If you listen carefully to that introduction, and I made it that way on purpose, I could have put lots in there,
but what I wanted to get across was the idea that I am not a politician, I'm an economist.
I worked for President Reagan, but before that I worked for President Carter and there was a reason.
Besides the obvious reason that I was young and I needed the work, which is the age-old reason for doing things,
I actually was raised in a Roosevelt Democrat family.
My parents were maleducated at Reed College in the 30s.
My father became an international economist through the Fletcher School of Business at
Harvard in the 1940s, but nonetheless, he was grounded in the American principles in
the sense that he sacrificed a lot during World War II as a fighter pilot, but he didn't
I didn't really connect all of the principles and what we do at Mises is we try to connect principles because otherwise you get people like Paul Craig Roberts who has gone astray because he hasn't fully grounded in all the ideas.
He's not Austrian trained. He has some economics and he has a lot of confused economics.
Okay, well that explains a little bit about what may be a confused background.
I went on from my family's just absorbing the ideas that business was bad, government
was good, that somehow businesses were greedy but politicians weren't.
And then that training continued at the University of Connecticut where I learned to three decimal
points to prove in a mathematical model that that was true in the Keynesian multiplier.
So I went to work for President Carter and soon found out that everything I had learned,
everything I had learned in macroeconomics was simply not fitting reality.
So here's the problem, I was also trained as a mathematician and a scientist, oops.
So we have data that's orthogonal to the reality that you're observing and if the data is good,
you have to question the theory behind which you were trained.
And that started me on an investigation, because at my core I was a scientist, not an ideologue.
And that training led me eventually to read some people that I never read in graduate
school.
I never even read Milton Friedman.
I got a Ph.D. in economics in the 1970s, while he got his Nobel Prize, we never read him.
It's even worse.
Because who else got the Nobel Prize for Economics in the 1970s?
Friedrich Hayek. Never even heard of him. At least I'd heard of Friedman.
So when I say maleducated, I mean it. So I had to educate myself.
So I started studying Milton Friedman. I got it about free markets. I got it about capitalism and freedom.
But still the economics of it didn't make a lot of sense, particularly if there was a central command and control of the most important price in the economy,
and the economy, which is the price of time interest rates.
So that led me then from Chicago to Vienna.
It was a long, strange trip, as Jerry Garcia would say.
Well, reading the Austrians really, really cemented my economic thinking,
because for the first time in my life, I saw an Aristotelian logic to it all.
I saw first principles. I saw derived theorems inside of it.
and I saw things as a scientist, as a mathematician would see, the logic of liberty, the science of liberty and so that's what's drawn me to this school ever since and of course I'm completely self-trained in it since very few people, maybe a few here teach some of this in graduate school but I had to learn a lot of it on my own and I'm still working on it. So with that introduction I'll just start my presentation if I can figure out how to do this here. Oh yeah, you might have also heard that I worked for President Clinton.
Well, I want you to think for a minute. When was the last time we had a balanced budget?
I was a visiting scholar at the Department of Treasury in order to implement that in my little world of the agricultural banks and the agricultural system.
So it's not about political party or even political ideology. It's about economics, true economics, praxeology, the logic of liberty.
So, this is somehow messed up. There we go. Okay. Now, AP Economics is Advanced Placement
Economics because besides what I was introduced as, all of that is simply a way of supporting
my teaching habit in the public schools. I have three boys in a charter school in Colorado
Springs. It's called the Vanguard School. We're graduating our first senior class this
This year, and before I had them take my course, I had them pre-read The Road to Serfdom as
an introduction to their economics.
Well, I had to go to this training, this advanced placement training put on by the college board
in order to be not certified so much, but really qualified to teach this because when
you get an advanced placement course in high school, that gives you college credit.
And boy, the central authorities control what is and what is not college credit.
So I went to this training.
I put my conclusion at the top because the title is actually what I learned at AP Economics teacher training, but my conclusion is separation of school and state, so I thought I'd add that to the title.
