On the Origins of Money

Menger

Kurt Bouwhuis, Mackinac Center Intern

Carl Menger, the founder of the Austrian School of economics wrote a very important article in 1892 that explained the origins of money for the first time.  Many believed money was a grand scheme planned out and created by the powerful rulers of empires. 

Menger’s article dispelled this myth by explaining that money was not the result of central planning, but rather, a phenomenon created by the interactions of several people over a long period of time.  Money, in short, was created spontaneously.

Work Harder, Get Paid Less

Good education comes from happy teachers.

It seems like a California cheese commercial, but instead of cheese and cows, its education and teachers.  Let me preface the remainder of this post with this statement: Charter schools are not the savior of education.  They are still riddled with problems and, while better than surrounding districts, still return rather pathetic results on standardized tests.  However, the freedoms given to charter schools and their employees are having a wide range of effects, one of which is saving money.

To cut costs some charters are practicing teacher leadership.  In essence, charter schools hire fewer than normal administrators and distribute leadership responsibilities among the teaching staff instead. As a result teachers are more involved in decisions about curriculum and school policy.

While money is being saved by hiring fewer administrators, money is also being saved with lower teacher salaries.  While charter teacher-leaders have more responsibilities than a normal educator, they are paid less than the average public school teacher.

Humans respond to intensives.  Economics is merely looking at how to allocate what resources we have to fulfill wants and needs.  In a free market, it is incentives, costs and benefits, that drive resource allotment.  While money is one incentive, so is interest and personal fulfillment.  This is why many faith-based organizations are run largely by volunteers; they get their incentives from personal fulfillment, and not money.

The same goes for charter school teacher-leaders.  Their leadership roles added to teaching responsibilities are more stimulating and fulfilling than just teaching alone. As such, they need less monetary incentive to provide a good education.

These educators also have a vested interest in the success of the whole school, not just their classroom.  There can be no more blaming of upper management when you are upper management. Providing freedom and responsibility has proved a win-win for many charters.

Adam Rule – MCPP Intern

Pursing Wealth, Not Money

Maybe all of us became enamored of making money from money, money from money from money, and we forgot that making things, real, innovative things, matters.

So said Dow Chemical’s CEO Andrew Liveris today at The National Summit in Detroit.  The Summit, hosted by the Detroit Economic Club, is bringing together top business leaders and politicians to determine the next steps that need to be taken to bring a remedy to America’s shaky economy.  The program looks to focus on the areas of technology, energy, environment, and manufacturing.  The hope is that this meeting of ideas will produce a list of top issues in each area as well as top actions that need to be taken in the near future to thoroughly address these problems.

What is so interesting about Mr. Liveris’ quote is that it hits the foundation of wealth.  A country’s wealth is found not in the amount of money it has, but in the amount and quality of goods and services it provides.  If the summit can bring about a revolution in the American economy that increases manufacturing, and advances technology to truly achieve greater wealth, it will go far to reverse the current crisis.

Adam Rule – MCPP Intern