Freedom 's Sound - Izzit.org

FreedomFreedom’s Sound s Sound

The purpose of today’s activity is to take a lookat the effects of liberty and free trade,on a piano company in Estonia.To better understand what happened,it is important to know certain key terms.We’ll break into groups, define the terms,and share the definitions.BlueBlackWhite

Key Terms(Think, Pair, Share)Soviet Union (Union of Soviet Socialist Republics)Following the Communist Revolution led by Vladimir Lenin in 1917, Russia mergedwith the Ukrainian, Belorussian, and Transcaucasia republics to form the SovietUnion. During World War II the Soviet Union took control of the Baltic Republics,including Estonia. In 1991 a number of constituent republics declared theirindependence, and the USSR was officially dissolved on December 31, 1991.Communism/Socialism/Central PlanningA system of economic organization in which the ownership and control of the basicmeans of production rest with the state, and resource allocation is determined bycentralized (government) planning rather than market forces.Market Economy/Free MarketsA method of organization in which private parties make their own plans anddecisions with the guidance of unregulated market prices. The basic economicquestions of consumption, production, and distribution are answered throughthese decentralized decisions.

InnovationThe introduction and adoption of a new product or process; theeconomic application of inventions and marketing techniques.EntrepreneurA person who innovates and decides which projects to undertake.A successful entrepreneur’s actions will increase the value ofresources and expand the size of the economic pie.ProtectionismThe advocacy, system, or theory of protecting domestic producersby impeding or limiting, as by tariffs or quotas, the importation offoreign goods and services.

TariffA tax levied on goods imported into a country.InflationA continuing rise in the general level of prices of goods andservices. The purchasing power of the monetary unit, suchas the dollar, declines when inflation is present.Free TradeTrade between nations without protective tariffs or quotas.DemocracyGovernment by the people, exercised either directly, or throughelected representatives; majority rule.

FREE TRADE &ENTREPRENEURSHIP

Thought: Thought: Thought: What What What are are are the the thepros pros pros and and and cons cons cons of of of working working workingin in in a a a group group group at at at school? school? school?As you watch Freedom’s Sound, think about thebenefits of Free Trade if you were . . .BLUE = an employee at Estonia Piano CompanyBLACK = a supplier to the companyWHITE= a customer in Chicago

VIEWVIDEOand complete the viewing guide(*GROUPS)*Groups:Blue Group = #1, 4, 7, 10Black Group = #2, 5, 8, 11White Group = # 3,6, 9, 12

DISCUSSION Questions1. Describe what life was like for Estonians during the years of Communist rule.2. “Just to buy an orange, you had to know someone…” Explain.3. What are bread lines?4. What do you think would have happened to the EstoniaPiano Company if Indrek Laul had not initiated all of thechanges to the product? Why?5. What makes it possible for Estonians to buy the very best materials,improve their products, and sell them to the rest of the world? Whywas this impossible under Communism?6. Not only consumers, but also workers benefit from free trade. Explain.

7. How has the rest of the world benefited fromEstonia’s entrance into the global marketplace?8. What are incentives? Why was there no incentive toimprove products under Communism? What was missing?9. “Without free trade, I don’t think the Estonia PianoCompany would even exist.” Explain.

10. After gaining independence, how long did it take for Estonia to transformitself from a Communist country to a democracy with free trade competing inthe global marketplace? What drove the transformation?11. Estonia now ranks very high in both freedom and competitiveness. IsEstonia achieving its goals better than other nations are achieving theirs, ordoes it just have different goals? Explain.12. How does free trade lead to both higher quality products andlower prices?

L = LEARNEDExample: results from BusinessManagement studentsEstonia Piano Company• Production:– From 500 per year to only 49 in 1994 afteryears of government control• Indrek Laul:– concert pianist and– Julliard School of Music graduate– Worked at piano factory as a young man,demonstrating pianos– In 2003 he gained controlling interest in thetroubled company– PRESIDENT & owner!

