Central Banks around the World

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February 23, 2015

Rather by accident, I found two interesting articles with information about central banks worldwide.

CB Map

The first, from UK Business Insider, has a great map showing who is easing and who is tightening monetary policy worldwide.  They point out that a “full 50% of the world’s population has seen monetary policy easing in 2015″ – and we’re only at the end of February!  Notice the absence of movement in the United States, which ties back to my previous post on Fed Chair Janet Yellen’s decision not to touch interest rates until at least June 2015.

Being able to analyze charts, graphs, and maps is a basic social studies skill for classroom use.  Have students analyze information off the map, and use the internet to research why these moves were taken and what potential results could be.

At the same time, a post in the Wall Street Journal looks at how some central banks are audited by governments around the world.  As we face Congressional pressure for legislative oversight of the Federal Reserve, it’s interesting to see what happens in other countries.  The article points out reviews of the Bank of England, the Reserve Bank of New Zealand, and the Sveriges Riksbank, the central bank of Sweden.

The difference becomes what such oversight means in different countries.  None of the reviews mentioned could require the central bank to turn over documents or meeting transcripts, something that Mr. Paul’s bill in the United States would require of the Federal Reserve.

Students could review the UFR overview lesson on the Federal Reserve, and use the news as a way to answer the question:  Who controls a central bank?

 

 

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Greece, revisited

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February 18, 2015

Princeton economist Paul Krugman has two recent blog posts comparing the current situation in Greece with the doomed Weimar Republic of inter-war Germany.  This could be a great example for students of how to bring UFR Lesson 4.3 on Weimar and Hyperinflation into the current day.

Krugman’s very interesting point in his first post comparing Greece to Weimar concentrates on a story that is often overlooked in inter-war Europe:  the attempt to force Germany to pay reparations for the Great War.  More specifically, he focuses on what those reparations would do to a new, fragile economy.  Krugman most definitely falls on a more liberal point on the spectrum than many of his colleagues, and he compares the reparations payments forced on Weimar Germany as similar to Greece continuing to pay on their massive debt to other countries.  It could, in effect, poison the relationships within the Eurozone.

In his second post comparing Greece to Weimar, Krugman offers a fascinating graph showing real GDP comparing the two countries.  In short, Greece actually falls below Weimar in terms of real GDP per capita over the troughs.

Krugman is not the only one making such comparisons between modern-day Greece and inter-war Germany.  The London Telegraph, the BBC, and the Financial Times have all written about it – but, they were looking at the Greece of 2-3 years ago.

This could be a great opportunity for students to dig deep into the Weimar lesson, and look to see what similarities and differences they can find in modern-day Greece.  What conclusion do they draw, and what evidence can they provide to back their opinion?

 

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Political Rhetoric

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February 13, 2015

I found a recent post by Princeton economist and NY Times blogger Paul Krugman a fascinating look at, essentially, political rhetoric.  Although Krugman’s focus is on individuals, most specifically Paul Ryan (R-WI), due to Ryan’s ties to the federal budget, it’s a terrific tie to UFR Lesson 2.5 on Rhetoric.

The essential dilemma for Lesson 2.5 is Is it convincing facts or effective rhetoric that determines what the public thinks about the debt and the deficit?  Krugman brings up the question – why do we judge politicians by how they come across in the mass media?

Have students read the blog post by Krugman and compare it to the lessons they learn in the UFR lesson on rhetoric.  How does Krugman define rhetoric in his blog post?  What examples does he give?  How does this relate to the federal budget?  What is the “personality cult” of Paul Ryan, and how does Krugman use it to make his point?

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Let’s talk about the Fed

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February 10, 2015

There has been a lot in the news lately about the Federal Reserve and interest rates – mostly about the fact that the Fed has stated they won’t touch interest rates until June at the earliest, and the desire by a growing number of Republicans and Libertarians to audit the Fed.

In late January, the Fed announced it could be patient with interest rates, and chose not to raise them at this time.  Citing potential stagnation of the economy and international developments (probably including events in Europe, Russia, and Greece), they will revisit interest rate changes in June.  The Washington Post pointed out that Janet Yellen, the Chair of the Federal Reserve, stated that “being patient” with rates meant at least two meetings, or about six months, before a decision to change the rate would occur.

On another front, Senator Rand Paul (R-KY) has stated his interest in legislation that would provide Congressional oversight of the Federal Reserve.  This idea is gaining interest from both Republicans and Libertarians.  Regional Federal Reserve Bank presidents and Fed Chair Yellen have stated their opposition to this proposal.  The New York Sun pointed out that in many ways, this suggestion would give powers back to Congress that were taken away with the formation of the Federal Reserve system.

Although not directly related to the federal debt or deficit, budgeting or policy priorities, the power (or potential power) of the Federal Reserve cannot be understated.  Use UFR Lesson 3.3, the overview of the Federal Reserve system, to give students background information, before encouraging them to research more information about the interest rate hike and/or the proposal for more Congressional oversight.   What stance do students take?  What evidence do they provide to back their opinion?

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Mankiw’s Rise of the Inequality Debate

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February 6, 2015

I found a post in Harvard Economist Greg Mankiw’s blog very interesting and to the point: he used the New York Times’ chronicle website to plot on a chart the use of “income inequality” and “inequality” in the news.  His query was simply this: why has the term “income inequality” only been popularized in the media for the last few years when economists have known since the 1990’s that it was a serious issue?

