“Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks which will have to be nationalized and the State will take the road which will eventually lead to communism.”
Das Kapital — Karl Marx, 1867
March 8, 2009 — My students and I discuss economically relevant news items at the beginning of each of my classes. I challenge them to claim their share of daily-assignment A’s, two for each student per grading period, for staying informed. Lately, however, it seems as though everything in the news is economically relevant — so this isn’t much of a challenge, except for the fact that most come prepared with the same most news-worthy items each day. Whoever gets their hand up first wins.
One story that everyone seemed to miss last week was that Russia’s Ambassador to the United States, Sergey Ivanovich Kislyak, predicted that our economy will fail completely during 2010. I shared this with my students from whom I was pleased to note that none seemed overly concerned about the ambassador’s opinion. After all, Russia, we all know, still isn’t overly fond of us, jealous perhaps – their own recent experiment with capitalism having all but failed following their financial crisis in 1998. Entrepreneurism, political corruption and crime rushed into the economic vacuum left behind by the failure of the Soviet Union’s command economy.
Offering something for discussion not gleaned from the legitimate media, thus avoiding the competiton for her daily assignment A, one of my advanced placement students brought a copy of the following to class, a much circulated email message, subject: “THIS SAYS IT ALL.” I read the message to my class including Karl Marx’s nineteenth century prediction about the future of capitalism, which seems to be hauntingly applicable to our current crisis.
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Shortly after class, an economics student approaches his economics professor and says, “I don’t understand this stimulus bill. Can you explain it to me?”
The professor replied, “I don’t have any time to explain it at my office, but if you come over to my house on Saturday and help me with my weekend project, I’ll be glad to explain it to you.” The student agreed.
At the agreed-upon time, the student showed at the professor’s house. The professor stated that the weekend project involved his backyard pool.
They both went out back to the pool, and the professor handed the student a bucket. Demonstrating with his own bucket, the professor said, “First, go over to the deep end, and fill your bucket with as much water as you can.” The student did as he was instructed.
The professor then continued, “Follow me over to the shallow end, and then dump all the water from your bucket into it.” The student was naturally confused, but did as he was told.
The professor then explained they were going to do this many more times, and began walking back to the deep end of the pool.
The confused student asked, “Excuse me, but why are we doing this?”
The professor matter-of-factly stated that he was trying to make the shallow end much deeper.
The student didn’t think the economics professor was serious, but figured that he would find out the real story soon enough.
However, after the 6th trip between the shallow end and the deep end, the student began to become worried that his economics professor had gone mad. The student finally replied, “All we’re doing is wasting valuable time and effort on unproductive pursuits. Even worse, when this process is all over, everything will be at the same level it was before, so all you’ll really have accomplished is the destruction of what could have been truly productive action!”
The professor put down his bucket and replied with a smile, “Congratulations. You now understand the stimulus bill.”
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After reading this to the class, I asked my students what they thought of it. Nobody offered an opinion, not at first. But I was patient, giving them a chance to think about it. Finally, one brave young fellow raised his hand and offered this, “I think the explanation is too simple… so simple that the author must think everybody else is stupid.”
Another student said, “Yes, and if economics was that simple we’d all be getting A’s.” In response to this, most of the class started laughing including me.
“Remember, class,” I said, “the John Maynard Keynes quote: ‘Economics is an easy subject at which few excel’.”
Then, the student who had brought the email to class sheepishly asked why the story’s professor was so wrong using a swimming pool as a metaphor for our economy.
“Unlike the professor in the story,” I said, “I will take the time and at least try to explain. Yes, this lesson on the Economic Recovery and Investment Act of 2009 is flawed on many levels.
First, our economy is not at all like a fluid swimming pool. Wealth does not flow freely from the deep end to the shallow. Wealth tends to flow from the shallow end to the deep where much of it tends to stay. At the beginning of the Bush/Cheney years, 80 percent of the water [wealth] in this nation belonged to 20 percent of its citizens, or just 20 percent of the pool. Now nearly 90 percent of it is in the deep end with much of it cashed away in U.S. Treasury Bonds, foreign numbered bank accounts and other investments that impede circulation. This is because the rich have a much lower propensity to consume and a higher propensity to save. Recall our lessons on the aggregate expenditures model. And, be not confused, saving is not the same thing as investing (http://www.finweb.com/financial-planning/finances-savings/saving-vs-investing.html), which is what many monetarist/supply-side economists would have us all believe. By the way, there aren’t very many serious supply-side economists left.
Second, we don’t have a private backyard pool any more. Our nation’s pool is connected to those in the back yards of all other nations.
Third, and there is little controversy over this among most economists now, government spending under the law will not be wasteful/unproductive activity. Infrastructure projects that this country badly needs done will get done. This will make us more efficient and reduce future costs (true investment)… plus, wages paid to get this work done will be spent and money spent eventually becomes someone else’s income — over and over again. Much of it will save state and federal governments’ unemployment and health care costs.
