Economics 640: Domestic and Global Business Environment

Spring Semester, 2009Towson University

Instructor: Howard Baetjer, Jr., Lecturer, Department of Economics Office: Stephens 123H Phone: Office: (410)-704-2585              Home: (410)-435-2664 (No calls after 9:00 p.m.) Email: hbaetjer@towson.eduWebsite: http://pages.towson.edu/baetjer/ Office hours: Wednesday and Thursday 1:45-3:15, and by appointmentPREFATORY ACKNOWLEDGMENT

It is a privilege for me to teach this course again in spring 2009, after teaching it in spring 2007 and spring 2008. The course has been developed over the last several years at the University of Baltimore by Professor Barry Brownstein. This syllabus is almost entirely his; I have made small adaptations to my own teaching style. As the joint UB/Towson MBA gains momentum, I thank Prof. Brownstein for his guidance and the opportunity to follow in his path.

INTRODUCTION

omestic and Global Business Environment is a course that draws on economics as its primary discipline. The course also draws on management, ethical, philosophical and psychological theories. Current

problems and lessons from history are woven throughout. The emphasis is on developing an economic framework for understanding the domestic and global environment of business. At the same time, implications of this framework for business management are continually drawn.

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At the beginning of the 21st Century, it has become clear that whether we are talking about central planning in markets or command and control management techniques, hierarchal systems have severe limitations. More than ever competitive advantage depends upon being able to utilize and grow new knowledge. But as Cowen and Parker point out: Too often the long and narrow management channel in command (and control) firms leads to new ideas being cut off before they reach board levels. As Dee Hock, the founder and former CEO of Visa International put it: We can't run 21st Century society with 17th Century notions of organization. The business environment our organizations find themselves in has rapidly changed, and this course will give you an understanding of how to navigate this new territory.

The course begins with a discussion of spontaneous and planned orders and the role of beliefs in economic paradigms and human action. We introduce ethical

Professor Baetjer, Econ 640 Syllabus, Spring 2009

perspectives and consider property rights. We examine the "use of knowledge in society" and the capacity of the market process to coordinate individual action. We consider leading-edge management theories, such as market-based management. Mastery of this framework yields insights into systemic domestic and global processes that result from the decisions of individuals, corporations and governments. These systemic processes create the dynamic environment of business. The framework can be applied to business management and regulatory and ethical issues such as international trade policy, environmental problems and health care issues. The course is also designed to build critical thinking, writing and dialogue skills. These skills include the ability

to uncover and articulate hidden beliefs and assumptions behind judgments, decisions and actions;

to recognize faulty reasoning and biases in perceptions; to trace through cause and effect beyond primary effects to secondary

effects and thus to analyze systems; to reframe a problem from many points of view; to synthesize ideas in writing; and to engage in active and empathic listening and productive dialogue with

others.

Throughout this course students will have opportunities to reflect on their own beliefs and professional and ethical values. Students will gain a deeper understanding of the mental models in their own minds and what is truly meaningful to them. They will have opportunities to reflect on such values as integrity, self-reliance and independent judgment; responsibility for our judgments, decisions and actions; commitment to life-long learning and understanding; and appreciation of the impact of one’s actions and decisions on others.

This course is challenging. Diligent students will find that learning the economic framework and practicing the skills demanded in this course will increase their capacity to analyze past, present, and future problems in the domestic and global environment of business. I believe that your understanding of the theoretical tools and practical skills taught in this course can continue to deepen and grow throughout the rest of your lives. Using the framework leads to understanding and to valuable insights that provide a foundation for responsible managerial decision making.

Course Goals: Econ 640 is designed to provide students:

A rich understanding of the economic and business environment. The course design stresses analytical, synthesizing and evaluative skills thus ensuring that long after the semester ends students retain “ownership” of important core concepts useful in their professional careers.

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An interdisciplinary framework, which while focusing on economics, also exposes students to cutting-edge management theories.Learning skills, useful in their education and professional careers, such as writing skills that involve synthesizing and evaluating, dialogue skills, critical thinking skills and respect for life-long learning.

