FROM IOUs to ATMs: OUR GUIDE TO FINANCIAL LITERACY (Based on Our Acclaimed Book)

From IOUs to ATMs:

 A Financial Literacy Guide to

 THE MINDSET LISTS OF AMERICAN HISTORY

(Wiley, 2011)…

 By Tom McBride & Ron Nief…

 Introduction: A Tour, Followed By 10 Lessons…

When we first began to write Mindset Lists about what had “always” or “never” been true for entering college students as they grew up, we little dreamed that such Lists would become so popular. And then we did not dream that we would be asked to write a book retelling American history over the past 150 years through the eyes of eighteen year olds as they grew up. And we certainly did not imagine that this book might become a way of teaching financial and economic literacy to today’s teens. But here we are.

The one hundred questions in this Guide reflect our belief that a young person today can gain financial literacy by looking at the challenges faced by young persons in the past. In effect, our method goes like this: “This is what your forebears faced; how is like or unlike what you’ll face? What can you learn from the teens of the past?”

In furtherance of this proposition, we’ll do two things in this Introduction.

*First, we’ll offer a selected tour of our book, with particular emphasis on each generation’s “normal” financial experiences.

*Second, we’ll abstract from the book the financial lessons that every financially literate young person should know.

In other words, first there is the tour, then the lessons. Let’s begin with the tour.

Every American generation since the 1880s has faced different economic challenges as it grew up. For the first generation of our book, graduating from high school in 1898, the challenge was finding a place in the first of two great American heydays: when the American economy was becoming the most dominant, efficient and productive one in the world—powered by high-tech railroads and assembly lines. New times called from new skills, and for this class those skills involved acquiring literacy and mathematics and pedagogical skills that you could get by going to “high” schools and “normal” schools; and typewriting skills that you could get by going to business school. For others, this meant going out West and seeing what could be done to make a fine living herding steers or pulling cowboys’ teeth or selling dry goods in new cow town. Becoming a telephone operator was a high growth profession. Being a scrivener, who wrote out legal documents in longhand, meant being phased out.

Then came the next generation, born in 1900 and barely missing service in the Great War, as World War I was called back then. This was a generation that had a great chance to make money by getting in on a revolutionary technology: the automobile, which spawned a thousand industries in rubber, tires, parts, gasoline, and so on and on. It, like the previous generation, had been told that in order to thrive they needed to rise at five. They were told that booze was a great impediment, not just to their moral health but also to their economic wellbeing.

The succeeding generation, which grew up during the 1920s (born in 1913), began their lives during a time of mass marketing, when for the first time there were myriad national chain stores (like A&P and Western Auto) and slick advertising that did much more than just describe the product but also tried, in our parlance of today, to “spin” it. They grew up in a society that thought it was better to have a motorcar than have a bathtub because you couldn’t drive downtown in a bathtub. While many people celebrated the new prosperity and all that jazz, and others argued about bathtub gin and feared the rising Ku Klux Klan, the backbone of all that fake prosperity was much weaker than anyone seemed to notice. While much of the country was increasingly urban, it was still a rural nation, and farmers had never recovered from a serious depression in the price of their land. Real consumer power was never as strong as the stock market’s bubble seemed to suggest, and in time a great contraction began, made even worse by mismanagement of the crisis in Washington, DC. This generation started life when times were good and graduated from high school when the grocery lines down at the A&P had become lines to the soup kitchen down at the Presbyterian Church.

The next generation, born in 1926, grew up during the Great Depression and then during World War II. Times were hard, and the war seemed at first to make them even harder, since you were not supposed to eat meat too often and were meant to turn in your front gate to aid the war effort with scrap metal. But by the time this generation graduated from high school it looked as though times were improving markedly, as indeed they were, thus paving a much easier boulevard for the next class, born in 1939.  This class, graduating from high school in ’57, grew up during the second great American economic heyday, when the United States for a while contributed, by itself, nearly a third of the world’s total output in goods and services. This was the era of comfy split level homes, weekly allowances, TVs and TV trays with newly cooked TV dinners seaming upon them, commodious interstate highways—and fathers who, newly educated by the GI Bill, were much more likely to wear a suit than a pair of overalls to work. This was the first generation to be wealthy enough to have their own disposable income—imagine that—and thus their own tastes in something called rock n’ roll.

And by the time the next generation rolled around—born in ’52 and graduating from high school in ’70—the day had come when the kids and their parents had totally divergent musical tastes. A time of untrammeled prosperity, the kids had their own cars, their own culture, and their own lingo, Daddy-o. But even as they were enjoying their way-out experiences in the secure belief that they could take time off to drop acid in a Vermont commune and still don their gray flannel suits for a good city job later, storm clouds were assembling over the American economy. The war in Vietnam that they so mightily protested did cost a lot of money, but politicians did not wish to raise taxes in order to pay for it. So they printed more money instead and thus launched the closest thing to hyperinflation in American economic history. It threatened one president, who eventually did himself in with burglaries and secret tapings; it destroyed the presidency of another, whose being saddled with rising prices and a humiliation in Iran was too much for him or the voting public to handle; and caused a third president to seem like a one-term president until, as the Federal Reserve finally tamed the inflation with amazingly steep interest rates, the economy revived and made sunny Ronald Reagan a resounding success for re-election.

