econlife - China’s Recycling Reversal by Elaine Schwartz

People living near Portland, Oregon were recently told to hold on to many of their plastics. 

The local recycler was no longer accepting them.

Where are we going? To a massive shift in waste.

The World’s Waste

China has told the WTO (World Trade Organization) that it will no longer take 24 kinds of waste. The decision was a whopper. As the prime destination for the world’s recyclables, China gets a lot of our waste.

China had two reasons:

1. The waste was too dirty. After all, our Amazon boxes are okay but not all of the plastic and foam inside. And beyond that, we discard our clothes hangers, shoes and garden hoses. Most then go to sorting machines that inadequately separate the filthy and hazardous materials from everything else. China used to get it all. Now they are saying “No.”
2.  They are more affluent. China can afford to purchase the new materials they need to make carpets and pipes and all they send us. They can import new plastics.

This is what China’s imported solid waste looked like in 2013:

As polyethylenes imported from the U.S., the images will soon be very different.

Our Bottom Line: Externalities

China recycled 56% of the world’s plastics. It received 20 million tons of US scrap metal in one year. It got hundreds of thousand of tons of waste paper.

No more.

Last year, it told the WTO that, “By the end of 2017, China will forbid the import of 4 classes, 24 kinds of solid wastes, including plastics waste from living sources, vanadium slag, unsorted waste paper and waste textile materials.”

The result will surely be a ripple of externalities. Hong Kong’s elderly waste paper collectors will lose their income. Portland and other municipalities will lose the income they received from selling recyclables. On the other hand, makers of virgin polyethylene (like DowDuPont) will have a new market. In the EU, Australia, Japan, Korea, Hong Kong and the U.S., countless businesses will rethink the flow of waste.

Quartz said that when China sneezes, the world…you know.

My sources and more: Always interesting, Quartz reminded me that it was time to return to China’s recycling role. The Quartz article had multiple superb links. It took me to documents that ranged from a WTO notice to an Oregon metro article. I also read what is happening to communities in California and this Bloomberg analysis.

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.

Six Drinks that Changed the World by Andy Jobson

I’m grateful to my sister for sending my A History of the World in Six Glasses as my birthday present this year.  I highly recommend it to you, no matter what you may teach.  Tom Standage examines various epochs by considering the role of a particular drink.  For the ancient world (think Sumer and Egypt), he provides a discussion of beer.  (In particular, I was intrigued to gain some insight as to why we offer toasts at ceremonies.)  The Greeks, of course, grew in power in part due to the wine they were able to produce and trade.  World history teachers would learn some interesting tidbits and find some useful materials for students to read.

I teach British literature from a sequential, historical perspective, and so one unit is on the Enlightenment.  Standage’s discussion of coffee houses as the ‘internet’ of the seventeenth century, helping to spark the scientific advancements that took place, was quite interesting.  There was also some very interesting material about how western Europe managed to procure and grow its own coffee when the Arab world proved to be very proprietary over its resources.  He also noted the resistance to coffee posed by various religious leaders.  No discussion of Britain would be complete without reference to tea, and Standage provides a helpful unit explaining the rise of the East India Company.  I couldn’t help but think of “Too Big to Fail,” izzit’s video on that company, as I read.  Those chapters provided some very helpful additional information about the collusion between the British government and that behemoth company, including some very unsavory dealings.

Another unit deals with distilled liquor (‘spirits’), in particular rum.  While there is discussion of the triangular trade and reference to the American colonial period, there is also some entertaining material on the British navy.  Did you know that “grog,” that sailor’s mixture of rum, water, and limes, may have played a role in British mastery of the seas?  Read the book to find out why!

You might not be surprised to learn that Standage chooses Coca-Cola for his sixth influential drink, noting how it came to be inseparably associated with American values in the “American Century.”  These chapters provide quite useful fodder for discussions about the values of capitalism vs. communism (or the potential pitfalls, to some people, of a truly free market.  Throughout, Standage tells interesting and entertaining anecdotes, mixing in some broad ideas of how cultures change and adapt.

So whether you teach economics, history, or literature, you may find this to be a valuable book.  If you teach none of these things but use the izzit videos in your classroom, you may find portions of it helpful in providing additional background information.

Happy Reading!