Objectives: Econ 640’s specific learning objectives are that upon completion of this course students will be able to:

Evaluate the connection between their paradigms and their attitudes and behavior in decisions having economic, managerial, and ethical components.Examine the relationship between order and control in markets and organizations.Recognize how simple rules such as property rights promote healthy economies and healthy business cultures.Examine the use of knowledge in society and organizations.Appraise the role of entrepreneurial alertness in a market economy.Assess the conditions that promote discovery in markets and inside the firm.Analyze the role and impact of prices and profits in a market economy.Evaluate cutting-edge management theories, such as market-based management, that are related to the economic framework.Assess the role that the "rule of law" plays in the market and in a business culture.Analyze the entrepreneurial discovery process and the effects of government regulation on this discovery process.Analyze international trade issues.Appraise regulatory and ethical dimensions of such domestic and global issues as health care, environmental problems, and globalization of markets.

TEACHING METHODOLOGY

This course utilizes lecture, dialogue and small group exercises. In every class period, I will both lecture and engage in a dialogue with students. The small group exercises, lectures and class dialogue are intended to promote students’ understanding of the material. This understanding should continually evolve throughout the semester.

I believe that in an effective classroom the professor and students create synergies. Together we will engage the ideas of great thinkers and in the process examine our own beliefs. When we learn together there is inspiration and excitement. To remain fresh and vital my teaching must be informed by your interests and questions. My ideas and those of the authors of the course reading

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material must mingle with your words and thoughts. Your own external and internal conversation with these ideas is where learning takes place.

Books and readings have been carefully selected to expose students to the works of original thinkers. Readings and lectures are designed to lead students toward a rich understanding of the framework the course presents. Students are required to analyze these works in order to understand elements in the authors’ arguments. Then, going beyond analysis, students must strive to uncover common threads across these works and so to synthesize these elements into a whole perspective on the domestic and global environment of business.

HOW TO MAXIMIZE YOUR LEARNING

This course is designed to provide a rigorous and stimulating graduate education experience. To realize the benefits of this course you must be an active learner, analyzing and synthesizing readings, lectures, and class discussions. The following are steps that you can take to maximize your success this semester:

Approach learning as a discovery process. Understanding is not something you either have or do not have; instead it is a continuing process that goes as far as your effort. Revisit many of these readings before and after we discuss them in class. Your understanding will increase with each reading.

Go beyond rote memorization of the material. Strive to acquire an integrative understanding of all you read.

Complete all assigned readings on time, before coming to the class in which they are discussed.

As you read, note the ideas the strike you, your understanding of the authors’ argument, common threads across readings, and questions that the readings raise for you.

Budget sufficient time outside of the classroom to insure a timely completion of all assignments and readings.

Attend all classes and arrive to class on time. While last-minute emergencies are part of life and understandable, a work schedule that consistently prevents you from fulfilling your obligation to this course will interfere with your success in this course. Please don’t disrupt class by coming late.

Adopt a study pattern that does not attempt to cram reading or writing assignments.

Think broadly about the readings and classroom discussion. Broad-based critical thinking will increase your enjoyment of the material. Enjoy this learning experience without feeling any obligation to accept any particular idea.

Treat your classmates respectfully, even when you do not respect their views.

Listen actively and empathetically as you talk with your classmates.

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In all written assignments, express yourself in a grammatically correct and literate fashion. Mechanics, tone, and coherent sentence and paragraph development will have a substantial effect on your grade.

COMMUNICATIONS AND STUDENT SUPPORT

For the fastest response students are encouraged to communicate by email at hbaetjer@towson.edu. When email is not possible try to reach me at my office phone. You may call me at home, but not after 9:00 p.m. Fee free to make appointments by email for any mutually convenient time, including before or after class.

Prof. Brownstein’s PowerPoint slides from three springs ago are available in our WebTycho course site in Course Content. Professor Brownstein’s home page, http://home.ubalt.edu/bbrownstein, provides sample student papers from previous terms.

If you are a new student, you should receive an email from WebTycho with your login information. If you have changed your email address you will miss the email. You may login to WebTycho at http://ubonline.tycho.ubalt.edu. Your username is your PeopleSoft login ID. Your initial password is the last four digits of your 7 digit UB Student ID number. See p. 11 on how to find your student ID information in PeopleSoft. I use your email address in WebTycho for broadcast communications. Always keep your email up to date in Tycho.

