Home Naked Economics Assignment Travels of a T-Shirt in the Global EconomyTEACH the CLASS: Use actual examples from at least one of the Four Parts of Pietra’s book—Texas, China, North Carolina, Africa-- to demonstrate the concept(s) raised in each of the Wheelan chapter. ASSESSMENT: Teach the Class Rubric
1. On the wiki post Power Paragraphs( click for a review of the power paragraph), not more than two, that use compelling evidence from the Pietra text to exemplify the economic concepts described in the Wheelan chapter.
2. Ask open-ended questions which encourage the students to demonstrate that they understand why your example is a practical application of the economic concept. Their engagement indicates their understanding. Be prepared to explain the concept in an alternative way. This is your formative assessment.
3. Each of the six posts should focus on one of Rivoli's four regions.
4. When the project is complete each student will have written paragraphs on all four of the regions--Texas, China, North Carolina, Africa and the content covered will demonstrate that the student read and understands the Rivoli text. This is a summative grade, 100 points.Friday, August 27: Chapter 1, The Power of MarketsMichael Huntley
Guiding Questions: How are decisions made in markets? Who benefits from markets? Who loses?
REVISED:
A critical idea of Wheelan’s text is to introduce the concept of a market, and to provide evidence that effectively answers the above questions. A market is essentially a meeting of a producer and a consumer in some form; certainly different types of markets exist, and the answers to the questions are different for each. However, Wheelan primarily refers to free markets (as per the U.S. market). In a free market, both firms and consumers ideally win. Firms win because in such a market “firms… attempt to maximize profits”(Wheelan 11). Consumers win because “individuals act to make themselves as well off as possible… individuals seek to maximize their own utility” (Wheelan 6). Thus, profit is a win for firms and fulfillment of utility is a win for consumers. Utility is a method of making decisions in markets on the consumption side of things; profit is the firm equivalent. How much potential profit a firm sees as possible warrants that firm’s actions (“What is going to make the firm the most money in the long run?” (Wheelan 15)). China is an example of this that favors profit over humanity; “the cheap T-shirts from China are a victory for U.S. consumers and for corporate profits, but a failure for humanity” (Rivoli 72).This is an example of the futility of the labor market in China; although work is in such high demand, it comes with a decrease in wages for all workers. It just so happens that Chinese workers are willing to accept low wages to avoid the alternatives of life on a farm, and in order to gain some degree of independence of their lives that seem predestined (Rivoli 95). This creates more productive labor in the factory, which results in cheaper t-shirts being produced. Thus, each reading goes in depth to an extent on some aspects of markets, and answers the given questions quite well when analyzed.
Michael,
You are using Wheelan's ideas on markets as a lens for analyzing the Chinese labor market. Prior to the utility section, you analysis is focused, accurate and well-supported with evidence.You follow the power paragraph well until the utility section. But your analysis in the utility portion is confusing. I recommend that your stay focused on the labor market in China. Tweak this and I will be back to grade your entry.
Click edit and post your power paragraphs. Make use that you cite evidence from both the Rivoli and Wheelan texts.Tuesday, August 30: Chapter 2, Incentives Matter Overall goal: Demonstrate to the year 1 students that economics gives us an analytical framework for thinking about important questions such as incentives. Objectives: 1. Accurately and precisely define the following: adverse selection, perverse incentives, principle-agent problem, the expansion of underground economies. 2. Select compelling evidence from the Travels of the T-Shirt and clearly explain how each example demonstrates one of the four behaviors. When you have exemplified all four concepts make sure that you have used at least one example from Texas, China, North Carolina, and Africa. 3. Post your paragraphs—one for each concept on your wiki before class, 4. Present your examples to the year 1 students.