But this roller coaster of high inflation and high interest rates and a staggering economy created complications for the generation born in 1965. They became the first latchkey kids, as their mothers needed to go to work during a time when the price of diapers and toys and cereal just kept going up and up. If they read the financial pages—though it is doubtful that they did—they read about new financial shenanigans such as hostile takeovers, in which bright young men raised money through junk bonds to take over companies, fire a fourth of the workforce, downsize them, and then sell them in a few years for a gargantuan profit. It was the first of a series of Wall Street “innovations,” some of which, two decades later, would have catastrophic results. By the time the next class, born in 1978, came along, financial novelty was as “in” as American steel manufacture was “out.” The era of big government was over; the business of America was business, not the social compact as expressed by the New Deal or Great Society; money and power had shifted to the Sun Belt, with plenty of air conditioning but few labor unions. Savings and loan companies got a little too frisky and had to be bailed out by taxpayers. Someone said the best way to rob a bank was to own one.

Still, times were good, propelled by a new digital technology that did for the American economy in the 1990s what the railroad and automobile had done for the American economy of a century before. Yet, as always, the hackneyed economic clouds were blackening for those who wished to see them. Computers were adding jobs but also putting people out of work. Cheaper labor overseas had gutted American manufacturing, so the national economy became one dangerously dependent on consumers and imports rather than producers and exports. Sizzling new financial products as “credit default swaps” and “bundled mortgage securities” turned out to be not quite so hot. What would happen if these companies that had been insured actually turned out to go bankrupt? And suppose all those rising home prices were as flimsy as the bubbles that used to float above the dancers on the old Lawrence Welk Show? We are finding out the answers to these questions.

So the current generation and the next one—the last two chapters of our book—may well become the first in over fifty years to be forced to grow up prudent. As the nation works off the massive debts and losses incurred during the first generation of the 2000s, this class and the next one may well come to see D-E-B-T as a four-letter word. Just as there were once thrifty Depression kids, so there may now be thrifty Recession kids. And thus the need for financial literacy becomes more urgent than ever.

But what should be the major lessons of such a financial literacy? Our view is that they must be grounded in young people’s being able to visualize how economic life works, based on their imagination and largely free of economic jargon. This is why our book is so rich in visual detail. We want readers to see what life was like back then, and we also want students of financial literacy to see what economic life is. Thus conceptualized, here are the lessons implied in our book and made more explicit in our guide.

Lesson One: Someone must always pay. From the Mindset List for the Class born in 1926: “College boys have continued to wear their $39 raccoon coats because after the Crash they could hardly afford a new one.”

This was the lesson of generation that learned that the bill for profligacy sooner or later comes due. Students need to recognize that there is a cost for everything: that just finding the key to unlock their cars, though necessary and in furtherance of the good of getting into the car and driving off, is not free. It costs time and energy. Thus young people must realize the truth of the old saw: Pay now or pay later. They can pay the price of getting career training that will get them a good living later, or they can decline to pay that price and then pay later in reduced wages and standards of living. But payment there will always be. History has proven this to be so.  That is why our very first question is about those young people who lived over a century ago with no economic bargaining power whatever, while later questions focus on the pursuit of financial goals by those who have such power.

Lesson Two: Figuring out who benefits is essential.  From the Mindset List for the class born in 1880: “Typewriters…are fast making business letters copied with perfect penmanship obsolete.”

Suddenly those who had perfect penmanship no longer had as marketable a service to offer. In every economic system a financially literate person will keep an eye on who benefits from change. No economic society has ever managed to eliminate altogether the division between winners and losers.

Lesson Three: Financial and economic goals are always haunted by the trickery of time. From the Mindset List for the class born in 1900: “Millions of children have always worked six or seven days a week for twelve hours a day in order to earn a quarter an hour.”

That generation sacrificed horribly, but fortunately American history has had a long way to go. History shows that the sacrifices of one generation may set the stage for the benefits of the next one. In the early part of the twentieth century America was like China today: hugely productive but able to plow profits back into expansion because workers were poorly paid. This created an economic powerhouse, and thus when American Progressives began to insist that wealth had to be more equally distributed or we would be near a new civil war, the previous generation’s hardships had ensured that there was at least a lot of wealth to argue about. Thus we see the play in history between a single chapter and the entire book. Personal financial decisions are likewise haunted by the exchange between short time and long time. Such choices should be balanced between this year’s needs and the coming generation’s goals. Balancing the energy of short-term wishes with the prudence of long-term planning is as hard as it is necessary, for “debt” can be both glorious and God-awful, depending on how it is managed.

Lesson Four: The law of supply and demand can never be evaded. From the Mindset List for the class born in 1978: “Game Boys have always made a cross-country trip with their parents more tolerable.”

History demonstrates that economic actors can do well if they can produce what people need or want or think they need. This ranges in our book from packaged meat to Pet Rocks to yes, Game Boys. But just having what people think they want or need isn’t enough. It is also a matter of producing it so that it is affordable and delivering it so that it is accessible. Any technology that furthers the twin goals of affordability and accessibility is going to boost an economy. Financially literate young people should reflect on what they are going to have that people are going to want or need.

