How Economics Can Strengthen the Teaching of U.S. History Council for Economic Education March 21, 2009 Mark C. Schug, Ph.D.

University of Wisconsin-Milwaukee

Overview

 Problems teaching history  How economic thinking might help  Features of

Focus: Understanding Economics in U.S. History

 Lesson 5 Demonstration

Problems Teaching U.S. History

 Schools rely on U.S. history to teach  Our national identify  An academic understanding of our past  But, history teaching is criticized as being    Boring in content and pedagogy Superficial Trivial  Remote

Problems Teaching U.S. History

 Students usually take 6 semesters of U.S. history:  Grade 5: 2 semesters  Grade 8: 2 semesters  Grade 11: 2 semesters  Yet, national tests show that achievement in history is low.

U.S. History Achievement Levels: 1994, 2001, 2006

NAEP

Level At Adv.

2% Grade 4 2% 2% 1% Grade 8 2% 1% Grade 12 1994 2001 2006 1% 1% 1% At or Above Prof.

17% At or Above Basic 64% Below Basic 36% 18% 18% 14% 66% 34% 70% 61% 30% 39% 17% 38% 17% 35% 11% 57% 11% 57% 13% 62% 65% 43% 43% 47% 53%

Civics Achievement Levels: 1994, 2001,

NAEP

Level

GRADE 4

1998 2006 At Advanced 2% 2% At or Above Proficient At or Above Basic Below Basic 23% 69% 31% 24% 73% 27%

GRADE 8

1998 2006 2% 22% 70% 30% 2% 22% 70% 30%

GRADE 12

1998 2006 4% 26% 65% 35% 5% 27% 66% 34%

Economics Achievement Levels: 2006,

NAEP

Level Grade 12 At Advanced At or Above Proficient At or Above Basic Below Basic 3% 42% 79% 21%

What Can Economics Contribute?

 Economics stresses the idea that all people make choices.

 But, they don’t know at the time what the consequences of their choices will be.

Individual Choices

 All social phenomena emerge from the

choices

that

individuals

make in response to

expected costs

and

benefits

to

themselves

.

 Paul Heyne

John Maynard Keynes

 The inevitable never happens. It is always the unexpected.

Who Would Have Predicted in 1980?

 The collapse of the Soviet Union.

 The reunification of Germany.

 Nelson Mandela becoming President of South Africa.

Who Would Have Predicted in 1980?

 Economic stagnation in Japan in the 1990s.

 Record U.S. economic expansion in the 1990s.

 An attack on the World Trade Center on 9/11.

 All-out war in Afghanistan and Iraq.

Who Would Have Predicted in 1980?

 The financial collapse of 2008 and the 2009.

 An African American President of the United States in 2009.

They Didn’t Know How It Would All Turn Out  In writing history or biography, you must remember that nothing was on track. Things could have gone any way at any point. As soon as you say “was” it seems to fix an event in the past. But nobody ever lived in the past, only the present.

TALKING HISTORY WITH: David McCullough; Immersed in Facts, The Better to Imagine Harry Truman's Life

By ESTHER B. FEIN Published: August 12, 1992

New York Times

They Didn’t Know How It Would Turn Out

 The difference is that it was their present. They were just as alive and full of ambition, fear, hope and all the emotions of life. And, just like us, they didn’t know how it would all turn out.

 The challenge is to get the reader [student] beyond the thinking that things had to be the way they turned out and to see the range of possibilities of how it could have been otherwise.

 David McCullough

The Economic Way of Thinking



Focus: Understanding Economics in U.S. History

introduces students to the economic way of thinking.

 It stresses how people at the time were making choices in response to anticipated benefits and costs.

 This approach allows students to be “present-minded” about the past.

Introduction to the Economic Way of Thinking

Guide to Economic Reasoning



Focus: Understanding Economics in U.S. History

uses six principles of economic reasoning to solve mysteries in U.S. history.

Guide to Economic Reasoning 1. People

choose

.

2. People’s choices involve

costs

.

3. People respond to predictable ways.

incentives

in 4. People create

economic systems

influence individual choices and incentives. that 5. People gain when they

trade

voluntarily.

6. People’s choices have

consequences

that lie in the

future

.

Why Did the Colonists Fight

Why Did the Colonists Fight?

 At first glance the American Revolution seemed inevitable:  Sugar Act in 1764  Stamp Act in 1765  Tea Act in 1763  Neither side was willing to back down.

The Colonists Were Safe

 Colonists lived in relative safety due to British military protection.

 Royal Navy protected American shipping.

The Colonists Were Safe

 The British spent heavily to protect the colonies from French forces and their Indians allies.

 The French and Indian War lasted from 1755-1763.

The Colonists Were Prosperous

 By today’s standards colonial life was rough. But by the standards of their own time, colonists enjoyed a high quality of life.

 Growth of production    Lived longer than most Average incomes were as high or higher than in England Better educated

The Colonists Were Prosperous

 “Even today, relatively few countries generate average income levels that approach the earnings of free Americans on the eve of the Revolution.” (Walton and Rockhoff, 2002)

The Colonists Were Free

 The colonies were a long way from Britain.

