economistsIs the teaching of basic microeconomics — opportunity cost, supply and demand curves, incentives, etc. — a form of conservative propaganda?

Most people, including almost all economists whether liberal or conservatives, would obviously say “no.” Yet many educators, as well as the general public, believe it’s true.

In 1994, the Federal Goals 2000 Act expanded the national standards movement to include the teaching of economics in K-12 education. This led to the creation in 1997 of the Voluntary National Content Standards in Economics (VNCSE), which were organized around the core principles of the discipline. While there has been almost no controversy within the discipline over the VNCSE, notes Robert M. Costrell, the objections have come almost entirely from those outside the discipline. Costrell adds that, “There are many who believe that mainstream economics provides an unwarranted defense of free markets, or at least gives short shrift to the case for government intervention.”

Joy Pullmann provides some examples of criticism from non-economists that Costrell chronicles:

• Teaching basic economics gives “no moral weight to the needs of the poor.”

• Students should instead “understand differences between the price of something [and] its intrinsic worth.”

• “Generally speaking, neo-classical theory emphasizes individualism over community.”

As Pullman says, “In short, the objections to an accurate representation of basic, evidence-based economics were based purely on people’s political beliefs. And unfortunately, their political beliefs contradict a great deal of convincing evidence that we have about how the world works.”

Political identification goes a long way toward explaining most of the misconceptions Americans have about economics on both ends of the political spectrum. Most people begin to align with a political party or ideology long before they learn (if they ever do) about the basic principles of economics. And since economics is usually translated into public policy, they tend to develop policy preferences without a solid understanding of the economic principles that the policies are built upon. (An example is the naive view — espoused by many on the political right since the Reagan era — that tax cuts always, or almost always, increase the amount of revenue to the federal treasury.)

This identification of microeconomics with conservatism makes it nearly impossible to have a fruitful debate about basic government policies with non-conservatives. Recently Jordan Ballor and I engaged with some fellow Christians in a discussion about minimum wage laws. We both made the banal and obvious point that the price of labor tends to reflect the value of the labor to the employer. If, for example, I were to pay you $10 an hour to mow my lawn and it took you two hours, the value to me of having a freshly mown lawn would reflect the price I was willing to pay — $20.

We assumed everyone would agree about how this basic microeconomic principle (i.e., price signaling) worked in the real world. Instead, we were accused of claiming that the price of labor reflected the value of the laborer. They seemed to believe that the price of labor was almost completely arbitrary, and that since people needed a certain amount of money to live, the value of the laborer’s life should determine the price of labor. Attempt to clear the tracks of that misunderstanding of price signaling became too difficult, and it eventually derailed the discussion about minimum wages.

That misunderstanding, however, provided me with a helpful insight: It’s not enough to try to convince people to understand and accept an economic policy —  we must first get them to understand and accept the basic economic principle that lies behind the policy.

I’m convinced that the only way to make progress in discussions about economic policy is to first explain economics concepts in a way that people understand. Economic policies are complex, but economic principles are generally intuitive and obvious. It takes more effort, but we must do something to correct the public’s misperception that concepts like supply and demand are “free market propaganda.”

Economics in One Lesson : The Shortest and Surest Way to Understand Basic Economics

Economics in One Lesson : The Shortest and Surest Way to Understand Basic Economics

This classic work provides the layman with a clear understanding of the economic way of thinking. A must-read for the beginner!

  • chiarabrown

    Reality has a conservative bias.

  • Jared Hull

    The idea that lowering tax rates increases revenue isn’t naive and it’s been borne out in the evidence. Lowering taxes leaves people with more money to invest and create new businesses. Consequently they make more money that ends up getting taxes

    • http://Culture11.com Joe Carter

      What I called “naive” was the idea that cutting taxes always, or almost always, increase the amount of revenue to the federal treasury. Supply-side tax cuts only increase revenue when on the right side of the Laffer Curve (http://en.wikipedia.org/wiki/Laffer_curve).

  • Bill Hickman

    In my opinion, many conservatives retreat to Micro 101-thought-experiment style arguments about the macroeconomy because they have very strong negative prior beliefs about government. Simplified arguments in which markets always clear at equilibrium are appealing because government becomes unnecessary. While the premises of Micro 101 are often a great starting point, they need to be supplemented with confounding empirical evidence. You brought up the example of labor markets – a simple supply-demand-equilibrium model of a labor market will probably be wrong because it ignores the much-observed fact that, for some reason, employers rarely cut wages. Or take evidence that the unique nature of the health care market makes it very difficult to set up a laissez-faire health care system. It seems to me that conservatives are extremely reluctant to concede that simple economic principles fail in these situations, because to concede as much would be to admit that a little central planning might be necessary. That might be why some people associate Micro 101 with politics.

  • Bonchamps

    I teach microeconomics for high school seniors at the moment. It would be impossible to deny some political bias, but I think on the whole liberals are simply frustrated with the limitations on human ability placed by objective economic considerations. That said, I make an effort to present two or more sides of any controversial topic.

    It is astonishing that people would complain that microeconomics gives no moral weight to the needs of the poor. The poor need employment opportunities and cheap consumer goods; microeconomics explains how to get them. There’s also the fact-value distinction that seems to drive anti-capitalists completely mad. What is, and what could be or ought to be, are quite distinct. It is a failure to understand what is that causes so many leftists to become frustrated at the absence of what they think ought to be. They attribute all problems instead to the supposed moral shortcomings of business owners, and propose their own morally superior consciousnesses as the solution,

    At least the old school Marxists kept it objective and engaged capitalist economics on its own terms.

  • drnavinsingh

    Economic principles are generally ‘intuitive and obvious’, but why aren’t they obvious to everyone? Obviously these economic princples which are obvious to some but not to others are -subjective. But science ought to be objective right? Now what is obvious is that earth is stationary, but it moves. What is obvious is that solid objects are solid, but bombard a thin foil of silver with electrons and most of them get past, even solid matter is made up of mostly hollow spaces. My point is science ought to be backed by empirics. Value of labour is a subjective thing, employer will always undervalue it what eployee will overvalue it. They will agree on a mutually acceptable price provide both have equal leverage. But in timesif chronic unemployment, balance shifts in favour of employer.

  • Miguel

    The market as God. The problem with teaching econ is that it’s taught as if it were 100% infallible, rather than as a theoretical tool to help understand the forces of commerce. This leaves no room to question the applicability of the theory to a given problem.
    http://www.theatlantic.com/magazine/archive/1999/03/the-market-as-god/306397/