Posted on 07/19/2026 9:21:28 AM PDT by MtnClimber
Over the past several years, polling agencies and pundits have documented a disturbing trend: Increasingly, many Americans – especially young Americans – are struggling to comprehend the most foundational principles of economics. This growing economic illiteracy could have a potentially devastating effect on not only the country’s economic future, but its political identity and American democracy itself.
In 2022, the Cato Institute found that voters “displayed a depressing lack of understanding of basic economics,” especially when it came to the issue of inflation. This problem was particularly pronounced among young voters. In an op-ed for the Washington Examiner, Nonresident Senior Fellow at the American Enterprise Institute Samuel J. Abrams wrote that “large shares of young adults [are] unable to define inflation, explain supply constraints, or predict the effects of price controls.”
This decline in economic literacy has coincided with a dramatic rise in support for collectivist ideals – more specifically, socialist and communist policies. Polling by the organization Victims of Communism conducted in 2020 found that around 40 percent of Americans viewed socialism favorably.
Additionally, in 2025, a Cato/YouGov poll found that around 62 percent of people under the age of 30 held a favorable view of socialism with 34 percent having a favorable view of communism – the ideology responsible for roughly 100 million deaths in the 20th century alone. Poll after poll shows that Americans are embracing the false promise of the “warmth of collectivism” at an alarming rate, and that the shift toward socialism is being driven by profound ignorance about basic economic realities and the universal historical record of failure of socialist regimes.
Yet there is still hope. The antidote to fallacy, confusion, and collectivist temptation is knowledge and education – specifically about economics, a discipline that was once a major part of American civic life. Anyone can learn the basics of economics, or further his or her understanding.
But before making the case as to why one should study economics, it is important to begin by briefly taking a step back to answer another important question: What is economics? The word “economics” is derived from the Greek word oikonomia, meaning “household management.” To the ancient Greeks, particularly the thinkers Aristotle and Xenophon, the idea of oikonomia was centered on people’s stewardship of resources such that they could flourish and live a good life.
Today, economics has evolved far beyond its ancient roots. It’s also a social science, concerned not with abstract equations or sterile statistics, but with human beings and the choices they make. As the late Austrian economist Percy L. Greaves, Jr. once said, “Economics is not a dry subject. It is not a dismal subject. It is not about statistics.”
As Greaves points out, economics “is about human life. It is about the ideas that motivate human beings. It is about how men act from birth until death. It is about the most important and interesting drama of all — human action.” Economics is concerned with people, their interactions with others, and how those interpersonal relationships affect the ability of a society to produce, deliver, and consume goods and services.
More specifically, economics studies how people interact, cooperate, and respond to incentives. As a field of study, it is concerned with revealing the truth and principles that allow people to find answers to problems through business and commerce.
The study of economics does not teach what the “right” policy decisions are. The “right” tax rate or interest rate is ultimately a subjective judgment. Rather, as Shawn Ritenour, a professor of economics at Grove City College in Pennsylvania, puts it, “The object of economics is to discover economic principles that are true, so that policies developed in light of those principles will be suitable for achieving our goals.”
Learning economics helps us understand ourselves and the world around us. These principles are not academic abstractions. They explain the world as it is. Nobel laureate Gary Becker once said, “[Economics] will be judged on how well it helps us understand the world – and how it helps us improve it.”
The basic principles of economics go a long way toward illuminating why things are the way they are in our world. Take, for example, the famous law of supply and demand, which explains why prices rise and fall. When there is a low supply of a good and demand is high, the price of that good increases. When supply increases, the price falls.
This lesson is probably one that most Americans remember from Econ 101 – although certain members of Congress could probably use a refresher. But most Americans likely don’t know much about the law of scarcity, which outlines concepts like opportunity cost, incentives, and the margin, or the law of marginal utility, which reveals why we’re more satisfied with the first unit of a good we consume than the sixth.
These and various other economic principles can help us understand why certain individual actions and government policies have the effect that they do – and in turn make us more informed citizens and voters.
