“Underlying most arguments against the free market is a lack of belief in freedom itself.” Milton Friedman
When I was in elementary school, which was a long time ago, we were taught “social studies”, a general topic which included basic history, economics, political science, and civics. It was factually based, without much discussion of theories and not all that much on current events in order to avoid conflicts with what parents thought. This was when schools were K-8 programs; then there was high school, and for those fortunate enough college, where these subjects were focused on separately.
My initial major was political science; it also required a curriculum in history, sociology, and economics. I remember that my economics professor on the very first day gave a quiz; it consisted of various questions that included either/or answers, some of which I still remember because myself and most of the class got so many wrong. The professor did not count this quiz in the grade aggregate, and explained that he was trying to make the point that most people have a very poor understanding of basic economics despite the fact that it is the essence of a society’s existence as in one way or another we are all a part of the economy in our daily lives. He was a good teacher who made this point very clear, much to our embarrassment.
This is even more disappointing today given what I have learned since, and because there seems to be even more economic ignorance than ever before; most high school graduates have never even had an economics class. While I eventually got an associate degree in political science, I later changed my major to engineering, but I have always kept my interests in these subjects and find that they are so interrelated as to be inseparable. I think that Friedman’s quote above makes the point about the inseparable nature of politics, sociology and economics very clear; it is not something that is understood in our society today, and that is the fault of our educational institutions, resulting in such ignorance, and providing an environment that makes deception that much easier.
The more I have come to realize how ignorance makes us more susceptible to deception, the more I think back on that economics professor’s quiz and thought it would be interesting to repeat some of those questions and ask readers to provide their answers; then in a follow-up post I will summarize the answers received. I will also provide the professor’s “correct answers” with his explanations, and my retrospective on them after all this time. I request that the answers be limited to those contained in the question without explanation as to why you chose them, which is how the quiz was given initially; there were more questions than these, but limiting them to ten provides an easy way statistically to summarize the answers:
- Is money an asset or a commodity?
- Is capital money or any asset?
- Is trade the essence of an economy, yes or no?
- Is inflation monetary, fiscal, or both?
- Is capitalism a cause or an effect?
- Is deficit the same as debt, yes or no?
- Is the maximization of efficiency and the minimization of cost profit or production?
- Is labor part of work or the same?
- Is interest the time preference of money, yes or no?
- Is an asset’s price depressed by high interest rates, yes or no?
Hopefully we can have some fun with this rather than the disappointment I had back when I got so many wrong. Please note that the word “ignorance” in the post is not meant to imply stupidity; ignorance simply means not knowing something whereas stupidity is an inability or unwillingness to learn.
“The first step to knowledge is a confession of ignorance.” Ancient Chinese proverb
Libera Voce 