The economic crisis has been truly depressing. Not just for the obvious reasons—the shuttered businesses, the lost jobs, the depleted retirement funds—but also for a less apparent one: It’s a reminder to many of us who follow politics of just how little we know.
When it comes to discussing the economy and how to fix it, I’ve come to realize that I have no basis for evaluating arguments, judging the right policy, or even understanding what’s going on in our country.
Among Americans, I suspect that I’m not alone. I nod my head, as if I’ve known it all along, when one of my smarter friends explains to me that unemployment is a lagging economic indicator. I do know that the housing market and too many foreclosures are largely to blame for the recession, but I don’t know why that’s the case. I read one op-ed that explains why the stimulus is needed, and find the argument compelling; the next day I open the paper to find an equally compelling explanation for why the stimulus will spiral us further into debt and fail to achieve its goal.
I’m not stupid, and neither are the millions of other Americans who find the economic crisis as confusing as I do. What we are is ignorant—ignorant of one of the most important academic disciplines: economics.
In a 2006 paper, Bryan Caplan and Stephen Miller, economists at George Mason University, identify four incorrect assumptions that Americans have about the economy, each of which has important political implications. (For one thing, Americans are too suspicious of the free market.)
Their findings are borne out by scores of public policy issues on which the views of economists and those of Joe Six-Pack sharply diverge. The vast majority of Americans support a relatively high minimum wage, for example; economists, on the other hand, are about evenly split, with a large proportion wanting to scrap a wage floor altogether. Most voters are concerned that globalization leads to outsourced jobs; economists, on the other hand, are almost unilaterally in favor of removing barriers to free trade.
For economists, the crafting of public policy can be frustrating—their professional opinions are often tossed aside in favor of positions that might hurt the economy but help politicians’ reelection chances. The solution to this is not hand-wringing over elected officials who support bad policy—after all, politicians have to be responsive to the views of their constituents. The answer is to educate the public in sound economics.
We can start in elementary school. Don’t get me wrong—I don’t mean to propose teaching first graders about monopsony or Pareto efficiency; rather, I envision lessons based around the discipline’s most basic principles. In the same way that the fundamentals of highly complex fields like math and chemistry are taught, the basic ideas of economics—supply and demand, prices, and competition—are actually quite conducive to elementary education. In turn, high schools should require that students learn more advanced economic principles, as well as practical personal-finance skills.
Spending more time on one subject would, by definition, take time away from another. But it’s a trade-off worth making. As it stands, social sciences in K–12 education focus too much on history—an important subject, no doubt, but one that could be slightly shortened without major loss. Moreover, economics can be integrated with other subjects: civics, math, and the aforementioned history.
Giving the citizenry a solid foundation in economics will reap a wide array of benefits. On an individual level, Americans will likely make smarter decisions as consumers, perhaps avoiding things like the sunk-cost fallacy. On a political level, they will become more informed voters, better understanding arguments from both sides, as well as the inherent trade-offs in policy-making.
It would also allow politicians to be more honest. During the buildup to the Ohio Democratic primary, for example, President Obama claimed that NAFTA was “devastating” and “a big mistake.” But when the election was over and enough anti–NAFTA votes were safely in hand, Obama sheepishly admitted that “Sometimes during campaigns, the rhetoric gets overheated and amplified.” In other words: “Don’t believe what I said when I was campaigning.”
Given the circumstances, it’s hard to blame him. He wanted to win the election and wants to make good policy, two goals that too often compete. And that is what requires action—action that will someday make pandering for votes go hand-in-hand with good economics.
— Matt Barnum is a fourth-year in the College majoring in psychology. He is a member of the Maroon Editorial Board.