Tuesday, June 05, 2012

We Must Teach Economics as a Core Subject in Schools

Every now and again someone in public life likes to pound the table and declare that the absence of this subject or that subject is a blight on the Irish education system. Some people think the children should be taught how to play a musical instrument. Some think it would be something of a miracle to get the little monsters to read and/or write, to say nothing of asking them to bang out sonatas on the piano. And so the long day wears on.

The latest to enter the lists is Senator Professor John Crown, who got busy on the Twitter machine over the weekend. The Senator is concerned about a certain level of scientific ignorance in the general population, remarking that “high levels of scientific ignorance in a society are very dangerous.” He went on say that “every person should do science in school right up to school leaving age,” on the basis that precise analytical skills will stand to students in their adult lives.

And that’s very laudable, of course. It would be lovely if people were more scientifically minded. Unfortunately, right now the nation cannot afford it. We cannot afford it in terms of money but more importantly, we cannot afford it in terms of time.

If any mathematically based subject should be brought front and centre in Irish education right now it isn’t science. It is economics.

Last week the sovereign Irish nation allowed the state to ratify the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union done at Brussels on the 2nd day of March 2012. All the evidence is that this was a blind vote on the nation’s behalf.

The nation voted on a Treaty that it didn’t understand, and that couldn’t be explained to it in the time frame given. The level of economic literacy needed to understand the arguments about the worth or otherwise of the Treaty doesn’t exist in the general populace.

What’s going on currently in Europe is extremely complex. Because of our history, we are brought up with the notion that states are formed because of nationhood – that no-one can set a boundary on the march of a nation, as Parnell put it.

But states can be formed for economic benefit too, and that is what is currently happening in Europe. A common language and culture is fine in a state, but what really butters the parsnips in a state is a common currency.

One of the reasons that the Euro failed is because it was created without the protections that exist for other, “proper” currencies – a central government and a central bank that regulates the flow of currency. One of the results of the referendum, of the establishment of the EU Stability treaty and the Spanish banks sliding slowly and surely to their doom, is that the European Central Bank is now being built, brick by brick, with the European Government to follow.

What that means in Ireland is referenda a go-go. Matt Cooper outlined this position in the Sunday Times and his article makes for distressing reading. More and more referenda will come down the line and each one will, by definition, trade sovereignty for economic benefit. And each referendum will be more and more fraught, for two reasons. The first is because sovereignty was so hard won in the first place and the second reason is because people genuinely don’t understand the economics of what’s happening.

One of early reactions to the Treaty vote was to identify a clear class division in Ireland, between a pro-austerity middle class and an anti-austerity working class. But is that true? Does the electorate understand how all this works? Are they sufficiently informed to make a judgment? Do the people really understand the full implications of austerity, the alternatives to austerity or the possibility of implementing one of the other?

Chances are they don’t. Economics isn’t taught as a core subject in Irish schools and it really ought to be. Generations have grown up and gone into the world without ever fully understanding just how money makes it go round.

Why is the West richer than the East? The West is richer than the East because the West is better able to generate money through borrowing and lending with banks. The East has a religious object to usury – there is no such problem in the West. Banks create wealth in a capitalist economy.

Why did the British Empire triumph and the Spanish Empire fall? The sinking of the Spanish Armada in 1588 certainly, but also because the British were so much better at trading. All the gold the Spanish looted from South America became worth less and less, because money is a measure of worth, and not actual wealth in and of itself.

That’s how the modern world was created, but most people don’t know it because it’s not taught in school.

It would be lovely if all subjects were taught in school. It would be lovely if the state could produce a population that saw all forms of knowledge as having their own particular merit. But in modern Ireland, the nation is being lost through lack of economic understanding. If it must be a choice between science and economics, the best bet is to follow the money.