Dollars or euros matter not; economic literacy still required. (photo: Roberto Verzo via Flickr)

To paraphrase Antony from Shakespeare’s Julius Caesar, “I come not to praise Obama’s and the Democrats’ economic stewardship,  but to bury it.”  Besides failing on actual economic policy (robust job creation), Obama and most Democrats have not proposed any new large jobs program.  This messaging failure, along with the lack of significant job growth over the last two years, doomed the Democrats in the midterms.  However, I think there is a third factor that has hampered and will continue to thwart the formulation and implementation of any progressive economic agenda: the economic illiteracy of the American people.  Without some means to educate the public, the media, and our elected leaders about progressive economic alternatives to our current economic crisis, conservative politicians with their message discipline will continue to sway an electorate that is woefully ignorant on economic matters with simplistic and illogical soundbites passing as policy solutions.

Now, I define economic literacy, for the sake of this blog, as understanding SOME of the tenants of basic economics.  In other words, stuff you should have learned in at least high school or maybe even college.  This does not mean that you or I should be able to hold forth on the complexities of economic theory with the likes of Paul Krugman, but I do think that a basic  knowledge of economics should involve understanding the definition of economics – the study of scarcity and how people deal with scarcity of resources – and a few key concepts.  NOTE:  I am not an economist, but I did take micro and macroeconomics in college many years ago.

Sadly — no, tragically — most Americans don’t know a damn thing about economics.  . . .

For starters, let’s look at some polls on what Americans supposedly know about economics. (Let’s put aside any quibbling over the accuracies of polls for the moment).  First up is a poll with an economic quiz given by the Federal Reserve Bank of Minneapolis in 1998. Granted, the sample size was small (404 people), but your average American scored a 45% on the economic quiz (you can take the quiz  and compare your score to the actual results).

You might be thinking, “Well, the sample size of that poll was small.  Furthermore, over half the people taking the exam never had an economics course.  Economic literacy must correlate with education.  Requiring classes in economics in high school and college for graduation would fix the problem.”  That is a logical conclusion, but, alas, the results are a resounding “NO.”

One study out of the University of Nebraksa demonstrated that college seniors who had taken economic classes, on average, scored  a 41% on the economics section of the Major Field Test in Business (MFTB).  The economics section of the MFTB asked basic economics questions, and the results were compiled from over 12,000 test takers.  Additionally, college seniors with an economic background were also given a quiz by the Gallup organization, and the average score from the Gallup poll was a 62%;  this score corresponds to a D-.

Not encouraging results for the state of economics education in the U.S.

The apparant economic illiteracy of Americans is not limited to the public at large.  While members of Congress and the Obama Administration have not been subjected to Gallup poll economic quizzes (I suspect that the results of such a project would be like watching a car accident on a freeway – I just can’t take my eyes away!), the only way to judge a politicians or governmental officials economic acumen is with results.  And on that score, both political parties come up wanting on economic policy.

I won’t go over the obvious failures of Republican economic policies (too damn lengthy for my taste).  Instead, I will look at how the Democrats fumbled the ball on economic policy.  Mainly, Obama, the Blue Dogs, and the conservadems in the Senate were timid and stingy when it came to the stimulus bill.

Under pressure from the corporate wing of the Democratic Party, Obama and the Democratic Congress took a progressive idea – deficit spending on a jobs bill to create demand during a recession – and tried to do it on the cheap.  So called educated fools like Larry Summers whittled the stimulus bill down from a proposed 1.2 trillion dollars to around 800 billion dollars.  Conservadems like Senator Ben Nelson went to town on the bill and bragged to Rachel Maddow that he helped cut the cost of the stimulus even further (Nebraska obviously didn’t need those bucks).  To ”attract” non-existent Republican votes, Obama loaded the stimulus bill with tax cuts (40% of the final bill), even though tax cuts don’t provide the mulitplier effect that direct government spending does.

Obama and his economic team predicted that the stimulus bill would keep unemployment to around 8%.  Too bad that didn’t happen!  Actually, 8% unemployment would have looked good before the midterm election disaster.  To make matters worse, Obama and the Democrats were left with the shitty message of “Well, it could have been worse without the stimulus bill.”