Lesson Five: Times of prosperity and hardship alike can offer benefits if you know where to find them. From the Mindset List for the class born in 1926: “Empty pockets flapping inside out have always been called Hoover Flags.”

History shows that thanks to the Great Depression Americans discovered the joys of badminton and Monopoly and stamp collecting—cheap hobbies and games—and that there were more worthy books in the public library than they’d ever thought before. But during times of Great Flourishing it’s wonderful to enjoy all those creative luxuries that folks couldn’t have afforded once upon a time, such as Hula Hoops, Walkmans, and I-Pads. Times can be good; times can be hard. The point is to figure out what is affordable fun—and pursue it.

Lesson Six: Cash never really goes away—it just seems that way. From the Mindset List for the class born in 2008: “They have never seen a folded road map, a phone book…or a check.”

History suggests that generations that think of money in terms of a finite supply of dollar bills are more likely to be careful than one that views money mostly as figures on a screen. Thus the same digital technology that has created major gains in efficiency and productivity has also multiplied the number of impulse buys by overleveraged purchasers.

Lesson Seven: What goes up must come down. From The Mindset List for the class born in 1926: “When they were in their cribs land around Broadway and Wall Street was going for seven dollars per square inch.”

But the price that went up in one generation came down in the next. History likewise shows that every economic problem solved seems to lay the groundwork for a future crisis. The technologies of telephone and telegraph, which did so much for American prosperity, also led to such easy transactions on Wall Street that the whole market by the late 20s was inundated with funny money. The post-war prosperity of the 60s tempted our political leaders into thinking they could afford, without raising taxes, to end poverty at home and fight a land war in Asia—with poignant economic results. The huge gains in productivity brought by the computer also created a lag in our educational system so those without sophisticated technological skills are, today, in peril of being left on the rolls of the permanently unemployed. Thus a solution of this problem becomes the basis for the next generation’s new problem, and what goes up always comes down sooner or later. Financially literate persons are realistic about this fact.

Lesson Eight: In financial terms no person is an island. From the Mindset List for the class born in 1978: “Bill Gates has always been in the chips.”

While there are great individual success stories, such as Henry Ford and Bill Gates, all these stories are about people who operated in a context of depending upon millions of others. Ford relied on the mechanical advances made by countless others, even before he was born. He depended even on the railroad, which his cars partly displaced, to take workers to his factories and to make money for those who would eventually buy his cars. Gates leaned on an economic culture that had come to depend on the filing and categorizing of untold amounts of information, and he too was indebted to great mathematicians like Alan Turing, who established the principles by which the computer comes to “think.” Financially literate students must be able to ponder not only their own economic actions but also the numerous other economic actors to whom they are linked, whether or not they know any of them personally.

Lesson Nine: Political disputes are nearly always about who pays. From the Mindset List for the class born in 1952: “There has always been a link between cigarettes and cancer.”

This became a matter of government’s letting us know what is safe for us and what isn’t. Cigarettes accordingly became a political issue. Most political controversies come down to matters of money, and this is something a financially literate person should be aware of. We want someone to make sure that the food we eat and the drugs we take are safe, but safety isn’t free. Someone has to pay taxes in order to pay the inspectors, and passing the tests of such inspection costs the food and drug companies a lot of money. They in turn will pass these costs onto consumers.  So safety cannot be removed from economics. Thus some political thinkers believe that we need even more of safety (for the value of human health is precious) and ought to raise taxes in order to make sure of it. Others think we need it but that it can be made a lot less cumbersome and expensive. And still others think that we ought to pay much lower taxes and get along without government regimes of safety: that the free market will sort out what foods and drugs can be relied upon and which ones can’t. These political schools might be called liberals, conservatives, and libertarians. They are also arguments about who pays, how much, and is it worth it. Financially literate students should get this vital connection between economics and politics.

Lesson Ten: There’s always a catch. From the Mindset List for the class born in 1918: “Their parents were among the first to get on the new installment plans.”

But from the first folks had to look at the new contracts carefully: What happens if you miss a payment? When can the store have the legal option to take what you’ve paid so far without ever giving you the product? What are the penalties? These are called catches. They not only occur in some mobile phone and credit card contracts that young people may agree to. Catches are also ever-present in the larger economy. During the Great Depression, which the class born in 1926 lived through, when nearly everyone was poor or poorer, merchants and producers had little pricing power. In a way this would seem great, as prices will never go up and only go down. But there’s a catch, for if people can’t raise prices, they can’t make more money. They can’t increase their profit margins. And because we are linked to them, our moneymaking power goes down, too. A now convicted Illinois governor once said of an economic asset (the power to appoint someone to the US Senate), “This thing is golden.” Economics is not called the dismal science for nothing. The economic world is a fallen world. Financially literate students should be alert for finding the catch in what may otherwise appear to be golden. What sounds too good to be true is almost invariably false.

With this background here is From IOUs to ATMs: A Financial Literacy Guide to THE MINDSET LISTS OF AMERICAN HISTORY.

High School Class of 1898 (born 1880) WOMEN HAVE ALWAYS RIDDEN BICYCLES

This class saw the first real liberation of women as they were permitted to dress in looser clothes and join the men on the bike craze.

From the Mindset List for the Class of 1898: Youngsters their age have always had about a one in ten chance of graduating from high school.

