Economics should go back to school

Understanding the private sector – and the prosperity it provides for millions of Americans and others around the globe – is one of the best kept secrets there is in today’s schooling. Unfortunately, economics is nearly invisible in elementary school – crowded out by a heavy emphasis on teaching reading and mathematics.  In high schools, things are better but not much. 

Most Americans will spend their entire work lives participating in the private sector. People employed by government, in turn, receive income derived from taxes on businesses and individuals.  In this fashion, the majority of American households depend directly or indirectly on a viable private sector for their wellbeing, yet fewer and fewer have a solid grasp of basic economic principles. 

{mosads}The study of economics most often entails a focus on how the private sector functions largely through its reliance on private property, enterprise, markets, competition, profits, limited government, and voluntary cooperation brought about by free trade.  

A 2016 survey released by the Council on Economic Education shows that 20 states require students to take a high school economics course before graduation. That is down two from 2014.  This is particularly important because most students who go on to college will never take an economics class.

It gets worse. Most media professionals, members of the clergy, and teachers – the opinion leaders in our communities – rarely study economics as part of their professional training.

We are left to wonder: How can the institutions of a free-market economy be sustained if our schools offer scant opportunities for in-depth instruction in the subject?  With limited formal instruction during years of schooling, wouldn’t we expect that voters would eventually support policies that are inefficient and detrimental to economic growth?

{mosads}The evidence is now at hand.  Economic freedom in the United States has been declining. 

Most economists agree that a nation’s basic political and legal institutions are fundamental to long-term economic growth and prosperity.  The widely respected Economic Freedom of the World Report (EFW) (Gwartney, Lawson & Hall, 2015) identifies these institutions as political stability, secure private property rights, freedom to trade, competition, the profit motive, and legal systems based on the rule of law. 

To the extent that these institutions are present in a given society, that society enjoys economic freedom.  High levels of economic freedom lead to long-term investments in physical and human capital and subsequent economic growth.  The EFW and numerous other studies reveal that a high level of economic freedom is associated with many positive outcomes such as higher per capita incomes, longer lives, higher income for people in poverty, higher levels of political and civil rights, less government corruption and more people satisfied with their lives.

The United States, historically one of the world’s freest economies, is quickly losing ground.  The EFW (2015) results show that the ranking of the United States, among 157 countries and territories, has fallen from second in 2000 to eighth in 2005, to eighteenth in 2010 and sixteenth place in 2015. 

Polices that undermine economic growth can, of course, be changed.  Voters who understand a thing or two about how the economy works might be inclined to elect officials who could put us on a more positive path to growth.  But, just how are the voters going to learn economics if it is rarely taught. Instilling strong economic understanding in our society begins at the most basic levels of education. Clearly, economics needs to go back to our schools.

Mark C. Schug, emeritus professor at the University of Wisconsin-Milwaukee, has written and edited over 200 articles, books, and national curriculum materials, including co-author of Economic Episodes in American History (Wohl Publishing).