Opinion: Daily Journal

Second Look at Playground Economics

Sunday was an extraordinarily busy day at the Hood household. Three visiting boys joined my two and, much of the time, me in the woods behind the house, cutting tunnels through dense thickets of vines and brambles to a wooden fort of their creation. We played all day (I mean, they played all day, I was just hanging around …) and just got tuckered out. So today’s DJ is a relevant rerun. Be back tomorrow fresh, slightly scarred from the thorns:

Originally ran May 13, 2004:

I spent much of Thursday dealing with children.

No, I actually didn’t make it down to the North Carolina General Assembly, if that’s what you’re thinking. Some of my colleagues did head to the Legislative Building Thursday morning, however, to distribute a preliminary analysis of the 2004-05 budget plan from the Easley administration.

No, I mean real children — specifically, the Little Conqueror (Charles Alexander Hood) and his younger brother, the Little General (Andrew Jackson Hood). Apparently, the two scamps learned some important lessons which they felt the need to explain in great, albeit halting, detail after I picked them up. I found myself mesmerized.

Alex told me about a game he and his fellow first-graders played in the woods at their school. It seems that these budding entrepreneurs decided to open a “store” to sell “food.” I use quote marks because the store was the top of a barrel and both the food and money consisted of things found on the ground. Salads were made of grasses and leaves. Gumballs transformed into various products, though curiously not meatballs, which were apparently made by hand out of mud, perhaps with a small stone at the center. Other rocks became vegetables and meats. Sticks were, well, sticks, for reasons not explained.

What particularly caught my attention was how the money changed hands. Alex told me that at first, sticks traded pretty much on a one-for-one basis with other commodities. But relatively soon, the kids began to realize that there were many, many sticks lying on the ground while other items were harder to find (scarcity) and harder to compare in quantity and quality (monetary theory). The highest consumer demand was for the meatballs, which were manufactured by a few “inventors” rather than found. (branding and return on investment). By the end of the game, Alex said, a single meatball was going for as many as 10 sticks. “They sure were expensive,” he complained. And when someone tried to demand more sticks for his rocks, the other kids simply started using gumballs instead, forcing the stick price of the rocks back down to parity (substitution).

Meanwhile, Andrew was at his preschool having fun on the playground. It seems that one of the other kids was playing rough around the sliding board. Eventually, Andrew and his playmates told the miscreant that because he wouldn’t play nice, he would have to play alone. If you want to play with us, they said (I’m paraphrasing, hope you don’t mind), you’ll have to treat us the way you want to be treated (Kant’s Categorical Imperative and/or the Golden Rule). After some initial defiance, the rough-houser reformed and rejoined the group.

So what have we learned? In the forest market, soaring stick prices for meatballs did not lead to a passing adult demanding that the meatball-makers sell their wares at a “just price.” The kids made their own decisions based on their own subjective preferences. Meanwhile, the would-be rock monopolist saw his scheme fail because there was no authority to grant him special favors and keep all those foreign gumballs from intruding into the “rock market,” which of course wasn’t a rock market at all but a market for fake food generally. And no one had to mandate that the kids use a single form of currency; after some initial barter, they settled on sticks as the denominator of value because they were the easiest to count and exchange.

And on the playground, we learned that voluntary collective action can often be effective in discouraging anti-social behavior. Although it might have been useful in the short run for an adult to come by and admonish the misbehaving child, the way to change the behavior in the long run was to make it clear that failure to play nice would keep the child from being able to play at all. Social cohesion must be based on common interests and shared values. It can’t simply be imposed from above.

See, these concepts really aren’t that hard. They come naturally to children, so politicians ought not to find it so hard to grasp them.

Hood is president of the John Locke Foundation.