FLORIDA ECONNECTION
February 2013
Volume 1, Issue 3
PUBLISHER: BRETT BURKEY/SENIOR EDUCATION ADVISOR
FLORIDA COUNCIL ON ECONOMIC EDUCATION
Special Interest
Articles:
How Should Children Learn to Shop?
• Helium shortage
http://www.nytimes.com/ro
omfordebate/2012/12/20/h
ow-should-children-learnto-shop
• Believe it;
outsourcing is
so yesterday,
insourcing is the
future
As it becomes more
difficult each year to
determine whether the
three wise men paid their
visit to the manger or the
mall, it begs the question
asked in the title. There
has been a great deal of
reckless spending by the
adults in recent years.
How do we make sure our
children don’t make the
• Who has the
comparative
advantage when
it comes to
chores in your
house?
Individual Highlights:
Kids and Shopping
1
Tax Incentives Work?
1
Helium Shortage
2
Family Rewards
2
75-watt Bulb
2
Comparative Adv
3
Externalities
4
Money Happiness
4
Personal Finance
4
Insourcing
5
State Database
5
Family Budget
6
Wages and Profits
6
same mistakes?
Obviously, there is a great
deal of pleasure gained
from consumption, but
how do we protect young
people from falling prey to
the illusions cast by the
near cult nature of the
ubiquitous messages? It
has been widely noted
that children are often
heard naming brands
before they can cite the
alphabet. It is imperative,
in this New Year, that we
teach the young to pay
themselves first, begin
planning for retirement
before they go to the
prom, delay gratification,
celebrate thrift, take pride
in their discipline, and give
to others.
The link takes you an
interesting set of opinions
on the subject and it might
be worth some time in
class discussing it. There
are probably many
questions swirling in their
heads about the national
fiscal crisis, too.
Do State Tax Incentives Really Work?
http://www.nytimes.com/vi
deo/2012/12/01/business/
100000001832941/border
-war.html
http://news.wfsu.org/post/f
la-pays-billions-lurebusinesses-lawmakersquestion-returninvestment
When States offer tax
incentives to lure
companies, they have
visions of reaping rewards
in jobs and tax revenues
that will justify the give
backs. In an increasing
number of cases, this
ends up not being the
case. General Motors had
been the recipient of
generous incentive
packages for years from
States in the Great Lakes
region. When the
financial crisis hit, GM
walked away from many
of the properties leaving
States holding the bag
and workers perplexed.
Now, thanks to a bailout,
GM is back to profitability
but many towns are far
less fortunate having
spent scarce resources
that now have nothing to
show. It has been
estimated that taxpayers
fork over close to $80
billion each year to
companies that come from
every corner of the
economy. According to a
recent New York Times
investigation, in Florida,
those incentives amount
to $212 per resident, or 16
cents of every dollar in the
state budget.
The first link is a video
report on an unbelievable
battle over incentives
between Kansas and
Missouri and the second
one is podcast describing
Florida’s experience with
these incentives.
FLORIDA ECONNECTION
Page 2 of 6
A Helium Shortage Leads to Fewer Balloons in the Sky
A global helium shortage
has turned the secondmost abundant element in
the universe (after
hydrogen) into a soughtafter scarcity, disrupting
its use in everything from
party balloons and holiday
parade floats to M.R.I.
machines and scientific
research. Did you know
that the federal
government maintains an
underground helium
reserve northwest of
A Mexican incentive
program served as a
model for the Family
Rewards programs in New
York and Memphis.
downtown Amarillo, Texas
that produces roughly 30
percent of the world’s
helium? It dominates the
market, effectively setting
the global price and
supplying enriched crude
helium for sale to private
refineries and plants via a
450-mile pipeline system.
In October, the Bureau of
Land Management raised
the government’s price for
crude helium to $84 per
thousand cubic feet, up
from $75.75. Helium is a
byproduct of natural gas
extraction, a drop in
natural gas prices has
reduced the financial
incentives for many
overseas companies to
produce helium. In
addition, suppliers’ ability
to meet the growing
demand for helium has
been strained by
production problems
around the world. Partypeople are scrambling as
a result.
Family Rewards: Can It Break the Poverty Cycle?
http://www.pbs.org/wnet/n
eed-toknow/economy/need-toknow-december-142012/15649/
http://www.readwritethink.
org/classroomresources/studentinteractives/persuasion30034.html
The first link opens to a
story on a controversial
initiative called the “Family
Rewards” program. The
idea is to pay people,
currently locked in
poverty, to promote
positive behavior and
break bad habits.
Students are paid for
going to school and
getting good grades,
adults are paid for
receiving medical checkups and maintaining
steady employment. The
goal is to increase selfsufficiency, create healthy
habits and promote
savings. Critics ask, why
pay families for what they
should be doing anyway,
and what happens once
the money runs out? This
program has been
recently tried in Memphis,
Tenn. and New York City.
Use the second link to
open a persuasion map
and have your students
express their views, in an
organized fashion, after
watching the video.
75-Watt Light Bulb is Going the Way of the Dodo
http://www.businessweek.
com/articles/2012-1130/the-75-watt-bulb-has-adim-future
Last year, the phasing out
of the traditional 100-watt
bulb was met with an
unexpected reaction.
Americans rushed the
shelves and hoarded the
product because of a lack
