Free markets and free education
America's economy leads the world, but few high-school students know why

To no one's surprise, the latest GDP numbers that were released last week showed that America once again leads the world in domestic production, extending a record of dominance that began more than a century ago.
Unfortunately most high-school students don't have a clue about the origins of that dominance.
Much of this is due to the fact that America's teachers, who are celebrating National Teacher's Day today , do a far better of job of teaching the evils of capitalism, than they do of explaining how our workers became so productive in the first place.
A big chunk of America's success is due to two reasons: free education and free markets.
The role of free primary and secondary education in boosting our national productivity is by now widely recognized. Americans understand that a population that can read, write and do basic arithmetic has a leg up when it comes to learning new skills and making effective choices. In fact the model has long since been emulated by most of the world's advanced economies.
Yet free schooling for children is hardly universal. When the United Nations set its Millennium Development Goals four years ago, one key target was to bring the world's primary schooling completion rates to 100% by the year 2015.
This is something the U.S. has been doing for more than a hundred years. And we don't just provide free primary education, we also provide free high school education and we heavily subsidize many universities and community colleges.
While high school students are generally aware of the importance of our free public education system, they are less clear about the role that free markets ­the second key element in America's success ---play in boosting national income.
Much of this has to do with their teachers.
According to research conducted by the Foundation for Teaching Economics, many high school teachers harbor suspicions that capitalism is not good for the poor. What's more, these views affect what they tell their students and often translates into an anti-business attitude in their instruction.
The effects can be seen in the anti-globalization protests, in which angry youth play a key supporting role.
Yet the benefits of free markets in reducing poverty are widely accepted by most economists.
Last week the World Bank released figures showing that the proportion of people living in extreme poverty, (less than $1 a day) has dropped by almost half between 1981 and 2001, from 40 to 21 percent of global population.
Not surprisingly the countries that excelled were those that did the best job in educating their population and increasing trade.
Far for hurting the poor countries, freer trade is actually crucial to their success.
"To achieve and sustain the levels of economic growth needed to reduce poverty, developing countries need greater access to foreign markets," concluded the report's authors .
Indeed according to the World Bank one of the most biggest obstacles toward increased trade facing the poorer countries is the $330 billion that rich countries spend to subsidize their agricultural producers. These subsidies have a devastating effect because 70 percent of the world's poor live in rural areas, and agricultural products are one of the few areas in which they can sustain a competitive advantage.
Of course open markets alone won't be enough to substantially improve the lot of the poor. Other key elements of the capitalist system, including respect for private property, rule of law and a culture of entrepreneurship also need to be present in varying degrees. But these tend to follow open markets in lockstep.
To help stimulate the debate, the Foundation for Teaching Economics has been conducting a series of seminars for high school teachers across the country titled "Is Capitalism Good for the Poor?
The courses use case studies drawn from around the world, to show how economies that have more of the elements traditionally associated with capitalism do better than those that don't.
The teachers are given free classroom materials and lesson plans, the hope being that they will take what they have learnt and pass it along when they get back into the classroom.
So while National Teacher's Day is the perfect opportunity to salute the men and women who get most of the credit for educating one of the world's most productive workforces, we must also ask them to do more to explain to our youth the sources of that productivity.
Because if our next generation of leaders doesn't understand how wealth is created, America's economic lead could evaporate a lot faster than we might like.


peter@peterdiekmeyer.com

 

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