Harvard University economist Gregory Mankiw has a simple solution for making the world a better place: teach everybody basic economics. In his Friday afternoon talk, Economics Education and Economic Policy,<= Mankiw described his alternate universe, in which the general public understood economic principles.
Economic policy would be better if we did one simple thingaimprove the quality of economic education,<= he told about 80 students and professors in Von Canon A. Three-fourths of voters have absolutely no training in basic economic ideas.<=
Mankiw writes a regular column in Fortune magazine and wrote the popular textbook Principles of Economics, which is frequently assigned at Duke. He used a medical analogy to explain the implications of economic ignorance.
Imagine going to a hospital for a treatment you donPit understand,<= he said. You learn the medical decisions will be made by a committee of four people, only one of whom has any medical trainingaand it will be done by majority rule. Essentially, thatPis how we make our economic policy decisions.<=
Mankiw asked the audience to envision another model for decision-making. In his world, he said that some controversial topics would be better understood and, therefore, less contentious.
One such topic is rent control, which is common in New York City. He said that instead of making housing more affordable, rent control decreases the supply of housing, and thus drives up the prices. Mankiw quoted another economist, who said that rent control was the second-best way to destroy a city, the first being bombing.
In MankiwPis society, the public would be in favor of free trade. Currently, he said, U.S. trade policies make very little economic sense. In my universe, I suspect you wouldnPit have any trade barriers at all,<= he said.
He also described how monetary policy, tax policy and environmental policy might be different if the public understood economics.
The second part of his speech focused on the steps to achieve this universe. About half of college students take economics, he said, and about half of the American public enters college.
Therefore, he explained, only a quarter of Americans have any economic background. Using his own column for Fortune as an example, Mankiw said, Economists need to spend more time writing for the general public than for each other.<=
He also said that economics education in high schools is essential because of its positive impact on society. Teaching economics makes for a better voter who will make better decisions. That directly affects me. ItPis hard to make that argument for high school chemistry,<= he said.
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