of familiarity and the high
price of the alternatives.
The government wants
the standard bulb to be
the more efficient LEDs.
Now, the second phase
out begins Jan. 1st but the
reaction has been far less
desperate. The reason is
because the market forces
related to the prices and
the knowledge related to
their alternatives have
changed inversely. The
result is the anticipated
demand curve shifts when
people become satisfied
with a new technology.
Page 3 of 6
FLORIDA ECONNECTION
Economic Concept of the Month, Comparative Advantage
What’s wrong with this picture?
The Dad has an absolute
advantage in both chores while the
son has a comparative advantage
in sweeping.
The party that can
accomplish a task
with the least
opportunity cost has
the comparative
advantage.
Students: Read the Article and Respond to Questions
http://www.slate.com/articles/double_x/doublex/2012/11/dividing_the_chores_who_shou
ld_cook_and_who_should_clean.single.html
Typically, comparative advantage is used in support of nation’s specializing in what they
do best and trading for the things that can be done more cheaply abroad. But, you’ll
see the term has applications in family life as well.
1. Prior to arrival of the couple’s child, why was it most efficient for the woman to
do all of the indoor house chores?
2. When there are multiple chores to accomplish in a household, what are some
methods a family might use to allocate the work?
3. Describe the principle of increasing marginal cost. Should the person who is
better at everything be given all of the work? Why?
4. According to the author, what is the best solution to optimize efficiency when
allocating work?
5. Use the terms “absolute advantage” and “comparative advantage” to describe
the guidelines for how work is divided in your own home.
On an average day,
women spent twice as
much time preparing
food and drink, three
times as much time
doing interior cleaning,
and almost four times
as much time doing
laundry as did men.
FLORIDA ECONNECTION
Page 4 of 6
Externalities: It’s Something More Than a Potato Chip
Negative externalities
represent a cost that is
not included in the price
of a transaction
http://learnliberty.org/video
s/externalities-when-is-apotato-chip-not-just-apotato-chip
Externalities is a concept
every teenager should be
introduced to. The sooner
they understand it the
better they will become as
economic thinkers.
Undoubtedly, a sure sign
of immaturity is the
inability to gather the
depth of consequence
one’s actions might
create. Not only do
choices affect the person
in direct contact but also
people outside of the
transaction. Michael
Munger, an Econ and Poli.
Sci professor from Duke
University, offers a light-
hearted example of
externalities. After the
students view the video,
have them make a list of
experiences where
externalities might have
resulted. What was the
decision made, who was
the intended partner in the
transaction, and what
other people might have
been affected by the
decision made?
Money Can Make You Happy, If You Spend it Correctly
http://www.theatlantic.com
/business/archive/2012/12
/christmas-econ-lessonyou-can-buy-happiness-ifyou-know-how/266575/#
The link takes you to an
interesting video created
by Canadian educators on
the power of money to
make happiness. It
seems that happiness will
grow as income rises, but
seems to plateau after
$75,000. An extension
can be attained by the joy
of spending money on
others and by purchasing
experiences instead of
material goods. This may
supply the reasoning
behind the tendency of so
many to go nuts with their
finances at Christmas
time.
http://www.oecdbetterlifein
dex.org/
This link allows your
students to create their
own better life index and
compare countries around
the world with their own
criteria.
Personal Finance Flash Cards and Videos
http://www.stlouisfed.org/e
ducation_resources/perso
nal-finance-flash-cards#
It has never been more
important for students to
have a strong
foundation in personal
finance education.
This link takes you to
another great resource
from the education folks at
the St. Louis Federal
Reserve. This is a series
of interactive, online flash
cards that test the
understanding of personal
finance concepts. There
is also a printable version.
The cards are appropriate
for students in both middle
and high school.
http://www.stlouisfed.org/e
ducation_resources/nofrills-money-skills/episode1-growing-money
This link directs you to a
very effective video, again
produced by the St. Louis
Fed, on money growth
through compounding
interest. The brief video
uses clear, simple
language and graphic
elements so that students
can better visualize the
personal finance content
being presented.
http://www.stlouisfed.org/e
ducation_resources/nofrills-money-skills/episode2-ways-to-save-no-frillsmoney-skills/
In this video students
learn that it is important to
save for the unexpected,
college, cars, and
retirement.
Page 5 of 6
FLORIDA ECONNECTION
Outsourcing is Obsolete, Insourcing is the Future
http://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/
After years of offshore production, General Electric is moving much of its far-flung
appliance-manufacturing operations back home. It is not alone. This article provides a
terrific exploration of the startling, sustainable, just-getting-started return of industry to
the United States. It also offers a great timeline of manufacturing’s rise and fall as a
significant creator of jobs in the U.S. The list below is an excerpt from the article citing
reasons for the potential of manufacturing’s return after a lengthy hiatus overseas.

