The past two articles on Keynesian Economics and the World Bank might be tough for some teens (and some adults, like myself) to understand. Sometimes it's easier to use current examples to comprehend how a principle or an institution works. The exercise below can be accomplished with your older children and a search engine, and it might help reinforce what we've learned within the past couple weeks.

First, we need to remember the philosophy behind Keynesian Economics. Four demands depend on each other to operate smoothly. These demands are consumer, government, investment, and export. The government is expected to stimulate economic growth when the other demands falter.

We're going to use a search engine to find news, because it's faster, more convenient, and the news is posted frequently. We use either the Yahoo or Google search engine, because both carry news articles for any given topic at the top of each search page. The topic itself may not carry its own news items; so if you fail to find news the first time, try various keyword searches. If we type "world bank" into one of these two search engines, we'll see current news about or from the World Bank listed at the top of the page, including the date and time the news story was submitted.

These articles for BUYandHOLD are written in advance, so our news will be a bit older than what you view today. We found the following current news items about the World Bank:

• World Bank Urges Mideast Peace - The Age (Australia)
• World Bank Begins N38.3m Electrification Project in Abia - All Africa.com
• Unhappy with World Bank, some try to choke off its funding - Originally from The Guardian (U.K.), reprinted in TaiPei Times (Taiwan)

We continued to search for tax news, so we typed "bush taxes" in the search engine and came up with the following current headlines:

• Bush Lauds Congress for Cutting Taxes - Reuters
• News analysis: Bush cuts taxes but backs away from reform - International Herald Tribune
• Bush tax plan hardly qualifies as fair, relief - Alameda Times-Star Online

Now we'll analyze these stories to better understand them. We used the "who, what, when, where, how, why" method to understand each article. These are the same questions journalists ask themselves when they write articles, and we know we'll find answers in the news items because of this practice. If you find adjectives or adverbs in the article, or a particular slant to the information, you'll know you're reading an editorial, not a news article. The editorial is an opinion piece. For this project we're searching for news - just the facts.

We already know "when" the story was written, so that question is easily answered. The next questions we ask about these articles are "where" the articles were printed, and "who" wrote the news. The first topic, the World Bank, gave us headlines from local papers all over the world. The second topic about President Bush and the new tax cuts were printed in international news mediums and local U.S. papers. This tells us both topics were printed in areas where the news impacted reader lifestyles.

Next we ask "what" the news is about. Although we were searching for just two topics, the three returns for each topic showed three different "slants" on the news. This was more obvious with the World Bank than it was with the tax cuts. The World Bank topic gave us various news stories about this institution's activities throughout the world. The tax topic varied on different ways to look at one news item. Each headline is designed to tell us what's in the article. We know the headline, "Bush Lauds Congress for Cutting Taxes" will tell us something different than "Bush's tax cut plan: results may vary."

"How" the story made news is important. If we look closer at the news article about Bush lauding Congress for tax cuts, we find this story made the news because the tax cut was specifically structured to stimulate economic growth. This is news, because the U.S. economy is still sluggish, and the tax cut is supposed to help remedy this situation. "Why" this news about tax cuts is simple if we apply what we learned from Keynesian Economics. Let's take one quote from this Reuter's news story, and break it down even further, so it's easier to understand:

"The bill lowers the top tax rate on dividends and capital gains to 15 percent through 2008 and accelerates scheduled income tax cuts. It also includes tax breaks for businesses to encourage investment in new equipment and provides for checks of up to $400 per child to be issued in 2003."

The first sentence breakdown tells us the government bill (who) will lower top tax rates on dividends and capital gains and accelerate income tax cuts (what) through 2008 (when). This will happen to American companies (where) when they file their taxes (how). "Why" this news is important is because government demand is encouraging investment demand. The growth of investment demand will supposedly stimulate consumer demand.

We can take the next two sentences and analyze them the same way. The biggest news for the consumer in this paragraph is the $400 child support in 2003. This gift is also designed to encourage consumer spending. Whether we buy socks and shoes or stocks that pay dividends is up to us, as long as we spend.

Since we now understand Keynesian Economics, we know the government will go into debt when they grant these tax cuts. A few sentences later in this story we find this quote: "Straight after approving the cuts, the Senate voted to raise the U.S. debt limit by a record $984 billion." We can pat ourselves on the back for understanding our country's financial workings.

Next week we'll look at the IMF and their objectives, so we can learn more about how the whole world operates within this structure.

Until then,
Linda Goin