If you want to get in touch with me, the best way, and I have this PowerPoint and I can
either send it to you or I'm going to post it on my website which is pikespeakeconomicsclub.com.
It's a long word but very simple, pikespeakeconomicsclub.com.
You can contact me through that and I'll have this posted.
On that website we have RSS feeds to Mises articles, we have RSS feeds from Cafe Hayek
if those of you might be familiar with what they're doing at George Mason University.
Well, we know that economics training is critical to maintaining a free society ever since Adam
Smith really discovered or uncovered a basic human principle that this invisible hand leads
us to wealth and prosperity, much more so than a central command and control.
But for too long, the study of economics has been ignored in the U.S. educational system.
Now, at the school that I teach, the Vanguard School, with our first senior graduating class
this year, it's a charter school in Colorado, and I'm a refugee from a failing district
system inside Colorado Springs, and a lot of parents got together and started their
own school.
It's a public school, but yet we have our own board of directors, and we don't hire
union teachers, and our curriculum, all it has to do is meet the outcome standards of
the state, so we can pretty much teach what we want.
So our high school students, we have them study Aristotle, they study Thucydides, they
study Homer and they study the Bible in a public school.
We do all that because it's literature and we just push back to the ACLU.
We are the number one high school in the state of Colorado by every available metric, by every
available metric.
We have of those small, very small first-graduating class 29 students, every single one of them
has not gone into college but has got into the college of their choice
and they've earned 1.2 million dollars in scholarships.
So it's an amazing place and I'm blessed and privileged to work there and also
have my three youngest boys there
which is another reason why I work there.
So I was so excited because for too long the study of economics has been
ignored
and now I get a chance to build the advanced placement program for these
students.
in fact economics is no longer required in most high schools
nor for most college degrees so here's the funny thing if you start with Adam
Smith and you realize political economy
today you can get a degree in political science and never have taken an
economics course
you can get a degree in economics and never have taken a political science
course
so the entire profession has gone so off track it's just shocking
well economic ignorance, in my claim, is at the root of many of the world's
problems
People do not understand trade-offs, opportunity, costs, incentives, how they work.
Here's economic ignorance, some data behind it.
The National Council on Economic Education, they put out a paper called, Why Johnny Can't
Choose.
It was a take-off on one of the earlier paper, Why Johnny Can't Read, Why Johnny Can't Choose.
It's about the economic illiteracy in America, and the link to it is in this PowerPoint which
Here's a quote from the former chairman of the American Stock Exchange.
The American economy is the eighth wonder of the world.
The ninth wonder is the American ignorance, is the economic ignorance of the American
people.
That's really phenomenal.
Here's an economic literacy survey by the Federal Reserve Bank of Minneapolis showed
that 44% of the public has even taken a course in economics.
High school students average score on economics quiz is 53%, that would be an F. And of the
total number of high school students, 60% of them flunked.
And that's ahead of the general population, by the way.
Well, it wasn't always this way.
Here's a cartoon from the Chicago Tribune, 1934, not sure how much of it you can read.
Down here is that Trotsky, Spend, Spend, Spend, Plan of Action for the U.S.
This was pushback in the journalist profession, if you remember back when they were journalists,
against Roosevelt's New Deal, depleting the resources of the soundest government in the world.
Whoopee, a bunch of drunk people running around spending money over here at Stalin, saying
how red the sunrise is getting, okay?
Well now, think about what we have now from the Columbia School of Journalism, okay?
We have the red.
Well, here's a cartoon about what it used to be like in America.
Now you can see how old I am.
I was here in the 50s when we breathed liberty, because we were taught this in the public
schools before the left had taken it over.
We were taught our founding principles, we were taught John Locke's life, liberty and
property leading to Thomas Jefferson's Declaration of Independence.
We were taught free market economics from Adam Smith.
And that was sort of in the air.
So this is from Hardin College, it's called Make Mine Freedom, and I would submit that
and no college today except perhaps Hillsdale and one or two others would even think of
making such a thing.