*Most kids in this “high school” class never actually finished high school. Most of them dropped out by not later than age fourteen. What sorts of work did they do, how were they paid, and what bargaining rights did they have by way of getting loans?

*For this class “machines have always talked.” This is a reference to the phonograph or talking machine (later called the record player). In half a century, an ordinary record player came to be an inexpensive item for most consumers. Would you expect it to be inexpensive when it first came out?

*A key element of financial literacy is a comprehension of what products consumers want very badly, such as (in this chapter) Texas beef. What else is required to make money off Texas beef besides just having lots of people who want it?

*This was the end of the “cowboy” era in the sense of the lone horseman rounding up cattle and protecting them from rustlers. Soon cattle were herded onto large ranches, and this turned the cowboy into a more corporate “ranch hand.” What new technologies made this possible?

*From the standpoint of financial literacy and understanding how money is made, why was there such a tremendous demand for typewriters and typists?

*Farming and mining during this period became “industries”: no longer the work of lone individuals but of large groups. What are the advantages of pursuing an enterprise—such as looking for lead or growing crops—through a big organization?

*Apartments were once thought of as “mere shelves beneath a common roof” and were considered radical at the time. Can you think of examples of new technologies and ways of living that did not catch on?

*During this period 60 per cent of the population worked in agriculture. What occupations that we take for granted today that simply could not exist back then because so many people were required to work the land so that everyone could eat?

*A high school education in the late 1800s gave you the skills to read, write, and do sums very well, so you could become a salesman, an insurance man, a clerk or a merchant. Would these basic skills, which served graduates so well back then, have as much economic power today?

*Why were so many people back then paid in cash rather than in check, and was this a good thing or a bad thing?

High School Class of 1918 (born 1900) RUM HAS ALWAYS BEEN DEMONIC

This class grew up in a world of moral fervor with those who thought that America should be booze-free forever and that just one more war could end wars forever.

From the Mindset List for the Class of 1918: Their fathers might have tossed a few camphor balls in the gas tank in order to pep up the old Tin Lizzie.

*During this period you could buy, for just a single dollar, a peck of red apples, a scrub brush, three bars of soap, a can of oysters, a few dried prunes and a tin of coffee. What can you buy for a dollar now? Why have prices have gone up so much in the last 100 years?

*The Progressive Movement sought to use the power of the Federal government to protect consumers and workers, to manage the economy–and even to promote the longer chewing of food. One of their number, a man named Horace Fletcher, advocated chewing food 32 times a bite in order to promote good health. Would your doing this consistently save you money, make you money, or cost you money?

*This was a time when newspaper owners made huge amounts of money selling sensational stories to a daily audience of avid readers. Would this economic success have been possible in the America of 50 years earlier?

*By the time this class was graduating from high school, movies had become one of the top five “industries” in the United States. What would be the top five in today’s United States?

*A key feature of financial literacy is our ability to understand economic connections. For the class of 1918 what were the links between the following: incandescent light bulbs, newspaper sales, book sales, and work schedules?

*Based on your reading of this chapter and its portrait of how society was composed in the early twentieth century, what might have been lucrative occupations that would hardly exist today?

*The Progressives tried to establish some consumer protections for citizens. If in 1918 someone sold you, a farmer, a defective plow, what rights would you have had, and whom could you have turned to for help?

*Members of this class grew up with idealistic movements such as the Temperance Movement, which eventually got sales of alcohol prohibited in the United States. If today all sales of alcohol were outlawed and everyone obeyed that law, would this be good or bad for the American economy?

*Suppose you were a consumer of some means back during this time. You could always purchase an automobile in the early 1900s but then you’d have to purchase a lot of gear along with it, such as towing cable, an extra fan belt, gauges, motoring gowns, and protective glasses. What are the pros and cons of being an “early” as opposed to a “later” consumer of a new technology?

*This was the era of Henry Ford and the rise of the Model T automobile. Read the following passage from Richard Dawkins’ River Out of Eden and use your financial savvy in order to explain it: “Henry Ford commissioned a survey of the car scrapyards in America to find out if there were parts of the Model T Ford which never failed. His inspectors came back with reports of almost every kind of breakdown:  axles, brakes, pistons — all were liable to go wrong. But they drew attention to one notable exception, the kingpins of the scrapped cars invariably had years of life left in them. With ruthless logic, Ford concluded that the kingpins on the Model T were too good for their job and ordered that in the future they should be made to an inferior specification.” Why would Ford, in order to make more money, insist that the kingpins be made worse?

High School Class of 1931 (born 1913) THEY’VE ALWAYS BEEN SPOILED BY ZIPPERS

This class grew up in the first great era of mass consumption and modern conveniences—along with elders who thought the whole shift was dangerous and decadent.

From the Mindset List for the Class of 1931: You could get your dental work done at Bloomingdale’s. 

*During this period, especially in the seemingly prosperous “Roaring” 1920s, you could get your dental work done at Bloomingdale’s. Why are dental offices not located in big department stores today?

*This was a period when hundreds of thousands of people took the trains to Detroit in order to build the cars that would replace the train. Can you think of workers today using one technology in order to replace it with another?

*During this period, for the first time, these students’ parents had money that was affected by the new Federal Reserve Bank. How about your own money? What does “the Fed” do, why does it do it, and why do some people, even today, want to get rid of it?

