How is it, I wonder, that so many people get bent around the idea of making an economic analysis out of this? We're talking here about a playroom, the very nature and substance of which means that the teachers should be primarily concerned with making sure everyone has equitable access to the "resources" -- i.e. the toys.
I think one can argue whether or not the teachers are doing that in an effective and appropriate way, certainly. But I believe that this one underlying fact is nonnegotiable.
Personally, and as a parent, I find the repeated and forceful attempts to turn this into some kind of capitalist vs. socialist laboratory are both ill-conceived and ill-advised. Whatever else may be true of the situation, I believe it is certainly no place to institute a Lego-fied re-enactment of Lord of the Flies.
Are you talking about the teachers making an economic analysis out of the lego game, or the internet-comments making economic analysis out of what the teachers did?
If the former, then I can at least understand your point, though I would disagree (I think that going through a simulation like this is a very interesting way to teach kids about economics and power, and I wish I'd had teachers who spent that much attention on trying to teach their students things they felt were important in life).
If the latter, than it sounds like you misunderstood what the teachers did and why they did it. They were not primarily interested in the organizing a system that would merely provide kids with equitable access to toys in the playroom. They were interested in teaching the children their own version of how economics and social justice should be understood in real life, a version which many people (including me) take issue with for its fundamental lack of awareness of how wealth is created, and the effects of a system of organization on that wealth creation process.
The kids in the post add value by building more complex structures out of the raw materials, no? Does the author of the article think we have an infinite supply of raw materials? I read the original article as an experiment into control of raw materials rather than an experiment of added value vs. zero-sum.
As much as economists may dislike it, these arguments seem to always boil down to 'who has control of the raw materials'; those that are empowered are happy with the current system, and those that are not empowered are not. The efficiencies of the market, and whether it's zero-sum or not, would seem to be a secondary concern for most participants.
Raw materials are less limited than most people think. The usual scenario is that as a raw material gets scarcer, the price for it goes up. With the price higher, firms are incentivized to spend more on technology to reach formerly unreachable raw resources, etc. This is why we've been running out of oil for about 100 years - the price goes up, technology is deployed, etc. And if we really did start to run out of oil, then the value of energy would go up creating demand for alternates as the price now pays for greater technological breakthroughs, etc.
So, to make a long story short, the idea that resources are a zero-sum game is also incorrect in the sense that the underlying value can be found given enough ingenuity unleashed with the profit motive.
So the lego example is in no way a reflection of the real world, and if I could give this blog post a larger up vote, I would.
Would you be happier to say that the utilisation of raw materials 'tends towards' a zero-sum game, then? ;-)
I don't disagree with what you say (although I would argue the likelihood of this theory playing out in practice and over the long term seems low), however this is largely irrelevant to my original point which was that many people who aren't successful (by some measure) will complain that inequities 'in the system' are unfair, and much discussion will ensue because of that.
The global uranium reserves with mining costs up to US $ 80 per kilogram amount to about 2 million tonnes ... If mining costs of up to 130 $/kg are taken into consideration the global uranium reserves are increased by further 3 million tonnes.
At some price, it will become possible to extract trace uranium from ocean water, of which there is quite a bit.
"The kids in the post add value by building more complex structures out of the raw materials, no?"
The problem with using that as a refutation is that in the market of the classroom, the lego houses are "durable capital goods". The 'right' way for the teachers to shake up the classroom is to highlight the value of other toy markets. For instance: you can create far more diverse objects with play-doh than you can with legos - in some instances, that might make play-doh more valuable.
Helping the kids understand that makes a conversation like, "I'll trade you 1/3 of my green play-doh for your lego car," possible. It also would not only -empower- the other students, it would begin teaching the kids valuable lessons in determining value and how to negotiate. Skills and insights that are far more valuable than learning how to say, "But you should give x to me because you have more."
Excellent point. This is an excellent lead-in to teach kids that the value they place on things is not intrinsic. Once they start thinking this way, they will discover that by changing the value they assign to things, they can manipulate their amount of satisfaction and even the amount of power they possess.
Ironically, this comes full-circle to the article's mention of stepping outside rules that are bad. The kids can now say, "I don't have to assign more value to green legos just because your game assigns more points to them." Some things still do have a certain degree of intrinsic value, so this won't always work. But they have been empowered to the extent allowed by the value assignments of which that they have control.
