Transcript Supply and Demand - Council for Economic Education

How Economics Can Strengthen the
Teaching of U.S. History
Council for Economic Education
March 21, 2009
Mark C. Schug, Ph.D.
University of Wisconsin-Milwaukee
Overview

Problems teaching
history
 How economic
thinking might help
 Features of Focus:
Understanding
Economics in U.S.
History
 Lesson 5
Demonstration
Problems Teaching U.S. History

Schools rely on U.S.
history to teach
Our national identify
 An academic understanding
of our past


But, history teaching is
criticized as being
Boring in content and
pedagogy
 Superficial
 Trivial
 Remote

Problems Teaching U.S. History
 Students
usually take 6
semesters of U.S.
history:
Grade 5: 2 semesters
 Grade 8: 2 semesters
 Grade 11: 2 semesters

 Yet,
national tests show
that achievement in
history is low.
U.S. History Achievement Levels:
1994, 2001, 2006 NAEP
Level
Grade 4
Grade 8
Grade 12
1994 2001 2006 1994 2001 2006 1994 2001 2006
At
Adv.
2%
2%
2%
At or
Above
Prof.
17%
18%
At or
Above
Basic
64%
Below
Basic
36%
1%
2%
1%
1%
1%
1%
18% 14%
17%
17%
11%
11%
13%
66%
70% 61%
62%
65%
43%
43%
47%
34%
30% 39%
38%
35%
57%
57%
53%
Civics Achievement Levels: 1994,
2001, NAEP
Level
GRADE 4
1998
2006
GRADE 8
1998
2006
GRADE 12
1998
2006
At
Advanced
2%
2%
2%
2%
4%
5%
At or
Above
Proficient
23%
24%
22%
22%
26%
27%
At or
Above
Basic
69%
73%
70%
70%
65%
66%
Below
Basic
31%
27%
30%
30%
35%
34%
Economics Achievement Levels: 2006,
NAEP
Level
Grade 12
At Advanced
3%
At or Above Proficient
42%
At or Above Basic
79%
Below Basic
21%
What Can Economics Contribute?
Economics stresses
the idea that all
people make choices.
 But, they don’t know
at the time what the
consequences of their
choices will be.

Individual Choices

All social
phenomena emerge
from the choices
that individuals
make in response to
expected costs and
benefits to
themselves.

Paul Heyne
John Maynard Keynes

The inevitable never
happens. It is
always the
unexpected.
Who Would Have Predicted in
1980?

The collapse of the
Soviet Union.
 The reunification of
Germany.
 Nelson Mandela
becoming President of
South Africa.
Who Would Have Predicted in
1980?

Economic stagnation in
Japan in the 1990s.
 Record U.S. economic
expansion in the 1990s.
 An attack on the World
Trade Center on 9/11.
 All-out war in Afghanistan
and Iraq.
Who Would Have Predicted in
1980?

The financial collapse of
2008 and the 2009.
 An African American
President of the United
States in 2009.
They Didn’t Know How It Would All
Turn Out

In writing history or biography, you must
remember that nothing was on track.
Things could have gone any way at any
point. As soon as you say “was” it
seems to fix an event in the past. But
nobody ever lived in the past, only the
present.
TALKING HISTORY WITH: David McCullough; Immersed
in Facts, The Better to Imagine Harry Truman's Life
By ESTHER B. FEIN
Published: August 12, 1992 New York Times
They Didn’t Know How It Would
Turn Out
The difference is that it was their
present. They were just as alive and full
of ambition, fear, hope and all the
emotions of life. And, just like us, they
didn’t know how it would all turn out.
 The challenge is to get the reader
[student] beyond the thinking that things
had to be the way they turned out and to
see the range of possibilities of how it
could have been otherwise.


David McCullough
The Economic Way of Thinking

Focus: Understanding Economics in
U.S. History introduces students to the
economic way of thinking.
It stresses how people at the time were
making choices in response to anticipated
benefits and costs.
 This approach allows students to be
“present-minded” about the past.