Increasing our society’s understanding of economics also helps people better detect economic fallacies and understand their damaging impact. As the economist Henry Hazlitt wrote, “Economics is haunted by more fallacies than any other study known to man. This is no accident.”
Hazlitt hits the mark when looking at today’s situation. Socialist politicians make their case by appealing to economic fallacies – such as the idea that the government can provide anything for “free” – so they can present themselves as self-anointed saviors that can solve all of society’s problems. These fallacies are built on ideas that conflict with reality and are easily recognizable to anyone with a basic understanding of economics.
The study of economics also reveals an important truth: economic freedom and political freedom are inseparable from one another. Milton Friedman saw this when he authored his book Capitalism and Freedom.
“Economic arrangements play a dual role in the promotion of a free society,” Friedman wrote. “On the one hand, freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself. In the second place, economic freedom is also an indispensable means toward the achievement of political freedom.”
Free market societies recognize individuals as self-governing in their capacity to make decisions through voluntary cooperation, not through the threat of coercion. Hazlitt made this point when he wrote Man vs The Welfare State. “The solution to our problems is not more paternalism, laws, decrees, and controls,” Hazlitt argued, “but the restoration of liberty and free enterprise.”
From the Soviet Union to Venezuela, Cuba, and North Korea, the historical record of collectivism is grim indeed. Even China, now the world’s second-largest economy, has only been able to succeed insofar as it has introduced market-oriented reforms to its socialist system. Still, U.S. per capita GDP remains roughly 6.5 times greater than China’s.
Economic freedom isn’t simply a policy preference. As Friedman said, it is a “necessary condition” for a free society, paving the way for human flourishing. A society that is economically literate understands that liberty cannot survive on economic myths. It survives on citizens who understand the principles that make freedom possible.
Generations of wage suppression policies and inflation have lead to difficult life and despair for many people that is what is leading to the rise of socialism.
That and lots of propaganda and miseducation.
Trump is trying to fix the economy, pray that he is successful because if we keep going in the wrong direction things are going to get very bad for everyone.
“The average person doesn’t understand that corporations do not pay income taxes. Their customers pay those taxes as part of the goods and services they purchase from that company.”
Imagine Company A has a profit margin of 12% and company B has a profit margin of 4%.
If a federal corporate income tax rate rise causes Company B to raise its price by $2/widget, Company A will get to raise its prices by about $2/widget.
However, the tax rate increase will fall harder on Company A because its profit margin is larger. Its shareholders will eat about two-thirds of the tax rate increase.
That was a lot of money back then. I still remember my Dad getting upset when gas went from 35 to 38 cents a gallon !
Medicare plan b? Always back to government? You have no private sector plan?
The article is fine but did not provide many examples. I think AMAC, the CATO Institute, and others should go much further.
The people who complain about millionaires and billionaires don’t know the difference between cash and net worth. They think a millionaire has a million dollars.
How many people think that profit is something extra, instead of something left over?
The article mentioned inflation without explaining it. It’s the reduced value of the monetary unit - dollars in this country. Do you suppose the supply of money has anything to do with the value of money? Consider the countries that experienced hyperinflation? How many people know about hyper inflation?
How many people think of price as a signal - a signal that coordinates action across all society?
How many people can explain “economic rent” and why some locations are more valuable than others?
Economic programs only address these topics haphazardly, if at all.
Learned that the hard way. Hiked five miles across town to sell candy bars for a school fundraiser, in the rich part of town. Discovered that rich people stay rich by sitting on their wallet !
“low tax states, such as Texas. Blue states such as NY & IL”
Mr. Worker needed and got $200 of medical care.
That $200 might be paid by Mr. Worker, his employer (from the proceeds from Mr. Worker’s work), or by both via taxation.
Now if NY plucked $500 both to pay for Mr. Lazy Import’s care, then neither Mr. Worker nor his employer got the benefit of the $500.
It’s not only the tax rates, but also the use of the tax money.
“large shares of young adults [are] unable to define inflation, explain supply constraints, or predict the effects of price controls.”
