It Shows: Few In Congress Have Economic Background

Interesting little tidbit from the WSJ's "Real Time Economics Blog" around the economic literacy levels of the members of Congress:

From the WSJ:

As Congress works on one of the most important pieces of economic legislation in a generation, a Washington research group has pointed out that more than 8 in 10 members of Congress don’t have a formal educational background in the business, economics, or finance fields.

The research by the Center for Economic and Entrepreneurial Literacy [CEEL], which aims to educate the general public about finance issues, showed that about 14% have degrees in economics-related fields and just 6.7% specifically have an economics degree. More than 30% of members have degrees in politics and government, while 18% majored in humanities.

“It’s interesting that those who are responsible for solving the biggest economic crisis in generations don’t have the educational background to know the difference between commercial paper and copy machine paper,” said James Bowers , managing director of CEEL.

CEEL looked only at undergraduate majors or minors and graduate degrees in economics, business and finance. Law degrees weren’t included in the tally.

Such a rubric leaves off Senate Banking Committee Chairman Chris Dodd and ranking member Richard Shelby , as well as House Financial Services Committee Chairman Barney Frank and ranking member Spencer Bachus. They all have law degrees, but don’t have formal education in other economics-related fields.

Personally, I think the real problem here isn't so much the lack of formal education as it is the lack of formal EXPERIENCE in the world's of business and/or finance, as the business world is full of people who majored in Engineering, Humanities, Law or Mathematics who go on to become quite successful in the business world. It's not that our Congress isn't full of educated people it's that it isn't necessarily full of educated BUSINESS PEOPLE, and more specifically business people who have a solid understanding of the dynamics at play in this particular crisis.

After all, when you hear the rhetoric coming out of Washington around the bailout plan (for and against), the potential benefits/costs/negative aspects of it, not to mention the usual rhetoric around economic and business issues, it's quite clear that most of these individuals are rather clueless. So for me, it's not so much their educational background as it is their working knowledgebase.

Still, the point around economic illiteracy at the average citizen level and within our government is very valid - it's quite rare to hear a politician speak knowledgeably on business or economics instead of just parroting their political party's ideological talking points.

You can read more here.

Sources:

The WSJ: "Real Time Economics: Most Lawmakers Don't Have Economic Education" -- Phil Izzo, October 1, 2008.

Comments

[John Lounsbury:]

I completely agree. I expect that very few in Washington understand such simple concepts as present value, internal rate of return and effects of leverage on capital structures. I wonder how many would be able to pass a multiple choice spot quiz on simple financial concepts and principles. I'd be surprised if 20% could get an 80% grade.

2008 Oct 02 11:20 AM

[unimpressed...:]

We send the least qualified in our communities to represent us in all elected offices, local, state, and national, so why should this article surprise us? Most of these clowns were failures in the private sector so they opted for elected office to seek their fortunes. That they betray the trust of their constituents is of no concern to them.

Until the electorate wakes up and decides that enough is enough and they no longer will tolerate chicanery and corruption from public officials, nothing will change and nothing of significance will be accomplished. We the People are to blame for our ineffective and corrupt government at all levels. It is up to us to clean up this mess. November 4 would be a good time to start. Vote NO on all incumbents and all Democrats (for sure). Even is an incumbent is running unopposed, do not vote for him/her! A very small number of votes for a candidate sends a message that their days are numbered, they have no power, and invites good people to run, next time. Try it, you'll like it!

2008 Oct 02 12:36 PM

[vineet:]

I do not think that legislative member needs or requires formal or business knowledge of econ, finance etc - for that there are many experts, Ph Ds, and Nobel winners or in running.
What I think is missing in Legislative body is interest and inclination to listen, investigate and define and identify the issues and causes and then arrive at an optimal legislation.
What I noted is SHEEP herd for quick fix, election bytes and throw the money as if there is no tomorrow or future for children.

2008 Oct 02 12:48 PM

[John Lounsbury:]

vineet - - -

I agree we don't need experts in congress. I agree that they should listen to experts. What I object to is financial illiteracy of such a magnitude that too many elected officials can not understand and evaluate the advice.

2008 Oct 02 01:51 PM