Want to know how well that message worked with the American public?  Most Americans think that the stimulus did not work.  In fact, a subset of this same poll found that 51% of Americans thought the stimulus was too big. Less stimulus leads to more economic growth!  Welcome to the Ben Nelson School of Economics!

With Obama and the Democrats failing to offer any new progressive economic policies for job creation, the political  field was left wide open for every conservative crank under the sun to offer up “solutions” for the weak economy.    Here are just a few of those nifty conservative ideas for economic renewel:

Now, the last point is the one that REALLY pushes my buttons.  Granted, all of the above ideas suck, but deficit reduction during a major recession?  We tried that during the Great Depression, and the economy tanked.

But do you think that the conservative cranks have been called out on their lame brain economic prescriptions by the media?  With the exception of some shows on MSNBC and some progressive economists like Paul Krugman, the nightly news programs have pushed the “deficit crisis” storyline.  Translation:  the major media outlets have bought into Republican talking points on the economy.

The local media has proven to be even worse in covering economic news and policies than the national outlets.  I sat in shock and horror as one reporter after another in Kentucky bought into Republican framing on the economy during the 2010 U.S. Senate campaign here.  During the so called Senate debates between Rand Paul and Jack Conway, I was continually assaulted with the local media’s economic illiteracy.

The Kentucky media was fixated on shrinking the federal deficit during a recession.   The Kentucky media wanted to know specific budget cuts that either candidate would support.  Conway talked about having Medicare negotiate drug prices which would save a nice chunk of change, but Conway accepted as a given the failed meme that deficit reduction during a recession is as good thing.  Rand Paul, once again, just made shit up with regards to deficit reduction.  Did you know that the average government employee makes $120,000 a year, according to Rand Paul?  We need to bring these bloated salaries in line with the private sector, and BINGO!  We are on the road to a balanced federal budget.

No follow up by the local  reporters on that nifty Rand Paul lie.  None. Nada.

I worked for the Census Bureau on and off for the last year.  As an average government emplyee, the bastards still owe me about $93,000 dollars!  I was ROBBED!

But I digress.

The economic illiteracy continued its unstoppable rampage during the Senate debate with another repoter’s question about the estate tax.  The gist of the question to both candidates was this:  Isn’t the scheduled increase in the estate tax rates (remember, those estate tax cuts weren’t permanent either) going to hurt family farmers in Kentucky?  Are you for keeping the estate tax at the present rate?

Conway was for a two year extension of the present estate tax rates.  Paul was for eliminating the estate tax.  Less than 2% of Kentucky farms sold for $500,000 or more dollars in 2007.  If memory serves, I believe that an individual can leave his or her family $1 million dollars free and clear of the estate tax, so 98% of Kentucky farmers will owe no estate tax.  Yet here we have two Senate candidates falling all over themselves to save Kentucky family farmers.

The economic crank, Rand Paul, won the election, by the way.

Barring any significant changes in the state of education in America, we are stuck with the American publics’ economic illiteracy for the foreseeable future.  Given its pervasiveness, I believe that economic illiteracy is not a new phenomenon for Americans.  In the past, what has offset your typical Americans’ economic illiteracy was strong progressive economic leadership. While your average American voter could not define the law of supply and demand, there were Democrats who could articulate progressive economic polices that resonated with the voters, despite the  voters’ appalling economic illiteracy.

Unfortunately, we do not have such a leader in the best bully pulpit available to Democrats:  the White House.  As most on FDL have realized long ago, Obama does not really believe in progressive economic policies.  In fact, Obama has been accused of embracing Reaganomics by at least one progressive Democratic Congressman, and I think the evidence over the last two years supports this thesis.

Frankly, the dearth of proponents in the establishment offering progressive economic solutions to our current economic mess is discouraging, to say the least.  The Congressional Democratic leadership and the media are AWOL on presenting the pros of a progressive economic agenda, and Obama, deep down, is a wholly owned subsidiary of Wall Street.  Basically, it appears to be left to the few progressives in Congress and the grassroots of the Democratic Party to provide the energy to promote a progressive economic agenda.

American economic illiteracy is a deep hurdle for progressives to overcome folks, but what other choices do we have to promote and enact progressive economics policies?