## Classroom Experiment 2: Learning through Experience

### by Fred E. Foldvary, Senior Editor

I again ran classroom experiments in two classes, simulating an economy. In each, I divided the class into three districts: lowtech, middletech, and hightech. I used money from the game "Monopoly" as the currency. The consumer goods were small individually-wrapped chocolate candy bars.

Each student in the low-technology district would be paid 50 dollars, the middletech students got \$100, and at hightech the income was \$150. The low-tech district was rent-free, and there would be one landlord in each of the other districts, who could charge whatever rent he wanted. The landlords were selected at random by a roll of dice.

In the first class, the landlord of middletech declared a rent of 10 dollars, and then the landlord of hightech declared a rent of 50 dollars. The middletech landlord could have charged as high as \$50, but evidently did not want to appear greedy. If he charged a rent of more than \$50, the students could move to rent-free lowtech. So economically, of the \$100 in middletech, \$50 was an economic rent, of which \$40 was retained by the tenant and \$10 paid to the landlord. Given the rent in middletech, the hightech landlord could have charged as high as \$60, but chose to take only \$50.

The students were first offered a choice of how to elect a government, either by district elections or by the class as a whole. The majority chose mass democracy, the whole class electing three representatives to a council. But nobody volunteered to be a candidate, so there was no government. After each student was paid, they in turn paid rent to the landlord. They then bid in auctions for the consumer goods, the small chocolate bars. The hightech landlord had about \$500 to spend, versus only \$50 per student in lowtech, or as much as all the lowtech students together. So he was getting most of the chocolate bars. The students in lowtech, however, formed buyers cooperatives, so they could successfully bid for some of the candy. But the landlords ended up with more candy.

The students had learned that rent was the income above the rent-free margin and could be collected for the benefit of all the community. In their reports on the simulation game, they wrote that the game had shown them that when the landlord could collect the surplus income, it did indeed create large inequalities. Some students had asked before why, if collecting rent for common benefit was such a good idea, why is it not done? I now pointed out that they themselves had not done it!

A lesson of the game was that a root cause of the inequality, and the failure of the class to change the status quo to sharing the rent, is ignorance and apathy. Though they had learned about rent in theory, it took the actual practice to fully realize the effects. And it requires an aroused citizenry to take the initiative to change the status quo, otherwise apathy will let the landlords reap where they have no sowed.

In the second class, three students volunteered for the three government council positions. The council then enacted a flat ten-percent tax on all income. So not only did the lowtech students have the lowest income, but after paying tax, they had even less, \$45. Even after paying income tax, the landlords still had much of the money and got a large share of the chocolate bars.

The government too bought some candy, but they spent it all on the government officials. Besides paying the council members, the government also appointed tax collectors to enforce the income tax, and these officials got paid too. So the only students who benefited from the income tax were those in the government. The rest of the class only lost income.

In their write-up, students in this class realized that their government was corrupt. What can we learn from this? First, if few citizens get involved in governance, the government officials get monopoly power and can serve their own interest instead of the public interest. But more deeply, it showe d that the at-large voting was a failed system. If they had elected representatives by district, the lowtech representative may have blocked the income tax and instead attempt to share the rent.

Mass democracy, even in this small population, failed in both classrooms. Voting in small groups may have radically changed the outcome. And the realization that much of the wealth would go to a few persons may have spurred some students to enter the government to do something about it. It shows that passive learning is not enough; active learning by experience helps bring lesson home.

Copyright 2001 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.