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“Christianity and capitalism are not bitter enemies. On the contrary, a good Christian can be, and indeed should be, a good capitalist.” from:
Money, Greed, and God: Why Capitalism is the Solution and Not the Problem











Voluntary National Content Standards in Economics were first published in 1997 by the Council for Economic Education. A revised set of standards (2nd Edition) was released in 2010.

The document consists of twenty standards. Each standard is covered concisely (but comprehensively) in 2-3 pages. Benchmarks (or learning objectives) are listed separately for grades K-4, 5-8, and 9-12. Each benchmark contains a statement of what the student should know and a second statement of what the student should be able to do under this benchmark. Overall these standards are most commendable. They contain the essential information on economics, and the writing is clear and succinct. In our review below, we primarily note positive aspects of each individual standard. We also suggest ways that some standards could be improved:

1. Scarcity

*Students learn that they need to make choices because resources are limited and they can’t have everything they want. Several important terms are defined: natural resources, human resources, capital goods, human capital, goods and services.

2. Decision Making

*Making economic decisions requires comparing the costs of alternatives with the benefits acquired. Some decisions involve taking risks, which requires an additional cost. Investment risks can be reduced by asset diversification.

*The importance of cost-benefit analysis in personal and social decision-making is stressed in several benchmarks. This will help students make informed decisions about their own financial matters as well as important public policy issues.

*The application of clear, level-headed cost-benefit analysis is very important in formulating public policy, especially in controversial areas like environmental policy. We need to develop in our youth (the future voters and citizens) clear economic thinking that will help formulate good public policy.

3. Allocation

*Students compare different ways to distribute goods and services. A market economy (capitalism) is contrasted with a command economy (socialism). A market system, like that in America, is properly the dominant theme in the standards. The alternative of a command economy is discussed somewhat and implicitly disparaged. However, more explicit discussion of the advantages of capitalism over socialism would be desirable.

*The moral aspects of a market economy are barely considered. For example, a common belief is that greed is the essence of capitalism. This is not true; pursuing one’s own self-interest is not immoral, but rather it can enhance competitiveness and help meet the needs and wants of others. Capitalism is consistent with Judeo-Christian principles such as the rule of law, honesty, cooperation, self-sacrifice, altruism, delayed gratification, and a willingness to risk.

*Overall, the standards are to be commended for emphasizing free market principles throughout.

4. Incentives

*Prices, wages, profits, subsidies, and taxes are common economic incentives. Subsidizing an activity usually leads to more of it being available; taxing or penalizing an activity generally leads to less of it being provided.

*The standards rightly emphasize that self-interest does not necessarily mean selfishness. A market system (capitalism) is often labeled as unbridled selfishness, which is not in general true.

5. Trade

*The win-win nature of voluntary exchange is highlighted, dispelling the myth that trade requires a winner and a loser. The standards support international free trade, but they also explain that there are legitimate reasons why governments might impose trade barriers. The standards will help teachers explain that the many benefits of free trade are largely dispersed and taken for granted, whereas the costs of free trade (such as the closing of an important plant in a town) are often localized and highly visible.

*When teaching economics one must begin (as these standards do) with the fundamental truth of the benefits of voluntary trade. After this truth has been established, students are then prepared to analyze the costs and benefits of various trade restrictions imposed by governments.

6. Specialization

*Individuals, companies, and nations tend to specialize in what they can produce at the lowest opportunity cost (i.e., where they have a competitive advantage). When they trade with others, both production and consumption increase. Specialization and division of labor result in increased productivity.

7. Markets and Prices

*Most prices in market economies are established by interactions between buyers and sellers. Monetary exchange rates between countries are determined by the forces of supply and demand. Shortages of a product generally result in higher prices, while surpluses result in lower prices.

8. Role of Prices

*When supply or demand changes, market prices adjust, affecting incentives. Rising prices encourage buyers to look for alternatives. The dangers of government-enforced price ceilings and price floors are discussed.

*The standards are to be commended for emphasizing the important role of prices in a market economy. This aspect is often misunderstood by the general public, making citizens more amenable to government solutions to situations that would best be left to market forces. Before informed public policy decisions are made, people must understand how a market solution might work.

9. Competition and Market Structure

*Competition among sellers usually lowers costs and prices, produces better quality, and results in better customer service. Competition among buyers increases prices and allocates goods and services to those who are willing to pay the most for them.

*This section is to be commended for its approach. Competition has a very negative connotation to many. Students need to realize that honest competition, tempered with strong ethical values, protects customers more than they realize.

10. Institutions

*Economic institutions are explained (banks, labor unions, markets, corporations, legal systems, households, and not-for-profit organizations). Some important terms are covered: collective bargaining, property rights, contracts, liability, and incorporation.