L = LEARNEDPROs for Entrepreneurs• Opportunity to learn• Identity and ownership that allowsthem to prosper• Opportunity to earn a living for self andfamily• Use imagination / creativity / skills• Take risks and possibly fail . . .• Reap the rewards if successful

Buy the bestL = LEARNED• Benefits of FREE TRADE– consumers’ gain AND– workers’ gain• (look at his face as he says “They’regood because I make this piano.”)• A new, free Estonia, has theoption to buy the best materialsfrom anywhere in the world

“PEOPLE are theworld’s ultimate resource.”Freedom’s SoundFree Trade & Markets“The promise of this dreamhas been a reason to live.”Venno Laul

Questions? Comments?• Option – View the film again,• Complete missing sections of theviewing guide if / as necessary,• View with an eye toward definingthe benefits of Free Trade as anoverarching concept• NEXT – Quiz ☺

QUIZ1. T / F Estonia has a long history ofindependence.2. T / F As soon as Soviet rule ended, theEstonia Piano Company immediately becamea successful, globally competitive company.3. T / F Indrek Laul was appointed by theEstonian government to run the EstoniaPiano Company.

Multiple Choice

Fill in the Blank6. Not only consumers, but also ______________benefit from free trade.WORKERS7. Indrek Laul, president of Estonia Piano Company,FREE TRADEsaid, “Without _________ _________ I don’t thinkour company would even exist right now.”

Short Answer8. What was Indrek Laul’s one-word answer tothe question of how to save the EstoniaPiano Company?QUALITY9. According to Johan Norberg, with the rightinstitutions (democracy, free trade, freemarkets) what has Estonia shown the world?FREEDOM WORKS!

Apply the concepts:Since Estonia’s government does not regulatethe quality or the price of pianos, whatprevents the owners of the Estonia PianoCompany from using inferior materials andfrom charging unfair prices for their pianos?Producers must compete against one another to sell theirproducts to consumers, who takeprice and quality into account when making their decisions.Remember, consumers VOTE with their DOLLARS;each answers the question “what is best for ME . . .What do I want to do?”

Participationis thekeyto harmony

Extension Activities

Computer Apps Extension ActivityAccess the web sites of several competing online businessessuch as amazon.com and barnesandnoble.com.Compare the prices of at least 10 of the same items. Forexample, search each site to find the price listed for the newest"Harry Potter" book or a new comedy on DVD.Next, develop a database program that catalogs each item, theprice from each web site, and the difference in price.Include in the database a category for types of non-pricecompetition such as shipping within 24 hours.Analyze the results – where would you choose topurchase each item; why?

Business Math Extension Activity 1Based on the following information,• calculate the unit price of each item, and• determine which price is the most competitive• explain your process and rationale:Business A—4 widgets for $9.55Business B—3 widgets for $6.99Business C—2 widgets for $4.69Business D—5 widgets for $12.25Answer KeyBusiness B—most competitive price of $2.33 each($6.99 ÷ 3 = $2.33)Business A—$2.39 each ($9.55 ÷ 4 = $2.387 or $2.39)Business C—$2.35 each ($4.69 ÷ 2 = $2.345 or $2.35)Business D—$2.45 each ($12.25 ÷ 5 = $2.45)

Business Math Extension Activity 21. Country Z charges a $36 tariff for 1. Answer: $7,128each Calculationston of asgrain it follows:imports.Country X exports 66 tons of grain to country $36 Z x 66 per = $2,376 month. per monthHow much$2,376has country Z collected in grain tariffs from country x 3 months =X after $7,128threemonths?2. Answer: $1,430,455; trade surplus. Calculation as follows:2. This year, country FTR’s imports $1,430,455total = difference$1,245,467, between imports andits exportsexportstotal $2,675,922. What is FTR’s balance 3. Answer: of 477.66 trade? Calculation Is FTR as experiencing follows: atrade surplus or a trade deficit?*The balance of trade is the difference between imports and+6571,433 = total tons exportedexports. A trade surplus occurs when the country exports more than itimports.1,433 divided by 3 = 477.66 average tons exportedKey:2. Answer: $1,430,455; trade surplus. Calculation as follows:$2,675,922- 1,245,4672784983. Farmers Best Business exported 278 tons of corn in June, 498 tonsof corn in July, and 657 tons of corn in August. What is the averageweight of their monthly corn export?

Business Internship Extension ActivitySelect five products that your employer sells, or you’ve purchased recently.Determine if the goods are domestically produced or imported from othercountries. If possible, identify from where the items came.Now examine the customer base. Who (primarily) buys the products from youremployer or local store? Investigate further to determine if your employer/storeexports the goods to international customers or if the products are sold to adomestic customer base. Record your information as below. Share andcompare your findings with your class. Analyze the overall results.SUPPLIERCUSTOMERProduct Import Domestic Export Domestic1.2.3.4.