Introduction to the Economic
Way of Thinking
Guide to Economic Reasoning

Focus:
Understanding
Economics in U.S.
History uses six
principles of
economic reasoning
to solve mysteries in
U.S. history.
Guide to Economic Reasoning
1. People choose.
2. People’s choices involve costs.
3. People respond to incentives in
predictable ways.
4. People create economic systems that
influence individual choices and
incentives.
5. People gain when they trade voluntarily.
6. People’s choices have consequences
that lie in the future.
Why Did the Colonists Fight
Why Did the Colonists Fight?

At first glance the American Revolution
seemed inevitable:
Sugar Act in 1764
 Stamp Act in 1765
 Tea Act in 1763


Neither side was willing to back down.
The Colonists Were Safe

Colonists lived in
relative safety due
to British military
protection.
 Royal Navy
protected
American
shipping.
The Colonists Were Safe

The British spent
heavily to protect
the colonies from
French forces and
their Indians
allies.
 The French and
Indian War
lasted from
1755-1763.
The Colonists Were Prosperous

By today’s standards
colonial life was rough.
But by the standards of
their own time, colonists
enjoyed a high quality of
life.
 Growth of production
 Lived longer than most
 Average incomes were
as high or higher than
in England
 Better educated
The Colonists Were Prosperous

“Even today, relatively few countries
generate average income levels that
approach the earnings of free Americans
on the eve of the Revolution.” (Walton
and Rockhoff, 2002)
The Colonists Were Free

The colonies were a
long way from
Britain.
 Transportation and
communications
were slow.
 English authorities
were inclined to
leave the colonists
more or less alone.
The Colonists Were Free

Samuel Eliot Morison (1965) writes
“British subjects in America … were then
the freest people in the world.”
Practiced in self government
 Freedom of speech, press and assembly.

“The hand of government rested lightly
on Americans.”
Lesson 7: Mystery

The British colonies in
America grew and prospered.
Since the colonists were
economically successful
under British rule, why did
they seek independence?
 Why would colonists fight a
revolution against Great
Britain, one of the world’s
most powerful nations and, in
many ways, when it was safe,
prosperous and free?
Apply the Guide to Economic Reasoning
1. People choose.
2. People’s choices involve costs.
3. People respond to incentives in
predictable ways.
4. People create economic systems that
influence individual choices and
incentives.
5. People gain when they trade voluntarily.
6. People’s choices have consequences
that lie in the future.
People Choose

The colonists
decided that fighting
the Revolution
offered the best
combination of
benefits and costs
they could attain.
People’s Choices Involve Costs

Questions of cost
loomed large.
 They risked losing:



Guaranteed market for
some goods.
Subsidies and
bounties.
Military protection
People Respond to Incentives

After 1763, new
taxes and
regulations became
more restrictive.




Sugar Act
Stamp Act
Tea Act
These actions
provided an
incentive to fight.
People Create Economic Systems

The Navigation Acts
(1651, 1660, 1663)
changed the rules of
the game.

Britain was more
willing to enforce
the rules resulting
in higher prices for
colonists.
People Create Economic Systems

Trade was allowed
only in American or
British vessels.
 All imports were
through British ports.
People Create Economic Systems

Enumerated goods
(tobacco, sugar,
cotton, indigo, rice,
and naval stores)
from the colonies
could only be
shipped to England.
 Townsend Act placed
new taxes on tea,
glass and paper.
People Create Economic Systems

Agricultural land was
very important to
many colonists.
 Quebec Act of 1774


Enlarged the size of
Quebec.
Destroyed western
land claims of
Massachusetts,
Connecticut and
Virginia.
People Gain from Voluntary Trade

Trade was very
important to the
colonial economy.
 Colonial producers
saw Britain’s
tightening mercantile
policy as an obstacle
to free trade.
Future Consequences

Changes in British
policy increased the
risk that the future
would not be as
safe, prosperous and
free as the past had
been.