BTW, startup founders use this type of understanding to prioritize ideas that have a better chance of success.
'The kids can now say, "I don't have to assign more value to green legos just because your game assigns more points to them." Some things still do have a certain degree of intrinsic value, so this won't always work. But they have been empowered to the extent allowed by the value assignments of which that they have control.'
By understanding when value is more subjective versus intrinsic, founders can choose to work on something where the value is more intrinsic. And if there's nothing with true intrinsic value, then they at least look for things where more people are likely assign value. Founders probably don't really think about it like this, they just look for something that people want. But it can't hurt to understand the characteristics of value at this lower level. If you can consistently find, create, or buy value, getting rich isn't too hard.
Do you have any evidence these arguments always boil down to who has control of the raw materials?
I think access to intellectual capital and social capital are far, far more important. In the future, perhaps, access to raw materials will become more important. But now, you can get access to raw materials easily if you have the rest (intellectual/social capital) -- people will sell them to you in exchange for renting out your brain & the smoothly operating institutions of your well-managed community.
It is nearly as simple for a man in China to order a container of wood as a man in Canada. But you cannot simply order a container of culture, or a container of civilization, or institutions, or habits, or education. And these things set the west apart far more than access to raw resources.
Low-resource cities fabulously wealthy due to great social/intellectual capital: Hong Kong (where I"m writing from, a city built on a rock with a great port and not much else), Singapore (built on swampland), numerous others.
High-resource locations mired in conflict, poverty, and struggle: Democratic Republic of Congo; Guatemala; numerous others.
I agree with your post 100%, but I think I'm generalising more than you're thinking I am.
My cards out on the table: I'm not a student of Economics (a deficiency I intend to correct, as time permits).
In terms of evidence, I have none. However, I think I need to be clear as to what I mean when I say 'raw materials'. It's probably a poor phrase to use (I guess it has a well-defined meaning in Economics); I consider even intangibles to be 'raw materials'. As an example, education is the 'raw material' on which 'intellectual property' is built. As a web developer, the LAMP technology stack (for example) is the 'raw material' (along with many others, including education) on which websites are built (and aren't we hackers lucky that people make much of that technology available to us for no cost? There's huge value in those 'raw materials' for us. Most people in the world aren't so lucky). For me a raw material is anything that acts as an input into a process that leads to a monetisable output. Of course, money itself is perhaps the ultimate 'raw material' in this sense, creating an interesting situation where one of the raw materials used to create the desired product is the product itself. Perpetual motion machines may be a physical impossibility, but a perpetually expanding economy apparently is not.
There are certainly many examples of low-resource cities that do very well; at least, low in terms of the amount of stuff that can be dug out of the ground. These are obviously not the only saleable resources or those cities wouldn't exist (I'm not sure about Hong Kong, but didn't Singapore first become wealthy due to its strategic ___location?).
As to the high-resource locations mired in conflict and poverty, I would suggest that much of this conflict is indeed related to who controls the raw materials.
Whilst this may or may not be true, I was more thinking originally about internet posts on economics and 'social justice' in my first comment, which seem to me to boil down to whether ownership of resources (of many types) should be 'more equitably shared' by some 'fairness' metric, or owned only by those able to compete effectively for them (or who just get lucky).
Of course there are many threads on what is actually meant by 'more equitable sharing', since all participants seem to feel that their approach is the most equitable without exception :-)
Hopefully I've not led too many people down dead-ends with my rather wooly use of the term 'raw material'.
Ah, thanks for the clarification -- our thinking has a lot more in common than I thought. FWIW, I'm no economist either. I did major in Political Economy for a short while, but that just means that I had enough time to gobble up some conventional thinking on the matter (including that strict definition of raw materials) -- if I judge by my classmates in those courses, my studies are certainly no guarantee that I understand anything at all about the real world :-).
I don't have a lot of time right now, but in brief -- I like the way Warren Buffett puts it when he mentions that we're all indebted to the "ovarian lottery" for much of what we have in life... if he'd have been born in some poor African country, there's little chance he'd have had the success he has, because they don't have "raw material" (in your sense of the word) necessary to take his talent and create wealth out of it.
