We then debriefed the Freakonomics video from yesterday about whether bribing ninth graders to do well in school is an effective strategy. The answer was "It might be, but you'd need more than $50."
This rolled us into this video of our Freakonomics friend Stephen Levitt answering a question about the use of incentives within business to motivate workers. Surprisingly, he says that for all his talk about incentives, financial incentives don't work that well in the workplace. How do you make sense of this? Before it sounded like incentives were his thing. He and Adam Smith say people respond through self-interest and people are better off. But now he's saying not so fast.
In the 9th grader video, Kevin said that he wasn't willing to sacrifice his social life for getting passing grades OR getting $50. His social life was too important. Kevin has a lot in common with Karl Marx. For Adam Smith, social life wasn't all that important. Everyone is an individual pursuing their self-interest. But for Marx, it's all about social relations, especially relationships between workers and owners of capital, which is full of conflict and crisis. It's not smooth sailing as it is in Adam Smith's world.
What does Marx say about the state or government? Not that much. He essentially thought that the state served the owners of capital. But ideally the state should serve the workers. There are a lot of workers and only a few owners. Most of the voters are workers. But it's the owners who fund politicians campaigns. The state sits between these two contending parties, which is one of the reasons why making policy is so contested.
How does the state figure this out? The major way is through Fiscal Policy, what the government spends and how the government pays for it.
For the rest of the period you worked in groups on two of the tabs in this Google Doc. You got to play with the revenue and expenditure categories of the city and county government. I showed the actual 2015 budgets for the city and the county for comparison.
The policy question is what kind of spending and which sorts of taxes most contribute to a strong, resilient economy. This is the question you debated in small groups.
Homework due Thursday, February 12th
· Finish Three Great Economist reading by reading the section on John Maynard Keynes.
· Do a journal entry on one thing that makes sense to you and one thing you can see an argument against.
· Read this article on Community Land Trusts and the Dudley Street Neighborhood Initiative. Remember we watched the video about these guys.
· Do a journal entry on one takeaway from this land trust article.