Oil prices are three times what they were in 2000, making cargo-ship fuel
much more expensive now than it was then.

The natural-gas boom in the U.S. has dramatically lowered the cost for
running something as energy-intensive as a factory here at home. (Natural
gas now costs four times as much in Asia as it does in the U.S.)

In dollars, wages in China are some five times what they were in 2000—and
they are expected to keep rising 18 percent a year.

American unions are changing their priorities.

U.S. labor productivity has continued its long march upward, meaning that
labor costs have become a smaller and smaller proportion of the total cost of
finished goods. You simply can’t save much money chasing wages anymore.
Incredible Data Base to Compare U.S. States
http://statehealthstats.americashealthrankings.org/#/country/US/2012/Overall-StateRanking
Which state has the highest level of air pollution? Unemployment? Which state is most
active, has the highest high school graduation rate, or the worst distribution of health
insurance? This is a wonderful database of 51 indicators that have an overall health
theme but do wander into other areas of the economy and society. Underemployment,
children in poverty, income disparity, personal income per capita, obesity, crime rates, and
youth smoking represent some of the comparisons in a very user-friendly format.
A review of the statistics points out some of these features about Florida (1 best and 50 th
worst):
29th rank for Children in Poverty, 44th rank for high school graduation, 10th best for quality
of air, 46th rank for lack of health insurance, 45th rank for income disparity, 24th rank for
occupational fatalities, and 16th rank in overall use of tobacco. In the entire metric, Florida
ranks 34th in nation while Vermont, Hawaii, and New Hampshire are 1-3. This resource
offers an endless set of possibilities for discussion in class, especially when considering
the role of personal responsibility in remedying the health care crisis and how personal
behavior can be altered.
Economics is all about
how people respond to
incentives and this
database exposes a
great deal about
personal behavior.
Brett Burkey can be reached via:
PHONE:
561-302-4143
E-MAIL:
BRETTBURKEY@
FLORIDAECONNECTIONS.COM
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This graph offers a comparison
between corporate profits as a
percentage GDP (red line) and wages
as a percentage of GDP (blue line).