from sheer vexation. With cloudy eye and a struggling intellect,” Dowley admitted he did not understand Hank’s argument. At which point their dinnertime discussion only deteriorated further.
Twain’s Hank was a literary representation of late-19th-century America’s free traders. These were men who prided themselves on their intellectual superiority and the economic soundness of their arguments.

They were, however, frustrated time and again by what they perceived as pernicious protectionist propaganda that nevertheless struck a chord in the heart of the ignorant American worker.
Twain’s extreme language hints as well at how fierce the tariff debate had become within the presidential election of 1888 – the “Great Debate” between Democratic free trade and Republican protectionism."

In a discussion of how the government raises revenue, Hank says:
"In my day, in my own country, this money was collected from imposts [a tariff or import duty], and the citizen imagined that the foreign importer paid it, and it made him comfortable to think so; whereas, in fact, it was paid by the American people, and was so equally and exactly distributed among them that the annual cost to the 100-millionaire and the annual cost to the sucking child of the day-laborer was precisely the same"
To see why it might work this way, click here.

Wednesday, December 21, 2016

A Barter Game To Teach The Value Of Money As A Medium Of Exchange (and maybe spontaneous order?)

I created a barter game that I use in class. Each student gets a handout that lists 10 items that they own and ten items they need to get. Every trade has to be one item for one item. The students also get a sheet to record each trade they make. I set the time limit at around 20 minutes and they get extra credit for each item on their want list that they end up getting.

The table at the end of this post first shows the items they each own at the start of the game and then shows the items they need to get. What every player has and needs to get is different. There are only 12 unique players. So if more than12 students show up, I start giving out player sheets that duplicate some that are already being used. Those students are probably in competition with each other and so may have a harder time than others. But I am not sure how to avoid this since I don't know ahead of time for sure how many students will show up. The game is set up for 12 players and, theoretically, they should all be able to trade for what is on their want list. If I set it up for more players, say 20, and not enough students showed up, then some students will have a hard time finding items on their list since the player sheet that has the items they need will not be in the game.

One issue is how hard to make the game. In the real world, if you had to rely on barter, you would probably have to make several trades before you got what you wanted (like trading good A to get good B, then trade B to get C, and finally trade good C to get good D). So I tried to set things up so that it would be hard to get some goods on your want list (requiring several trades) while others would need fewer trades to get.

For example, using the information from the table below, player #1 could make the following trades

Apple for Blender with player #11
Blender for Belt with player #9
Belt for Bed with player #7
Bed for Baseball with player #5
Baseball for Bag with player #3

Bag is on the want list for player #1. This takes 5 trades, quite alot of work (one issue in setting up these tables is that I have to make sure some of the other goods that each player has or wants can't be used-for example, in the case above, what if player #3 wanted a bottle-then he could trade is bag to player #1 for the bottle and only one trade needs to take place-this would make the game too easy).

In this example, player #1 has to make 5 trades. But the other players don't only make one trade, getting an item they want from player #1, so the game won't always be that hard. The story above involving player #1 finally getting his bag works for him getting his bottle and checkers. He would make 5 trades with those same five players involving other goods.

In this next case, player #1 only has to make three trades

Desk for Drums with player #4
Drums for Folder with player #7
Folder for Fries with player #10

Something similar would happen with the glove and lock.

In this next case, player #1 only has to make two trades

Organ for Phone with player #5
Phone for Plates with player #9

Something similar would happen with the radio and socks.

In the last case, only one trade has to be made. Player #1 trades his turkey to player #2 for his TV. Then players #3 & #4 can make just one trade to get a good. The same is true for the rest of the pairs of players.

So some trades are easy and others harder. Students have to walk around and find people to trade with. It does not take them long to realize that they have to form little groups and discuss what everyone has and wants. Then someone starts saying things like "if you trade me A for my B then you can trade B to get C from this other guy, which is on your list." This happens spontaneously, without me, the teacher, telling them to do this. What at first glance seems like it would be very disorganized or chaotic, ends up going fairly smoothly with quite a bit of cooperation. Often if someone says "I need good A" another student will say "that guy Joe over there has good A" or "you have good C? that woman over there needs it." Again, that is done voluntarily, without any direction from me. So an orderly process emerges without my directing it (I've see scalpers at sporting events try to find other scalpers who might have what you want if they don't).

I do tell them at the beginning that they will often have to make several trades to get what they want, but that is it. Then I just say "start trading" and give them a five minute warning before time is up. I might remind them during the game that if they trade for a good that they now own it and can trade it for something they want.

Once the game is over, I ask them questions such as "how would you like to do something like this every time you go to the store?" No one says yes because they just experienced how hard that would really be. It is much easier getting what you want with money.


1
Apple
Bottle
Checkers
Desk
Glove
Lock
Organ
Radio
Socks
Turkey
2
Backpack
Bread
Cheese
Dog
Guitar
Magazine
Pen
Raisins
Soda
TV
3
Bag
Burger
Chicken
Door
Hammer
Map
Pencil
Rake
Spoons
Umbrella
4
Banana
Cake
Coat
Drums
Hat
Matches
Pepper
Rope
Straws
Vase
5
Baseball
Candles
Coffee
Fish
Honey
Milk
Phone
Rug
Sugar
Violin
6
Basketball
Candy
Comb
Flute
Ice Cream
Mirror
Piano
Ruler
Syrup
Vitamins
7
Bed
Car
Compass
Folder
Iron
Mustard
Pie
Salt
Table
Wagon
8
Beer
Carrot
Computer
Football
Jelly
Napkins
Pillow
Screwdriver
Tape
Wallet
9
Belt
Cat
Corn
Forks
Juice
Newspaper
Plates
Shirt
Tea
Watch
10
Bike
Cereal
Couch
Fries
Ketchup
Notebook
Popcorn
Shoes
Toothbrush
Wine
11
Blender
Chain
Crackers
Frisbee
Knives
Nuts
Printer
Shorts
Towel
Wrench
12
Book
Chair
Cups
Glasses
Light Bulbs
Oranges
Puzzle
Shovel
Trumpet
Yogurt

































1
Bag
Burger
Chicken
Fries
Ketchup
Notebook
Plates
Shirt
Tea
TV
2
Banana
Cake
Coat
Frisbee
Knives
Nuts
Popcorn
Shoes
Toothbrush
Turkey
3
Baseball
Candles
Coffee
Glasses
Light Bulbs
Oranges
Printer
Shorts
Towel
Vase
4
Basketball
Candy
Comb
Desk
Glove
Lock
Puzzle
Shovel
Trumpet
Umbrella
5
Bed
Car
Compass
Dog
Guitar
Magazine
Organ
Radio
Socks
Vitamins
6
Beer
Carrot
Computer
Door
Hammer
Map
Pen
Raisins
Soda
Violin
7
Belt
Cat
Corn
Drums
Hat
Matches
Pencil
Rake
Spoons
Wallet
8
Bike
Cereal
Couch
Fish
Honey
Milk
Pepper
Rope
Straws
Wagon
9
Blender
Chain
Crackers
Flute
Ice Cream
Mirror
Phone
Rug
Sugar
Wine
10
Book
Chair
Cups
Folder
Iron
Mustard
Piano
Ruler
Syrup
Watch
11
Apple
Bottle
Checkers
Football
Jelly
Napkins
Pie
Salt
Table
Yogurt
12
Backpack
Bread
Cheese
Forks
Juice
Newspaper
Pillow
Screwdriver
Tape
Wrench