It is my privilege to help facilitate your learning. You are always welcome to send an e-mail or visit with me to clarify coursework, assignments and grading criteria and/or to discuss ways to improve your written work and class performance or to visit about any other concerns.

REQUIRED BOOKS:

Brownstein and Brownstein: Discovery and the Market Process: Toward an Understanding of the Business and Economic Environment, Third Edition (McGraw-Hill 2005; ISBN: 0-07-354212-1) Note: Earlier editions of the reader are significantly different and not recommended for class use.

Roberts: The Choice: A Fable of Free Trade and Protectionism, Revised Edition (Prentice Hall, 2001) ISBN: 0-13-087052-8. I have not ordered this through the bookstore, please get it on your own. Amazon.com has plenty new and used.

I strongly recommend daily reading of the Wall Street Journal. I read it almost every day and find that there is news and analysis in the Journal that I cannot easily receive elsewhere. A link to steeply discounted student subscription rates is on my home page http://pages.towson.edu/baetjer/.

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Professor Baetjer, Econ 640 Syllabus, Spring 2009

GRADING:

This course is designed to reward you for demonstrating that you have read and prepared reading assignments on time. Grades for this course will be based on students’ scores on (1) group dialogue (2) class dialogue, and (3) two essays as follows:  First EssayGroup DialogueClass DialogueFinal Reflective Essay Total

  24%  25%   18%   33%  100%

A note on attendance: Attendance as such does not count. On the other hand, attendance is necessary for earning credit on everything that does count. Accordingly, poor attendance will be very costly to your grade. Do your best to make every class. Arrive on time and stay the entire time. Anyone who misses more than two or three classes is unlikely to pass the course and should withdraw.

Learning in this course depends on actively, thoughtfully grappling with the ideas presented in the readings. Good preparation is essential. Preparation for class includes completing the assigned readings on time and analyzing and considering each reading for its contribution to an integrative whole.

You will demonstrate your engagement with the readings in four ways, each of which has a grade as described here:

First essay (24%) - The first is the completion of a ten page (more is acceptable) (doubled-spaced) essay in which you analyze and synthesize readings in this course. To analyze means to demonstrate that you comprehend central ideas and that you can express them in terms that are meaningful to you and to the reader of your essay. Your analysis of the main ideas conveys your understanding of: 1) the framework for reasoning that the course is building, 2) essential elements in the works of the authors, and 3) the relationships among these elements under the umbrella of the framework. To synthesize means to: 1) recognize common threads across readings and, 2) combine diverse elements into a new whole. Strive to make meaningful statements about insights you have gained that demonstrate your mastery of the analytical framework. Attached to this syllabus is a copy of the comment sheet that I will use to provide you with feedback on your essays. The criteria used to grade your written work are itemized on the comment sheet. Note also the scores that correspond to letter grades. The due date for this writing assignment is March 24, the first day back from Spring Break. Please do not put your name anywhere on your paper. Identify yourself only with your PeopleSoft ID (e.g. 1027384) (not your User ID).

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The first essay includes readings up to and including Surowiecki: “The Difference Difference Makes.” Your first essay should be inclusive of most or all of the readings to this point in the term. Please carefully review the grading criteria comment sheet beginning on p. 12. It is for example critical that you make specific references to the course reading material in your essays. It is easier to write an excellent essay when you make the material personally meaningful by applying it your professional or personal life or an area of special interest to you.

Class dialogue (18%) - A second way to demonstrate your engagement with the readings is by contributing to the class dialogue. Strive for class dialogue that advances your understanding and that of your classmates. Share your thoughts about the readings; relate readings to your personal experience or other reading that you have done; share genuine and thoughtful opinions; restate your understanding of the thoughts expressed by your classmates or the professor; ask for clarification; pose probing questions; respond to the probing questions of others; uncover, articulate, and challenge assumptions; and propose alternative interpretations based upon reasoned analytical thinking. The quality of your comments is foremost. The expression or adoption of unsubstantiated positions will not make a positive impression.