But this was just the common thinking of the world at the time.
It was to create a deeper understanding of what has made America the finest place in
the world to live.
It's a 10-minute cartoon.
I'm not going to play it for you here because I don't really think we have time.
If we do have time later on, we'll go back to it.
But it's really interesting that this was produced by the Extension Service of a small
college in America, because this is how everybody used to think.
Not everybody, but a lot.
A lot of people.
The common American public thought this way, and at one point the intelligentsia were grounded
in this.
But no longer.
Something has happened.
I'm going to show you what has happened.
Well, there's a little bit of hope.
Here's a journalist's idea of what the actual stimulus plan is.
Shovel-ready projects.
Well, so, when I found there was this new push for advanced placement economics education in high schools, I got pretty excited.
Because, after all, parents like advanced placement because students get free college credit, free of charge to them.
The Advanced Placement courses bump up your GPAs, so if you get an A in Advanced Placement course, that gives you five points instead of four, so it's not so much grade inflation, it's just a much harder class and it gives you college credit at the same time, if you can pass the standardized test.
The administrators like it, because they're judged on the number of courses that they offer, the number of AP courses, and the number of students that are enrolled. That's the metric.
Well, we know that you get what you measure. We know that in business. So here's what they're measuring.
The number of courses and the number of students enrolled, but here's one of the problems is,
they're not judged on the number of students who actually pass.
So they're pushing all this AP economics training and AP courses in the high school,
but it's not important to them what the people learn or if they can even pass the course.
They're judged on how many courses they offer and how many students enter,
not how many exit with a passing grade very interesting so more economics teaching is a good
thing you would think right well we'll see wrong here's a paraphrase from Walter Williams i don't
know what the exact quote is so i paraphrased i just remember hearing him say it once there are
two kinds of economists good economists and bad economists good economists know there's no such
The first thing is a free lunch.
Well here's the thing, in order to pass the Advanced Placement National Macroeconomics
Exam, students must be taught that there is a free lunch.
Even more so, they are taught that it comes from the government, and they have to answer
this to get credit for the course.
Students must prove, and I say must, I'll tell you what happened when I pushed back
a bit at the training.
They must prove that printing more money, more paper money, creates real income and wealth.
It's called a monetary policy stimulus.
They are taught that inflation is caused by too many people working.
The old Phillips curve, trade-off between inflation and unemployment.
And they have to answer this to get credit for the course.
They are furthermore taught that taking money from the private sector and giving it to the government
creates more real income and wealth.
It's called the balanced budget multiplier.
You're familiar with that because you run those models to three decimal points, proving it, but we know it's nonsense.
They have to prove that a weak dollar relative to foreign currencies creates more real income and wealth.
We debouch our currency domestically, we debouch it internationally, and we're all better off somehow for this.
And they actually have ways of proving this.
But what this is based on is this fact, that their belief.
The economy is inherently unstable and can only be stabilized by government policy.
Now, when you understand what the economy is, it's us, it's people, it's what we do, it's what we're born and created and designed to do, to produce and trade and create wealth.
That's who we are.
When people say the economy is inherently unstable, that means that they believe that liberty itself is unstable.
It doesn't work. People can't be trusted to make their own decisions to do the right thing.
That's what it means. If you believe, in a Keynesian sense, that the economy is inherently unstable,
you must therefore believe that people themselves set free at liberty are not going to create good outcomes.
So I asked about competing economic theories, different schools of thought.
You know, there they were drawing their aggregate supply and demand curves,
improving all the stuff about the balanced budget multiplier and so forth.
What about supply-side economics? What about people responding to incentives? What about
simple classical theory? What about the fact that you have to save in order to create capital
in order to produce the wealth that you're talking about here? I don't know if that's
a leakage from the system. So here's what I was told. Actually, I even brought up Mises.
I said, what about Austrian economic theory? What if a student answers any of these questions
is on your College Board test with a different theoretical construct.
I was told this.
