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Essential economics instruction
By Paul M. Weyrich
Recently I attended a meeting of conservatives in New York City chaired by James Higgins and Mallory Factor. The meeting was similar to those that I chair in Washington. However, in attendance at this meeting were many people from the investment community. Hence, I was not surprised to learn that my old friend Larry Lindsey, former economic advisor to President Bush, would be speaking. But I was surprised that, rather than deliver a talk about the latest machinations at the Federal Reserve Board or projections for consumer spending, Lindsey spoke about an equally important topic that receives too little attention.
Lindsey is involved with an effort called FirstJobs, which seeks to educate young people in the realities of economic life. Too many kids, particularly those in college, simply share an unquestioning view, similar to the one espoused by Ralph Nader, believing that regulations and excessive government spending come at no real cost to them. The presence of die-hard liberals in academia is another hindrance to eliciting the truth as to how the world really works.
That's not the only problem. Rick Berman, the owner of a research and communications company in Washington who formed FirstJobs, did extensive research about the attitudes young people hold toward the economy. Berman found that many dollars are thrown into education but largely are wasted because kids simply do not see economic education as being relevant to their lives. There are some after-work programs for adults but few are willing to make the commitment to learn the ins and outs about everyday economics.
Parents can teach their children about finances, perhaps even showing them the bills that must be paid every month, the interest that must be paid on a loan and explaining the conditions of their home mortgage. There is just one small problem. FirstJobs' webpage quotes a Fleet Boston survey that discovered 74 per cent of parents consider themselves unprepared to teach their children about personal finance.
That means too many young Americans either hold wrong-headed views of the economy or simply do not think much at all about it. That is bad news either way because it indicates that too many citizens are unprepared to participate intelligently in debates over the future course of our country, including the future of Social Security, much less make informed financial decisions in their own lives. The young American who views his credit card as a tool for making limitless purchases will probably not be concerned about the Federal Government's overspending.
Berman was sitting in a movie theatre looking at trivia questions flashed on the screen and was seized by inspiration. Why not conduct economic education that way and reach young people? He has forged a deal with one of the companies that handle the advertising in movie theatres and hopes to expand his effort. He hopes viewers of the questions will be intrigued enough to visit the website at http://www.econ4u.org
Below are some of the questions he intends to ask Americans, especially young people. See how well you do:
1. If you charge $5,000 on a credit card and only make the minimum monthly payment of 2 per cent, how long will it take you to pay off the debt?
2. What percentage of American businesses have fewer than 20 employees?
3. On the average, how much does the owner get as profit for every $100 of a restaurant's sales?
4. How much of all federal income taxes is paid by the top 1 per cent of American earners?
These are questions that even literate and educated people probably do not consider often. Think about the last time you ate at a restaurant. Did you consider how much profit the owner was making? The answer, incidentally, is "c" -- just $5. When you consider all the overhead costs, you can see why many restaurant owners are just getting by, and how costly regulations would hurt them.
The other answers are 1.) d, 2.) d, 4.) b.
Plenty of Americans will be shocked by the answer to Question 4. Too many believe the charges made by the left that the "rich" are not paying their fair share. However, they are paying a percentage well in excess of their numbers. It also bears mentioning that many who are in the top brackets one year may not have similar earnings in other years by virtue of business reverses, dips in the stock market, or other variances.
When my wife, Joyce, and I took our grandchildren to a movie recently, sure enough those questions were raised on the FirstJobs video slides just before the previews and main feature. Some of the questions caught the attention of the young adults in the theater. I heard some discussion of the answers. I think an idea like this will help start more young Americans thinking about what makes our economy work.
First Jobs has also recruited prominent Americans to relate what it took to be able to succeed in life. Qualities such as perseverance and determination and willingness to sacrifice are likely to stand out, the kind of traits that tend to be obscured by the entertainment industry.
I was pleased to see that the list includes some Democrats, including former Senator George McGovern, who, you may recall, ran for President in 1972 on a plan to redistribute income. I can't speak for where McGovern, once one of the most liberal members of the Senate, stands on the issues these days. My guess is that we probably disagree more than we agree.
What I can tell you is that he went into business operating a hotel in Connecticut, only to end up writing in The Wall Street Journal in 1992 that "my business associates and I also lived with federal, state and local rules that were all passed with the objective of helping employees, protecting the environment, raising tax dollars for schools, protecting our customers from fire hazards, etc. While I never have doubted the worthiness of any of these goals, the concept that most often eludes legislators is: ‘Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape.' It is a simple concern that is nonetheless ignored by legislators." McGovern learned that many of the people he intended to help with regulations ended up paying a price through diminished earnings caused by higher costs to comply with regulations, fewer sales caused by higher costs, sometimes job loss or closing of a business.
The experience of Senator McGovern needs to be repeated by those economics professors, wonks on Capitol Hill, scholars or alleged scholars in think tanks who want to tax and spend and regulate us regardless of the consequences. These people do not need so much to "get a real job" but to own a real business. Thanks to the FirstJobs campaign, more people will start learning about how the world really works.
Paul M. Weyrich is Chairman and CEO of the Free Congress Foundation.
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