Capitalism for Kids

REDWOOD CITY, CA – The bell rings, and a gaggle of energetic sixth graders pour into Mike Harris’ math classroom at North Star Academy public magnet school. These kids are bright
– they must meet entrance qualifications based on six different academic factors – but like most children, they have little idea about the workings of the free-enterprise system. That’s about to
change because of BizWorld, an innovative two-week curriculum that should be called Capitalism 101 for kids.

In Bizworld, the brainchild of successful investment wiz Tim Draper, students work in teams to start and run their own businesses producing friendship bracelets made from colored
string. The students assume different roles, such as CEO, CFO, and marketing head. Team representatives pitch their products to a venture capitalist who decides how much financial backing
to give the team in exchange for shares in their company. Using these funds, students then pay labor, material and assorted other costs to produce and sell the bracelets.

In Harris’ class, the student teams dive into pitch sessions that address their company’s leadership, design ideas, teamwork, and marketing. One team, understanding the concept of market segmentation, jots down that they have a “variety of bracelets that appeal to different groups.” Harris warns students that the
investment money from the venture capitalist means the investor gains some control of their company. The team reps then pitch to the venture capitalist, parent volunteer Sarah Blatner, who invests more in teams that emphasize elements such as high quality employees. Blatner, who has a son in the class, says he “can’t wait to come to school because of BizWorld.”

Students write memos that address topics such as intellectual property rights, business success measures, and the production
process. Teachers and students discuss concepts such as incorporation, revenue, expense, profit, salary, rent, loss, pricing structure, and scarcity. Students learn that maximizing profits
means keeping revenues high and expenses low, and that successful companies treat employees well and demonstrate good business ethics.

As children learn to be entrepreneurs, they also learn subject matter required by the state’s rigorous academic content standards. This is critical because standards-aligned instruction
improves student achievement. For example, the state math standards in the upper elementary grades require students to compute large or small numbers, and understand the
relationship between decimals, fractions and percents. A BizWorld homework question assignment asks students: If a teacher needs to borrow $3,273.67 to buy computers at 12.5
percent interest, but the school board gives him 25 percent of the computer cost amount and he raises $1,500 through school fundraisers, how much in interest fees would he save?

The students also meet key state standards in algebra, statistics, data analysis, probability and mathematical reasoning. Harris says that BizWorld’s math elements make students adopt
“the discipline of having to do one step, then the next step, and then the next step, everything follows, if you make a mistake
back here you got to go back and start over.” In other words, BizWorld isn’t just another busywork creative activity.

Harris says that BizWorld’s best outcome is that students understand the whole process of business. He loves sales day when his sixth graders have products worth six hundred
BizBucks, the curriculum’s play money, and fourth graders, armed with only four hundred of the play dollars, are let loose in the classroom. He says that supply-and-demand laws are fully
on display as bracelets go from full retail to discounted to out the door in 20 minutes.

“In this era of standards and accountability, being able to have BizWorld’s level of engagement and relevance to curriculum
is what we are after,” says Ann Campbell, superintendent of the Portola Valley school district near Stanford University. Indeed, smart kids with business savvy are exactly what our
nation desperately needs if we’re to maintain our international economic leadership.

Lance T. Izumi is the director of Education Studies at the Pacific Research Institute.