Thursday, March 6, 2008

Education as an Economic Institution

Those of you who are regular visitors know I am very interested how economic institutions within systems impact on the growth and development of economies. The organizations and rules within any given system have the ability to direct choices and decisions in profound ways. Nations that promote and reward innovation, risk-taking, and growth through the institutions they put in place can see significant improvement in living-standards. Conversely, countries that construct institutions that hinder change, and threaten innovation and risk-taking often see slow or even decreasing improvement in the lives of the people. One is reminded of an old aphorism, "Most people are in favor of growth. It's change that they fear." I've recently run across a couple of items that provide some food for thought along these lines.

First, Anthony de Jasay has an interesting column on the Library of Economics web site. In it, he discusses the economics textbooks used in Europe. He finds their teaching about markets lacking; promoting the view that the only way to equality is through "appropriate policies", i.e. government action in the market place. Textbooks are part of the educational system, and the educational system is an institution. For it is through educaton that many opinions and beliefs are formed. These opinions and beliefs then help to shape and direct choices. If a person believes an argument has enough moral or intellectual weight, that person can be persuaded to decide in certain ways -- even against their own best interest.

Second, Stefan Theil, in the January/February 2008 issue of Foreign Policy writes about Europe's Philosophy of Failure. In the article, Theil points to the some of the core beliefs that are taught in European schools. He then posits that citizens who embrace these beliefs can logically be expected to act upon them, in the marketplace as well as in the voting booth. Again, the institution of education shapes the choices by putting rules in place to direct them.

I encourage you to take a look at both of these essays. They make a strong case about the strength of education as an instrument, and ultimately as tool of economic development and growth. Both articles speak directly to the mission of the Powell Center for Economic Literacy, this blog, and ultimately the necessity of economic education. Helping students understand all aspects of the economy is vital if we are to empower them to make informed choices.

I look forward to your comments.

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