Economic growth
was in doubt.
Self-government
was threatened.
Solve the Mystery

The colonists fought
the Revolution
because benefits
they had obtained - especially prosperity
and self-government
- - were threatened.
 The prospect of
fighting to secure
these benefits for the
future outweighed
the other choices.
Table of Contents
Table of Contents
Unit 1 Three Worlds Meet
1. The New World Was an Old World
2. Property Rights Among North American
Indians
Table of Contents
Unit Two: Colonization and Settlement
3. Why Do Economies Grow?
4. Understanding the Colonial Economy in
a Global Context
5. Indentured Servitude: Why Sell Yourself
into Bondage?
6. Specialization and Trade in the Thirteen
Colonies
Table of Contents
Unit Three: Revolution and the New
Nation
7. The Costs and Benefits of American
Independence
8. Problems under the Articles of
Confederation
9. The U.S. Constitution: Rules of the
Game
Table of Contents
Unit Four: Expansion and Reform
10. Rising Living Standards in the New
Nation
11. How Did Cotton Become King?
12. Francis Cabot Lowell and the New
England Textile Industry
Table of Contents
13. Improving Transportation
14. Investing in American Growth
15. Why Did the Indians of the Great
Plains Invite White Americans into Their
Land?
16. Andrew Jackson and the Second Bank
of the United States
17. Free the Enslaved and Avoid the War
Table of Contents
Unit Five: Civil War and Reconstruction
18. Why Did the South Secede?
19. Economic Analysis of the Civil War
Table of Contents
Unit Six: The Development of the
Industrial United States
20. Was Free Land a Good Deal?
21. The Changing U.S. Economy
22. The Demand for Immigrants
23. Bigger Is Better: The Economics of
Mass Production
Table of Contents
24. Industrial Entrepreneurs or Robber
Barons?
25. The Economic Effects of the 19th
Century Monopoly
26. Could the U.S. Economy Have Grown
Without the Railroads?
27. Free Silver or a Cross of Gold
Table of Contents
Unit Seven: The Emergence of Modern
America
28. Money Panics and the Establishment
of the Federal Reserve System
29. Who Should Make the Food Safe?
Table of Contents
Unit Eight: The Great Depression and
World War II
30. Whatdunit? The Great Depression
Mystery
31. Did the New Deal Help or Harm
Recovery?
Table of Contents
32. We Shall Not Be Moved
33. When the Boys Came Marching Home
34. Women in the US Workforce
Table of Contents
Unit Nine: Postwar United States
35. The Economics of Racial
Discrimination
36. The No-Good Seventies
Table of Contents
Unit Ten: Contemporary United States
37. The Hispanic Americans
38. The Knowledge- and TechnologyBased Economy of Today
39. World Trade after World War II: The
EU, NAFTA and the WTO
Indentured Servitude: Why Sell
Yourself into Bondage?
Lesson 5
Visual 5.1 Background on
Indentured Servants
Contracts
 Indentured servants' contracts bound them to perform
work for an employer in North America.
 These contracts had the force of law, and they were
enforced.
 Contracts typically called for three-to-seven years of
service. The average period of service was four
years.
 Early in the colonial period, women were offered
somewhat shorter contracts than men.
 Contracts for harder work, such as growing tobacco,
were often for shorter terms than contracts for easier
work, such as performing household duties.
Visual 5.1 Background on
Indentured Servants

How the System
Worked


Ordinarily a person
would sign with a ship
owner or a recruiting
agent in England.
As soon as the servant
was delivered alive to
an American port, the
contract would be sold
to a planter or
merchant.
Visual 5.2 Why Would Free People
Sell Themselves into Bondage?
Why Would Free People Sell Themselves into Bondage?
 Many workers in colonial North America were
indentured servants.
 The work they performed was often difficult—clearing
land, planting tobacco, performing household services.
 The contracts signed by indentured servants had the
force of law.



Terms of service could be increased, for example, if a worker
violated the indenture by trying to run away.
Servants could even be sold to other owners.
Why would people sell themselves into bondage?
Activity 5.2 Indentured Servitude in
North America
Patrick McHugh
 Costs?
 Benefits?
William Heaton
 Costs?
 Benefits?
Mary Morgan
 Costs?
 Benefits?
Tom Holyfield
 Costs?
 Benefits?
Christian Mueller
 Costs?
 Benefits?
Would You Sell Your Labor?

