“Economic illiteracy is dangerous,” warns economist Todd Buchholz. “I can ride on a roller coaster without understanding centrifugal force… Physics can protect me, whether I believe it or not. But if I ignore basic economics, I could go broke. And if a country ignores basic economics, it could go bankrupt.”
These observations about economics are profound. Nations (and individuals) can rise or fall depending on their knowledge of economics. When people don’t understand economics, they gullibly embrace “quick fix” promises (such as government “stimulus” schemes or minimum wage laws or paper money printing) that make problems multiply and worsen.
Why else do you think the Biden administration officials would claim that some $4 trillion in proposed new government spending would cost “zero” (as the President himself has claimed)? They’re hoping that enough people will know so little economics that they can get away with it. The fact is, to argue that $4 trillion in spending is costless is self-serving malice, and to believe it is boundless stupidity.
In my memory, one of the worst examples of bias in economics textbooks came from Principles of Economics, 12th Edition (1985), written by the late Paul A. Samuelson and William D. Nordhaus. Writing about the economy of the Soviet Union (which died an overdue death six years later), the authors claimed that “there can be no doubt that the Soviet planning system has been a powerful engine for economic growth.”
Perhaps Samuelson and Nordhaus were only counting Soviet missiles. They certainly didn’t consider life expectancy or the average standard of living, both of which had been stagnant or falling for years. Students were given the false impression by that awful text that central planning commissars knew what they were doing, when in fact they did not. The Soviet economy was a trash heap, producing little for which there was demand beyond its own barbed-wire borders.
Errors abound in the economics texts students are reading. What follows is a sample of other statements I found over the years—statements that do not inform students, but instead mislead them.
“As societies become more complex, the need for government power tends to increase.” From Sanford Gordon and Alan Stafford’s Applying Economic Principles, this statement was tossed out in a matter-of-fact fashion, as if it’s beyond dispute. Have these authors studied the abysmal track record of government planning in the 20th century? Either they didn’t, which would be bad enough, or they did and simply chose to lie about it.
The philosopher Leonard Read, founder of the Foundation for Economic Education where I served as president for 11 years, pointed out that the impossible task of one person planning the life of another is made even more complex when a handful of people in government set out to plan the lives of millions. “No mind of man,” Read noted, “nor any combination of minds can even envision, let alone intelligently control, the countless human energy exchanges in a simple society, to say nothing of a complex one.”
As societies become more complex, it’s not government power that we need more of. What politician or bureaucrat is more able to plan your life than you are?
“Despite fears by some Americans that governmental tampering with the free enterprise system would be harmful, most government policies have met with success.” David E. O’Connor teaches this to high school students in his text, Economics—Free Enterprise in Action.
Government doesn’t always fail, but the track record hardly suggests that “most” of its policies have been successful. Education? Studies show the more government spends and regulates, the worse the schools become. Monetary policy? Several recessions, a Great Depression, and a currency worth a nickel of its value when the Federal Reserve System was established does not add up to success. Poverty? Recent scholarship shows that $5 trillion in poverty spending after 1965 only worsened the problem by crushing incentives to work and undermining self-reliance.
Everybody who thinks government did a great job with COVID, raise your hand. Don’t forget that the virus itself was likely created in a government lab and subsidized by American tax dollars.
“Under a balanced budget, the government would not be able to do things that many people think it should do, like building roads and providing for the needy.’’ Henry Billings, in his Introduction to Economics, apparently believes one of the following: a) when government spends more than it raises in taxes, we get the extra goodies for free; or b) people must be fooled into supporting programs they wouldn’t knowingly want to pay for.
Students need to learn that deficit spending simply means that today’s taxpayers get the goodies and tomorrow’s taxpayers get the bills, plus a hefty interest charge. That’s economic reality.
Most textbooks are written by academics, and that’s a big part of the problem. Academia is largely a left-wing bubble, full of people who teach because they can succeed at nothing else. Economist Thomas Sowell noted, “The most fundamental fact about the ideas of the political left is that they do not work. Therefore, we should not be surprised to find the left concentrated in institutions where ideas do not have to work in order to survive.”
Perhaps economic texts need to come with warning labels. If textbook authors could be sued for lies, bias or malpractice, many would need skillful attorneys to stay out of jail.