First of all, the use of the chronicle website on the NY Times site is a great way to show students what’s popular in the media (or at least in the Times) via graphical representation.  It’s also a strong tie to the UFR Mathematics lesson on models – can we use information in mathematical models to tell the same story in two different ways, both of which are true?  The skill of not only being able to read a graph with information, but more importantly, how to analyze that information and look for the “why”, is one that every students should have.

Second, the data itself offers valuable insight into income inequality discussions.  What is rhetoric?

 

 

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Repealing the Affordable Care Act?

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February 4, 2015

The House of Representatives voted this week to repeal the Affordable Care Act (the first this Congressional term, but the 56th attempt overall), although House Republicans admit that they do not have a viable alternative.  The law remains divided on partisan terms, with most Republicans in the House voting for repeal, and all Democrats voting against.

The Center on Budget and Policy Priorities released an analysis of the Republican alternative to the ACA, citing millions of people losing their current health care coverage, and actually increase the number of people who could not afford health care, falling into the category of “uninsured”.  They also state that the decrease in state aid Medicare would increase the number of underinsured.

I bring this back again to the basic lesson on Medicare, funding, and the national debt, and also to the UFR lesson on rhetoric.  Encourage students to read through media reports on the Affordable Care Act – even something as simple as asking why one “side” tends to use the term “Obamacare” could bring great discussion on rhetoric and political uses of words.

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Back to Greece

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February 1, 2015

Greece continues to face economic issues and a debt crisis, although there are hopes that a new leader could help pull them off the edge.  The new government under Alexis Tsipras was elected under the promise of having half of the Greek debt written off, even though debt holders have said that will not happen.  The BBC points out that unemployment in Greece is 25% right now, and the economy has shrunk by almost half since the Eurozone crisis began.

The Huffington Post questions whether Tsipras can actually renegotiate debt terms, while a blog on the Washington Post wonders if Greece will leave the Euro behind.  The Guardian suggests that Tsipras should call the bluff of German Chancellor Merkel, who is refusing to provide any debt relief to the smaller country.

All of this is a great way to identify cycles to students.  Returning to UFR Lesson 4.4 on Europe’s Debt Crisis, students can ponder that question of Greece:  when does it become everyone’s problem?  Have students work through UFR Lesson 4.4, then read through some of the current news on Greece, including the hopeful work of Tsipras.  Students could see what Princeton Economist Paul Krugman has to say about it.  How could this affect a world economy – and how could it affect us in the United States?

 

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Indiana Medicaid changes

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January 28, 2015

Yesterday, the Obama administration agreed to allow the state of Indiana to reform Medicaid (within their boundaries).  Some of the changes will be things that were not formerly allowed by the federal government.  The New York Times reports that over 350,000 more people will be able to access Medicaid with the changes, with much of the cost covered by the federal government and the Affordable Care Act.  Indiana Governor Mike Pence, however, has added in a pay-for-play clause, requiring people to pay premiums up to 2% of their income every month in order to access the increase in coverage.

I found this article a great companion for the UFR lesson 1.2 on Medicare and the National Debt. Using the essential dilemma “Can we guarantee quality health care to the elderly in a way that is both efficient and equitable?”, have students analyze news reporting on the changes proposed in Indiana.  Is this proposal efficient?  Is it equitable?  What could be a long-term effect?  How would this affect other states’ decisions on Medicare and the Affordable Care Act?  Are there consequences for the Affordable Care Act?

It could also be a fantastic reminder for students on bias in news reporting.  How do different news sources report the same event?  What similarities and differences do they find?  Can they determine a more-liberal or more-conservative bias in the reporting?

Other potential resources:

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State of the Union – Political Cartoons

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January 28, 2015

The political cartoons included in this blog are selected as tools to teach about public policy issues. Their inclusion does not in any way constitute an endorsement by Teachers College, Columbia University, of their point of view.

Political cartoons can be a powerful way to teach and talk about public policy issues in the classroom. They engaging, often funny, and they teach very complex ideas in a quick and intuitive way. We are so convinced of the value of political cartoons that, in addition to including them in many of our blogs, we feature posts that are all cartoons.

Using cartoons presents an opportunity to teach students media literacy, including the ability to detect point of view or bias. As a sequence, we strongly encourage students to study the cartoon carefully, analyze the specific context of the cartoon, and determine the cartoonist’s point of view. See the blog post of October 8, 2013 for a guide to using the political cartoons we have selected. The Library of Congress also has a a very useful Cartoon Analysis Guide.

Dave Granlund, 2015

Gary Varvel, 2015

Mike Luckovich, 2015

 

Andy Marlette, 2015

 

Bruce Plante, 2015

 

 

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The end of OPEC?

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January 19, 2015

I read a great post from the Brooking Institute entitled “The End of OPEC as we know it“.  It not only gives a fine overview of the current market for oil, but gives a clear outline of how an oligopoly/cartel works.  In general, when you have a group that tightly controls a resource or commodity, you can find an overall lack of trust over time – OPEC has stated that if the US slows down oil production, they will, as well.  But what ties them to that?  Their word.  And they have backed out of such promises before in order to increase profits.  So why would the US trust them now?

US oil production in terms of access to shale oil has increased dramatically, and with that, along with other suppliers such as Canada, we’ve seen prices in the oil market drop dramatically.  This affects OPEC countries and those that have tied their currency to oil (such as Russia – see previous posts on Dec 12, Dec 20, Jan 7 (cartoons), and Jan 7 (post)  ).  At the same time, those of us in the United States are enjoying lower prices for gasoline than we’ve seen in years.

This could be an easy introduction to students of a difficult topic – oligopoly and cartels – and also tie in well with discussions on the Euro and debt issues from UFR Lesson 4.4.

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