Wednesday, July 23, 2008

A Nation at Risk?

I am reading a book right now about the under-30 generation, and the book often mentions an NAEP test that seniors take every year. Educational illuminati use students' declining scores on this test as evidence of the fall of western civilization. I was curious as to what kinds of questions were on this test, so I did a little digging and I found some released questions on the web.

I was taking the economics quiz when I came across this question:

Question 4: Which of the following has been most important in reducing poverty over time?
A. Taxes
B. Economic growth
C. International trade
D. Government regulations

I was struck by how the answer might depend upon party affiliation. Democrats might say high marginal tax rates that redistribute wealth from the rich to the poor have done much to level citizens' wealth, so they might answer "A". They might also say that reigning in corporations and creating federal programs have had an impact on poverty, so a Democrat may also answer "D".

Republicans, on the other hand, might believe that free trade has reduced the cost of goods and has opened up economic opportunity across the globe, so they may answer "C". Republicans may also argue that a white-hot economy benefits everyone ("A rising tide raises all boats") so they could also answer "B".

Before you read on, lock in YOUR answer. I'll wait.............

I have a few qualms with the question. First, I'll bet you could poll economists and they might not agree on the answer. Second, the question itself is vague. Reducing poverty where? Worldwide or in America?

Third, I have qualms with the "correct" answer, "B". Growth in the economy does not necessarily equal a reduction in poverty. Often, as it has lately, growth means more jobs at Walmart, with the true economic gains, the ones reported in the newspapers, accruing mostly to the wealthy.

I guessed the correct answer by default, really. The question basically says "Why are people not poor any more?" with the answer being, "Because they make more money." Still, the question certainly seems to be politically slanted much more so than, say, this question:

Question 5: What happens to most of the money deposited in checking accounts at a commercial bank?
A. It is used to pay the bank’s expenses.
B. It is loaned to other bank customers.
C. It is kept in the bank’s vault until depositors withdraw the funds.
D. It is paid to owners of the bank as return on their investment.

You can test yourself, and find out the answer to question 5, at this site.

1 comment:

Anonymous said...


This is very straight forward economic stuff. Taught in almost every economic class. Every economists would answer "B" It is proven with facts. The rich make more money than the poor during growth periods thus increasing the gap between rich and poor. That is the true hot button. But reducing the poverty level during economic growth is not even debatable.