Thursday, October 9, 2008

Everything I know about the economy, I learned in 4th grade

When I was 10 our teacher started the "classbucks" monetary system. We could earn classbucks by doing extra work, taking out trash, clapping erasers, etc... Every week we could buy items (e.g., snacks, red rubber erasers) with our classbucks. We were learning about capitalism.

Being entrepreneurial, I found a very large cardboard box, cut out a cardboard door, wrote "Bank" in large letters on the box, and went into the business of high finance. Teacher thought this was great extra credit so she supported me all the way. Anyone who stored their classbucks with the Bank of Brent would receive interest payments at the end of each week, and I received extra classbucks as payment for all the valuable work I was doing.

At one point I did worry that people might break into my bank and steal all the money (especially that mean bully Karl Gilbert), so I added a giant padlock on the cardboard door. Karl Gilbert wasn't strong enought to break the padlock, but he was almost clever enough to bypass the padlock and just tip the box over, and so Teacher helped out with an extra guarantee: if anyone stole the money she would replace it all.

As I got older I looked bank on that bank as childish silliness. There was no real reason anyone should have earned interest, or that the money should be guaranteed. The basis for our whole economy was that Teacher was the only one with access to the mimeograph machine on which our money was printed. By the time I was 12 I realized that the fundamentals of our classbuck economy had not been sound; it was totally artificial and did not represent the real world at all.

But now that I’m 46 I can see that Teacher did model our economy accurately; any 10-year-old could see that.

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