Teaching the Dismal Science in Europe and the USA

Stephan Theil, in this article, criticizes German and French economics education for slagging free enterprise and indoctrinating students into a regulation-friendly ideology.  Here’s what Theil says about German textbooks:

Germans teach their young people a similar economic narrative, with a slightly different emphasis. The focus is on instilling the corporatist and collectivist traditions of the German system. Although each of Germany’s 16 states sets its own education requirements, nearly all teach through the lens of workplace conflict between employer and employee, the central battle being over wages and work rules. If there’s one unifying characteristic of German textbooks, it’s the tremendous emphasis on group interests, the traditional social-democratic division of the universe into capital and labor, employer and employee, boss and worker. Textbooks teach the minutiae of employer-employee relations, workplace conflict, collective bargaining, unions, strikes, and worker protection. Even a cursory look at the country’s textbooks shows that many are written from the perspective of a future employee with a union contract. Bosses and company owners show up in caricatures and illustrations as idle, cigar-smoking plutocrats, sometimes linked to child labor, Internet fraud, cell-phone addiction, alcoholism, and, of course, undeserved layoffs. The successful, modern entrepreneur is virtually nowhere to be found.

German students will be well-versed in many subjects upon graduation; one topic they will know particularly well is their rights as welfare recipients. One 10th-grade social studies text titled FAKT has a chapter on “What to do against unemployment.” Instead of describing how companies might create jobs, the section explains how those without jobs can organize into self-help groups and join weekly anti-reform protests “in the tradition of the East German Monday demonstrations” (which in 1989 helped topple the communist dictatorship). The not-so-subtle subtext? Jobs are a right to be demanded from the government. The same chapter also details various welfare programs, explains how employers use the threat of layoffs as a tactic to cut pay, and concludes with a long excerpt from the platform of the German Union Federation, including the 30-hour work week, retirement at age 60, and redistribution of the work pie by splitting full-time into part-time jobs. No market alternative is taught. When fakt presents the reasons for unemployment, it blames computers and robots. In fact, this is a recurring theme in German textbooks—the Internet will turn workers into “anonymous code” and kill off interpersonal communication.

One might expect Europeans to view the world through a slightly left-of-center, social-democratic lens. The surprise is the intensity and depth of the anti-market bias being taught in Europe’s schools. Students learn that private companies destroy jobs while government policy creates them. Employers exploit while the state protects. Free markets offer chaos while government regulation brings order. Globalization is destructive, if not catastrophic. Business is a zero-sum game, the source of a litany of modern social problems. Some enterprising teachers and parents may try to teach an alternative view, and some books are less ideological than others. But given the biases inherent in the curricula, this background is unavoidable. It is the context within which most students develop intellectually. And it’s a belief system that must eventually appear to be the truth.

I’m not all that familiar with German schoolbooks.  I will say that, judging by my interactions with Germans, I think there’s something to what Theil says.  Young Germans seem more ignorant of basic economic laws and facts than most Americans I know of a similar age and income level.

In particular, they seem unaware that lots of primary, basic economic laws really are laws. My problem is not so much with the fact that German textbooks discuss the drawbacks of capitalism, as the apparent fact that they don’t explain how it works.   The textbooks progress directly from superficial description to the kind of breathless moralizing and sanctimonious posturing Theil evokes above. 

The result is that many Europeans just don’t understand capitalism well enough to have legitimate opinions about it.  An example: saying supply and demand operates in all societies more or less the same way — an uncontroversial descriptive assertion in Anglo-Saxon countries — may well be interpreted as a polarizing ideological claim in Europe.  This explains why so many Europeans believe the lump of labor fallacy — that if you slice work up into smaller units (30 hours a week), everyone will have jobs (which makes about as much sense as saying that if you limit carmakers to producing cars that are only 6 feet long, everyone will have cars). 

As to descriptions of workers’ rights, unionization, and benefits, though, I have a different perspective.  Here, it seems to me, Americans are undereducated.  Very few Americans have any idea what unions are for any longer, what kinds of factors really determine their wages, or why banding together with fellow workers is the only way to significantly improve job security and working conditions.  After decades of union decline, the whole vocabularity of "solidarity" has been airbrushed out of American discourse — and believe me, that wasn’t an accident.

The root problem is that Theil critiques the educational system without ever asking who this education is for.  Only about 22% of Germans will ever get a four-year college degree, and the number is about 27% for Americans, depending how you measure these things.  And, of course, not all of the people who actually do get those degrees will end up in highly-paid jobs which use the skills they learned.