*This was also the era that began “the installment plan.” What was this plan? What are its pros and cons as an economic strategy?

*As members of this class were growing up, people in the major cities were becoming more and more daring: with tomboy hair styles, eccentric new dances, innovative “cocktail” parties, special powder rooms for ladies, flagpole sitting as a lark, and innovative new jazz music. Why are these sorts of activities more likely during times of seeming prosperity?

*As members of this class were beginning seventh grade, a man named Bruce Barton wrote a book called The Man Nobody Knows, in which he argued that Jesus Christ was a marketing genius. Is it true that religion is, to a degree, marketed, advertised, and sold just as more material products are?

*One of the presidents during this period was a flinty old Yankee named Calvin Coolidge, who was called “a Puritan in Babylon” because while he had traditional small town values of thrift and hard work, he presided over an America that was being “spoiled” by automobiles, long distance phone lines, and even zippers! Does hard work that invents new, labor saving technology compromise the value of hard work itself?

*The year members of this class graduated from high school (1931) the Hollywood producer Samuel Goldwyn had his first picture ever nominated for an Oscar (Arrowsmith). He is supposed to have once said, “An oral contract is not worth the paper it’s written on.” Why is this both funny and yet also true?

*By the time they were in their late teens members of this class found that their “trust” in the American economy was severely shaken, as the entire system went into what is now known as The Great Depression. Yet just a generation ago there were huge business organizations known as “trusts,” such as the Standard Oil Trust. What were trusts and why were they called “trusts”? Is there anything like them in the American economy today?

*As the Great Depression began to take hold (see next chapter), the comedian Will Rogers joked, “We are the first nation in the history of the world to go to the poorhouse in an automobile.” How was this meant to be funny, and what does it suggest about economic decision- making?

High School Class of 1944 (born 1926) THE SHADOW HAS ALWAYS KNOWN

This class was the first radio generation and listened eagerly every week as the enigmatic Lamont Cranston (The Shadow) exposed gruesome villains.  

From the Mindset List for the Class of 1944: Radios have always been bigger than most toddlers.

*Members of this class were not quite starting to school when The Great Depression swooped down upon the United States and much of the rest of the world economy. What was the unemployment rate at its highest during The Great Depression? What has been the highest unemployment rate so far during The Great Recession of today? What “safety net” protections did workers have during the 1930s, such as unemployment insurance or two income families?

*Badminton became suddenly popular during the Great Depression because it was an affordable form of entertainment. In an economic downturn, if you were investing in a business or starting one, what sorts of businesses would they be?

*When members of this class were in their cribs, property on Broadway and Wall St. in Manhattan was selling for a record seven dollars per square inch—a huge amount of money. But by the time members of the class were in first and second grade, the property was selling for much less. So the land bubble burst. Why do bubbles form, what sustains them, why and how do they burst and what is the possible pain as a result?

*A huge problem during The Great Depression was deflation, in which prices keep falling rather than rising. Why would wages and prices naturally fall during a time when the economy is severely shrinking?

*Would you rather live in an economy in which prices are much more prone to fall than to rise?

*Some people think economic crashes like the one the Class of 1944 live through are ultimately good things because they force people to retrain for new jobs, pay off excessive debt, and separate productive workers from unproductive ones. How do you evaluate this argument?

*A typical early Depression scene might be the family gathered around the radio, with poor relatives having just moved into the house because they were kicked out of theirs, and everyone discretely cheering on bank robbers like John Dillinger as their crimes are being reported on the airwaves. Can you explain this scene as a product of economic deprivation?

*One risky practice of investors during this time was called “buying on margin,” which meant they borrowed money in order to buy stocks and could thus make investment bets with money they didn’t really have. Suppose every time they bought stocks they had to take actual cash out of their own wallets in order to do so? Would this requirement have promoted greater realism in the transaction?

*Because the Depression was so hard on families, they must have worked hard to figure out ways to save money or earn extra money. If you were going to try to save up to one sixth of your current money, what would you do? How easy or hard would that be?

*During the time when this class was growing up, it was common for hoboes to come to the door looking for work. Many of these had “ridden the rails”—slept in the boxcars—in order to get to a particular town, and then they’d go door-to-door looking for odd jobs. Would you be fearful if a stranger came to your door nowadays under such circumstances?

High School Class of 1957 (born 1939) FLOURIDE HAS ALWAYS BEEN CONTROVERSIAL

Having grown up in a period of post-war prosperity unlike any other in history, this class, the first teens to have disposable income all their own, endured the both the real perils and paranoid fears bred by a very Cold War.

From the Mindset List for the Class of 1957: Chips and dips in their special dish on TV trays have replaced popcorn in paper sacks on Saturday night.

*This generation were just toddlers when the nation mobilized for world war as it had never done before. How did a wartime economy affect their daily lives in terms of food, clothing, automobiles, transportation, communication, and advertising?

*It is often said that World War II—and hence Adolf Hitler and other Fascists—got the United States out of the Great Depression. What is the basis for this argument?

*Their parents lamented the government’s withholding taxes from their paychecks—something that happened for the first time as they were growing up. See if you can get a copy of someone’s pay stub, if not your own, and look at the taxes being withheld. Can you “read” the pay stub in order to decode where these taxes go?