This is not a quote, but it's a paraphrase.
It doesn't matter with some anger on the part of the teacher.
The trainer.
No, I won't use the word teacher.
The trainer.
The Keynesian answer is the only correct answer.
Now, here's the thing.
If you remember my background, I came into the government, Keynesian-trained, in an era
of stagflation that wasn't supposed to happen under the Keynesian model.
I thought we had gotten over all of that.
You see, I thought we had then disproved that and I thought we'd moved on.
I thought we had at least accepted some of the tenets of supply-side economics, some
of the ideas of Milton Friedman, at least in terms of the power of markets.
And certainly we were moving towards more Austrian understanding of the real economy
and how it works and what it's about.
And certainly the economic boom that we had over the last 20 years or so, 25, 30 years,
Number one, cut the tax rates, provide incentives for people to produce and save and invest.
Number two, deregulate the markets so the government can get out of the way and people
can be free then to trade what they've produced.
Number four, harden the currency, not only gold standard but just stop printing it, stop
printing these pieces of paper and that's what Volcker did, stop printing these pieces
of paper.
So we got those three done.
The fourth one we didn't get done.
The fourth one was to cut government spending while we were waiting for the revenues to
come in.
I promised $2 in spending cuts for every dollar in tax cuts, and he was a lying son of a bitch.
What can I say?
So we got three out of four of those, and that was enough to give us a pretty darn good boom.
Because those principles are economic principles.
It's as if it never happened.
So part of my subtitle is, they're back.
I mean it, they're back.
And they're back with a vengeance.
Because they're not just teaching any old high school students, they're teaching the best and the brightest.
And they're not teaching them, they're brainwashing them. I'll go through this.
Here's what they said. If your students want to pass the exam, they have to give the Keynesian answer.
They have to. Because these exams are controlled by the Central College Board.
Who are they? Who are these guys?
They control the economic standards that have to be taught in order for students to pass.
consists of college professors, high school teachers, government education bureaucrats, and textbook publishers.
AP Economics textbooks, well for many years, when it was becoming more mainstream to think of incentives and supply side economics in that sense,
and that dominated the real world of policies and of course the breakdown of the Soviet Union and the emergence of the Eastern European economies
and even China and many places around the world.
So the AP, the Advanced Placement Economics of Choice, was N. Gregory Manku,
Principles of Economics. It's not bad. For a mainstream economics text, it's not bad.
It's not what we'd like, but it's not bad, okay? Well, here's what happened.
Now that markets are out of fashion, out of fashion, the Advanced Placement Textbook of
The choice is Paul Krugman's economics. Now it's published brand new in 2009. He got his
Nobel Prize in the fall of 2008. That was not an accident. They show up at these AP
training courses all around the country, all around the country with stacks of these to
give out as their suggested textbook. Who is this guy, Paul Krugman? We've talked a
little bit about him. We've heard a little bit about him. He won the Nobel Prize in the
He's an op-ed columnist and economics blogger for the New York Times, his blog is called
The Conscience of a Liberal.
All of these are hot live links inside my PowerPoint.
Quote, government deficits are the only thing that have saved us from a second Great Depression.
That's Nobel quality thinking.
He calls socialized medicine a trillion-dollar bargain. It will result in lower health care costs.
Well, that's, you know, I heard that word. And it's possible.
Here's what he said about betraying the planet. Global warming deniers are committing treason against the planet.
Well, that kind of sets you up because we know what the penalty for treason is in most nations.
That's a pretty extreme guy, but yet his textbook is the textbook of choice.
Now the textbook is not full of a lot of this nonsense, but it's getting money to the guy.
You understand, when you buy his textbook, you're funding this guy.
Your tax dollars are funding this guy.
He said the current stimulus is too low and too slow, we need a second stimulus.
So we have the top Keynesian economists are near unanimous in their belief that there
must be a second stimulus.
Where does this come from?
The best and the brightest of our high school students are being taught this free lunch
economics.