The majority of students in ordinary public schools in both Germany and the United States will grow up to be ordinary workers, not bosses or owners.  Theil praises America’s entrepreneurial spirit, but also concedes that only 8 percent of Americans are currently involved in starting a business.  Despite all  the Horatio Alger mythmaking, most Americans will never get a college education, never start a business, and never become boss of anything.  According to this recent report, citing a 2006-2007 study of the American workplace, "the average earnings of production and non-supervisory workers, more than 80 percent [my emphasis] of the workforce, was $543.65 in 2005 and the weekly take home earnings after federal taxes amounted to $478.41." 

Thus, I’d say that education about workers’ rights and social welfare protections is generally a good idea, because it will be of direct practical relevance to the majority of students in most schools in Germany and the U.S.  Of course, it might also open many American students’ eyes to how few rights workers have in the U.S., relative to other countries…

10 thoughts on “Teaching the Dismal Science in Europe and the USA

  1. > many people just don’t understand capitalism well enough to have legitimate opinions about it

    Didn’t we just know it? Antikap agitprop is legit, provided -dammit, you sloppy textbook authors!- it’s done professionally. btw: nasty neocons read Foreign Policy, too; funny to find Theil’s diatribe mentioned here as well. But then…


  2. @AndrewUh oh, law professors discussing economics. First you are saying that young Germans don’t get to be taught how capitalism works and that their textbooks aren’t describing the modern entrepreneur, with which you are implying that that would be necessary to create a more entrepreneurial future, a vision, I assume that you would like to see come about?But then you go on to say that these people mostly don’t need to know that because it has already been determined today that in the future x% will do this and y% will do that etc.Why don’t you go get a coffee and when you’re more lucid, rewrite the post. Either the future can be changed or it cannot.


  3. @DonHuh? This post is about economics and education, Andrew’s thing with the car was just a metaphor. Why don’t you open your own blog where you can discuss the advantages of Indian vs. other cars.


  4. Good post and a balanced position, because you show that there is a need on both sides of the Atlantic to understand each other’s positions on labor and capitalism.

    In a similar way, Robert Reich criticizes the demonization of capitalism while also showing the erosion of the social contract in the U.S. since the Sixties.


  5. Understanding the basics is important, but achieving some mushy-middle consensus that everyone can agree with is – less important.

    Rather we should learn from each other and steal other nation’s best ideas for ourselves! One way to find out what works is to ask the consumer; look at satisfaction statistics.

    The US could profit by seriously studying the French Health care system. Not because the French system is somehow more holy or anything, but because the French seem to really like it. Really, emphatically like it! And because it seems to offer superior bang for the euro than health insurance systems practiced by any other country.

    Conversely the Frenchy could profit by modeling their system of tertiary education more along American lines; the US is usually the first choice of students from neutral countries (Asia, Africa, etc). Indeed French healthcare and US higher education resemble each other in financing as both systems draw major support from both opublic and private sources.


  6. I can accept the criticism of the schoolbooks in general, but I don’t quite follow the tone of the criticism, which seems to imply that somehow our nation’s youth is being indocrinated with extreme socialist positions. Now it’s true that school education plays a certain role in shaping the society we live in, and a very small part of that role may indeed belong to social studies textbooks. But much more than that the textbooks will obviously be a reflection of the societal conditions that we already have.

    A characteristic of the German economy is the tremendous degree to which labour relations have been regulated and institutionalised. This is one of the core principles of the so-called “social market economy” (soziale Marktwirtschaft), which was conceived of and built by the Christian Democratic governments in our republic’s early years, without many contributions by the Social Democrats. Even though over-regulation and supposedly business-unfriendly conditions have come under much fire in recent years, the core principles have remained largely untouched. It seems only appropriate to me that, in this environment, students learn about employee’s rights, unions, strikes, etc. It will be necessary to understand the great political debates that are happening now and will be happening for some time in the future.

    So while maybe the tone and one-sidedness of individual schoolbooks may be criticised – and while it is always permissible to direct critcism at the prevailing conditions in Germany, however deeply ingrained they may be – the overall impetus of the books seems to be all right. What they are teaching is largely accurate and useful to their young readers.


  7. What we now have in Germany is quite different from what Erhard envisioned in the Fifties. I think he’d be in for a shock if he were still alive.

    Though I do agree that it is a good thing for young students to learn about labor unions, Mitbestimmung, etc.

    The point is to avoid the one-sidedness that afflicts both European and American thinking.


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