This short paper (Smart Taxes: An Open Invitation to Join the Pigou Club) is worth reading for its discussion of Pigovian taxes, of gasoline taxes (in a USA context), and generally of “topics about which there is a large gap between the beliefs of economists and those of the general public”. It’s written by an economist whom I have mentioned previously, Gregory Mankiw.

As the financial world goes into meltdown mode, the following extract from Mankiw’s paper struck me as an encapsulation of where it all went  wrong for free-market democracies in most of the western world.

In a democracy, of course, economic policy is set not by economists but by the general public. One of my favorite books of recent years is Bryan Caplan’s treatise The Myth of the Rational Voter, subtitled Why Democracies Choose Bad Policies. The answer Caplan offers is that voters are worse than ignorant about basic economic principles of good policy. Ignorance, at least, would have the virtue of being random and so perhaps would average out to zero in a large population. Instead of being merely ignorant, voters hold onto systematically mistaken beliefs. And politicians, whose main job is to get elected, mold those mistaken beliefs into bad public policy. To quote Caplan, “What happens if fully rational politicians compete for the support of irrational voters–specifically, voters with irrational beliefs about the effects of various policies? It is a recipe for mendacity.”

Of course, while admitting that free-market democracies are having it tough, it must also be emphasised that alternative systems work even less well, at least in anything other than the short term – as the USSR found out, and as China undoubtedly will in the near future.  That’s why it’s distressing to find commentators wobbling in their support for free-market solutions.  See, for instance, the Telegraph’s Charles  Moore who wrote a recent article* headlined “I’m starting to think that the Left might actually be right”.  Just the bathwater, please, not the baby too.

Not surprisingly, there’s no easy solution to this crisis of economics and politics. But any long-term fix must include a much more rigorous teaching of the basic principles of economics to all citizens. We allow all those of a certain age to vote for whatever government they want, yet we fail to educate those voters properly about the economic consequences of so doing. We should not then be surprised when (as Caplan noted) rational politicians compete for the support of irrational voters with ultimately calamitous policies.

*Although one is tempted to have some sympathy with Moore’s views on banks: “…. when the banks that look after our money take it away, lose it and then, because of government guarantee, are not punished themselves, something much worse happens. It turns out – as the Left always claims – that a system purporting to advance the many has been perverted in order to enrich the few. The global banking system is an adventure playground for the participants,  complete with spongy, health-and-safety approved flooring so that they bounce when they fall off. The role of the rest of us is simply to pay.”

Here’s an extract from a piece in today’s Irish Times .  Comment is superfluous, except to say that here is another example of how reckless failure to effect change in our institutional structures is having deleterious consequences for the well-being of our nation. 

STUDENTS IN one of Ireland’s largest teacher training colleges spend too much time studying religion, according to a report.

Trainee primary teachers at Mary Immaculate College in Limerick also suffer from programme overload, it said – many do not have time “to critically reflect on their professional development and practice”.

The report from the Teaching Council – the professional body for teachers – said the time allocated for religion in the college was four times that for science.

While the report welcomed the fact student teachers have access to the Certificate in Religious Education on an optional basis, it was concerned at the amount of time allocated to religious education within the Bachelor of Education (B Ed) programme, in the context of the overall number of contact hours available.

For example, attention should be given to the fact that subjects such as science, social, personal and health education (SPHE), geography and history are currently allotted 12 hours each, as compared with the 48 hours each allotted to other subjects such as visual arts, religious education and múineadh na Gaeilge.”

The report is certain to revive controversy regarding the huge influence of the Catholic Church in teacher training. The certificate in religious studies is a compulsory requirement of the Irish Catholic Bishops’ Conference for teachers working in Catholic-managed primary schools.

These comprise more than 90 per cent of schools in the Irish system.

Some, however, have questioned whether State-funded teacher-training colleges should still require all students to complete a course in religion.