econlife - Where Lost Luggage Finds a Home by Elaine Schwartz

Our story starts in 1970 when a part-time insurance salesman heard that Trailways wanted to get rid of a stack of unclaimed luggage. He borrowed $300 (equal to $2,046.01 now), bought it all, and the rest is history.

The Price of Lost Baggage

On card tables, Doyle Owens displayed the contents of his suitcases and sold whatever people would buy. Today, in Scottsboro, Alabama, the Unclaimed Baggage Center occupies a 50,000 square foot store. From airlines and other commercial establishments, it buys lost baggage, wheelchairs, items that were forgotten in overhead bins.

All is either sold, trashed, or donated. More than half is clothing that the company launders before selling it at a 20 to 80 percent discount. They also offer unclaimed headphones, lots of watches, e-readers, and the eyeglasses we stash in seat back compartments. Much less typically, they’ve found wedding dresses, a live rattlesnake, and a Gucci suitcase with Egyptian artifacts.

These are some of the watches they’ve found:

And these are the racks:

The Airlines

Only after mishandled baggage first has sat, unclaimed, for 90 days can it be sold. During the first quarter of 2020, an average of five or so bags per 1000 were mishandled. You can see below that, among the larger airlines, American is the worst at 5.74 per 1000:

Our Bottom Line: Markets

Not necessarily a place, a market is a process through which prices are determined. In 1970, Doyle Owens was clever enough to see that he could create a market for the shirts, shorts, and electronic devices that travelers left in lost luggage. Mr. Owens provided the supply and the prices at which he was willing and able to sell his inventory. But then demand kicked in because bargain hunters knew what they were willing and able to pay. At that point, supply and demand interacted and the market created an equilibrium price.

When Unclaimed Baggage buys suitcases from airlines, the market determines their value. Then, when the contents are sold, again, the invisible hand of the market nudges sellers and buyers toward a mutually agreeable price.

My sources and more: My email subscription to The Hustle introduced me to the lost luggage story. From there, a new world of baggage emerged, starting with U.S. DOT reports and WSJ, here and here. Then, for even more, you could go to the Unclaimed Baggage website.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

From the Homeschool Front … Unschooling by Colleen Hroncich

In their early years of life, children learn to sit, stand, walk, talk, and scribble. They learn the names of people in their family. They’re insatiable learners—exploring their universes with endless curiosity. They do all of this without sitting in classrooms.

But once they turn 5 or 6, society seems to think they can’t or won’t learn independently anymore. Kids are put in classrooms at younger and younger ages. The nation’s largest teachers’ union wants the government to mandate full-day kindergarten for every 5 year old. How long before their call for universal preschool also becomes a mandate?

It seems that people have lost sight of the importance of free play when it comes to children learning. I first realized this when my oldest daughter was in school. We’d chosen a small, family-oriented, academically focused, Catholic school for our kids. While there was a lot we liked about the school’s atmosphere, I was troubled by the lack of free time for the children. With so much time structured, how would kids learn to cooperate, share, regulate their own behavior, and think creatively? 

Eventually we switched to homeschooling, in large part to gain control over our lives. We wanted more flexibility and more family time. We wanted our kids to become independent and to love learning. We didn’t want to replicate school at home; we wanted to embrace learning in our home.

I hadn’t heard of unschooling back then, so I described our approach as “eclectic.” I didn’t use a formal curriculum other than for math. My kids learned history through books, videos, trips to museums, and discussions. They learned to write by writing—blogs, letters, stories, and even books. My oldest entered essay contests for fun and won thousands of dollars and a trip to NYC—now the other kids follow her lead. They enjoy writing, which I think is at least partly due to the freedom they’ve had. 

Speech and debate has helped educate them in a number of ways. The research and writing skills they’ve acquired are transferrable to any field. Despite our casual approach to science in the lower grades, they’ve done quite well in college science classes as high schoolers. I think this is because they’re inquisitive and know how to think, research, and communicate. 