 Transportation and communications were slow.

 English authorities were inclined to leave the colonists more or less alone.

The Colonists Were Free

 Samuel Eliot Morison (1965) writes “British subjects in America … were then the freest people in the world.”  Practiced in self government  Freedom of speech, press and assembly.

“The hand of government rested lightly on Americans.”

Lesson 7: Mystery

 The British colonies in America grew and prospered. Since the colonists were economically successful under British rule, why did they seek independence?

 Why would colonists fight a revolution against Great Britain, one of the world’s most powerful nations and, in many ways, when it was safe, prosperous and free?

Apply the Guide to Economic Reasoning 1. People

choose

.

2. People’s choices involve

costs

.

3. People respond to predictable ways.

incentives

in 4. People create

economic systems

influence individual choices and incentives. that 5. People gain when they

trade

voluntarily.

6. People’s choices have

consequences

that lie in the

future

.

People Choose

 The colonists decided that fighting the Revolution offered the best combination of benefits and costs they could attain.

People’s Choices Involve Costs

 Questions of cost loomed large.

 They risked losing:  Guaranteed market for some goods.

 Subsidies and bounties.

 Military protection

People Respond to Incentives

 After 1763, new taxes and regulations became more restrictive.

 Sugar Act  Stamp Act  Tea Act  These actions provided an incentive to fight.

People Create Economic Systems  The Navigation Acts (1651, 1660, 1663) changed the rules of the game.

 Britain was more willing to enforce the rules resulting in higher prices for colonists.

People Create Economic Systems  Trade was allowed only in American or British vessels.

 All imports were through British ports.

People Create Economic Systems  Enumerated goods (tobacco, sugar, cotton, indigo, rice, and naval stores) from the colonies could only be shipped to England.

 Townsend Act placed new taxes on tea, glass and paper.

People Create Economic Systems  Agricultural land was very important to many colonists.

 Quebec Act of 1774  Enlarged the size of Quebec.

 Destroyed western land claims of Massachusetts, Connecticut and Virginia.

People Gain from Voluntary Trade  Trade was very important to the colonial economy.

 Colonial producers saw Britain’s tightening mercantile policy as an obstacle to free trade.

Future Consequences

 Changes in British policy increased the risk that the future would not be as safe, prosperous and free as the past had been.

 Economic growth was in doubt.

 Self-government was threatened.

Solve the Mystery

 The colonists fought the Revolution because benefits they had obtained - especially prosperity and self-government - - were threatened.

 The prospect of fighting to secure these benefits for the future outweighed the other choices.

Table of Contents

Table of Contents

Unit 1 Three Worlds Meet

1. The New World Was an Old World 2. Property Rights Among North American Indians

Table of Contents

Unit Two: Colonization and Settlement

3. Why Do Economies Grow? 4. Understanding the Colonial Economy in a Global Context 5. Indentured Servitude: Why Sell Yourself into Bondage?

6. Specialization and Trade in the Thirteen Colonies

Table of Contents

Unit Three: Revolution and the New Nation

7. The Costs and Benefits of American Independence 8. Problems under the Articles of Confederation 9. The U.S. Constitution: Rules of the Game

Table of Contents

Unit Four: Expansion and Reform

10. Rising Living Standards in the New Nation 11. How Did Cotton Become King? 12. Francis Cabot Lowell and the New England Textile Industry

Table of Contents

13. Improving Transportation 14. Investing in American Growth 15. Why Did the Indians of the Great Plains Invite White Americans into Their Land?

16. Andrew Jackson and the Second Bank of the United States 17. Free the Enslaved and Avoid the War

Table of Contents

Unit Five: Civil War and Reconstruction

18. Why Did the South Secede? 19. Economic Analysis of the Civil War

Table of Contents

Unit Six: The Development of the Industrial United States

20. Was Free Land a Good Deal?

21. The Changing U.S. Economy 22. The Demand for Immigrants 23. Bigger Is Better: The Economics of Mass Production

Table of Contents

24. Industrial Entrepreneurs or Robber Barons? 25. The Economic Effects of the 19th Century Monopoly 26. Could the U.S. Economy Have Grown Without the Railroads?

27. Free Silver or a Cross of Gold

Table of Contents

Unit Seven: The Emergence of Modern America

28. Money Panics and the Establishment of the Federal Reserve System 29. Who Should Make the Food Safe?

Table of Contents

Unit Eight: The Great Depression and World War II

30. Whatdunit? The Great Depression Mystery 31. Did the New Deal Help or Harm Recovery?

Table of Contents

32. We Shall Not Be Moved 33. When the Boys Came Marching Home 34. Women in the US Workforce

Table of Contents

Unit Nine: Postwar United States

35. The Economics of Racial Discrimination 36. The No-Good Seventies

Table of Contents

Unit Ten: Contemporary United States

37. The Hispanic Americans 38. The Knowledge- and Technology Based Economy of Today 39. World Trade after World War II: The EU, NAFTA and the WTO

Indentured Servitude: Why Sell Yourself into Bondage?

