Universities and the Price of Ignorance

My friend and American Enterprise Institute colleague Alex Pollack had a brilliant column in the Wall Street Journal on March 14 that unintentionally speaks importantly to one of the many scandals surrounding higher education: our students are weak in core knowledge about the development of our civilization.

More specifically, Pollack said an even cursory glance through history would tell you that the recent European financial crisis and threatened Greek debt default are hardly surprising—history is replete with scores if not hundreds of other examples. Governments use their sovereign and coercive powers to pressure people to buy their bonds. For example, our system of national banks created in the National Banking Act of 1863 resulted in considerable part because of Treasury Secretary Salmon Chase’s desire to peddle bonds to finance the North’s effort in the Civil War. Banks were coerced to keep U.S. bonds as part of their reserves. Political leaders love bond financing because it is less of an overt form of taxing the people than explicit direct taxation, and thus sometimes imposes a lower political cost.

We used to make kids in college know about these things. I still do. In my European economic-history course, I tell them one factor in the fall of the Roman Empire was the dubious fiscal overreach of the imperial government—an early form of deficit financing. I tell them that during the Pax Britannica (1815-1914), France’s economic growth lagged behind that of Britain, Germany, and the United States in part because of the peculiar French habit of buying government bonds, including ones such as Czarist Russia’s, that ultimately defaulted. In my American economic-history class, I tell the students that American economic exceptionalism got a boost from the Founding Fathers, who knew of the perils that Pollack talks about, leading to Hamilton’s assuming debt obligations of the colonial and confederation eras that could have been avoided. By meeting those obligations, our credit standing in the world soared.

In short, people can avoid huge mistakes by knowing history. My university’s largest donor of the 1960s and 1970s once told me that reading Arnold Toynbee’s A Study of History made him more money than any of the finance, economics, or accounting courses he took. For reasons like this, universities formerly required as part of their general-education requirement a good dose of history.

Speaking personally, I think my year long course in Western Civilization had all sorts of positive spillover effects on my development. The same applies to other excursions into the humanities. Reading Plato’s Republic, Locke’s “An Essay Concerning Human Understanding, King Lear, the Brothers Karamazov and (in French) the great 17th century playwrights Moliere, Corneille, and Racine helped me understand the human condition and human behavior. I was more or less forced to take those courses, and have benefited from them over a lifetime.

So today I am sounding like fellow Chronicle blogger Peter Wood or American Council of Trustees and Alumni president Anne Neal. I think what Benjamin Ginsberg terms “the all-administrative university”—the growth in the power of nonacademic administrators—has contributed some to the decline in the common core curriculum. Marketing experts tell schools they must sell vocationally relevant majors. We need more emphasis on courses “which will help students get jobs.”

Yet the evidence that Arum and Roksa (Academically Adrift) present suggests that those with a strong liberal arts curricular emphasis actually develop better critical-thinking and writing skills than those with backgrounds in such vocationally oriented fields as business or communications. And in their more recent follow-up research, they suggest that post-graduate vocational success is strongest among those doing well on the CLA test that forms the basis of their research. In other words, a strong dose of liberal education seems consistent with ultimate vocational success. A good history or English major can equal or exceed the business major in terms of longterm vocational success.

Yet we are paying the price of our contempt or ignorance of history. At the federal level, the Fed prints money and creates unbelievably large excess reserves despite historical evidence that such policies often lead to hyper-inflation. The government engages in huge budget deficit spending and incurs huge unfunded liabilities from an out-of-control welfare system when historical evidence shows this ultimately leads to economic and political decline. We will pay the price for showing our contempt for the lessons taught us by our forefathers, as well as showing disdain for their contributions to our well-being. And the universities must take part of the blame because of their downplaying, even at such great schools as the University of Chicago, of a truly liberal education.

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