Group dialogue (25%) - A third way to demonstrate your engagement with the readings is by contributing to meaningful dialogue in group exercises. The group exercises are in this syllabus. Each student will be assigned at random to a group that will meet for in-class discussion exercises throughout the semester. The professor will observe each group and note the contributions made by each member. Evidence of active listening, critical thinking, and dialogue skills will also be noted. Students are expected to bring their books and study notes to these group meetings. Sharing quotations from the readings that helped form your position helps to facilitate your understanding and the group dialogue. For each exercise, the group will consider thought questions related to the readings. The role of presenter will rotate week to week. The group presenter will prepare a three to five minute, informal report to the class on his/her group’s work.

(I will grade the performance of the group as a whole, but each student will earn an individual grade for his or her contribution to the group. At the end of the term, I will apportion the credit earned by the group among its members, based on group members’ judgments of the contribution made by each. I have a tried and true device for this that I’ll explain toward the end of the term.)

Web conference - One supplementary way to demonstrate your engagement with the readings is to participate in the web-"conference" dialogue for Econ 640. You may share relevant links and observations, discuss current events, post your ideas concerning the readings, post questions, post answers to questions etc. The resulting Conference will be the result of your efforts. This ongoing student dialogue is intended to be similar to your group exercises but is not

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limited to the exercise questions. It is intended to be all-encompassing of the course material. I will be monitoring the dialogue but will not participate much. Courteous, decorous behavior similar to that in classroom discussion is expected in the web conference.

Final reflective essay (30%) - In this essay you will demonstrate your mastery of the course material and reflect on what you have learned over the semester. You will be asked to compare and comment on your answers to a self-assessment questionnaire administered during the class at the beginning and end of the semester. The essay should be at least 10 double-spaced pages.

Before writing your essay, analyze your responses on the pre- and post-course self-assessments. Observe items on the questionnaires for which your answers changed and items for which your answers remained the same. Many items on the questionnaires are related to each other; you should be able to see the items that cluster together.

YOUR REFLECTIVE ESSAY MUST DEMONSTRATE YOUR MASTERY OF THE COURSE IDEAS. For items on the questionnaire for which your answers remained the same, discuss specific readings from the course that contributed to your deeper understanding. For items on the questionnaire for which your answers changed, consider specific readings in the course that contributed to your new perspective.

Do NOT discuss the items from the questionnaire one-by-one in the order in which they appear on the questionnaire. Instead, discuss clusters of items which you see as being related to each other. Organize your discussion in a coherent manner. The self-assessments are intended to help stimulate your thinking on the major issues in this course. They are not intended to place boundaries on how you write a meaningful final essay.

Like the first essay, this final reflective essay should synthesize and analyze the material and demonstrate genuine personal reflection and insight. Use appropriate footnotes or endnotes. The quality of your discussion, not the positions you hold, will be evaluated. The criteria used to evaluate the paper are the same as for the first essay(s).

Do NOT put your name on your essay. Identify your paper only by your UB PeopleSoft Student ID number (e.g. 1027384). Good luck with this final assignment!

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Professor Baetjer, Econ 640 Syllabus, Spring 2009

ACADEMIC HONESTY

Although plagiarism is uncommon, it is important that I bring this to your attention. The University of Baltimore and Towson University have similar policies on academic dishonesty. Plagiarism is a violation of the academic integrity policy. The penalty for plagiarism is failure of the course and notification of the appropriate university authorities.

Copying from any source without giving credit to the author constitutes plagiarism. Paraphrasing, even with a citation, usually constitutes plagiarism. Be very careful not to paraphrase or else to do it acceptably. For clarification of this point, I recommend the discussion and examples at http://library.csusm.edu/plagiarism/howtoavoid/how_avoid_paraphrase.htm#. Plagiarism includes but is not limited to copying or paraphrasing papers of previous students, or using without credit material found on the Internet. As graduate students, you are responsible for knowing what plagiarism is and never plagiarizing.

