Mises Daily Articles
Capitalism for Kids
Parents and non-parents alike should quake in fear at the methods in which our young people are being taught in school, both public and private. In the public school systems, we see all children learning in conformity with the "lowest common denominator," while in private schools, the children are brainwashed with the "community service" mantra and all other forms of political correctness. What is a capitalist parent to do?
Try going to your local Target and picking up, for less than 50 bucks, a copy of the CD-ROM "Roller Coaster Tycoon." This innocent-looking child’s game will provide all of the basic training in economics, marketing, and business management you could hope for in freshman-level college courses. The only difference is that this format makes learning these subjects fun, intuitive, and easy to understand.
Perhaps your children already have this game, and you haven’t really paid much attention to it. You should. Not only will you find it fascinating, but you might actually learn (or relearn) a thing or two. This is pure capitalism at its best: you design a theme park, complete with all of the real-life accompaniments (information booth, souvenir and food stands, walkways, queuing lines, restrooms, etc.), and try to satisfy customers.
The more interesting the rides, the better the food, the more efficient and well planned the layout, the happier the customers will be. The happier they are, the more money they spend. The customers’ happiness, however, is also somewhat dependent on how much money you spend designing and operating your park—just like real life. And, ultimately, the more money they spend, the larger your profit should be. (There is even a handy Profit and Loss statement available any time you want to "count your money," a nice intro to accounting for kids.)
Just as in real life, there are costs associated with all activities needed to build and maintain a business. You must take out loans to pay for your capital expenditures like roller coasters, infrastructure, and common areas. Your revenues are offset by operation costs (e.g., hourly expenses to run the equipment, personnel costs, construction costs, costs of food/beverages/souvenirs). Your revenues come from several sources. For example, there may be an entrance fee, which you set, to get into the park; each ride may have a cost associated with it; food/beverages/souvenirs all have prices.
The program is extremely flexible, allowing you to change prices "on the fly." Let’s say that it starts raining (the program is always tossing in changing variables, much like real life). You just go in and raise the price of umbrellas and make a killing. (This was my seven-year-old’s idea.) It is extremely logical.
In addition to weather (is it hot or cold, rainy or sunny, what is the forecast?), other game variables include queues for rides/attractions, and how the rides are designed. (You can really micro-engineer the coasters for maximum effect; there is even "vomit," which must be cleaned up by your maintenance crew if the rides are too violent.)
It is up to the player to act—or react—to these variables. If your queue is very long for one particular ride, raise the price. Depending on the price elasticity, you may be able to increase your profit per hour with fewer riders. (Again, a lesson imparted to me by my seven-year-old.)
There are some effective marketing lessons imparted as well. Each customer in your park has a number, and by clicking on your customer, you are treated to a host of marketing information, such as how the customer is feeling (happy, sad, frustrated, hungry, bored); how much money this customer came with, has spent and has left to spend; what types of rides the person likes; why the customer came to the park; etc. You can respond to these bits of data in appropriate and effective ways (e.g., quickly plop a hot dog stand down near a hungry person).
There are also "marketing awards" that pop up periodically, depending on the overall opinion of your customers of your park, such as "value for the money." These awards will affect the customers attending your park, and it is important to maintain a good reputation and develop brand-name capital. Other, more subtle, marketing-type decisions include where to locate various kiosks and rides for maximum exposure and value to your customers and how to lay out your park for efficient flow of customers and their dollars.
Finally, there are innumerable real-life features of the game that any of us would be hard-pressed to explain to an elementary-aged child. Employee efficiency, for example, is called into play when various rides break down and your current maintenance staff is nowhere to be found (i.e., wandering around, taking a break, in the wrong part of the park).
You begin to lose revenue immediately until the ride is fixed, so you end up hiring more staff—at an additional expense, of course. You are given objectives at the start of the game, so you have a goal to work toward. And the most important lesson of all is learning the concept of "what price the market will bear." I doubt if any of these concepts are being taught in schools today.
The idea of teaching these valuable concepts to children in a rational, nonthreatening, and interesting way should be attractive to any parent or adult who cares about the future generation and its ability to understand some basic principles of economics and business. Let’s help our children realize that "learning" isn’t about preventing loggers from chopping down rainforests and figuring out how to recycle dad’s beer cans; it is about logic, thinking, and using their brains to solve problems. I’d allow this software package to take the place of a propaganda-spouting public school social studies teacher any day of the week.