An educator of 22 years, Andy Jobson has taught government, economics, and U.S. History. Currently teaching English literature at Riverside Military Academy in Gainesville, GA, he’s also been an administrator, a STAR teacher twice, and taught elementary school with Teach for America.

econlife - Elon Musk’s Tunnel Vision by Elaine Schwartz

It appears that Elon Musk’s year-old Boring Company has tunnel vision. The firm has proposed a high-tech tunnel between NYC and Washington D.C. that got a verbal okay from the White House:



Where are we going? To new tunnels and the old Erie Canal.

Boring Business

Meanwhile Maryland gave Boring the go ahead for a 10.1 mile tunnel under a section of the Baltimore-Washington Parkway. Also, Chicago is considering Boring for a speedy connection between its downtown and O’Hare International airport. And, close to SpaceX (near Los Angeles), construction has begun on a 2-mile long underground tunnel that Musk hopes he can extend another 15 miles.

Below, Elon Musk described a bit of what he would fund, build and operate for Chicago:



Musk’s current projects are not quite what he ultimately seems to have in mind. His LA project is drive on/drive off with cars and passengers carried along by an electric “skate” moving on magnetic rails. Ultimately though, the Musk vision is tubes in which capsules move as fast as 750 mph along a cushion of air.

I believe that this is the “skate” concept planned for the LA tunnel:

Here is a Hyperloop rendering:

People with tunnel knowhow wonder if any of this can work. After all, the 35-mile Gotthard Base Tunnel took 17 years and $7 billion to slice through the Swiss Alps. There also is London’s recently completed $19.4 billion, 26-mile underground rail connection to Heathrow. A 9-year project, it won’t be entirely operative until 2019.

But they thought the Erie Canal was impossible too.

Our Bottom Line: Transportation Infrastructure

His last name was Clinton, he wanted to be president, and he became known for “Clinton’s Folly.” This Clinton lost the presidency in 1812 (James Madison won), and later in his political career, as governor of New York, he wanted to dig a 363-mile canal. Because no canal in the nation was longer than 2 miles, people ridiculed the proposal.

DeWitt Clinton proved them all wrong. Between 1817 and 1825, using (what was then) revolutionary technology, the Erie Canal was dug. Its impact was immense. By connecting Albany to Buffalo, New York, the canal completed an all-water route between the port of New York and the Great Lakes, thereby permitting eastern manufacturers to trade with western suppliers of raw materials. Instead of traveling via slow and expensive overland routes, goods could move across the Erie Canal more cheaply and quickly.

Like DeWitt Clinton, Elon Musk says his Boring Company can inspire and enable our transportation infrastructure to take a leap forward.

Maybe Musk is on the right track.

My sources and more: Having discovered the Boring Company in Gizmodo, it was impossible to stop reading. From there, Quartz is perfect as a second stop and after that, the possibilities include Bloomberg, Mashable, Curbed. Then finally, I felt obligated to convey CNN's concerns.

Our Bottom Line includes an excerpt from the revised edition of The Foundation Econ 101 1/2 Part 2.

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 - Where Life Is Better by Elaine Schwartz

When approximately 43,000 people in 38 countries look back to 1967, some say life is better but others do not.

The Pew Research Center gathered their answers last spring. The most positive response came from Vietnam and India. The most negative was expressed by Venezuelans:

Pew concluded that people’s view of their economy seems to have been the key variable. You can see below the correlation between “life is better” and “the economic situation in our country is good:”

Where are we going? To the GDP.

Our Bottom Line: Well-Being Yardsticks

Knowing that one’s economic situation influences life satisfaction, we can ask what we mean by economic situation. Some people would say we are referring to the GDP.

GDP

The GDP is mostly composed of the value of a country’s consumer, business, and government spending. And yes, if you look at the U.S. a climbing GDP meant better food on the table, more bedrooms in our homes, and the innovative appliances (like a washing machine) that make our lives easier. Correspondingly, at work, fewer hours bought and brought us additional goods and services.

Better Life Index

As a well-being yardstick, though, the GDP can be rather controversial. In the OECD’s Better Life Index, the environment, community and health are included among the criteria that measure national well-being.

