In 1992, James Carville, the political strategist for Bill Clinton’s presidential campaign against the incumbent George H.W. Bush, coined the phrase “the economy, stupid,” which was later amended to include the word “it’s.”
Today, just like in 1992, the economy is still the foremost election issue in the battle for the White House between President Barack Obama and Mitt Romney. The difference is that most Americans are less naïve — less, if you will, ‘stupid’ — and more educated and astute than they were 20 years ago concerning economic theory, principles and issues, all resulting in a substantial increase in “economic intelligence” since the early 1990s.
When we hear talk of QE2, we know this is not a reference to the Queen Elizabeth luxury liner but the Federal Reserve policy of quantitative easing, which is a somewhat euphemistic term for printing more money. And few are unaware of the “fiscal cliff” we are soon approaching that could be triggered in early 2013 via automatic tax increases and government spending reductions, potentially resulting in another recession unless there is responsible congressional action.
One reason for this increased awareness, especially among younger voters, is that 60 percent of states now require either personal finance or economics for high school graduation. (Michigan requires half a year of economics credit.) Thus, young voters have a better understanding of free markets, the role of government, budget deficits and tax policies.
Another reason for the increase in “economic intelligence” that pertains mostly to adult voters is that more than 4 million individuals have read Steven Levitt’s book, “Freakonomics.” Granted, the book is three-quarters entertainment and one-quarter economics, dealing with topics such as “How Is the Ku Klux Klan Like a Group of Real-Estate Agents?” and “Why Do Drug Dealers Still Live with Their Moms?” The book’s success can also be loosely connected with the significant increase in the number of students choosing economics as their major in college.
Access to online sources of financial and economic information has also been a valuable tutor. The Grand Rapids Press, Mlive.com and Bloomberg.com offer valuable and timely financial and business insights, as do The Wall Street Journal and The Economist.
The economy itself has also been our teacher in an experiential way. That is, unemployment, the national debt and poverty have all been harsh teachers, and in many instances the instruction has been one-on-one. When we hear about the current unemployment rates of 7.8 percent nationally, 9.4 percent in Michigan, and 6.9 percent in Grand Rapids, these numbers aren’t merely statistics to be bandied about but represent individuals whose contribution to society has been reduced or eliminated and whose self-worth might be challenged. And those who have either stopped looking for work or are underemployed recognize all too well that they aren’t included in the 7.8 percent figure but in the larger U6 definition of unemployment, which is around 18 percent of the labor force. These individuals understand how the economy works better than most economists because they know it isn’t working for them.
And if you are below the poverty line, you don’t need to sit in a classroom to understand its impact upon you and your family. In 2011, about 15.9 percent (48.5 million) of the U.S. population had incomes below the poverty level. Michigan has 9.8 percent in poverty (7th worst in the nation), and Grand Rapids 23.4 percent. These voters don’t need to be enlightened by politicians or pollsters on their economic status, but have been taught by their personal experience and will vote based on that.
This year’s election is certainly still very much about the economy, as it was in 1992. However, I believe it needs to be about more than this. That is, while our decisions at the ballot box can and should be to a large degree framed by economic principles, there is a distinct need to be guided inwardly by our personal conviction of right and wrong while anchored outwardly by a view of the world that seeks truth, shows compassion and acts justly. Our decision matrix must also include the important elements of protecting and promoting family, faith and freedom. So while “economic intelligence” is on the rise, we should not neglect a commitment to moral literacy and an increased awareness of the spiritual capital that is a necessary foundation for long-term economic prosperity.
K. Brad Stamm is a professor of economics at Cornerstone University and author of the recently released book, “Faithonomics: It’s the Economy, But You’re No Longer Stupid: The Rise of Economic Intelligence.”