• Wojciech Sabat

Economic education to limit pictorial democracy

According to the report on the Financial Knowledge of Poles by the Kronenberg Foundation, people who are deeply interested in economics in Poland are twice outnumbered by geni who qualify to Mensa. It could have been optimistic news if not for the fact that only 2 percent of population can join Mensa. The article has been awarded in the Obserwator Finansowy contest "If it depended on me...".

(Fot. CC-By-NC-Cayusa)

Is economics boring? Perhaps. Whatever the answer is, an adult person needs to have a considerable knowledge of this branch of science to cast an informed vote in elections.

Ignorance is grist to the mill of populist parties

Dissemination of economic knowledge is important in a democratic state since it is citizens who bestow power on candidates during elections and accordingly the elected ones set the trends in economic policy. If 62 percent of Poles have little knowledge on economy (at least that is what they think), they are receptive to populist slogans of politicians.

The point is that people with little economic knowledge most likely are not able to verify the plausibility and sensibility of candidates’ promises because they do not know the meaning of some concepts. Most of the respondents believe that better knowledge of the rules governing economic life would not be useful for them or they do not have any opinion on the matter. Another sad fact is that people who, in their own opinion, have poor knowledge of the economy have very little hunger for economic knowledge.

Political parties have noticed that they do not have to worry about their promises and that they actually do not have to make any. That is why a smiling face of a candidate on a billboard accompanied by an electoral slogan and the list number is masterpiece in doubletalk. This way of communicating with voters is nothing else but pictorial democracy.

In theory, Poles declare the greatest support for progressive tax (51 percent). But when asked a question” “Mark earns PLN 4,000 and earns Peter PLN 2,000 – what tax should each of them pay?” only 26 percent said PLN 600 for Mark and PLN 200 for Peter (other options: PLN 400/200 (linear tax) and PLN 200/200 (poll tax)). All in all, 46 percent of the respondents provided inconsistent answers to a question regarding fair taxes. It gives rise to some doubts: how can a Pole be happy with the government if he does not know what he likes?

It is worthwhile to note that Poles should not feel economically less aware than, for instance, Germans. In Germany, a country much wealthier than Poland, economic knowledge of its citizens leaves a lot to be desired. This was the conclusion of researchers from the Dresden University of Technology after analysing the results of an economic knowledge test. But weaknesses of others cannot account for our own impassiveness.

Support-for-various-options-of-income-tax CC by Tax Credits (2)

Infographics DG/Tax Credits2

Common interest

Economic education of the country’s population should be recognised to be in our common interest and state exams in economy with financial awards for passing should be held. Publishing an economic textbook written in a clear language with a lot of examples, also available as an e-book, audio book, video and a paper book is of vital importance. The textbook would be distributed free of charge in all these forms.

Such a textbook should not contain more than 100 pages in A5 format (or 50 A4 pages) and test questions should be based on the textbook. The textbook would include, among other things, explanations regarding the pension scheme, tax regime, health care and basic economic concepts such as inflation.

It is essential to dispel the myth that economy contests for pre-university students contribute to developing economic awareness among young people significantly. Only a narrow group of outstanding, passionately involved students, ready to work hard with research literature on their own take part in such contests.

According to last year’s survey by PZU and the Junior Achievement Foundation, young Poles would like to receive knowledge in economy mainly from teachers. In fact, their knowledge basically comes from the media, putting school in the fifth place. True, secondary schools teach the basics in entrepreneurship but it is the subject secondary school students respect the least. The classes may very well be replaced by classes in economics and introduced as a mandatory subject for the secondary-school leaving exam to check if students have learned the material in a standardised form.

Still, it is important to be careful with the economics curriculum. A good economist is not the one who knows how to present economic relations by using charts and calculates derivatives eagerly. It is rather important that he perceives a lot since, as a famous French economist, Frederic Bastiat, wrote: “Between a good and a bad economist this constitutes the whole difference: the former takes account only of the visible effect; the latter takes account of both the effects which are seen and those which it is necessary to foresee”.

During the three years students spend at an upper secondary school, it is certainly possible to form such economic opinions in a young person that will be something more than just a naive repetition of ideological slogans or internally incoherent statements, such as the above opinions on the fairest tax system. And indeed, the point is that an upper secondary school graduate should understand what a “progressive tax” is rather than what “complementary goods” are.

We do not need a revolution in secondary school staff to achieve this objective. A road to the profession of a teacher of economics for the people who currently teach the basics of entrepreneurship could consist in short, at most one-year postgraduate studies or in passing a special exam certifying their skills. Such exam would cover a more extensive part of the material than that designed for the entire population and would be more specific. The number of hours of instruction in economics would be the same as the number of hours of instruction in the basics of entrepreneurship, so more staffing would not be required.

Besides, a cost-free ad hoc solution is also available. It consists in making use of undeniable power of the media, especially the public ones. The fact that usually the same economic experts from universities and business are invited is surprising. We may notice that journalists prefer to invite a media darling rather than find a specialist who focuses on research. But truth-seeking is the most important task for a journalist, and thus, finding the best experts, is it not? It is striking that experts from Warsaw outnumber those from the rest of the country, which affects the quality of economic debate in the media.

Still, not only journalists are responsible for this situation. We need to introduce and promote a concept of social responsibility of economics professors. If a professor watches TV and strongly believes that he sees obvious inadequacies or even worse: deliberate manipulation and economic populism, he has not only the right, but it is his duty to send a letter to the editor, comment to a given medium or publish an article.

Alas, Polish professors rarely bestow such favours on society. A good example of social responsibility was given by economist, Professor Leszek Balcerowicz, who in 2011, during a debate with Minister Rostowski demanded that the contribution to open pension funds should be reduced. Persuading other professors for being more active in the media is some kind of an honourable duty for the greatest authorities of the Polish economy, such as Professor Balcerowicz, Professor Kołodko and Professor Rybiński. Such celebrities should be requested to suppliantly implore other academics to be active in the media to our common benefit.

If, however, such encouragement by specialists of great renown proves fruitless, a special state award for a Socially Responsible Economist of the Year should be funded. It would be an award for economists who had not been active in the media, but struggled passionately against economic populism in mass media in a given year. Even one million zloty reward would not be too high since politicians often decide about spending billions.

Save a billion

Losses stemming from the present state of economic knowledge among Polish people are difficult to evaluate. However, we will try: in 2013, the budget revenue has been forecast at app. PLN 300 bn. An election of non-populists for one term of office of the Parliament saves app. PLN 1.2 bn. from the influence of populists. On top of that, it is also a blow in the face of pictorial democracy.

We should also admit, ironically though, that Poles’ unconcern for economic issues is an evidence of the country’s wealth as a poor country could not dispense such a huge amount in an irrational way, could it?

The author majors in finance and accounting at the Warsaw School of Economics.


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