Michael Huntley
REVISED:
Adverse selection is easily visible in the textile mills of North Carolina. Adverse selection is an economic concept that essentially dictates that information between buyers and sellers is not equivalent; the labor market parallel is where employers and employees do not receive the same information (e.g. the teacher payscale example). In Pietra Rivoli’s The Travels of a T-shirt in the Global Economy”, adverse selection is a prevalent factor in these North Carolinian mills, which have seen declining success in recent years. In a parallel to the teacher example from Wheelan’s text, more skilled textile workers have no incentive to continue working in textile mills once more profitable industries have arrived in town (“a new BMW manufacturing facility… drew much of its labor force from the decaying cotton mills” (98)). However, “many less-skilled workers have not moved up [from textile mills]” (124). This is due to the fact that laborers are not aware of their relative output as compared to workers in other mills; accordingly, the higher-producing workers are offered the better manufacturing jobs. Thus, there is no incentive for a talented worker to stay in a low-paying textile mill when a higher-paying industrial job is available, and the textile industry in this region becomes weaker as a whole as a result of adverse selection. Adverse selection is caused because buyers and sellers have asymmetrical information. Your example need to be tweaked to show that one party know more than the other.
NOT REVISED (I assumed it was already good):
Perverse incentives are evident to some degree in the African Mitumba trade of used clothing. Perverse incentives are unintentional incentives that are a result of something presumably unrelated; in other words, they are the creation of “unintended consequences”. In Rivoli’s text, this is apparent to some degree in Africa; the shipment of used clothing to Africa is intended to provide those there with an opportunity to better financial situation while simultaneously clothing the poor. However, as a result of this sale, all the negative aspects of a market occur as well; there are certainly robberies, insider information, squabbles over property rights, etc. One more noticeable unintended consequence is the damage that mitumba trade does to some local firms; “the barriers to the mitumba trade have in large measure been erected by the groans of the local textile industry, which echo those of Americans” (199). While certainly mitumba produces more employment than it destroys, it also undeniably makes it more difficult for local textile workers in African regions to stay employed or to make a profit, which in itself is an example of perverse incentives. Good entry--you meet the rubric criteria.
REVISED:
The U.S. government is faced with what appears to be a principal-agent problem with Texan cotton farmers during years where insurance subsidies are active. A principal-agent problem results from misaligned incentives of an employer (principal) and employee (agent), which lead an employee to do something in their own best interest, rather than the firm’s. The government, while not a technical employer of Texan cotton farmers, provides enough subsidies to act in effect as an employer in the scenario of a year of bad harvest. Rivoli recalls how Nelson Reinsch, after losing an entire year’s cotton crop to a storm, “planted milo grain in the ravaged fields, which brought in some income to augment the government crop insurance and the disaster subsidy” (56), yet how “most days, Nelson even takes a nap after lunch” (40). It is in the best interest of the government to keep Texan cotton farmers prosperous through subsidies, and to ensure that a year of bad weather will not affect their industry, for this will bolster American cotton industry; however, during years of ruined harvest, the incentive to work productively has declined to some extent due to surefire insurance. The subsidies are insurance against risk, this example is a stretch.
REVISED:
The restrictions placed on many Chinese textile mills have resulted in the expansion of underground economies. This expansion refers to the development of an alternative market system, typically referred to as a “black market”, in which participants opt to disobey regulations and laws that are otherwise enforced in the popular economic system observed (e.g. a command system or a market system). This system develops as a result of excessively high tax rates and overly controlling regulation, which motivate participating firms to find ways to evade the existing laws. One example from Rivoli’s text is the falsification of labels that note the origin of a t-shirt in order to make a greater profit based upon place of origin; Rivoli recounts that one Chinese factory had a variety of labels on display, and that a “Chinese supplier had offered good 'made in' Cambodia, Kenya, or Lesotho" (146). This is certainly relevant to the Wheelan text, for the reason for the expansion of an underground market is purely based upon incentives; if capable of obtaining more profit, it is in the firms best interest to pursue whatever path ends in this result, including the development and maintenance of an illicit market, for it is undoubtedly illegal to falsify this information on a t-shirt. You should stress what motivates the underground economy--high marginal taxes and draconian regulation. This needs revision.
Work Cited Rivoli, Pietra. The Travels of a T-Shirt in the Global Economy. Hoboken: Wiley, 2005. Print.
Wednesday, September 1: chapter 3, "Government and the Economy Michael,
Fix the last concepts and I will return to grade it this weekend. It is evident that you read the Rivoli text and understand the concepts raised in the first two chapters of the Wheelan text. I want you to research Pakistan. Click on this link.Michael--Pakis
Naked Economics Assignment
Travels of a T-Shirt in the Global Economy TEACH the CLASS: Use actual examples from at least one of the Four Parts of Pietra’s book—Texas, China, North Carolina, Africa-- to demonstrate the concept(s) raised in each of the Wheelan chapter.
