Executive Summary

"If a nation guarantees absolute freedom to pursue individual gain, it will ensure misery for those who are least able to succeed." -Mary H. McCarty, Dollars and Sense: An Introduction to Economics

"Price controls are adopted because the price system is unable to reach equilibrium on its own." -David E. O'Connor, Economics—Free Enterprise in Action

"The allocation of resources in capitalism is efficient because resources tend to be attracted to the most profitable firms." -Sanford D. Gordon and Alan Stafford, Applying Economic Principles

"The public sector can redistribute income more efficiently than the private sector." -J. Holt Wilson and J. R. Clark, Economics

Any economist who keeps abreast of developments in his field will find it difficult to believe that the sweeping, confused statements cited above could find their way into any economics textbook. Yet, such ignorance is typical of much that one encounters in most textbooks used by Michigan high school students.

Given the findings of this study of 16 economics textbooks used in Michigan high schools, it is highly doubtful that most of Michigan's teenagers are obtaining a basic understanding of the principles of economics from the textbooks they use in class. While a few of the textbooks did instill "an economic way of thinking" about problems, most of the texts were partly and sometimes almost completely deficient. We often found dismal understanding or outright bias on the part of the text authors.

We examined the textbooks on the basis of 12 criteria that form the basis for the sound study of economics: 1) the price system and production; 2) competition and monopoly; 3) comparative economic systems; 4) the distribution of income and poverty; 5) the role of government; 6) the role of the entrepreneur; 7) public choice; 8) taxation; 9) the business cycle; 10) wages and unions; 11) trade and tariffs; and 12) money and banking.

We graded each textbook according to these criteria. The results: Of the 16 textbooks we examined, three received A's and three others earned B's. However, three received C's, five textbooks received a D, and we handed out two F's. A concise listing of titles and their respective grades begins on page 18 of this report.

Michigan students sometimes read in their textbooks that competition is dangerous and causes economic problems; that Americans are undertaxed; that government spending creates wealth; and that politicians are better at economic planning than entrepreneurs. If such notions were contrasted with other views, they might be acceptable in a textbook. But this is almost never the case.

Some authors are consistently critical of free enterprise and private property, yet present government intervention with little or no scrutiny. "As societies become more complex," one text assures us, "the need for government power tends to increase." Another author tells students: "Despite fears by some Americans that governmental tampering with the free-enterprise system would be harmful, most governmental policies have met with success." Yet a third text warns students that under a balanced budget, the government would "not be able to do things that many people think it should do, like building roads and providing for the needy. . . ." In other words, in many cases, students are not studying facts; they are digesting political opinions.

Most texts do a decent job of describing trade, the failure of communism, and the impact of entrepreneurs. However, most are deficient in three areas: competition and monopoly, the economics of taxation, and the lesson of the Great Depression.

How do discredited ideas find their way into textbooks? For one thing, many of the older authors learned their economics from the Keynesians of the 1930s, who believed strongly that government could fine tune and direct economic activity.

In response to our inquiries, however, several textbook authors suggested their publishers pointed them in a statist direction. One author, whose text received a low grade, responded: "I have in the past made suggestions to the publisher for changes along the lines of that in your review . . . the publisher wants a more liberal view presented in the text, and so that is what is in there. They especially want government intervention treated with favor in several chapters of the text."

Many of these problems will take a long time to resolve. Our concern here is to increase the level of economic understanding in Michigan high schools. We want students to be taught sound economics and the economic way of thinking.

We recommend that

  • Schools that do not now offer economics to their students do so;

  • Schools use one of the highly graded texts noted in this report;

  • School boards in districts where economics is offered check to see what economics text they are using;

  • Schools using a text that received a poor grade switch to a better learning tool. There are several good texts on the market and we recommend that Michigan high schools adopt one of the highly graded texts.