I now know that our approach to homeschooling is often called unschooling or child-directed learning. It focuses on actual learning rather than checking off the boxes of school. More and more people are beginning to embrace unschooling. There are even unschooling “schools,” where kids have access to things like labs, workshops, apprenticeships, and art studios.

In a typical school—with a rigid curriculum, emphasis on grades and standardized tests, and students whose parents might not understand the concept—it might seem tough to embrace the idea of unschooling. However, finding ways to give students some freedom amid all the rules and layers of bureaucracy can help them take ownership of their education. If we want creative thinkers and problem solvers in future generations, we need to give them some freedom now.

Colleen Hroncich loves that homeschooling allows her to learn right alongside her children. A published author and former policy analyst, Colleen’s favorite subjects are economics/public policy and history. She has been active in several homeschool co-ops and is a speech and debate coach.

econlife - The Mystery of the Artless Heist by Elaine Schwartz

Our story starts in the Netherlands with a museum director who wanted a painting by John Constable. In London, an art dealer had precisely what he was looking for. The two got together and agreed that the painting would be sent to the museum.

There was one glitch.

Paying For the Painting

The museum could not pay for the painting. However, by showing the painting to several donors, the director secured the purchase price. He just had to wire the money to the seller.

But then the unexpected happened.

The museum received an email that changed where the money was to be sent. Instead of its original destination, the $3.1 million was wired to Hong Kong. And then it disappeared.

The museum says the Constable painting belongs to it because they sent the money. The seller says it is the legal owner of the Constable since it never got paid. Each side says the other was hacked.

A court recently declared the museum could not sue the art gallery for negligence. But they need to decide much more. Someone has to own the Constable painting.

The court will decide.

 Our Bottom Line: Private Property Rights

In a market economy, clearly articulated private property rights are crucial. Only then can goods and services be bought and sold with minimal transactions costs. Only then will owners be willing and able to improve and innovate. And, only then, would a buyer be willing to transfer the purchase price.

At first, the art gallery and the Dutch museum could negotiate the sale of the Constable because everyone knew who owned it. Now, until the courts clarify ownership, that painting is going nowhere.

It will remain at the Rijksmuseum Twenthe in Enschede, Netherlands:

My sources and more: Thanks to Bloomberg Radio for alerting me to the Bloomberg Businessweek “Heist” Issue. From there, artnet came in handy. (The Constable painting is today’s featured image. Called “A View of Hampstead Heath,” it dated back to 1824.)

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - Why Now Is the Perfect Moment for a Mars Mission by Elaine Schwartz

Now is the perfect time to go to Mars. Otherwise we have to wait another 26 months.

Every two years or so, when the Earth and Mars are on the same side of the sun, it’s the ideal time to schedule a visit. Just 35 million miles apart, the (relatively) short distance creates a window that the U.S., the U.A.E., and China will use to learn more about Mars.

Mars Missions

Launching between July 30 and August 15, NASA’s Perseverance projects a February 18, 2021 Mars landing. During a mission that will last approximately one Mars year (687 Earth days), they hope to find evidence of ancient life and to try out a Mars helicopter. The rover also will collect rock and soil specimens that a future flight will pick up and take back to Earth.

This 2 3/4 minute video describes their rather complicated plans for the pick up:

Meanwhile, the United Arab Emirates expects a take off tomorrow for its Mars mission. But, rather than land on Mars, their Hope probe will orbit the planet. The goal is to collect data about Martian weather that will let them compare daily and seasonal changes. While it’s a U.A.E project, they collaborated with U.S. scientists at the University of Colorado and will take off from Japan.

China has said that they will launch their Mars mission during the next several weeks. Called Tianwen-1, the name of their Mars explorer means “heavenly questions” and comes from a 2,000 year old poem. Its goal is to orbit, land, and collect data from the planet. (NPR said the specifics are sparse.)