ASSESSMENT: Teach the Class Rubric
1. On the wiki post Power Paragraphs( click for a review of the power paragraph), not more than two, that use compelling evidence from the Pietra text to exemplify the economic concepts described in the Wheelan chapter.
2. Ask open-ended questions which encourage the students to demonstrate that they understand why your example is a practical application of the economic concept. Their engagement indicates their understanding. Be prepared to explain the concept in an alternative way. This is your formative assessment.
3. Each of the six posts should focus on one of Rivoli's four regions.
4. When the project is complete each student will have written paragraphs on all four of the regions--Texas, China, North Carolina, Africa and the content covered will demonstrate that the student read and understands the Rivoli text. This is a summative grade, 100 points. Friday, August 27: Chapter 1, The Power of Markets Michael Huntley
Guiding Questions: How are decisions made in markets? Who benefits from markets? Who loses?
REVISED:
A critical idea of Wheelan’s text is to introduce the concept of a market, and to provide evidence that effectively answers the above questions. A market is essentially a meeting of a producer and a consumer in some form; certainly different types of markets exist, and the answers to the questions are different for each. However, Wheelan primarily refers to free markets (as per the U.S. market). In a free market, both firms and consumers ideally win. Firms win because in such a market “firms… attempt to maximize profits”(Wheelan 11). Consumers win because “individuals act to make themselves as well off as possible… individuals seek to maximize their own utility” (Wheelan 6). Thus, profit is a win for firms and fulfillment of utility is a win for consumers. Utility is a method of making decisions in markets on the consumption side of things; profit is the firm equivalent. How much potential profit a firm sees as possible warrants that firm’s actions (“What is going to make the firm the most money in the long run?” (Wheelan 15)). China is an example of this that favors profit over humanity; “the cheap T-shirts from China are a victory for U.S. consumers and for corporate profits, but a failure for humanity” (Rivoli 72).This is an example of the futility of the labor market in China; although work is in such high demand, it comes with a decrease in wages for all workers. It just so happens that Chinese workers are willing to accept low wages to avoid the alternatives of life on a farm, and in order to gain some degree of independence of their lives that seem predestined (Rivoli 95). This creates more productive labor in the factory, which results in cheaper t-shirts being produced. Thus, each reading goes in depth to an extent on some aspects of markets, and answers the given questions quite well when analyzed.
Michael,
You are using Wheelan's ideas on markets as a lens for analyzing the Chinese labor market. Prior to the utility section, you analysis is focused, accurate and well-supported with evidence.You follow the power paragraph well until the utility section. But your analysis in the utility portion is confusing. I recommend that your stay focused on the labor market in China. Tweak this and I will be back to grade your entry.
Click edit and post your power paragraphs. Make use that you cite evidence from both the Rivoli and Wheelan texts. Tuesday, August 30: Chapter 2, Incentives Matter
Overall goal: Demonstrate to the year 1 students that economics gives us an analytical framework for thinking about important questions such as incentives.
Objectives:
1. Accurately and precisely define the following: adverse selection, perverse incentives, principle-agent problem, the expansion of underground economies.
2. Select compelling evidence from the Travels of the T-Shirt and clearly explain how each example demonstrates one of the four behaviors. When you have exemplified all four concepts make sure that you have used at least one example from Texas, China, North Carolina, and Africa.
3. Post your paragraphs—one for each concept on your wiki before class,
4. Present your examples to the year 1 students.
Michael Huntley
REVISED:
Adverse selection is easily visible in the textile mills of North Carolina. Adverse selection is an economic concept that essentially dictates that information between buyers and sellers is not equivalent; the labor market parallel is where employers and employees do not receive the same information (e.g. the teacher payscale example). In Pietra Rivoli’s The Travels of a T-shirt in the Global Economy”, adverse selection is a prevalent factor in these North Carolinian mills, which have seen declining success in recent years. In a parallel to the teacher example from Wheelan’s text, more skilled textile workers have no incentive to continue working in textile mills once more profitable industries have arrived in town (“a new BMW manufacturing facility… drew much of its labor force from the decaying cotton mills” (98)). However, “many less-skilled workers have not moved up [from textile mills]” (124). This is due to the fact that laborers are not aware of their relative output as compared to workers in other mills; accordingly, the higher-producing workers are offered the better manufacturing jobs. Thus, there is no incentive for a talented worker to stay in a low-paying textile mill when a higher-paying industrial job is available, and the textile industry in this region becomes weaker as a whole as a result of adverse selection.
