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August 13, 2004
Does Knowing Economics Make Better Citizens?
Someone recently asked an email group the question of whether knowledge of economics made people less inclined to support government programs, or more inclined. They might be less inclined because they would realize how inefficient most government programs are, but they might be more inclined because they would better appreciate how certain of those inefficient programs would benefit them personally.Here are my thoughts.
Educating a person in economic theory helps in two ways.
1. The person will learn about policies that hurt them (and most citizens) a little and help a few people a lot. An example is the ugar import quota that hurt US consumers nad help a few US sugar growers. People don't have the incentive to learn about the hurt to themselves that the sugar growers have to learn about the benefit.
2. The person will learn just how inefficient many policies are-- that they
hurt almost everybody. The minimum
wage and the corporate income tax fit roughly into this category.
I have wondered if the deregulation of airlines and trucking in the 1970's was
due to better economic education in colleges over the previous 30 years. Before
1970, economists such as Stigler and Friedman had noted the inefficiency of such
programs but scoffed at those who thought they would ever be repealed. The
programs had perhaps gotten more inefficient, due to growth of the economy, but
the benefits to special interests had grown correspondingly. So why would a
rotten program be repealed in 1975 when it hadn't been repealed earlier?
I should mention one common explanation which makes some sense for airline
regulation, at least. In the early 1970's, Ted Kennedy wanted to run for
president, and needed some publicity and credit for doing good things. He found
airline deregulation to be an issue he could take up, an issue of good
government, quite removed from his usual big-government policies, so he could
reach out to centrists. Thus, he was a "political entrepreneur", innovating on
an issue
Posted by erasmuse at August 13, 2004 04:17 PM
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