Crashroom Economy

September 28, 2009

The Earth School, in the East Village, is a bit of an anomaly in public education – a progressive elementary school with an active parent group, qualified and motivated teachers, and a truly diverse student body.  On Friday afternoon this past spring, my class of third graders had open work – an unstructured period in which students use classroom materials to produce something, anything, of their choosing – when a student grabbed the classroom bank to use in a board game he had just designed.  He tripped on a chair leg, and about $10,000 in fake cash went flying up and raining down on the classroom.  Immediately, about half the class got down on their hands and knees and scrambled to scoop up their share of the cash, forgetting any learned rules or manners in the process, a literal free for all, just like what would happen in real life.

For me, their teacher, it was a proverbial a-ha moment.  Money – albeit fake money – was a clear and present motivator for these kids.  On the following Monday we set up our very own classroom economy.  Naturally, my students took it very, very seriously.

The basic premise was this: kids make up fake products, name fake factory prices versus fake store prices and calculate fake future profits, writing this all down on a business plan that had to get approved before they could enter production (or, more specifically, make 2-d drawings of these fake products).  Each kid was given $100 but then had to purchase the “materials” to make his or her products, the remaining money of which could be used to enter the consumer marketplace and purchase other businesses’ goods.

The simplicity of this design was challenged by the answer to a seemingly innocent question: “After we’ve sold all our stuff, can we sell the things we bought from other people?”

Some kids hadn’t even entered the production phase yet, so to keep everyone interested, I said “sure.”  Within twenty minutes, Garrett, an unassuming Mets fan in team gear and glasses who started with the same $100 as everyone else, had $400, buying products from one side of the class, marking them up 1000% and reselling them on the other side of the room.  Other kids, feeling squeezed out of the market, started to make deals with their classmates, and thus began the mergers-and-acquisitions phase of the marketplace, with kids combining their money and production expertise to create such odd marriages as “The Pet and Cosmetics Store” and “The Video Game/Tourist Company.”

Of course, much like with historical examples, these moves were not nearly as successful as their instigators had hoped.  In this closed economy, the creation of these super-conglomerates made everyone much more concerned with selling things than with buying things.  With so many big companies and no small fish to patronize them, the economy literally went dry.  Fifty-percent sales started to announce themselves, only to turn into liquidation sales guaranteeing that all items must go – name your price!  Nothing worked.  No one wanted to buy.

Our classroom economy had crashed.

Finally, a voice of reason: “We should have an economic summit!” yelled Evan, fresh off reading about the G20 in London.  “Yay!” they exclaimed as they eagerly scampered to the rug, ready to discuss their potential economic interventions.

“The economy went bad,” I said, “and no one wants to buy.  What happened?”

Lochlainn raised his hand.  “Well, see, people aren’t buying anything because they feel like they don’t have any money, so couldn’t we just borrow some money from the bank?”

As the manager of the classroom bank, I said, “I’d love to, but here’s the thing: last fall when I lent money to people to buy their homes, nobody could pay me back.  So I don’t feel like lending any money to you right now.”  A few dozen puzzled faces looked up at me, so what followed was an impromptu 15-minute lesson on how banks work – complete with a deposit, a loan, a business purchase, a sale, a profit, a repayment of the loan, and a withdrawal of the initial deposit, with half the class making money along the way.  This was followed by an example of what happens when the repayment of the loan, for one reason or another, never materializes and all those potential profits disappear.

“Couldn’t we bail out the banks?” asked Alex.  Ah, progressive education.  “Yes, we could,” I said, “and maybe then they would lend money again.”

“Yay!” rejoiced the budding capitalists.

“But, what else could we do to help the economy… Think about what’s going on right now…”  Twenty-five light bulbs simultaneously went off, and in exuberant unison they yelled “Stimulus plan!”  Good little Obamans, they are.  Michael explained that this meant creating jobs.  “Does this mean everyone gets a job?” I asked.  “No, just a few people,” he said.  “Ok, well then who?”

Ella, who had somehow lost all her money about ten minutes into the activity, suggested we give jobs to the people who needed their jobs the most.

Garrett, who now had $500, insisted that that was not fair.  “Why don’t we just give the same amount to everyone?” he said.  “You mean like a tax break?” I answered.  “Like Bush.” I added.  A quiet hush went over the class.  Someone whispered under their breath, “He said the B-word.”

“No!” Garrett shouted, “I like Obama,” an embarrassed smile coming to his face as he clearly felt a bit more conservative now that he had some money to protect.

We had a class-wide discussion and vote, and like good little Democrats they all decided to for the stimulus plan, except for Garrett, who voted for the tax break (no one voted to bail out the banks).  The shape of the stimulus plan was five $100 jobs organizing the classroom library given to the five kids in the worst economic shape.  But stimulus takes time, and the kids were not given their pay until they were done with their job (a good ten minutes, or, in classroom economy terms, a year or two).

What happened next shouldn’t have been surprising, seeing as so many other economic principles had already acted themselves out on cue, but it was… Even before the stimulus money was awarded, as the stimulus jobs were still being performed, the economy loosened up on its own.  Apparently, consumer confidence had improved with the simple knowledge that more money was on its way.

Like most of the sparkling moments that happen in education, I couldn’t have planned it any better.

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