Matrix Economix, to coin a term, cares only about making things better for those who are losing, never measuring the costs of doing so.

Our kids don’t understand economics, our journalists don’t understand economics, our politicians don’t understand economics, our electorate doesn’t understand it.

It’s always a pleasure to teach a Junior Achievement course in a local classroom. Recently for me it was JA Global Marketplace, requested by a 6th grade Social Studies teacher in a suburb of southeastern Massachusetts. In my second visit, the curriculum called for a discussion on trade barriers. The students were split into groups, two of which independently wrestled with this scenario:

Because of intense price competition resulting from furniture being imported from China, approximately 34,000 U.S. furniture manufacturing jobs have been lost in the past two years... Factory workers in China earn about $100 per month. China has a major advantage in international trade because it has a huge population, a low standard of living compared to other countries, and low wage rates. A nation with a major advantage in certain areas, such as wages, technology and climate, can price some products much less expensively than its trading partners. The result can be that companies in importing countries are not able to match the low prices and are forced to close. Should free trade be allowed when the price of an imported product is so low that it results in factory closings and layoffs?

Separately and unanimously, the students emerged from their deliberations, and with nodding agreement by their twenty-one classmates, responded that free trade should NOT be allowed in this case, that it was not fair that U.S. workers were losing their jobs. With an expanded class period of seventy-five minutes, my third visit presented the opportunity to continue the discussion.

“Let’s bring the furniture example closer to home,” I said. “Let’s say my family and I have spent our lives building a retail furniture business right here in town. Your classmate Danny also has a store across the street from me. Though we compete for business, both stores have always done well enough to support our families. In the case of mine, our line of office desks is the biggest part of our business --- people love the unique craftsmanship of these pieces of furniture. Recently, we have been losing sales to Danny, however. It seems he spent time and money flying to a faraway country last year, and now imports office desks from Bhutan, a small country between China and India. Pointing to the teacher’s desk, I said, ‘His are just about the same style of furniture as mine, but Danny’s special deal with Bhutan allows him to charge just $200 per desk compared to the $600 I need to charge to make the same profit. The loss of sales is killing my business. I may have to pick up another job, or even sell my store. What can be done?”

Sharp kids, these are; attentive, knowledgeable, well-spoken. Yet their answers won’t surprise anyone. “That’s not fair to you! Why couldn’t Danny share his relationship with Bhutan with you? Why can’t Danny charge more, say $400 per desk, so that he still benefits from his deal but doesn’t put you out of business?” That last idea of their schoolmate’s was popular, and class-wide brainstorming followed on the exact price Danny should be charging for his furniture, to help save my business.

Of course, I explained about Danny’s risk in flying to Bhutan, the advantage he created for his store, how he ‘won’ this competition for himself, his family, his employees, how his customers win by having to spend less of their paychecks on a nice desk --- and broader, how Cfree trade is valuable to American consumers. These are what is lost if Danny aids my business instead of his own.

Many things can be said from these visits in teaching this JA Global Marketplace course, but I’ll make just two important points at present. 1- Of the hundreds of liberal/progressive people I have spent time with across Massachusetts and Rhode Island these many years, the large majority are defined, more than anything else, by their anti-capitalist beliefs. Wealth, and the power it brings, competition, as it creates winners and losers --- these things do not jive with the sixth grade compassion they still hold close in their hearts. It’s a big part of the reason so many here became teachers and nurses.

2-Fairness is at the core of the American soul, perhaps as much as anywhere else in the world.

People will come to believe in liberty and small government when they come to understand basic economics, and how therein lay the most fairness, freedom and prosperity. Then the door will open to understanding more about fiscal and monetary policy, entitlement debt, taxation and more.

We must break Matrix Economix. I work at it every day, and invite you to do so as well.