11. Money and Inflation

*Money is anything accepted as final payment for goods and services. The real value of money is determined by what it can buy. Inflation is defined as a general increase in prices. The terms consumer price index (CPI) and inflation rate are explained.

12. Interest Rates

*Borrowing money is clearly explained as an important part of the economic system; charging interest on loans is a legitimate and necessary practice. Borrowing is contrasted with saving money.
*Interest rates are determined by the forces of supply and demand. Riskier loans command higher interest rates. Interest rates rise and fall to balance the amount saved versus the amount borrowed.

13. Income

*Wages and salaries are determined by the interaction of buyers and sellers. Students are rightly encouraged to develop employable skills through education and training; people with marketable skills are more highly paid and more productive. The hope of achieving wealth can energize a person to work harder, while the hopelessness of poverty can discourage people from trying.

*A person’s wage or salary is determined, fundamentally, by one’s productivity – by the economic worth a person brings to the market. Raising the minimum wage is not how a society’s standard of living is raised.

14. Entrepreneurship

* The key role of entrepreneurs in a market economy is explained. Entrepreneurs create new businesses and bring new products/inventions to the market. Cost-benefit analysis is needed to help decide whether to start a new enterprise.

*The creation of wealth is clearly explained, countering the common belief that wealth is not created but simply transferred (or redistributed). Entrepreneurs are largely the key to creating wealth.

15. Economic Growth

*Investment in factories, machinery, new technology, and employee training stimulates economic growth. Increases in productivity can result from new technology or increases in physical or human capital. The terms standard of living and gross domestic product (GDP) are explained.

*The key to a rising standard of living is ultimately economic growth, not wealth redistribution. The standards make the important point that growth requires saving – which necessitates patience and sacrifice.

16. Role of Government and Market Failure

*The standards properly emphasize private property rights and the necessity of government to protect these rights.

*There is discussion of goods and services provided by the government versus those provided by the private sector. Obviously, some services are best supplied by government (e.g., national defense/security, police/fire protection, roads/bridges). The standards could benefit from more discussion of the advantages and disadvantages of having certain services provided by the private sector as compared to government (e.g., K-12 and college education, job training, electricity/utilities, communications systems, family services, housing, agriculture, parks and recreation).

*Redistribution of wealth by government is discussed briefly, but no judgment is made as to whether this is in general a good or a bad idea. There could be more discussion of the positives and negatives associated with “social justice” considerations. For example, does long-term government assistance discourage individuals from seeking education and employment? Do government policies regarding women and children discourage traditional marriage and at-home child-rearing? What effect does massive government assistance have on federal and state budgets and the national debt? Is personal responsibility still a fundamental American principle?

17. Government Failure

*Governments have shortcomings and imperfections. Some public policies cost more than the benefits they generate. Political leaders have a tendency to favor programs that provide immediate benefits but defer costs. The motives and dangers of government officials increasing spending and creating deficits are discussed.

*The standards are to be commended for pointing out the inefficiencies of price controls (e.g., rent and interest rate controls). This is an important topic that is properly addressed by the standards.

*The standards correctly explain the dangers of “moral hazard,” which is particularly applicable when questionable public policies are implemented.

18. Economic Fluctuations

*The standards provide clear, concise explanations of key concepts. Gross domestic product (GDP), trade surplus and deficit, recession, and business cycle are explained. Recessions may occur when overall levels of income and employment decline.

19. Unemployment and Inflation

*Important concepts about unemployment are covered in appropriate detail for students. The calculation of unemployment rates is explained. The effects of inflation are discussed. Inflation hurts savers and people on fixed incomes, but it helps people who have fixed-rate loans.

20. Fiscal and Monetary Policy

*The economic and political difficulties of prescribing and implementing fiscal and monetary policies are nicely explained. The role of government in setting policies is covered, and the consequences (both positive and negative) of various government actions are discussed. The standards note that these kinds of policies are often contradictory in their outcomes.

*The dangers of deficit spending and an increasing national debt are clearly explained.

*The role of the Federal Reserve System in monetary policy is nicely elucidated.

Overall the economics standards do a fine job of covering basic practical economic principles. There are, however, a couple areas that could be strengthened. One would be more discussion on the moral aspects of economics – especially the consistency between free market principles and Judeo-Christian values. The second would be more coverage of the dangers associated with government solutions to economic situations. Jay Richards gives good coverage to both of these topics in his 2009 book Money, Greed, and God: Why Capitalism is the Solution and Not the Problem. Regarding moral aspects, Richards says: “Christianity and capitalism are not bitter enemies. On the contrary, a good Christian can be, and indeed should be, a good capitalist.” Regarding government solutions, he says: “For the last forty years, we’ve reflectively looked to government to solve every problem, especially social problems. When the state takes over a task that is better handled by someone closer to the problem, it transgresses its proper boundaries and creates more problems than it set out to solve.”

National Civics and Government Standards
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