What is FINRA and what do they do? We briefly looked at this organization in our readings and discovered that it protect investors. I wanted to see FINRA in action.

This article explains  what FINRA does and this short video explains FINRA’s basic purpose.

With institutions as large as financial markets, it is difficult, but vital, to have FINRA. Knowing little about the financial markets myself, I would feel uncomfortable trusting money to people I have never met. The existence of fraud should necessitate caution at every corner (see here)  

The question then becomes, why is FINRA so important. Using what we learned in commerce about the time value of money, hoarding cash will not maximize its future value. Without FINRA or a regulatory body, the risk of fraud would prevent investment. This harms the investor as well as companies. The investor would be unable to expand the value of their money. The company could not use this money to expand and better the economy.

People should feel their money is safe and be protected from fraud. FINRA provides security for investors, and harshly disciplines companies that misbehave.

In last weeks tutorial, we discussed the current deadlock in American economy.

I think this article has some very practical and wise advice for the Republicans, yet it also raises some larger issues. If the Republicans don’t back out, it will cause enormous harm to the American economy, and that is not in the best interests of American citizens. Obamacare has been passed democratically, however the Republicans are so set against it that they will not compromise. This is illogical for a 3 main reasons

1) The 800,000 workers out of a job are not likely to forget why they were put out of a job in the next election

2) If the Republicans refuse to make a deal by accepting the budget and raising the debt ceiling, they will be responsible for the great economic disruptions that ensue.

3) It goes against democratic principles! Americans voted the Democrat government into power. holding the country captive is irresponsible and does not benefit the people (especially in a country that is “by the people and for the people”).

Stop stalemating! Every day that goes by is hurting American citizens!

Stop playing chicken! We are not in kindergarten anymore! Get over it and move on!

Is merit-based pay for teacher a good idea?

The fraser institute thinks so (article 1) and so does the state of Louisiana (article 2). At first glance it might makes sense. An economist would probably tell you that people are motivated by incentives so merit-based pay would improve teaching and therefore education.

Why is such a value proposition flawed?

1) There needs to be consistent criteria for measuring merit of a teacher. It cannot be on students evaluation of a teacher or the teacher would cater to pleasing students rather than teaching effectively. It cannot be a non-standardized testing method or else teachers will simply inflate their students grades to earn more money. Thus we are left with standardized testing. This leaves teachers with little ability to diversify curriculum and the teacher ends up teaching towards success on the test rather than on learning for learning’s sake.

2) Unions are against merit-based pay. Unions would lobby it to death because the teaching union pays on seniority, education, and job category.

3) There is an assumption that money is sufficient motivation especially in the amounts of a few hundred dollars. Other factors such as purpose, autonomy and mastery are intrinsic motivators. In fact, money as a motivator has been shown to decrease performance in tasks that require cognitive ability.

The carrot and the stick are outdated. In this case, the carrot is simply harming students and teachers.