Paraphrasing an earlier French parliamentarian Georges Clemenceau said, “If you are not liberal when you are young you have no heart, and if you are not a conservative when you are old you have no head.”
This statement, which is often incorrectly attributed to Churchill, may indeed convey a truth. In any event, it no doubt partially explains a recent Harvard University Institute for Politics survey that found only 42 percent of young Americans said they support capitalism. Only 19% of millennials, those born between 1980 and 1990, identify themselves at capitalists.
This attitude of millennials was reiterated in a Rasmussen Report. This non-political polling company reported that only 37 percent of those under-30 favored capitalism, 33 percent preferred socialism and 30 percent were undecided.
It seems that socialism among the young has moved from being taboo to something that has found rising appeal among those polled by Harvard and elsewhere.
The author of the Harvard Study, John Della Volpe, suggests that there are two reasons for millennials’ distrust of capitalism. First, young people today seem to have less faith in all institutions whether they be religious, political or economic. Second, millennials are concerned about their own futures. Sixty-seven percent of the millennials polled in another Harvard survey said they are more worried than hopeful about the direction of the country and fear about their own limited economic opportunities according to the Wall Street Journal.
How can it be that young people in today’s rapidly recovering economy, see no place for themselves? Today the national unemployment rate is below 5 percent. As a result, wages are beginning to climb. Nationally economic growth is projected to be close to 3 percent in 2018. While 3 percent is hardly stellar, it surpasses the growth rate in most recent years. Millennials with a modicum of fortitude and ingenuity should be able to complete college and/or enter the workforce in a better position than many who have gone before.
Perhaps the real reason millennials are so worried about the economy is that they know so little about it. Study after study, such as those undertaken by the Council for Economic Education, and its network of state and university affiliates, have shown that high school and college students understand little about the market based economy that has served this country so well. Among many other things they don’t understand how savings turns into investments and how productive capital and people create jobs and eventually economic growth.
Such understandings are not intuitive. Capitalism is more complex than socialism. In capitalism there is no central authority telling people what to buy, how to buy it or what to produce. Instead markets dictate these answers. These are difficult ideas for young people to grasp without some basic economic understanding. Similarly, young people should come to grips with the pitfalls of systems which rely on central authorities to make economic decisions. The demise of the Soviet Union, the pool living conditions in Cuba, North Korea and Venezuela, are not just a derivative of evil people making vindictive decisions. Rather they are the inevitable outcome of placing too much power in the hands of a centralized economic authority.
Pennsylvania does not require students to take a course in economics or personal finance. In fact, only 19 states require an economics course and only 17 require one in personal finance. This means that students in more than two-thirds of the states are not required to learn about our economic system. The results of this lack of attention to economic education has consequences. In an international assessment of young people’s financial literacy, the U.S. students fall in the middle of the pact scoring just behind Latvia and just ahead of Russia.
Just because of age and maturation, it may be inevitable that young people usually lean toward centralized government answers to economic questions. But for a country which has mostly enjoyed unparalleled long-run economic success, based upon market principles and consumer choice, can we neglect our obligation to help younger generations use a little more head and perhaps a little less heart when it comes to the economic system under which they live?
Michael A. MacDowell is the Managing Director of the Calvin K. Kazanjian Economics Foundation and President Emeritus of Misericordia University.