This is their full list which they then break down into more specific standards:

Stiglitz Commission

Nine years ago, France’s former President Sarkozy felt so strongly about GDP inadequacies that he created a commission. Led by Nobel Laureate Joseph Stiglitz, the commission’s report explained “the limits of the GDP.”

In a 12-page overview, they included the following recommendations:

1. When evaluating material well-being, look at income and consumption rather than production
2. Emphasise the household perspective
3. Consider income and consumption jointly with wealth
4. Give more prominence to the distribution of income, consumption and wealth
5. Broaden income measures to non-market activities

So, returning to the Pew life satisfaction survey, where does all of this leave us? There probably is no right or wrong yardstick. We just need to remember that, “What we measure affects what we do.”

My sources and more: H/T to Mark Perry at Carpe Diem for alerting me to the Pew Research. Only the beginning, the next logical step was to see the detail at Pew, And then for contrast, the Better Life Index and Stiglitz Report were ideal.

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 - A Closer Look at the Digitization in Our Lives by Elaine Schwartz

Recorded music used to start with a label and an artist. The production process was expensive because of the skilled technicians and the sophisticated equipment. Add to that a music video, the physical album, the distribution process, and what do you get? For a new artist, the tab is $1 million and the success, unlikely.

But then came digitization…and The Piano Guys:

 For this one video, so far, there have been 62.5 million views.

And a considerable shift in market behavior.

The Digital Impact

Looking at music, movies and books, we can see a seismic shift because of digitization.

McKinsey concluded that the media were the digitization leaders:

Summarizing a huge body of digitization research, we can say that supply side costs are down–with marginal costs as low as zero. And on the consumer side, we have an increase in welfare as choice and potential quality skyrocket.

Some of the changes relate to sinking production costs. As a musician, an artist or a writer, you once needed an agent just to sign a contract. No more. Now, do-it-yourself lets you bypass the gatekeepers.

We have also seen the distribution revolution as online media supply what we used to buy exclusively from record and book stores, and movie theaters. In 2012, there were 550 films released through movie theaters. By the next year, Netflix alone had 1058.

For the media, you can see the whopping increase:

Our Bottom Line: Market Structures

Let’s just conclude with a look at our market structure continuum. On the left, we have smaller less powerful firms that can easily enter and exit markets. Meanwhile, moving rightward, pricing power and firm size increase.

Digitization is upsetting our traditional market structure order. In some markets we have more competitors. Because of easy entry and exit, digitization is adding more of the characteristics of monopolistic competition. Also though, thinking of Amazon, some firms have much more pricing power, taking us to the right side of the scale.

Maybe though we should remove our economic lenses and simply enjoy the Piano Guys.

My sources and more: Always selecting interesting topics, economist Joel Waldfogel now has a paper on digitization in the Journal of Economic Perspectives. Also, I discovered  this NBER paper that complemented his analysis. Finally, you might enjoy looking at McKinsey (as did I) here and here, with its real life examples.

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.

izzit, 2081 and the Meaning of Equality from Rachel Colsman

One teacher’s Story of How an izzit.org DVD Changed the Life of a Struggling Student

Irving Kristol once said, “Democracy does not guarantee equality of conditions – it only guarantees equality of opportunity.”

This concept has always been a challenge to teach in my government classes. This past year was no exception. I teach in northwestern New Mexico, in a district that serves the Navajo Reservation. My particular school is over 80 percent Navajo. Their history makes it hard for many students to understand individual rights when, for many years, their rights had been ignored.

My classes had just finished studying the Bill of Rights. We read the document, broke it down into terminology, and looked at Supreme Court cases. They were still struggling with the idea of equality. I had to find a way to teach them that equality does not mean everyone should earn the same amount, or live in the same size house. Enter izzit.org.

I have used izzit.org for a couple of years for a variety of topics. I just happened to order the video “2081.” It was sitting on my desk waiting to be watched. I took the video home to preview. My first reaction was awe… followed very closely by apprehension. There were guns. The production was dark. It was filled with powerful symbolism. I knew that it would be a major risk to show it, but I felt that the benefits of using it would outweigh the risks.

I went to my principal for guidance. He told me to go for it. So I did. I could not have anticipated the results.

