January 30

Today we started off our class as usual, doing a Do Now. Then,we met into our companies and calculated the amount of orders and money we got. Up next we had a spirit check where we showed our spirit to earn HUMBUCKS. Later on we read a document that was in our Humanities folder. We finalized todays class by doing a reflective Blog post about our simulation. That was it for todays Humanities Class :)

Our humanities Class

Silver Genious Company

Best Price Company

Maya is explaining the Do Now to Gian.

Jack is thinking of how to answer the question.

Miss.Vallillo is helping Maya.

Yael is working very hard on her Do Now

Wow! Claudia is so in to her work!

Joe is working 

The Do Now

The class is so concentrated on the reading...

Free Market Capitalism Reading 

(The document in the Humanities folder)

Clo

Vocabulary Terms

Law of Supply and Demand

Incentives

Income Inequality

Market Failure

You just experienced the good, the bad, and the ugly of the market economy system.  It is the system you are probably most familiar with.  Remember from the Two Poles reading that decisions in a market economy are made largely by individuals acting out of self interest.

What are the decisions to make in an economic system?  Think of all the decisions you made over the past two days acting within this system.  You decided what to make.  You decided how to make it and how much to spend making it.  You helped decide the price of items that were scarce by bidding on them.  You decided the selling price of your own item.  And who owned what you made?  You did.  If you made a profit, how much of it went to you?  All of it.

You saw some of the basic principles of the free market system in play.  When the supply of something is increased, the demand for it goes down.  This usually causes the price to go down.  When the supply of something goes down, demand increases.  This usually causes the price to go up.  This is called the law of supply and demand.

Supporters of the free market system believe that a government shouldn’t tell people what to make, how much to make, or what the price of something should be.  They think that people will notice what is in demand and they will naturally try to supply it in order to make money.  Individuals and business owners are best qualified to accurately read the supply and demand trends according to this thinking.

Supporters of the free market system also believe that by acting out of self interest, you are still doing a good thing by providing people with the goods and services that they want.  Even if the incentive was purely to make the most profit, student’s lives at Graded would be better off if they actually had some of the devices you created.  Supporters of a free market system think that the incentive does not need to be a moral one, and you will still help others.  Who sold the most devices?  In a free market system, ideally the best product at the best price rises to the top.  The competition and financial rewards should mean better goods and services for consumers.  However, just as we saw in the arm wrestling example, and from your free market experience over the last two days, there are winners and losers.

Remember how we discussed the legacy of MLK and Mandela being about trying to deal with economic inequality after political equality had been largely achieved.  Basically your class showed that even if everyone started with the same amount of money, they will not earn the same amount given that they will make different choices.  This difference in the amount earned is called income inequality.  Free market systems will always have this.  Supporters believe that the wealth will still trickle down to those who make less if businesses are successful.  They point out that successful businesses will hire more workers, who will then have more money to buy more goods and services, which will in turn increase demand, which will require more workers.  When this is happening, an economy is experiencing growth.  

There are times when the free market system does not seem to serve the interests of most people and is not efficient.  When this happens, we call it market failure.  Can you think of ways that your free market experience failed?  Was the best product at the best price ordered the most by students?  What if the resources that were bid on were actually harmful in some way to people or the environment?  In that case, you might say there there should be more rules about what supplies you can use to make things.  Maybe you feel that there should have been maximum prices set so people did not bid most of their money on one item.  When you start talking about more rules and setting prices, then you are moving away from the free market and towards the other pole of command economy.