*This class has grown up with the “norm” of relatively low unemployment and high defense budgets. Even the current unemployment rate of over nine percent—its recent high—seems to be a flesh wound compared to that of the Great Depression. Is there a relationship between fairly low unemployment and very high defense spending both during World War II, during the Cold War, and today?

*This was the first generation to get Social Security payments from a deceased parent, as many of their fathers died during World War II. What is Social Security? How is it different from, but also similar to, a group insurance policy?

*It is sometimes said that this generation as it grew up was used to seeing their grandfathers wearing overalls or uniforms—working as farmers or service station owners or mechanics or factory workers—while their fathers increasingly wore gray flannel suits on the job. What changes in the American economy—and education system—after World War II accounted for this shift in work clothing?

*This was also the generation that, by the time they were in middle school, was writing with ballpoint pens. Has the convenient ballpoint had an economic effect? Suppose an economy that had only pencils and ink pens as writing instruments. Would such an economy be handicapped?

*This was also the first generation to get a weekly “allowance,” which sometimes amounted to more than what a working person earned per week during the Great Depression. Why do you think parents who grew up in the Depression would have insisted that, though times were now prosperous, allowances should amount to a certain number of dollars and no more?

*By the time members of this class were about seven, the United States began a period of tremendous prosperity. Explain how increased productivity,  the power labor unions, government actions to heat up or cool off the American economy as conditions demanded, increased government support for education, and a Baby Boomer explosion of newborns might have accounted for such prosperity.

*Although women had worked during the war doing men’s work, such as riveting and repair, after the war they went back to the kitchen. Was there no economic demand for women’s services and products after the war ended?

High School Class of 1970 (born in 1952) MAGAZINES HAVE ALWAYS BEEN MAD

This class read a magazine called Mad, lived through the nuclear absurdity of MAD (Mutual Assured Destruction) and drove their parents mad, too.

From the Mindset List for the Class of 1970: Trusting no one over thirty, their generation’s anthem has always included “I hope I die before I’m old.”

*This class was born as part of the Baby Boom, as parents no longer delayed having children. Why did the Baby Boom happen? How would a sudden increase in the number of new children fuel the economy—and in what areas of the economy would all these new kids be a special stimulus?

*By the standards of today’s American conservative movement, income taxes were very high during the 50s and 60s, yet the United States economy continued to be the undisputed #1 in the world. How would you explain this?

*This was the first generation to become “teen-agers” in the sense of their having a separate identity with unique tastes and a lot of disposable income with which to pursue those tastes. How might this help explain the rise of rock n’ roll music?

*This generation was also the first one to pursue “way out” experiences, such as “dropping” LSD “acid” in order to get very, very high. Is this sort of thing a function of the period’s great economic boom?

*This was the first generation to make phone calls operated by computers rather than real-life operators. What are the economic implications—for good or ill—of jobs once done by human beings becoming mechanized?

*A famed artist during this period, Andy Warhol, began painting Campbell’s soup cans, calling his paintings art, and selling them for big bucks. How does the law of supply and demand work differently for actual cans of Campbell’s soup and Warhol’s paintings of Campbell’s soup cans?

*This generation’s grandparents were the first to benefit from the government’s old age program of medical benefits known as Medicare. As old people were living longer, their medical bills increased, yet they had great difficulty getting affordable medical insurance. Why did they have such difficulty? And what are the possible benefits to the economy from Medicare?

*This generation grew up during an unprecedented flight by their parents from the cities to the suburbs. What economic motives accounted for such massive suburbanization?

*When this generation was fifteen they may have seen a movie with Dustin Hoffman, who played a young college graduate advised by his parents’ friends to go into “plastics” as a growing field of endeavor. Hoffman’s character is perplexed and alienated by his advice, but might such advice have been sound economic counsel back then?

High School Class of 1983 (born in 1965) THERE HAS ALWAYS BEEN THE GRATEFUL DEAD

The first latch key generation, this class lived through scandal, divorce, stagflation and the growing likelihood that Mom would want a career all her own. 

From the Mindset List for the Class of 1983: The “typical family of four,” headed by a working father with a stay-at-home mother and two children, has always been the exception.

*This class was among the first to be part of the ecology movement from an early age, and class members can recall getting time off from school to pick up litter. The ecology movement was about other things as well, including a new government agency called The Environmental Protection Agency (or EPA). How do government regulations of the environment, the nuclear energy industry, and safety in the workplace affect the growth of the economy for good or ill?

*This class never knew an elected Snow Belt president, as all their elected presidents as they were growing up came from Texas or California or Georgia. This region was called The “Sun Belt,” and during this time it was the most economically prosperous part of the country (especially Texas, Florida, North Carolina, Georgia, and California). What accounted for this shift in economic prosperity from the Frost Belt to the Sun Belt?

*This generation was the first not to have to worry about being drafted, as the nation shifted to an all-volunteer army. How might such an army—highly trained and professionalized—be an economic benefit to the nation?

*When members of this class were just five years old—not even in school yet—the United States was no longer able to produce most of its oil within its own shores. How did this economic fact affect members of this class as they grew older?

*This might also be the first generation to experience the “vanishing” of money, as fewer people began to pay for things by cash or check but rather charged it on their plastic credit cards. It was sometimes called “sliding by on plastic.” What are the advantages for you personally in having a credit card? What are the disadvantages?

