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Ocasio-Cortez’s rise reveals rampant economic illiteracy in US

Rep.-elect Alexandria Ocasio-Cortez (D-N.Y.), made headlines when she revealed that she wouldn’t be able to afford Washington, D.C. rent until her government salary kicks in.

The lack of affordable housing in Washington is no joke, but the predicament also speaks to the young lawmaker’s financial literacy — or lack thereof. The 29-year-old didn’t think to consider something as basic as the relocation expenses of a new job opportunity.

If she doesn’t know how much an apartment costs, how much confidence should taxpayers have in her ability to effectively deliver trillions of dollars in campaign promises?  

{mosads}Ocasio-Cortez has proposed free “Medicare for All,” free college tuition, guaranteed federal employment at $15 an hour and free houses for the nation’s poorest. These ideas have been conservatively priced at $40 trillion — twice as much money currently listed on the national debt.

It’s the kind of extremist proposal you’d expect to hear from someone who has never made a budget, never been responsible for a business and payroll and never had taxes deducted from a hard-earned paycheck. It’s the kind of proposal you’ve heard from Venezuela President Nicolas Maduro and Hugo Chavez before him. 

While an undergraduate student at Boston University, Ocasio-Cortez’s coursework in economics apparently didn’t make much of an impression about the power of market enterprise.

The problem with her myriad of “free” giveaways is it’s unbelievably naïve and empirically falsifiable to think the federal government is more cost-efficient than the free market. The first rule of economic thinking is that “there’s no such thing as a free lunch.” Choices have costs.

Economics helps us understand that it is entrepreneurs, inventors and new ideas propelled by ordinary people that power an economy. She should have learned that at BU.

If you want to see young, successful people who are making a real difference, look at someone who started his or her own business, got his or her foot in the door at a prestigious company or worked for what they achieved.

Most people don’t want to be stuck in a $15-an-hour, guaranteed government job because it stunts their long-term opportunities. The private sector incentivizes hard work and lessons learned, and it pays better than any government position. 

Unfortunately, the world view espoused by Ocasio-Cortez and Sen. Bernie Sanders (I-Vt.) paints the economy as a zero-sum equation unless the government directs the choices. Their proposals call for showering benefits on certain groups and paying for it by taking money from the wealthy. If millionaires and corporations are losing, then surely welfare recipients will be winning, their logic holds. 

That’s not how the global economy works. The free market is the world’s largest and most successful poverty alleviation program. Market investment and entrepreneurship far outperform government investment, and the resulting surges in economic activity benefits everyone, particularly the poorest.

There’s also an inadvertently tragic ramification of today’s trendy Democratic Socialist ideas. If you actually added $40 trillion to the U.S. national debt, as Ocasio-Cortez has proposed, it would be younger people and future generations that have to bear the astronomical tax burden when the bills come due.   

The proliferation of these ill-conceived economic ideas over the past few years speaks to the lack of economic literacy in our education system.

Graduates of Boston University’s economics program are supposed to be able to “understand economic theory … and be able to apply these models to evaluate policies and real­-world events,” according to the school’s website

Ocasio-Cortez would do well to understand that the path to prosperity is not built on government handouts but on free people unleashing their human creativity to advance the common good. An honest to goodness economics debate between Ocasio-Cortez and her opponent could have been a sorely-needed corrective lesson. By exposing the flimsy arguments of central planners like Ocasio-Cortez, it may have helped young people understand economics better than any college course ever could.

Anne Rathbone Bradley, Ph.D., is the George and Sally Mayer fellow for economic education and academic director at The Fund for American Studies (TFAS), an organization that advocates for limited government and free-market economics. She is also a visiting professor at Georgetown University.

Tags Bernie Sanders economy Free market Venezuela

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