Would you agree to
perform two years of
community service in
exchange for a
significant reduction
in college tuition?
 Costs?
 Benefits?
Other Mysteries in U.S. History
Lesson 2: Mystery
American Indians are widely supposed
to have favored common ownership
rather than private property.
 Like people everywhere, however,
American Indians distinguished
between private and public ownership.
 Why did they decide to use private
property in some cases but public
ownership in others?

Lesson 4 Mystery

The American colonies were an unlikely candidate
for economic success.
There was no gold and silver and no
spices to trade.
 England held sway as a primary source of
manufactured goods.
 Colonial America did possess land and
other natural resources, but labor was not
abundant.



Eventually, however, the colonists lived longer and
better than the populations of other nations and
places at the time.
Why?
Lesson 18: Mystery

In light of the economic advantages of
the North over the South, it seems in
retrospect almost irrational for the South
to have engaged the North militarily. Why
did the South secede?
Lesson 24: Mystery
During the late 19th century,
industrialization proceeded rapidly in the
U.S. Men like Andrew Carnegie, John D.
Rockefeller and the Cornelius Vanderbilt
pioneered the way.
 Were these men “Robber Barons” or
industrial entrepreneurs?

Lesson 33: Mystery
People feared that the end of World
War II would be followed by a return to
depression.
 Instead, the years that followed the war
brought rising prosperity and an
unprecedented expansion of the
American middle class.
 Why did the economy expand after
World War II rather than falling into a
new depression?

References for Teaching
Economics in History
Focus: Understanding Economics
in U.S. History
Research on Focus: U.S. History
Table 1: Descriptive Statistics for Pre- and Post-Test 1
Mean
Score
Before
U.S.
History
Mean
Score
After
U.S.
History
Change in
Predicted
Direction?
Paired
sample tstatistic
Control
Group
13.26
(4.24)
n=150
13.66
(4.33)
n=150
Yes (no
-1.465
Group
that
Used
U.S.
History
13.49
(4.65)
n=353
18.85
(10.57)
n=353
Yes
Group
statistically
significant
change)
p-Value
(2-Tailed
Test)
p=0.145
-9.977
(change is
statistically
significant)
p<0.000
1 Schug, M.C. & Niederjohn, M.S. (2008). Can Students Learn Economics in U.S.
History? Journal of Private Enterprise, 23 (2), 167-176
References

Teaching Economics
in U.S. History
 Social Education,
March 2007
 Edited by Mark
Schug and Richard
Western
References

Historical Statistics of the
United States: Millennial
Edition
Edited by Richard Sutch
and Susan Carter with
contributions from 200
other scholars
Cambridge University
Press
2006
References

History of the
American Economy
Gary M. Walton and
Hugh Rockoff
South-Western
Thompson Learning
References

American Economic
History
Jonathan Hughes
and Louis P. Cain
Pearson Education,
Inc.
References

An Entrepreneurial
History of the United
States
Gerald Gunderson
Beard Books
References

Basic Economics: A
Citizen's Guide to
the Economy
Thomas Sowell
Basic Books
References

Common Sense
Economics: What
Everyone Should
know About Wealth
and Prosperity
 James Gwartney,
Richard Stroup and
Dwight Lee
St. Martin’s Press
www.commonsenseeconomics.com
Christmas
Riddles





What do elves learn
in school?
What do you call
Santa’s motorcycle?
Why does Santa
have 3 gardens?
What do snowmen
eat for breakfast?
Where do snowmen
keep their money?

The elf-abet

A Holly Davidson

So he can ho, ho,
ho!
 Frosted flakes

In a snow bank
Christmas
Riddles

Where snowmen go
to dance?
 What you call a
person who is afraid
of Santa Claus.
 Parents favorite
Christmas carol?
 Why was Santa’s
little helper
depressed?

A snow ball

A Claustropbic

Silent Night

He had low elfesteem.