So I was pretty discouraged.
I sat there for five days listening to all of this and every time I tried to object or
bring up a different thing, it wouldn't even listen.
So what I did was I talked with the teachers in the lunchroom, because I'm kind of a people
person and a street guy, okay, I don't care about the professors that much, but who is
teaching AP economics?
The history teacher, the English literature teacher, somebody with no training in economics
whatsoever, okay.
So they're absorbing all of this and this is what they have to be teaching, they have
to learn this aggregate supply and demand Keynesian model and then teach it to their
students for their students to get the credit for the courses.
This is a horrifying situation.
So I talked to them and a couple of them, at one point during my pushback to them, one
of them from Louisiana turned to me and she just mouthed the words, this is totally bogus.
So there's some smart people there as part of our teachers, they just don't know what
to do, they have to teach this.
But they don't even themselves know why it's wrong, it's just intuitively wrong.
It's intuitively false that if you take, it's intuitively that if you take money from productive
of People and give it to unproductive people. It's intuitive that you're not going to help
the economy. It doesn't take a lot of Aristotelian insight. So a lot of these teachers were just
confused as they could be. So I did my best to straighten them out. I'm in touch with
many of them still and I'm on the AP Economics blog, which is an international blog of advanced
placement teachers, pushing back, pushing back, pushing back. But you should see some
of the things that are coming out of that. It's amazing.
Well, somebody once said, and maybe some of you actual professors would know who said
this and it's a paraphrase, that two of the most important questions in the world are
who will teach our children and what will they teach them, because we've stopped teaching
them about liberty, the other people are now teaching them.
Here's Karl Marx, the education of all children from the moment they can get along without
out of mother's care, shall be in state institutions at state expense, straight out of the Communist
Manifesto.
Here's Vladimir Lenin, give me four years to teach the children and the seed I have sown
will never be uprooted.
We're now into our second and third generation, those of you that work in universities know
you see it.
We're into our second and third generation of Marxists in every single discipline, even
Education is a weapon whose effect depends on who holds it in his hands and at whom it
is aimed.
Another blast from the past, Benito Mussolini, it is the state which educates its citizens
and Civic Virtue gives them a consciousness of their mission and welds them into unity.
So we've heard about this. This is very deliberate. It's very much related to the progressives,
the takeover from the history that you go back to 1900s, to Woodrow Wilson, etc., etc.
But it's just been there a long time and it's very hard to uproot it. So this is a fairly
discouraging and perhaps depressing scenario for you. What I do like is when I see things
There's like the Mises Institute involved with their high school training programs, there's
one coming up here in a few weeks I believe, but what we've got to do is get to the teachers.
Every state has got an organization called the Council of Economics Education.
We have the Colorado Council of Economics Education.
We educate the educators, okay, we educate them in markets and liberty.
So there's probably one in Alabama, probably one in your state, I suggest you start working
with them, because the ultimate conclusion here is we can't trust the state.
We have to have separation of school and state before we can ever begin, ever begin our way
back to liberty.
Here's a quote from the Association of California School Administrators.
It's about parent choice.
Keep in mind I'm involved in that because we're working in a charter school.
Parent choice proceeds from the belief that the purpose of education is to provide individual
Social Students with an Education, who to thunk.
In fact, educating the individual is but a means to the true end of education, which
is to create a viable social order to which individuals contribute and by which they are
sustained.
Family choice is therefore basically selfish and antisocial in that it focuses on the wants
of a single family rather than the needs of society.
Society. Do you see the words here? Okay, that's the Association of California Public
School Administrators. It's probably not that different here or anywhere you are in
your state. So if we want to take this country back, we have to start with the kids. We have
to start by educating for liberty. It's the motto of Hillsdale College, educating for
liberty. So it's not so much the professors. Go volunteer in your high schools. Teach the
Some middle school students, get involved because these people are serious and they're not going
to stop.
They're not going to stop until they win or we destroy them somehow.
They're very serious.
Okay.
Thank you very much.