The world has been turned upside down: Socialism is on the rise in the U.S. and capitalism is on the rise in China. The former is a result of an uneducated electorate that fails to understand socialism’s history of producing poverty; the latter is a result of pragmatic leadership able to put aside communist ideology to embrace capitalism because it produces prosperity.
Thomas Jefferson, recognizing that the cornerstone of democracy rests on the foundation of an educated electorate, said that “whenever the people are well-informed, they can be trusted with their own government.”
Unfortunately, Americans are not well-informed about economics. If they were, they would have learned from the economic failures of socialism—in China, Cuba, Eastern Europe and all of the other places where socialism took root—and elected a pragmatic leader who supports capitalist policies.
Instead, they elected Barack Obama, an ideologue who supports socialist policies that promote big government, class warfare, and redistribution of wealth. During the election, Obama demonstrated his lack of pragmatism and economic understanding on several occasions. For example, during a debate with Hillary Clinton, Obama said he would favor raising the capital gains tax “for the purposes of fairness,” despite the fact that doing so would decrease tax revenues. This should have been a clue to the American electorate that punishing the rich is more important to Obama than improving the economy for all Americans.
Now that he’s in office, Obama is ignoring the advice of White House economic adviser Christina Romer, who published a paper with her husband in the June issue of "The American Economic Review" that concludes that tax increases kill growth. Obama is still raising capital gains taxes. Ideology trumps pragmatism.
In the book, "The Myth of the Rational Voter: Why Democracies Choose Bad Policies," George Mason University economics Professor Bryan Caplan argues that typical voters have strong opinions about economics despite the fact they never studied the subject. Those biases tend to compel voters to support economic policies that are not in their best interest. For example, typical voters are irrationally biased against markets and interacting with foreigners.
This does not mean the democratic process is flawed; it means the American electorate needs to be better informed about economics.
China’s pragmatic leaders learned from the economic failures of socialism and decided to embrace markets, monetary discipline, and pro-capitalistic tax policies. China is being richly rewarded for that decision.
Obama, the ideologue, still believes in socialism. An uneducated electorate voted him into office. The U.S. is paying the price for that decision.
As developing countries observe the economic center of gravity shifting from the West to the East, China begins to emerge as an alternative model to the U.S. The long-held assumption that capitalism requires democracy is being challenged by China, which has adopted some capitalist ideas while retaining an authoritarian government.
To prevent the economic and political centers of gravity from shifting to the East, the U.S. needs an educated electorate that supports capitalism, not socialism. This can be accomplished by establishing mandatory economics courses at all levels of education.
Until then, the outcome of the U.S. education system will continue to be a “dumbocracy.”
Bill Costello, M.Ed., is the president of U.S.-based Making Minds Matter, LLC and the author of "Awaken Your Birdbrain: Using Creativity to Get What You Want."© Japan Today