Also -- you're perfectly right that a lot of the conflict in a place like the Congo is caused by conflict over raw resources. I was using that sort of example to show how an abundance of raw material doesn't necessarily lead to wealth "in general" for the country; it can actually have the opposite effect.
In the trading game that aided the formulation of the teachers' ideas, it didn't sound like there was a way for the children to add value.
It's interesting that the article's core attitude is based on the idea that eliminating inequality is (or should be) the main concern. It would seem that socialist societies have demonstrated that when you focus on inequality, you end up stifling productivity. Maybe there should be more focus on productivity and advancement rather than inequality, although that's harder to do in the ___domain of Legos. When you do this, it's not about control of the raw materials as much as it's about who contributes the greatest value at their link in the chain.
It's interesting that the article's core attitude is based on the idea that eliminating inequality is (or should be) the main concern.
It would be appropriate at this point to zoom out a bit and remind everyone that we're talking about a playroom full of kids ranging from roughly kindergarten to third grade. Of course eliminating inequality (insofar as access to toys and play equipment is concered) is the point! As I stated in a previous comment, you can argue whether the teachers picked the best way to do it, but that argument does not change the underlying premise.
Maybe the underlying premise is flawed. Maybe it would be better to focus on teaching the children the fact that in this world inequality is unavoidable and how best to deal with it. After all, it's clear from the article that the teachers are going after something bigger than plain equitable distribution of the toys.
This is just my perspective as a parent, but I think the underlying premise is just fine, thanks. My daughter will have her entire life to learn how to deal with inequality by simple dint of being American. I don't need a playroom to teach her that particular lesson. Besides, there are outside forces to consider...if I pay for my child to have access to an after-school playroom, I have a right to expect her not to be unnecessarily or arbitrarily excluded from play. Again, just my perspective.
As I noted in my other comment, I think you can question the teachers' methods, certainly.
Ahhh, I see where you're coming from. I'm really interested in the socio-economic aspects of this, and the article was written in a way that prompted thought from that angle. Since I don't have kids and the concerns that go with them, I took that line of thought and ran with it.
I don't deny that the playroom might not be a good place to be doing socio-economic experiments. But since the article didn't seem to take that view, I'm interested in the discussion of the experiment. The question of whether they should have been performing the experiment is not a big deal to me.
I think you'll find it hard to find a more representative microcosm of what an unfettered capitalist society would look like than that of an unsupervised classroom...
From the article: "It's plenty obvious that free commerce is not a zero-sum game. I go to the liquor store to buy beer. I buy five bottles of Staropolskie Zlote for about ten bucks. I value the beer more than I value the ten bucks -- else I wouldn't have given the clerk my money. The liquor store values my ten bucks more than the beer -- else they wouldn't have sold it to me. We both come away from the exchange happier: I have my beer, they have their money. We both get what we wanted. The world is, in fact, a better place after that exchange than it was before... at least for me and for the liquor store."
From the article: "One firm adds value by trucking the beer from the brewery to a port. Another firm adds value by shipping the beer across the Atlantic. A third firm adds value by shipping the beer across Canada, and yet a fourth firm adds value by providing a broad selection of beers in a relatively convenient place for my buying pleasure."
I keep seeing comments about how the original builders of Legotown were unjustly punished for being successful little proto-capitalists. The argument goes something like: "They added value to their raw materials and created something great and beautiful. Then they were struck down for being better than their peers, and all the children were doomed to a life of uniform mediocrity."
To me, the story of Legotown was not one about capitalism. The questions about whether the builders added value to their Lego brick raw materials, and whether the trading game only allowed zero-sum transactions are irrelevant to the larger point of the story.
To me, the story of Legotown is about legitimate and illegitimate authority.
By what right did the original builders of Legotown assert their authority over the Legos? Why were they able to make the rules about who could use the Legos and who couldn't? Because they got their first? Because they built the best, most elaborate structures? Because they were bigger? There were no classroom rules that allowed them to claim ownership of the Legos. Instead, they took control of the Legos by force and simply asserted their right to make the rules about them.
Yes, capitalism requires adding value to raw materials and ability to trade freely, but it also requires the rule of law that is accepted as legitimate by its participants. If there had been rules about claiming ownership of toys in the classroom, then the builders could have followed those rules and then enforced their own rules about things that they owned. But, in the absence of such a governing framework, they cannot simply assert that they own something, and then expect others to accept their authority.