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What does he expect from them? They can’t find the US on a map, or their state, naming state capitals is too much, let alone knowing who the first President was. Now he wants them to know the finer details of economics - the man is a loon.
“Medicare plan b? Always back to government? You have no private sector plan?”
The Swiss rely private insurer coverage for all ages.
Logically, coverage should be by sector, hospital care, drugs, and whatever else might strike your fancy.
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[posted many times before]
For health care, bring on market force:
1. Break most hospitals into two highly competitive entities.
2. Convert other hospitals into real estate leasing entities with competing surgical suites and nursing wings.
3. Separate out drug coverage so hospital systems can run care coverage systems and cut out insurance company overhead and meddlers.
4. Create interstate drug plans that don’t have to pay what the drugmaker wants for every drug. To qualify for exchange listing and federal subsidies, they would have to most (~80% or more) in all important types (large volume recombinant, small volume recombinant, breakthroughs under patent, etc.). Group and exchange plans to offer time-limited vouchers at plan set amounts for out-of-formulary drugs. Voucher plans would have variable premiums. Plans without minimums (or vouchers) could be vended directly to individuals and families.
5. These plans would be all the doctors (and AI) prescribe for formulary drugs with co-pays equal to manufacturing cost
6. Reform medical education, breaking down medicine and dentistry into simpler chunks and start it in the first year of college
7. Replace most primary care doctoring with AI.
(Insurers would pay human doctors to confirm AI diagnosis, orders for expensive tests[MRI, genetic], prescribe radiation imaging[CT, PET, X-ray]/treatment, and voucher/government co-pay drugs. Other human doctor care would be private pay.)
8. Radioisotope-related care would be at international airport centers
That is because there is no such animal. Might be in the future but probably not.
As long as there are nation states each one will try to promote their countries interest above that of the other. To expect otherwise is to ignore human nature entirely.
Remove it out of the realm of economics and move it into the arena of sports. Most counties in the world are not sending "Amateurs" to the Olympics. They say they are but their amateurs are also being supported by "sports clubs" that allow them to practice every day. Our Amateurs work at Home Depot and practice when they can.
Many people argue that this is ok because we still take home more gold medals than any other country. It is perfectly ok for them to give their guys a "little boost".
And when people stand up and say, no, it really is not ok they get yelled at by their own countrymen.
It is the same with economics. It is perfectly ok for them to support their industries and dump on our markets to drive our guys out of business. We just have to be "more efficient" and if those businesses die it is ok. I note that it is never the economists that suffer.
I will always remember the time the founders of the company I worked for went to Washington to ask Congress to do something about our patients being stolen. These three guys who had built a world leader company from nothing were told to go home and just invent more stuff. They had confidence that we could keep ahead of the people who were stealing from us. In less then five years the company was shuttered. You can not innovate fast enough to keep ahead of the thieves.
That is because there is no such animal. Might be in the future but probably not.
I’d say we’re getting pretty close to it.
Every nation on earth is still tribal. Some of the guys at the top claim they aren't. But they lie about other things too.
“My people are ruined because of lack of knowledge”
Excellent observations.
Years ago, after I explained to one young know-it-all socialist what a Bond was and how it worked as an investment. I asked him if he would pay more for a high interest bond or a low interest bond and why.
He responded to me as of I were an idiot and claimed that only a moron would pay more for a low interest bond. The really distressing thing was that even when I explained why price rises as risk and return drop he refused to recognize the equation as obvious and dismissed my explanation as “white mans bull$hit”.
It supports Hayek observation that if socialists understood economics they wouldn’t be socialists
Swiss healthcare much like Singapore and other countries require the heavy hand of government. Did you support obamacare? The compulsory model of forced insurance is a standard ploy. Do you have any other ideas besides more government intervention?
Looking at all of the disaffected youth who got into debt by training in the tech fields only to have their parents and grandparents offshore the jobs they trained for, and who are now willing fodder in the leftists' calls for violence against conservatives, we are already getting lessons in cause and effect.
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