In his latest Townhall column, David Strom points out that Europeans are being taught in school that Capitalism is evil while Americans aren’t taught much about it at all. Both conduce to voters being sold the idea by pandering politicians that economic growth is bad and a stagnant economy is good.

William Ross Wallace famously declared in a poem extolling the virtues of motherhood that “the hand that rocks the cradle is the hand that rules the world.”

The point is clear enough: shaping the moral and intellectual beliefs of the next generation determines what kind of future we face.

In this age of near-universal government-run education, one of the most important hands that rocks the cradle is the public school. And if reports fromEuropeare any indication for what the future of public education holds forAmerica, there is much to worry about.

In an article published in Foreign Policy Stephen Theil exposes the dangerous anti-capitalist indoctrination that students in France and Germany endure in the public schools. It is well worth a read.

Free markets are portrayed in European textbooks as “savage, unhealthy, and immoral,” and Theil describes the curriculum as a “diet of prejudice and bias” against capitalism. That prejudice is being reflected in popular attitudes, with German citizens supporting socialist ideals (47% respond favorably to socialism), and only 36% of the French supporting free markets.

French and German textbooks are larded with anti-capitalist propaganda, even linking prosperity to failing health. “Economic growth imposes a hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease, and, according to some, even the development of cancer” asserts one French textbook.

One wonders what a zero-sum economic paradise would look like? History suggests it would not mirror the Garden of Eden. In point of fact, a zero-sum economic world that rejected economic growth would be a Malthusian nightmare.

Theil’s study of European and American textbooks does contain a ray of hope: while fewer than half of American students are taught economics, the education they do get is pretty firmly grounded in classical economics, not polemics against the market.

Though the news is encouraging, suggesting that American exceptionalism is still alive, the current political debate in the United States is not exactly encouraging. Both John Edwards, and to a certain extent Mike Huckabee are tapping into a growing economic anxiety here in the United States that is sure to be picked up by the other Presidential candidates and members of Congress.

It seems clear that the creative destruction that capitalism thrives on makes many people uncomfortable to begin with; adding to that base level of anxiety the uncertainties associated with the recent popping of the tech and mortgage bubbles and the corresponding decline of the dollar, and it is easy to imagine a toxic backlash against the more freewheeling aspects of capitalism.

Unfortunately, the greater certainty that is offered by the semi-socialist economic model is accompanied by slower economic growth, lower standards of living and much higher levels of unemployment that we have experienced here in the United States. German unemployment, now at its lowest rate in 15 years, still hovers near 8.4%–68% higher than in the United States. France’s unemployment rate is 8.3%, again low compared to recent history in France, but much higher than in theUnited States.

The (Bill) Clinton campaign famously rode to victory on the theme “it’s the economy, stupid;” and to a great extent, every politician knows that economic concerns drive political behavior. Today, Americans are anxious about our economic future, and it seems probable that one consequence of that will be a rise in government attempts to reign in and direct the market—to become more like Europe.

If that is the case, we may not be able to blame the shift on a steady diet of anti-capitalist propaganda in the schools, as is the case in Europe. In America, the cause is the widespread ignorance of the virtues of the marketplace, which makes us more susceptible to the siren calls of the economic populists whose policies would just as surely undermine our prosperity as the European socialists do.

The solution? Again, only half of American students are taught basic economics in our public schools, and still fewer of our college students get a good grounding in economics to counteract the overwhelmingly leftward bent of higher education. It’s long past time that we recognize that a basic grounding in economics is a necessary component of our education to become good citizens.

Economic literacy would not eliminate genuine policy disagreements based upon competing values, but at least it would give Americans a common baseline of understanding that would elevate the debate. Americans would at least understand the trade-offs that various policies entail, and that would be a step in the right direction.

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David Strom is President of the Minnesota Free Market Institute

In his latest Townhall column, David Strom argues that the biggest threat to the US economy is not illegal immigration or the sub-prime mortgage crisis, but economic populism.
Economic Populism Biggest Threat to U.S. Economy

by David Strom

If you asked most Americans today what the biggest threat to our continued prosperity in the coming years might be, you wouldn’t be surprised to get answers such as world trade, outsourcing, the subprime mortgage crisis, and the wave of illegal immigration swamping the labor market.

Those answers would be wrong.