*A comic writer said about the American economy when this generation was in its teens: “This is the first time in American history when it’s cheaper to borrow money from the Mafia than from a bank.” That’s because some banks were charging up to twenty percent interest, so that if you borrowed a thousand dollars you’d get the money but would need to pay back $1,200! This was a result of the very high inflation that gouged the American economy during this period (see next question). Why does inflation produce such high interest rates?

*It’s quite possible that your own parents were born in this generation—or around 1965. If so, then chat with them about their own economic experiences of growing up during a time of inflation—and even of “stagflation,” as inflation was so bad that it was also a drag on the growth of the economy. As kids, were your parents aware of these trends, or did their circumstances shield them for the effects of such unfortunate patterns? Were your parents or grandparents born around 1952 or 1939? Ask them about their own economic experiences growing up; above all, perhaps, ask them about how they’ve managed their own economic lives, as they’ve gotten older.  How did they decide what to purchase, what fields to go into, and what debts to incur? What lessons can you they teach you?

*Would this inflation have contributed to a major development as the Class of ’83 was growing up: the departure of women from the kitchen to the work force and the rise of the two-career family?

*As members of the Class of 1983 were growing up, the “back to nature” movement that started in the previous generation became commercialized. Thus the simple virtue of “Earth Day” was expressed in commercially produced “Earth Shoes” and the love of natural rocks was expressed in a gimmicky product known as “Pet Rocks.” Both products fizzled in time. Can you think of other non-commercial cultural movements that came in time to be commercialized for profit, and is this a good thing or a bad thing?

High School Class of 1996 (born 1978) MICHELANGELO HAS ALWAYS BEEN A TURTLE

In love with video games, comforted by Mr. Rogers, and instructed by Yoda and Miss Piggy, this class came of age in a second American Gilded Age.

From the Mindset List for the Class of 1996: Game Boys have made many a cross-country auto trip with their parents more tolerable.

*This generation grew up in a time of financial and commercial innovation. For instance, television and musical videos came together as never before on a cable channel called MTV (Music Television), and the old DJs (Disc Jockeys) become VJs (Video Jockeys). Would such a commercial novelty never have developed without the advent of cable TV? Would it have never happened had the country stayed with the same three mainstream networks?

*As members of this class were in grade school a new financial innovation was called “the hostile takeover” or “leveraged buyout.” “Raiders” bought up most of a company’s stock with money gained from sometimes high-risk bonds. Once they had control of the company they “downsized” it (another new term), apparently made it leaner and meaner by firing unnecessary workers, and then sold it for a profit. If you were planning to “take over” your friend’s summer lawn-mowing business (or other summer business), how might you make it more valuable by making it more efficient?

*This generation grew up with a crisis in the savings and loan business, as many S&Ls went broke. But the government had insured the deposits of their customers. What are the pros and cons of such government insurance of bank and S&L deposits?

*This was also a period when small drug, clothing and grocery stores started to vanish, as the little “Mom and Pop” stores were displaced by big box chain stores such as CVS and Cub Foods. Who loses, and who gains, in such a development?

*This generation’s grandparents actually outlived the Soviet Union. It is said that the Soviet Union crashed and went out of existence because a capitalist system rewards self-interest and production of wealth in a way that socialism does not. Is this true?

*One of the major sports developments during the Class of ‘96’s growing up was the rise of “free agency” in baseball. This meant that ball players were free to sell their skills to the highest bidder without interference from their current team. What are the pros and cons of this freedom for both players and the sport overall?

*According to this chapter one of the gurus for this generation was Miss Piggy, who told the kids it was OK to be insecure and needy and keep trying to get what you need. Is this also good financial advice?

*A bad thing for an economy occurs when people no longer demand products, or when everyone is under-consuming. This chapter gives two examples of how economic actors tried to increase demand for two ordinary products—shampoo and water. They blended shampoo with fruit and put water in handsome, sleek plastic bottles. Can you think of other packaging that seeks to increase demand for a product?

*This was the age of the new Walkman (no longer made). People wanted a Walkman because it made taking exercise a lot less boring. How might this development be a plus or minus, both in the long run and short run, for an economy?

*As the class of 1996 was growing up, China became a major economic power by producing cheap goods at a cheap price, paying their workers very little, and then plowing the profits back into ever expanding manufacturing. We think of capitalism as being based on individual freedom, but has China become a capitalist powerhouse by denying their workers economic freedom in the form of low wages and thus underselling the global competition?

High School Class of 2009 (born 1991) THEY’VE NEVER DIALED A TELEPHONE

This class, the first fully digital generation, learned to type at a computer keyboard as soon as they could stand, never wrote in cursive, and may now be cursing an economy that has gone on a long, long recess.

From the Mindset List for the Class of 2009: They can’t figure out why anyone would bother to print out a whole set of encyclopedias.

*This generation was also the first to have sent an email before they got out of elementary school. What has been the role of computers and the Internet in creating the prosperity that, until recently, they have grown up in?

*This generation has also grown up during a time of major “globalization,” which means among other things that American industries can “outsource” jobs overseas, where labor costs are much cheaper, and therefore produce goods at cheaper prices that are very affordable to American consumers. How is globalization good, and how is it bad, for the American economy?

