The Educational Gap in Economics | SchiffGold

It’s no secret that the American public is wildly ignorant of many issues that are central to the success of our nation. Just a generation ago it would have been unthinkable that less than half of the American population could recognize all three branches of government. America is in most cases far less educated about its government than citizens of even less freedom-oriented nations.

The American Public School System was created to prepare people for democratic citizenship. Now it seems that it has failed to prepare people for even regular citizenship. Even in a country rife with other examples of government inefficiency and inadequacy, the public education system stands out as an emblem of wasteful spending without nearing its intended effect. While public education has led to a crisis of citizenship, it has also failed to give individuals the economic intuition needed to make wise financial decisions. Less than half of U.S. high school students have taken an economics class by graduation, and far less than that have spent time developing practical financial knowledge. The results of this inadequacy are becoming quite clear as Americans, and young people in particular, demonstrate an unprecedented lack of preparation for the financial choices that adulthood brings.

The current lack of economic education can be seen by an examination of the ideas that have become popular in the public sphere. Both liberal and conservative candidates have been able to gain traction by describing trade as a zero-sum game. A significant portion of the general public believes that America is “losing” if it imports more than it exports. They don’t understand that both countries are still better off, regardless of whether their trade is even. This lack of knowledge will rarely be corrected, because citizens only vaguely see the consequences of their votes long after they have voted. Even when their economic misinformation manifests itself in poor candidate selection, it is easy for the media to disguise the full extent of a specific mistake’s damage. Economic policy misinformation does not often self-correct, so the role of public education is exacerbated. If economic common sense is ingrained before they can even vote, the future of America as a country will be much more secure.

While economic ignorance is detrimental in the public sphere, financial folly leads lives to ruin in a much more tangible way. The current state of personal finance knowledge can be seen through a few depressing metrics. 40% of Americans have less than 300$ in savings. Even in a world where the internet has made sound financial information extremely accessible, bankruptcy filings have increased. Even by their own standard, 15% of Americans lost over 10,000$ in 2022 because of a lack of financial literacy. Because this was self-assessed, the reality is probably much more alarming. Financially illiterate consumers do not even possess the knowledge to assess how much their ignorance is harming them. Their ignorance is radical, as they are not even aware of the knowledge they lack. If they were fully aware of the avoidability of their poor decisions and willingly chose to ruin their credit and security, some would still choose to, but many would make better choices.

The problem that has arisen is systemic rather than individual. While parents used to be more involved in their children’s upbringings, they now generally expect the public education system to teach their children many basic life skills. This expectation coupled with the system’s failure leads to an uncomfortable reality for the nation. An entire generation of citizens lacks the skills needed for survival and civic life that the last generation took for granted. The weakness of parental guidance must either be remedied or supplemented if democracy is to survive. The public school system is doing neither, so the American public will soon be unworthy and incapable of self-rule. Even aside from the citizenship question, the direct practical effects of parental and educational neglect should be clear enough to spur institutional change.

The current state of public schooling needs some serious revision if Americans are to be prepared for life and citizenship. The basis of this nation is personal responsibility bolstered with knowledge. Even citizens who want to be responsible are unable to see where they need mental growth. Knowledge of economic issues and personal financial responsibility are two areas that do not easily self-correct, so it is much more effective for them to be taught while citizens are still young. The current situation may be bleak, but some initiatives look to make future Americans more well-informed through increasing access to economic and financial education. As inflation rises and the budgets become ever tighter, the skills needed to survive and be a responsible citizen are more in demand than ever before.

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