On July 17, the rocket carrying Tianwen-1 was photographed on its way to the launch pad:

Our Bottom Line: Outer Space Property Rights

As economists, we can ask who will own the specimens that NASA and perhaps China collect from Mars.

Looking back, we could find a parallel in 17th century New England where the legal right to private property unfolded gradually. Many of the settlers had come from English manors when the land and tools were communally owned. In towns like Sudbury (currently Massachusetts) they continued sharing their land and tools. Soon though, with people moving westward and claiming their own land, private ownership evolved. By the end of the 18th century, we have Alexander Hamilton defending the sanctity of contracts. He knew that the success of capitalism depended on respecting individual property rights.

For outer space, we have a UN agreement from 1967 that precludes nations from declaring sovereignty over planetary possessions and from engaging in military activity. Long after, in the Commercial Space Launch Competitiveness Act (2015) the U.S. Congress said “exploration” and “exploitation” were okay.

You can see that it all is rather vague. Outer space property rights have not been clearly established nor do we know who can make them.

So, when a future Mars mission brings back the rocks that Perseverance left for it, we won’t have definitively established who owns them.

My sources and more: The NASA, the NY Times and NPR are good places for facts about this summer’s Mars missions.  The perfect complement, Politico’s “Who Owns the Moon” discusses outer space property rights.

Our featured image of Perseverance is from NASA.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

Group Work vs. Individual Work by Mike Siekkinen

When determining your classroom setup and how your students will be seated, there are a number of things to consider. Deciding how students are seated (singly, in pairs, groups-group size?) as well as if assignments will be done together or individually will yield different results. The following are some thoughts from a teacher in the trenches vs an educational “expert” who does not teach. I teach middle school, primarily 8th grade, so these thoughts are based on my experience.

Individual seating and assignments






Pros

• You can see precisely what a student can or can’t do.
• See what a student knows and doesn’t know.
• Usually “quiet" instruction/work environment (some like this/some don’t)
• Many students would rather work alone and provide an individual product.

Cons

• No student collaboration (no exchanging ideas).
• No social interaction (can be a positive or a negative).
• Some students like working with others vs individually.

Groups Work (pairs or small group)






Pros

• Get a more rounded project or assignment as more eyes on the assignment.
• Encourages cooperation among students.
• Students work toward common goal.

Cons

• Students tend to be social, so often can get off task.
• One student can dominate and provide all the answers.
• Don’t necessarily get to see what an individual student knows.

I use a combination of both seating arrangements, depending on what I have students doing. When working with groups, I make expectations very clear on conduct and enforce proper behavior working within a group. I explain that in a group or partner situation, talking should be related to the assignment and work they are doing, not a social time. Even with this explanation, consistent monitoring needs to be done (walking around the room, visiting with students, checking where they are in the assignment, etc.). Students can quickly get off track and forget why they are together and it can become a very social environment. You will get a feel of your students over time and decisions about group size and how often you have students collaborate will become easier.

Dr. Mike Siekkinen, a retired U.S. Navy submariner, became a teacher as a second career. He teaches history at St Marys Middle School as well as Adult and Career Education at Valdosta State in Georgia.

econlife - Six Handy Economic Ideas That Describe Our Coronavirus Response by Elaine Schwartz

Six ideas can summarize any basic economics course. They also can describe our response to the coronavirus pandemic.

Coronavirus Economics

1. Opportunity Cost

This is the big picture. Because the opportunity cost of a decision is what you decided not to do, choosing is always refusing. With coronavirus policy, some say we are choosing between the economy and safety– our wealth or our health.

Not so.

We’ve looked at a study from economist Austin Goolsbee. He and others have shown us statistically it’s not the lockdowns that slow the economy. It is the fear of illness. So, rather than a tradeoff, our health will fuel our wealth during the pandemic.