That's also the real point of the trading game. It wasn't to model capitalism. It was to show the children how it felt to be treated in a system ruled by arbitrary, illegitimate power. By what right do the holders of all the green Legos get to make the rules? Why should their power be considered legitimate? The answer is it shouldn't, because tilting the game in favor of the green Lego holders is obviously arbitrary and unjust. And, if it's unfair for the green Lego holders to make the rules in the trading game, how is that different than the original builders making all the rules about who can and cannot participate in Legotown?
In the end, the children earned back the Legos. But, it wasn't because they agreed to a more "Socialist" set of rules imposed by the teachers. Instead, it was because the children came together and agreed to a set of rules that reflected their values of fairness and justice. And, because the rules were the result of their input, the children considered them to be legitimate.
but still, not even america is a purelely capitalistic society,you do have some socialism in the blend.and the 20 or so western nations with higher standard of living are even less capitalistic.so in the trade off between the two ideas i think america should move towards socialism.of course there are other nations that should do the opposite
Please cite your evidence for how we are being "dragged down," and please cite a purely capitalist society that rivals our own (or those of Western Europe). I'm willing to consider evidence, but not an unfounded assertion like this.
The examples are numerous - please look around. Simple examples would include the rent control policies in New York and San Francisco. The intention: provide low cost rent for tenants at the expense of landlords. The reality: because of the rent control, the ROI for entering the rental business declined dramatically. This caused less development of rental units and rapidly increasing rents for the scarcer supply left. The result of rent control: chronically higher rents for all but those lucky enough to already be renting and a chronic under-supply of rental units. Other classic examples are the minimum wage which increases unemployment, medicare/Medicaid which drives up the cost of health care for all, excessive taxation to pay for all of the entitlements which is a disincentive to business, etc.
Despite which, the US economy remains one of the largest and most productive in the free world. Your examples do not support your assertion.
According to both the IMF and the World Bank, the world's 10 largest economies in 2006 were, in order, the EU, the US, Japan, Germany, the PRC, the UK, France, Italy, Canada, Spain and Brazil. Very mixed economies, every one. I really don't see how this supports the idea that they're being "dragged down."
Do you understand the point that the result of rent control is less rental units for renters, higher prices for renters, and less profit for landlords? How is that not dragging down what would otherwise be a sphere of creativity of landlords going out of their way to provide greater value to renters (to increase their profits) if the regulations were removed?
Also, how does the fact that the US economy does well in comparison to other more socialist countries in any way show that removing the socialist controls we have now would not improve our economy even more?
I maintain that it doesn't support your argument that our economy is being dragged down. You may argue that it's not growing at the rate you think it would, and I can respond by arguing that the resulting society isn't one I'd want to live in -- that's a different discussion. But the general trend of growth year over in real GDP (http://www.ers.usda.gov/Data/Macroeconomics/Data/HistoricalR...)
is not evidence of being "dragged down." The trend is broadly up.
Regarding your second point, this is a canard. The fact that the 10 largest, most successful economies in the world (in fact, most if not all of the top 20) incorporate elements of socialism (most to a much greater degree than the US) demonstrates that mixed economies can, and do, succeed. Your initial argument at least implies that a mixed economy is not a successful one. If I read that incorrectly, please tell me, because by most metrics, mixed economies are not only surviving, but prospering.
but it is a well established fact that the standard of living in norway, denmark, finland, germany... well exceeds that of america.do tou really think that any of these countries are more capitalistic than america?
Happiness research is nonsense when used in this way. People from different cultures often have different conceptions of happiness.
There are also calibration effects: show person X someone else better off than him, and tell him that guy reported 8/10 (happiness units). Then he will never report higher than 7/10. This isn't jealosy, it's just not knowing what the units mean.
Another reason to see why there is something off: compare Bhutan on your first link (#133) and on your second (#8, higher than Canada).
I think one can argue whether or not the teachers are doing that in an effective and appropriate way, certainly. But I believe that this one underlying fact is nonnegotiable.
Personally, and as a parent, I find the repeated and forceful attempts to turn this into some kind of capitalist vs. socialist laboratory are both ill-conceived and ill-advised. Whatever else may be true of the situation, I believe it is certainly no place to institute a Lego-fied re-enactment of Lord of the Flies.