Finally, much of the water moved (government spending) will be used to nurture education and do research on alternative energy sources making us even more efficient and competitive in the future.
Viral disinformation like this swimming pool analogy making the rounds lately, I think, are poor attempts by those who oppose the current administration’s efforts to deal with the recession. They raise doubts and promote fear for political purposes and, as such, are disingenuous. It’s sad because what we need just now in the private sector is a sense of unity and confidence. But informed individuals, or at least those who have open inquisitive minds, won’t be suckered-in by simplistic appeals like this. We know that the world is not flat, and we know that laissez faire economics is anarchy. An economy without structure and rules is like a jungle wherein only the fittest survive. I must admit, however, the Karl Marx quote, does come pretty close to explaining what has happened to us owing to deregulation of the financial sector. Let’s all hope his forecast isn’t correct too. If foreigners decide to stop lending us money, it could come to that, heaven forbid!”
Please feel free to respond to this posting below with a comment, whether or not you agree.



So that readers might know where I’m coming from, I wish to preface this posting with the following pronouncement: I am a fiscally conservative Democrat. This means that, while I have liberal leanings socially, I believe in balanced budgets, I believe in maintaining a strong national defense capa- bility, I believe in abiding by the rule of law, and I believe in protecting both the people and the environment from the ravages of corporate greed and in doing so with “measured”, reasonable restrictions on “free” markets.
I opened with Jefferson’s quote saying that much has changed since 1803 with respect to advantage and happiness sought and gained by some in return for public service, but that one thing is a constant. Serving one’s country is still honorable.
After the opening slide transitioned to this one, I thanked the school for asking me to speak, saying that it was a true honor to be allowed to represent all veterans, including one of my own sons who served in our first war in the Persian Gulf, Desert Storm. But I emphasized that one need not wear a uniform to be a hero, that there are EVERYDAY heroes, and they are all around us. Those who sacrifice and serve quietly on a daily basis are heroes, moms and dads taking time off to support extra-curricular school activities for example… volunteers in church and civic organizations… teachers who might be making a lot more money in other careers.
Then from the picture of me marching, I recalled my grandmother’s words of admonishment when she dropped me off at the induction station at Camp Douglas east of Salt Lake City in June of 1966. “Do what you have to do, Kent,” she said, “then come home.”
“When I came home from Vietnam,” I said, “we were told to change out of our uniforms before leaving the airport terminal and to leave from side- and rear exits. Vietnam was a most unpopular war and many then were blaming those of us in uniform for perpetuating it. No victory parades for us.
I told my audience that perhaps the most heroic thing I did while in Vietnam was to sacrifice my front row seat to see the Bob Hope Christmas show at Camp Eagle, the division base camp for the 101st Airborne/Airmobile Division. As a Transportation Detachment commander for the division, I knew that seats to see the show were limited, and that my going would mean that some other enlisted man couldn’t. So I volunteered to fly a mission on Christmas Eve of 1969 transporting a Division Chaplain from one fire support base to another.
“The Chaplain and I flew together the entire day, returning to Camp Eagle to refuel only once,” I said. “This is a picture of Fire Support Base Eagle’s Nest overlooking the Asha Valley. It’s one that I took weeks before my Christmas Eve mission on a day that was not overcast. On Christmas Eve, 1969, the clouds were hanging low in the late afternoon when we arrived, and before the chaplain finished his worship service and offered sacrament to those who wanted it, we were completely ‘socked-in’. We spent the rest of the evening filling sand bags and singing Christmas carols. C-rations and mud — it remains my most memorable Christmas experience.”
One-by-one I recalled some examples of modern-day heroes who, except for President Kennedy, were not heroes by virtue of military service.
As a public school teacher in what I consider to be an excellent school district in the state of Texas, I suppose that one could say I have a biased view on the school voucher issue. But I’ve had a first-hand opportunity to compare education in both private and public sectors. While in the process of becoming certified to teach, I taught in two different private schools in this state. Yes, it’s true, there are public schools in Texas to which I would not send a son or daughter, one of them is right here in the city where my wife and I presently live. And, yes, it’s true, some private schools are superior to most public schools. But these schools are very expensive and their focus is almost always “formation” first, education second. This inequity, to my mind, is an intolerable situation, one that badly needs fixing in our state. But I’m convinced that vouchers are not the way to go about it.
I have been a teacher of World Geography for high school freshmen in Texas for the past five years. I will begin teaching a new subject next year to seniors in the same independent school district — Economics and AP Macroeconomics. Accordingly, I will have an opportunity to be teacher again for many of my former students, this time focusing on a subject that’s a logical extension of the former. I’m excited about this and looking forward to the beginning of the new school year.

All of what follows, save for my own observations, is readily available elsewhere on the Internet. However, I’ve not been able to find a good, unbiased site that compares and contrasts the two major political parties in the United States today. I shall endeavor to do so.