ADD ECONOMICS TO THE THREE RS

Los Angeles Times: Back in the old days of soaring stock markets, Fed Chairman Alan Greenspan once quipped that he would require day traders at least to name the product or service of any company whose shares they bought and sold. Like many expert observers, he worried about the ignorance with which many Americans plunged into the markets, betting on little more than impulse. With half of U.S. households in the markets, economists are starting to worry that large-scale lack of knowledge adds to market volatility, affecting the economy.
Of course, individual investors are no more responsible for the dot-com meltdown than individual voters are for the election of a dishonest or incompetent official. But with so much of an investor's future hanging on day-to-day economic decisions, and with so many people participating in the markets, a little bit of economic knowledge would go a long way.
Educators and policy-makers have been complaining for years about the public's lack of economic understanding. The most recent study, done by Louis Harris & amp; Associates Inc. in 1999, showed that most students and nearly half of the adults asked didn't know what stock markets do, two-thirds did not know the meaning of inflation and only about 14 percent of students and one out of two adults knew the basics of the government's budget. No wonder President Bush feels confident he can sell his mega tax cut -- essentially a huge gift to the wealthy -- as a "refund" to blue-collar workers.
Basic economics: For the last 50 years, a group called the National Council on Economic Education has been arguing that, just as a good citizen should know how democracy works, a good consumer should learn in school the basics of market economics. The reasonable expectation is that educated consumers would not only make better decisions in their daily lives but also be better participants in important public policy debates such as those over federal budgets or trade policy. So far only 13 states, including California, require high schools to offer a course in basic economics, although the subject is part of social studies in other states.
As in politics, the harm caused by economic ignorance is hard to measure but could be substantial and when multiplied by millions could affect the entire society. Investment in a scheme that's too good to be true can wipe out a family's savings. Unrestrained credit card borrowing can add up to trouble for both individuals and banks, and consumers' decisions not to save for a rainy day affect economic growth. Without domestic savings, expansion depends on investment from countries where people save more. But that works only as long as the U.S. economy does well enough for foreigners to invest in it.
Public happiness: "Knowledge," George Washington once said, "is in every country the surest basis of public happiness." That goes double for knowledge that could keep a family in its own house and out of the poorhouse.