COURSE OUTLINE(THE NUMBER, IN PARENTHESES, IN FRONT OF A READING REFERS TO THE

ASSIGNMENT NUMBER OF THE READING AND TO THE CORRESPONDING GROUP EXERCISE; AN * IS USED TO DESIGNATE OPTIONAL READINGS)

PART I: ECONOMIC FRAMEWORK FOR UNDERSTANDING THE DOMESTIC AND GLOBAL BUSINESS ENVIRONMENT

1. KINDS OF ORDERS IN AN ECONOMY; THE ROLE OF THE INDIVIDUAL, BELIEFS AND PARADIGMS IN ECONOMICS AND ETHICS

Brownstein and Brownstein: Pages 3-120 including:(1) Wind, Crook and Gunther: “Our Models Define Our Worlds”(1) Ellinor and Gerard: “The Connection Between Conversation, Leadership, and Cultures of Collaboration”(1) Ellinor and Gerard: “What is Dialogue?”(1) Suarez, Mills and Stewart: “Wisdom, Insight and Psychological Change”(1) Hayek: “Cosmos and Taxis “(1) Pascale, Millemann and Gioja: “Self-Organization and the Corporation(1) Regine and Lewin: "Wizards and CEOs" http://www.plexusinstitute.org/ideas/show_story.cfm?id=16

(2) Emerson: “Self-Reliance”(2) Hayek: “Individualism: True and False”

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Professor Baetjer, Econ 640 Syllabus, Spring 2009

2. THE NATURE OF RIGHTS AND JUSTICE

Brownstein and Brownstein: Pages 121-194 including:(3) Rothbard: “Justice and Property Rights”(3) Lissack and Roos: “Use Simple Guiding Principles”(4) Hayek: “‘Social’ or Distributive Justice”

3. THE USE OF KNOWLEDGE IN SOCIETY; THE ROLE OF PRICES; THE MEANING OF COMPETITION.

Brownstein and Brownstein: Pages 197-259 including:(5) Hayek: “The Use of Knowledge in Society”(5) McMaster: “Design for Emergence”(5) Surowiecki: “The Difference Difference Makes”(5) Peters: “Violent Market-Injection Strategies”(5) Sanders: “Butterflies and Hurricanes”

First Essay Due: March 24th. Analyze and synthesize all readings up to and including “The Difference Difference Makes.” Identify your paper by your PeopleSoft ID number only (e.g. 1027384) (this is not your User ID).

4. THE ROLE OF DISCOVERY, PROFITS AND THE ENTREPRENEUR IN A MARKET ECONOMY; DISCOVERY AND THE INTERNAL BUSINESS ENVIRONMENT

Brownstein and Brownstein: Pages 260-395 including:

(6) Kirzner: “Uncertainty, Discovery and Human Action”(6) Von Mises: “Profit and Loss”(6) McMaster: “Organising For Forever”(6) Gilder: “The Enigma of Enterprise”

(7) Gable and Ellig: Introduction to Market-Based Management(7) Seifter and Economy: “Put Power in the Hands of the People Doing the Work”(7) Hock: “The Chaordic Organization: Out of Control and Into Order” http://www.fastforwardblog.com/wp-content/uploads/2008/11/dee-hock-the-chaordic-organization.pdf

5. THE RULE OF LAW AND REGULATION

Brownstein and Brownstein: Pages 399-468 (8) Hayek: “Planning and Democracy”(8) Hayek: “Planning and The Rule of Law”(8) Lindsey: “The Rule of Lawlessness”

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(9) Kirzner: “The Perils of Regulation: A Market Process Approach”(9) Levy: “Microsoft Redux: Anatomy of a Baseless Lawsuit” http://www.cato.org/pubs/pas/pa352.pdf(9) McTigue: “Alternative to Regulation: A Study of Reform in New Zealand” http://www.cato.org/pubs/regulation/regv21n1/21-1f3.pdf

PART II: MORE DOMESTIC AND GLOBAL APPLICATIONS OF THE ECONOMIC FRAMEWORK

1. INTERNATIONAL TRADE/GLOBALIZATION

(10) Roberts: The Choice(10) Goklany: “The Globalization of Human Well-Being” http://www.cato.org/pubs/pas/pa447.pdf

2. ENVIRONMENTAL ISSUES

Brownstein and Brownstein: Pages 469-506; including:(11) Anderson and Leal: “Bureaucracy vs. Environment”(11) Anderson and Leal: “Homesteading the Oceans”

3. HEALTH CARE ISSUES

Brownstein and Brownstein: Pages 507-537; including: (12) Blevins: “The Medical Monopoly”

Important Dates:

First Essay Due: March 25, at class time

Last Class: May 5

Final Essay Due: Friday, May 16, 1:00 p.m.