I had one particular student that was struggling to finish his senior year. He rarely came to class. He seemed disconnected. I thought we were going to lose him. But after I got hold of the 2081 DVD, I asked him please to come to class the next day, as I had a great lesson on equality, and would really like him be there. He looked skeptical. But to my surprise, he actually showed up.

I began class by writing “equality” up on the board. I asked each student to write down their definition of the word. We had a brief class discussion and developed a class definition of “equality,” and wrote it on the board. I handed out the video questions and began the movie. The students were giggling and whispering through the introduction, but when the movie started, things got dead silent. 

The students were mesmerized. At the conclusion, you could hear a pin drop. I asked the students to revisit their definition of equality for homework, and to bring it in for class discussion the following day. I could have never predicted the response. Students had been discussing the idea of “equality of outcome,” versus “equality of opportunity” with other teachers, in the lunchroom, and at home. The next day, every student was in their seat ready for discussion before the tardy bell had even rung – including our struggling young man. The classroom was abuzz with ideas and meaningful exchange.

After class, the young man who’d been missing class came up and asked if he could borrow “2081” to show his parents. I allowed him to take it, and the revolving door of checking out the video began. Over 50 students took “2081” home to share. Parent-teacher conferences four weeks later revolved a lot around my lesson on equality.

Helping students understand the difference of equality of outcome, versus equality of opportunity has always been a challenge. Many of my students believed that government has a responsibility to ensure that everyone has exactly the same things. But this lesson helped them understand the fundamental principle of a democratic republic: equality before the law.

My young man continued to come to class, rarely missing a day. I asked him what made him want to come. He informed me that the video and the lesson really touched him. He realized that hating the system would do nothing to fix his problems: “Democracy doesn’t mean that everyone ends up the same. It means that everyone can make choices, and whether they succeed or fail is up to them. It might not be fair, but at least we each have ownership of our individual journey in life.”

(Note from izzit.org - Please be advised that 2081 is not streaming on our site but you are able to select it as your free DVD for the year! It's a powerful video, and we highly recommend it for high school students.)

econlife - Why the Secret Service Monitors Fake Movie Money by Elaine Schwartz

When Rush Hour 2 needed many millions in 100 dollar bills, Independent Studio Services (ISS) sent them 14 pallet loads of 4′ x 4′ cubes of fake money. During the filming, the Secret Service showed up, issued a cease and desist order, and accused ISS of counterfeiting. It appears that movie extras had been spending the cash nearby.

Although no one wound up in jail, the raid cost ISS a lot of real money. Their digital files were confiscated and billions destined for a slew of movies, destroyed.

Below, the real $100 bill is the top image while the Rush Hour 2 fake is under it. Commenting on the bogus bill (that does look rather real), a Secret Service agent said,”…son of a gun, if it’s green and it says ’20’ on it, somebody will take it.”

In this Rush Hour 2 scene, the fake money flies after an explosion in a casino:

Occasionally a movie maker decides to use actual cash. When The Brinks Job (1978) needed close-ups of U.S. currency, they borrowed the money from a bank. Real guards hovered near huge piles of real cash that, after filming, was counted and returned ASAP.

So, where are we going today? To what makes money real.

But first…

Counterfeiting History

Abraham Lincoln signed the act that created the Secret Service on the day he was assassinated (April 14,1865). Because somewhere between one-half to one-third of U.S. currency was reputedly fake, the Secret Service’s sole purpose was to combat the counterfeiting.

Fast forwarding to 1992, we can look at current counterfeiting criteria. According to the Counterfeit Detection Act of 1992, the fake money has to be clearly bogus in several ways.

It should be…

• either 75% smaller or 150% larger than real cash.
• one-sided.

Also, after its final use, the equipment used to make the money has to be destroyed.

Our Bottom Line: What is Money?

The textbooks say that any commodity can be money if it has three basic characteristics:

1. a medium of exchange
2. a measure of value
3. a store of value

It makes sense that money needs to be real for us to believe it is a medium of exchange. Get enough of those fake movie dollars in circulation and we have a problem.

My sources and more: Thanks again to 99% Invisible for another quirky episode. Only the beginning, the fake money story took me to more detail about movie prop money at priceonomics and Mental Floss. From there, it made sense to look at some counterfeit money history.

Please note that sections of Our Bottom Line were in a previous econlife post.

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.