Lessons Learned Camp Gives Students A Look At Capitalism

Courtney Badger is learning a hard lesson about the business world.

High Notes, the fictional radio company she and nine other high school students are charged with running, is projecting $205,000 in profits after its first year.

That means $82,000 in income tax.

”$82,000? For income tax?,” said the astonished Badger, a 15-year-old from Walla Walla. “You can buy a house with that.”

Badger’s introduction to the realities of capitalism didn’t end with taxes. As part of the Business Week summer program, which ends at Gonzaga University today, teenagers from across Washington received a crash course in everything from profit and loss to pensions and 401(k)s.

Founded in 1976 by the Association of Washington Businesses, the Business Week program spends a week in Spokane and two weeks each in Bellingham and Ellensburg every summer, immersing high school students in business fundamentals.

“The idea was that kids coming out of high school don’t have enough information about business and economics,” said Steve Hyer, executive director of the program.

The cost for most students is $75, while 600 Washington businesses contribute another $325 per student to pay their way.

While many of the participants are interested in careers in business, the program isn’t just for budding entrepreneurs, Hyer said.

“No matter what they do out of high school, they’ll be involved in business,” he said. “The more they know about profit, the better employees and students they will be.”

While the program included presentations by real-world business leaders and tours of local companies, the centerpiece of the week was the computer-simulated corporations the students ran.

Divided into 20 groups, the students were responsible for every facet of the company.

As they munched Twizzlers and animal crackers in their dorm room headquarters, the High Note group debated everything from choosing a company name to budgeting for marketing and quality control to weighing the value of campaign contributions.

By Wednesday, or four quarters into their simulated two years of business, High Note was hitting the high notes. Its stock price, calculated by the computer, had climbed from $132 to $183 and earnings grew to $93,000 from $50,000.

But by Thursday, High Note stock tumbled to $119 and its market share slipped from 13.4 percent to 9.2.

The problem was how the company responded to the post-Christmas lag in sales.

“We overspent on marketing, and we didn’t produce enough units,” lamented Gina Lee, from Seattle.

“We made them want it, but we couldn’t give it to them,” explained Heather Holmes from North Bend.

On Friday, however, High Note fortunes had turned again, and spending on quality control and research and development had reduced production costs so their factory could run at full capacity.

After seven quarters, High Note’s earnings were at $1.4 million, and when the group’s adviser posted their final stock price of $251, they gave a loud cheer.

While the team celebrated its turnaround, the students recognized that the simulation wasn’t the real world.

Chris Baker of Tumwater explained why the company decided to fund its employees pension plan without debate.

“In the simulation, it rewards you for doing the noble thing,” he said. “We just made a judgment about the program.”