Because the final reflective essay is due after the last class, toward the end of the semester I will give you instructions on how to submit it.

Identify your essays by your PeopleSoft ID (this is not your User ID) number only. To locate your UB PeopleSoft ID (e.g. 1027384), for use on essays, I think this will work: Log on to PeopleSoft (https://myubtowsonmba.ubalt.edu/dana-na/auth/url_11/welcome.cgi , click on “My Page” at the top left, then click on “What is my employee ID/student ID?” in the right hand column.

Your Student ID (seven digits) is not the same as your login user ID.

Course grades will be available on PeopleSoft shortly after I post them.

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TOWSON UNIVERSITYECON 640 - SPRING 2009

COMMENTS ON ESSAY ASSIGNMENT

CONTENT: CAN IMPROVE ON:

____ Setting forth a main theme synthesizing the assigned reading material. The theme should demonstrate genuine personal reflection and insight. The theme should also demonstrate a very good understanding and synthesis of the major ideas in the source material.

___ Supporting the main theme by analysis of the essential elements used by the writers of the assigned reading material. Errors in the substantive interpretations of this source material should be minimal.

____ Using and including specific references to the assigned reading materials that contribute to the development of the theme. Ideas in the source material should not be taken out of context in order to give superficial support to the writer's own interpretation.

____ Conveying an understanding of the framework for reasoning that the course is building.

____ Developing the paper with appropriate and specific details, examples, quotations, illustrations, anecdotes, and the like. These are drawn from class readings, class discussions, personal insight and from other appropriate source material.

WRITING: CAN IMPROVE ON:

____ Organizing the paper. The paper should be coherent and well organized so that from sentence to sentence and paragraph to paragraph the main theme is well developed and supported. Appropriate transitions link the parts of the paper.

____ Conveying ideas in meaningful terms. There is no overly general or unnecessarily abstract wording. Superficial jargon and padding should be absent. The paper should not rely upon lists of items when interpretation is called for.

____ Observing rules of grammar, punctuation, spelling, word usage, and sentence structure. Editing should be more complete.

____ Using footnotes (or endnotes) appropriately to document quotations or major ideas attributed to particular writers. An acceptable and consistent style must be used for footnotes (or endnotes).

PEOPLESOFT ID _________________ NAME: ________________________

GRADE: __________

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Professor Baetjer, Econ 640 Syllabus, Spring 2009

GRADE SCALE:

Remember learning is a process. By composing your ideas carefully, you will come to understand and enjoy the course material better, and you will likely earn a higher grade.

A grades – 90% or higher (A -= 90-92%) Papers in this category respond fully to the assignment by both analyzing and synthesizing the source material with understanding, creativity and reflection. A main theme is well developed and well supported. Writing is coherent, meaningful, and virtually free from errors in mechanics, sentence structure, etc.

B grades – 80%-89% (B- = 80-82%, B+ = 87-89%) Papers in this category reflect a fairly good understanding of the assignment although they may not be as thorough as an "A" paper in the analysis and synthesis of source material. The integrating idea may not be as thoughtfully or carefully developed as in an "A" paper. Writing is not overly general or abstract and is largely free from serious errors in mechanics, etc.

C grades – 70%-79% (C+ = 77-79%) Papers in this category show difficulty managing the assignment. The main integrating idea may not be sufficiently developed and/or supporting analysis may be thin. There may be some errors in interpretation of source material and/or source material is not always utilized appropriately. The paper may be difficult to read; the writer may have needed to spend more time composing his or her thoughts and editing.

D grades – 60%- 69% (D+ = 67%-69%) Papers in this category are largely unresponsive to the assignment. Source material is not adequately analyzed and/or synthesized. The writer's main idea is generally unclear and difficult to follow. Many errors are made in the interpretation and/or utilization of source material. Writing may be incoherent and/or serious errors may be made in mechanics, sentence structure, etc.

F grades – less than 70% Papers in this category are poor, unacceptable.

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