In fact, the biggest threat to Americans’ continued prosperity is the growing disquiet about our economic prospects in the face of those challenges, and the economic populism that is bursting out in response to these fears.

Democratic presidential candidate John Edwards has distilled those fears into the central message of his campaign, but echoes his message can be heard in most of the Presidential candidates’ pitches for votes. Certainly much of Governor Mike Huckabee’s meteoric rise in the polls can be attributed to his ability to tap into middle-class fears about the economy’s future.

Edwards’ campaign is built almost entirely on a foundation of class warfare—“the people versus the powerful”—and is chock full of attacks on business, the wealthy, and just about anyone who stands in the way of remaking the American economy into a workers’ paradise built upon government protection and largesse.

Middle class unease about America’s future prospects in the world economy is likely to become the dominant theme in the 2008 elections, no matter who the Democrats and Republicans ultimately choose as their nominees. Barring a huge resurgence of violence in Iraq or another large terrorist attack on American soil, of course.

Unfortunately, Americans are woefully undereducated when it comes to the real roots of our enduring prosperity. Since at least the time of the Great Depression many Americans have been taught that the government somehow “controls” the economy—and that good times and bad have been the product primarily of the economic stewardship of the President and Congress.

This is a deeply dangerous illusion for a number of reasons. While it is certainly true that the government—particularly in these times when government spending is such a large and growing part of the economy—can have profound impacts on economic growth, it is certainly not the case that government policy has ever been particularly successful at driving economic growth.

In fact, quite the opposite is the case. Government policies have proven time and again capable of slowing economic growth, but with few exceptions they have never proven capable of stimulating the economy in the long term. Even policies that economic conservatives think of as “pro-growth,” such as deregulation, tax cuts and reducing trade barriers are more accurately the removal of government barriers to growth than actual government stimulants to economic activity.

“The economy,” simply put, is not manageable. It is dynamic, driven by the choices, actions, and desires of over 300 million Americans, and ultimately the billions of people around the world. However frustrating it is to think that our fortunes are hostage to the actions of people across the globe, there is almost nothing positive the government can do to change that fact. We all live on the same planet and are tapping into the same resources to better our lives.

For instance, oil prices have skyrocketed because demand for oil has climbed steadily, particularly in Asia and India as their economies have grown. Conversely, the prices of electronics have dropped precipitously for precisely the same reason, as China in particular has become a manufacturing power due to the adoption of ever freer markets.

These changes have generated enormous anxiety among Americans, fueling fear that our place as the dominant engine of economic growth in the world is threatened. Compounding those fears is the realization that with globalization and economic dynamism inevitably some will be winners and others losers as the changes ripple through our economy.

These fears are nothing new. They mirror the anxiety that accompanied the change from an agricultural to an industrial economy, and more recently the change from a more dominant and insular American economy to one that needed to compete with Japan in the 1980s. Millions of jobs were displaced during these economically tumultuous times.

Unfortunately, the obvious solutions offered by politicians are usually the wrong ones to ensure future prosperity.

The imposition of more government control, more rules and regulations, more economic redistribution, and higher barriers to trade will do more to impoverish Americans than any competition from foreigners ever could. Like it or not, the rest of the world will not remain satisfied with living in poverty. China’s rise as an economic power is driven largely by the natural desire of Chinese to escape poverty, not some conspiracy of corporate interests who care little for Americans’ well-being.

The secret to America’s continuing prosperity is and always has been our ability to adapt rapidly to changing economic conditions, and find new ways to provide economic value where none existed before. The growth of government—of economic planning and barriers to change—threatens precisely these qualities that have helped America endure as the beacon of economic growth throughout the 20th Century. Imagine a world where the government tried to protect the jobs of those in the horse and buggy industry as automobiles took the world by storm.

It is our dynamism, our ability to adapt to change that has been the secret of our economic success. The growing economic populism that is the expression of our anxiety about change is precisely the wrong prescription for facing the challenges ahead.

We can’t bank our economy on keeping the jobs that exist today, because in all likelihood many of them will not. Instead, we need to foster the economic conditions that ensure the creation of new jobs and new products that are as yet unimagined.

Change is the only constant we can count on. Dynamism and adaptability are the only tools that will help ensure that America stays on top of the economic ladder in the century to come.