Fair and Balanced (New Zealand High School Public Exam in Economics enforces socialist thinking?)

These are two actual questions from a 2004 NCEA Economics Exam worth four credits:

The New Zealand government provides 'free'... education at state secondary schools. Explain why this results in a better resource allocation than the free market...

Some readers will agree with the underlying assumption present in both questions: free market bad, interventionist government solution good. Some won't. But everyone can agree this world view is hotly contested. And if the question were put the other way around - "Explain how using 'interventionist' policies restrains economic growth" - then the unhappiness would switch to the other side.

Basically, if you were writing an economics exam, wouldn't you try to avoid questions so obviously based on contentious, politicised arguments?

NCEA Level 1 is a public exam at by most New Zealand high school students in Year 11 (that's equivalent to Grade 10/ high school sophomore) to gauge their academic performance and form part of their qualifications when they leave school. Compulsory education usually ends at Year 12, but 60% stay on to finish Year 13 and the final year, which will prepare them for NCEA Level 3 which academically is like SATII but harder as tertiary education for humanities and sciences in NZ is normally 3 years rather than 4.

When I look at this, it borders on indoctrination rather than teaching. Anyone has thoughts on the nature of these exam question?

Explain why using 'free market' policies causes income inequality.

Because, in a free market, the individual that produces more valuable goods and/or service receives a higher income.

I see nothing wrong with that question unless you accept the socialist notion that individuals are entitled to equal incomes regardless of the worth of their contributions to the economy.

Actually, I see nothing wrong with these questions although the second is more controversial. If there is bias it would be in how answers are graded. A quick answer to each would be:

1. "The New Zealand government provides 'free'... education at state secondary schools. Explain why this results in a better resource allocation than the free market..."

Education is a public good. That is there is a spillover associated with education. As such people will not reveal their true preferences and try to "free ride" on the expenditures of others. This means the market will provide too little education.

One of the possible solutions to this market failure is to collectively, ie through taxation and government provision of the good, provide the good. This could be done via government schools or vouchers to subsidize private schools.

2. "Explain why using 'free market' policies causes income inequality."

Free market policies cause income inequalities because income inequalities are a natural part of an economy and serve an important economic function. The role of income inequality is to get the best, most able, most talented in appropriate fields. Society benefits when the most able people become brain surgeons. We don't want the car sales man and the brain surgeon to earn the same income whether monetary or whether non-monetary factors like prestige are included. If the car sales man and the brain surgeon do make the same amount of money/prestige, then the most talented brain surgeon might become a car salesman.

Society does not benefit from such a misallocation of resources. Thus, when sound free economic policies are adopted, income inequalities must necessarily results. They are a good thing.

Now if when expanded, these two short answers would get high marks on the test, then the test is not biased toward socialism. On the other hand if they would get low marks then the test is biased. My answers are pretty much the answers of standard modern economic theory, although as I said the second is somewhat more controversial than the first.

I agree, this question is actually quite reasonable. When you give them equal opportunity to succeed, because of various people's qualities, there will always be a difference (inequality) of results. The first question is creepy though.

The First Question: The New Zealand government provides 'free'... education at state secondary schools. Explain why this results in a better resource allocation than the free market...

One must keep in mind, however, that modern American republican society is a mix of governmental and private services.

A purely private system results in oligarchic tyranny.

A purely government system results in socialistic tyranny.

Since the Middle Ages, my own paternal branch of my family was part of the oligarchy in the Spanish Ancien Regime. This past summer, I visited my family's manor house in Spain that is now owned by the descendants of the vassals that used to work the land. Back in the 1700's, 1600's, 1500's and 1400's, education in that region was limited to my family or to those who were chosen to be educated by them. Now, the descendants of the former vassals, at government expense, can receive an education. Their children and my children now have the opportunity to both go as far as their drive will carry them regardless of their birth or the wealth of their parents.

It is a much better system and far healthier for a free society.

Government control of the curriculum can be a threat to freedom but government financing of a basic education for all, regardless of birth or wealth, is the basis for a free Republic or, in the case of Spain, a constitutional monarchy.

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