Adverse selection is caused because buyers and sellers have asymmetrical information. Your example need to be tweaked to show that one party know more than the other.
NOT REVISED (I assumed it was already good):
Perverse incentives are evident to some degree in the African Mitumba trade of used clothing. Perverse incentives are unintentional incentives that are a result of something presumably unrelated; in other words, they are the creation of “unintended consequences”. In Rivoli’s text, this is apparent to some degree in Africa; the shipment of used clothing to Africa is intended to provide those there with an opportunity to better financial situation while simultaneously clothing the poor. However, as a result of this sale, all the negative aspects of a market occur as well; there are certainly robberies, insider information, squabbles over property rights, etc. One more noticeable unintended consequence is the damage that mitumba trade does to some local firms; “the barriers to the mitumba trade have in large measure been erected by the groans of the local textile industry, which echo those of Americans” (199). While certainly mitumba produces more employment than it destroys, it also undeniably makes it more difficult for local textile workers in African regions to stay employed or to make a profit, which in itself is an example of perverse incentives. Good entry--you meet the rubric criteria.
REVISED:
The U.S. government is faced with what appears to be a principal-agent problem with Texan cotton farmers during years where insurance subsidies are active. A principal-agent problem results from misaligned incentives of an employer (principal) and employee (agent), which lead an employee to do something in their own best interest, rather than the firm’s. The government, while not a technical employer of Texan cotton farmers, provides enough subsidies to act in effect as an employer in the scenario of a year of bad harvest. Rivoli recalls how Nelson Reinsch, after losing an entire year’s cotton crop to a storm, “planted milo grain in the ravaged fields, which brought in some income to augment the government crop insurance and the disaster subsidy” (56), yet how “most days, Nelson even takes a nap after lunch” (40). It is in the best interest of the government to keep Texan cotton farmers prosperous through subsidies, and to ensure that a year of bad weather will not affect their industry, for this will bolster American cotton industry; however, during years of ruined harvest, the incentive to work productively has declined to some extent due to surefire insurance. The subsidies are insurance against risk, this example is a stretch.
REVISED:
The restrictions placed on many Chinese textile mills have resulted in the expansion of underground economies. This expansion refers to the development of an alternative market system, typically referred to as a “black market”, in which participants opt to disobey regulations and laws that are otherwise enforced in the popular economic system observed (e.g. a command system or a market system). This system develops as a result of excessively high tax rates and overly controlling regulation, which motivate participating firms to find ways to evade the existing laws. One example from Rivoli’s text is the falsification of labels that note the origin of a t-shirt in order to make a greater profit based upon place of origin; Rivoli recounts that one Chinese factory had a variety of labels on display, and that a “Chinese supplier had offered good 'made in' Cambodia, Kenya, or Lesotho" (146). This is certainly relevant to the Wheelan text, for the reason for the expansion of an underground market is purely based upon incentives; if capable of obtaining more profit, it is in the firms best interest to pursue whatever path ends in this result, including the development and maintenance of an illicit market, for it is undoubtedly illegal to falsify this information on a t-shirt. You should stress what motivates the underground economy--high marginal taxes and draconian regulation. This needs revision.
Work Cited
Rivoli, Pietra. The Travels of a T-Shirt in the Global Economy. Hoboken: Wiley, 2005. Print.
Wednesday, September 1: chapter 3, "Government and the Economy
Michael,
Fix the last concepts and I will return to grade it this weekend. It is evident that you read the Rivoli text and understand the concepts raised in the first two chapters of the Wheelan text. I want you to research Pakistan. Click on this link.Michael--Pakis
Friday, September 3: Development Economics