2. Demand

Defined economically, demand is an entire schedule of price quantity pairs. It is what we are willing and able to buy at each price. Naturally, thinking of saving money, we are willing and able to buy more at lower prices.

Now with the coronavirus, our demand has shifted. Whether looking at the U.S., India, the U.K., or Canada, demand for groceries, household goods, and medicines is up. The surveys took place on June 27th.

The U.S.:

India:

The U.K.:

Canada:

3. Supply

Defined economically, supply is an entire schedule of price quantity pairs. It is what producers are willing and able to provide at each price. Naturally, thinking of potential profits, they are willing and able to make more available at higher prices.

Now, with the coronavirus, supply has shifted. One example is the rerouting of the supply of food and paper goods from bulk buying institutions to individual households.

At econlife, toilet paper was one example. Imagine a fork in the road for our toilet paper supply. A part of it goes to commercial establishments from one group of paper mills. Those shipments typically move on huge pallets with more “utilitarian” recycled paper in larger rolls. Meanwhile, what we buy in the supermarket is typically 100 percent virgin fiber. It feels and looks better.

We could say that one market is commercial and the other is consumer. The problem though is that each has a different supply chain. Toilet paper is not alone. The bananas destined for restaurants and school cafeterias are smaller than what we buy in grocery stores. Indeed, all that used to flow through our restaurant and institutional supply chains have nowhere to go.

4. Monetary Policy

A country’s monetary policy relates to its supply of money and credit. During normal times, the money and credit supply matter. They matter because there needs to be a balance between what we can spend and what we produce. Sort of like the Goldilocks and the Three Bears, if there is too much to spend then prices rise. If there is too little, then we diminish production. The goal is “just right.”

It used to be simple to explain the Federal Reserve’s monetary policy. The Fed raises and lowers the discount rate that it charges banks for loans. It targets interest rates and the money supply by buying and selling government securities. And rarely, it changes financial institutions’ reserve requirements.

Now, because of the coronavirus, the Fed has become a lender of last resort by providing loans to banks so that they can loan money to you and me. Also, they are buying assets that help money market funds deal with withdrawals. In addition, the Fed is helping to implement the CARES Act stimulus programs and helping riskier businesses borrow money.

5. Fiscal Policy

Congress and the President are responsible for the spending, taxes, and borrowing that we call fiscal policy. During the pandemic, the fiscal policy headline has been the March 27, 2020 CARES Act. The following Wall Street Journal graphic makes it look very neat and clean. We should note that it was not.

But this was the plan for the Coronavirus Aid, Relief, and Economic Security Act:

6. International Trade

When it comes to medical supplies, international trade is especially relevant.

In 2018, the medical supplies we need for COVID-19 represented many billions of dollars of world trade: However, buying what we need for the COVID-19 pandemic has become increasingly difficult. By March 21st, 54 governments had declared export restrictions. The curbs included bans, government approvals, more stringent licensing rules, and state agencies cornering the market. All are examples of obstacles that block foreign purchases.

Globalization helps to increase our medical equipment supply. Even if restrictions temporarily increase local availability, ultimately, manufacturers have less incentive to ramp up production because their market is limited. Furthermore, the expense of restrictions can be costly for governments that need to allocate limited finances toward fighting the outbreak. Most crucially though, export curbs diminish the cooperation and trust that can help everyone.

And of course, I think of David Ricardo’s comparative advantage. Here, he would surely hope that nations with the lowest opportunity cost produce masks or ventilators. Only then will we optimize the worldwide output that we so badly need.

Our Bottom Line: Behavioral Economics

If we dug more deeply into each of our six ideas, we would see the change in our behavior. Nobel Laureate Richard Thaler would say that we are receiving nudges. Those tiny shoves are incentives that have transformed our daily lives.

My sources and more: Thanks to WSJ’s Andy Kessler for giving me the idea for this post. From there, I’ve returned to past econlife posts.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.