*The authors write of this generation, “One of them might set a Guinness World Record for multi-tasking.” Is multi-tasking “productive” or “inefficient”? And does productivity in the work place, where more work is done in a shorter time, help keep prices low?

*This was the first generation to grow up with Caller ID. What are the pluses and minuses of Caller ID for the American economy?

*During this period both governments and households took on too much debt, and the economy is now dealing with the misery of the aftermath. But can debt, properly managed, be a good thing?

*Because this generation may have gotten into high school and college with less money than it expected to have—thanks for the economic downturn that started in 2008—it may have had to budget more carefully and make a distinction between monthly expenses that are fixed and those that are varied. Can you make such a distinction in your own budgeting?

*Although every generation since the 30s has had the chance to read Consumer Reports and get ratings on various products as to quality, durability and safety, this generation was the first to grow up getting CR very easily via the Internet. Pick a product you might be interested in buying and check CR’s commentary on the various brands. Do you find their methods objective? Do their conclusions make it easy for you to decide which brand to buy, or do you need to consult other ratings agencies?  Must you still make your decision based on other things as well, such as personal preference and overall cost?

*The authors say that, thanks to the Internet, “memory has always been doubling.” Does someone have a better economic future these days if he or she knows information or can find information, or neither or both?

*The chapter title is “They’ve Never Dialed a Telephone” in the sense that we don’t have rotary dial phones any more but push buttons in order to call the numbers.  Did you know that when area codes came into existence in the 1960s the larger populations were served by the lower the numbers on the dial? For example, New York’s was 212 and Chicago’s was 312. That’s because with more people dialing those numbers the rotary needed the shortest possible time to make its return. Does this strike you as a good business principle as well? Do you observe this principle in every day economic life?

High School Class of 2026 (born 2008) THEY’VE NEVER NEEDED A KEY FOR ANYTHING

This class will be known as the first “virtual” generation, which means they will rarely touch a newspaper, sign their names, miss out on computerized travel more real than the “real” thing—or need a key for anything.

From the Mindset List for the Class of 2026: Carpal thumb syndrome is a universal malady that afflicts mostly adolescents

*This class was born in 2008, one of the bleakest financial years in living memory, when a major investment firm failed, major banks had so much bad debt that they might have collapsed without government loans, and the economy began bleeding jobs. Assuming bad economic times, what age would you prefer to be when living through them?

*In this chapter the authors predict a “paperless” world—no maps, no phonebooks, and no checks. Is the absence of checks going to be a good thing or a bad thing for you or for the larger economy?

*The authors predict that Africa will rival Latin America in supplying fruits and vegetables for the American table. Think about what it takes to grow, process and ship fruits and vegetables, and then list the sorts of things African countries must do in order to succeed in this business.

*This class was born during a period with the Federal government’s debt—what it owes to those from whom it has borrowed—is several trillion dollars. Now that class members are three years old this figure is $14,713, 528, 176, 528.70. Can you grasp what this figure entails? For instance, someone with 528 million dollars (a small portion of our national debt) can make millionaires of 528 people if he or she gave away all his or her money. How many people can someone with 713 billion dollars make millionaires? Yet 713 billion is still only a relatively small portion of our national debt. So how many people can someone with 14 trillion dollars make millionaires?

*One of the economic theories of this period has been one from Chris Harris, and it is the theory of “the long tail.” Harris predicts that relatively small numbers of consumers can now find “niche” products, thanks to the World Wide Web, and that producers can therefore make a good living providing these niche goods and services to small audiences. Can you think of a product that a small, but still sufficient, group of consumers would be willing to purchase in order to make you a decent living?

*The high school class of 2026 may be growing up with a company called Groupon, of which you may have heard. Their model for making money goes like this: Groupon asks its customers if it would like to purchase a coupon for a discounted product (meal at a fine restaurant, fancy bicycle, and so forth). If enough people do so, then they all get the discount. If not, then they don’t. A key economic strategy is one in which all parties in a financial transaction profit and by which working together they can increase the size of wealth for all. How might the Groupon model be an example of this principle, as the company, the customers and the producers of the product (meal, bike, etc.) all profit?

*Some experts predict that your generation, as well as the one set to graduate from high school in 2026, will come to maturity in a generational war: that an aging population that lives longer is bound to soak up most of the nation’s resources through government health care and social security, leaving little for your gang when it gets old. Is there anything you should or can start doing soon in order to prepare for this possibility?

*Other observers think that the coming generation will even be able to throw away their plastic credit cards and do all their consuming via mobile phones. (It is said that even ATM cards will no longer be necessary but that people will be able to access cash by using their cell phones as a sort of remote control.) This will make buying even easier than it is now. Is going to be a plus or minus for the economy?

*As you think about the future of the American economy, which of these do you see as its greatest challenges to growth: the rising price of energy; the replacement of human workers by digital technology; or competition from cheaper workers abroad; all of the above; none of the above; something else?

*Members of the high school class of 2026 may well grow up in a more ethnically diverse society. It is predicted that brown and black skinned people will be the American majority by the middle of the twenty-first century. Many people think tolerance of different sorts of people—live and let live—is an ethical virtue. Might it also be an economic virtue, rooted in economic self-interest and the endeavor to make money?