Lesson 5

Visual 5.1 Background on Indentured Servants

Contracts

 Indentured servants' contracts bound them to perform work for an employer in North America.

  These contracts had the force of law, and they were enforced.

Contracts typically called for three-to-seven years of service. The average period of service was four years.

  Early in the colonial period, women were offered somewhat shorter contracts than men.

Contracts for harder work, such as growing tobacco, were often for shorter terms than contracts for easier work, such as performing household duties.

Visual 5.1 Background on Indentured Servants  How the System Worked  Ordinarily a person would sign with a ship owner or a recruiting agent in England.

 As soon as the servant was delivered alive to an American port, the contract would be sold to a planter or merchant.

Visual 5.2 Why Would Free People Sell Themselves into Bondage?

Why Would Free People Sell Themselves into Bondage?

  Many workers in colonial North America were indentured servants. The work they performed was often difficult —clearing land, planting tobacco, performing household services.   The contracts signed by indentured servants had the force of law.   Terms of service could be increased, for example, if a worker violated the indenture by trying to run away. Servants could even be sold to other owners.

Why would people sell themselves into bondage?

Activity 5.2 Indentured Servitude in North America

Patrick McHugh

 Costs?

 Benefits?

William Heaton

 Costs?

 Benefits?

Mary Morgan

 Costs?

 Benefits?

Tom Holyfield

 Costs?

 Benefits?

Christian Mueller

 Costs?

 Benefits?

Would You Sell Your Labor?

 Would you agree to perform two years of community service in exchange for a significant reduction in college tuition?

 Costs?

 Benefits?

Other Mysteries in U.S. History

Lesson 2: Mystery

 American Indians are widely supposed to have favored common ownership rather than private property.  Like people everywhere, however, American Indians distinguished between private and public ownership.  Why did they decide to use private property in some cases but public ownership in others?

Lesson 4 Mystery

   The American colonies were an unlikely candidate for economic success.  There was no gold and silver and no spices to trade.  England held sway as a primary source of manufactured goods.  Colonial America did possess land and other natural resources, but labor was not abundant.

Eventually, however, the colonists lived longer and better than the populations of other nations and places at the time.

Why?

Lesson 18: Mystery

 In light of the economic advantages of the North over the South, it seems in retrospect almost irrational for the South to have engaged the North militarily. Why did the South secede?

Lesson 24: Mystery

 During the late 19th century, industrialization proceeded rapidly in the U.S. Men like Andrew Carnegie, John D. Rockefeller and the Cornelius Vanderbilt pioneered the way.  Were these men “Robber Barons” or industrial entrepreneurs?

Lesson 33: Mystery

 People feared that the end of World War II would be followed by a return to depression.

 Instead, the years that followed the war brought rising prosperity and an unprecedented expansion of the American middle class.

 Why did the economy expand after World War II rather than falling into a new depression?

References for Teaching Economics in History

Focus: Understanding Economics in U.S. History

Research on Focus: U.S. History

Table 1: Descriptive Statistics for Pre- and Post-Test 1

Group Mean Score Before

U.S. History

Mean Score After

U.S. History

Change in Predicted Direction?

Paired sample t statistic p-Value (2-Tailed Test) Control Group 13.26

(4.24) n=150 13.66

(4.33) n=150 Yes (no statistically significant change) -1.465

p=0.145

Group that Used

U.S. History

13.49

(4.65) n=353 18.85

(10.57) n=353 Yes (change is statistically significant) -9.977

p<0.000

1 Schug, M.C. & Niederjohn, M.S. (2008). Can Students Learn Economics in U.S. History?

Journal of Private Enterprise,

23 (2), 167-176

References

 Teaching Economics in U.S. History 

Social Education, March 2007

 Edited by Mark Schug and Richard Western

References



Historical Statistics of the United States: Millennial Edition

Edited by Richard Sutch and Susan Carter with contributions from 200 other scholars Cambridge University Press 2006

References



History of the American Economy

Gary M. Walton and Hugh Rockoff South-Western Thompson Learning

References



American Economic History

Jonathan Hughes and Louis P. Cain Pearson Education, Inc.

References



An Entrepreneurial History of the United States

Gerald Gunderson Beard Books

References



Basic Economics: A Citizen's Guide to the Economy

Thomas Sowell Basic Books

References



Common Sense Economics: What Everyone Should know About Wealth and Prosperity

 James Gwartney, Richard Stroup and Dwight Lee St. Martin’s Press www.commonsenseeconomics.com

Christmas Riddles

     What do elves learn in school?

What do you call Santa’s motorcycle?

Why does Santa have 3 gardens?

What do snowmen eat for breakfast?

Where do snowmen keep their money?

 The elf-abet  A Holly Davidson   So he can ho, ho, ho!

Frosted flakes  In a snow bank

Christmas Riddles

    Where snowmen go to dance?

What you call a person who is afraid of Santa Claus.

Parents favorite Christmas carol?

Why was Santa’s little helper depressed?

 A snow ball  A Claustropbic  Silent Night  He had low elf esteem.