Now is that time of year when thousands of students across the world, from Zurich to Zimbabwe, will be taking their first economics course. Perhaps it will be a basic, high school introductory course or perhaps an even more challenging AP or IB course. Perhaps you are taking an introductory college course.

It seems like all economic text book authors seem make the point, usually in their chapter 1, that a primary benefit of studying economics is that it transforms us into more effective citizens by enabling us to better understand and conclude on the economic positions and promises of those running for public office.

I couldn’t agree any stronger!

In my classroom, I like to informally call the study of economics “the 180 degree science” because as the student studies this science for the very first time they often develop opinions and conclusions that are precisely the opposite of what they had originally believed before taking the course.

For example, here are 3 of my favorite “180 degree moments”, which are applicable to the United States’ economy but are generally applicable to all global economies, that you will probably learn in your first year economics’ course:

Ø Pre-Econ Course Citizen Quote: “We don’t make anything anymore in America. America’s manufacturing prowess is in a state of constant decline.”

Ø AP Student’s Response: “I disagree. The dollar value of manufactured goods in the United States, restated for price level changes so the comparison is accurate, is up over 50% in the last 12 years! Yes, it is true that the U.S. has lost several million jobs in manufacturing over that same time period, but that is primarily due to rising productivity (think machines & technology), where the U.S. can now produce more valuable manufactured products than ever before with many less people freeing those workers to be employed in more lucrative service-related businesses. Moreover, the US has maintained its share of global manufacturing product over that same aforementioned time period, whereas other manufacturing countries, such as Japan and Germany, have actually decreased their percentage share of global manufactured product. But, I think I understand where you may have gotten that mistaken notion that manufacturing in the U.S. is in decline; from the U.S.’s shrinking automobile industry, the lower employment in manufacturing due to higher productivity, and from the negativity inherent in the media and press which focuses mostly on the lost jobs.

Ø Pre-Econ Course Citizen Quote: “The U.S. government’s national debt of $9.6T is out of control. Imagine our country having to borrow $9.6T to pay its debts because it has no fiscal control!”

Ø AP Student’s Response: “The United States’ current level of national debt is both affordable and consistent with most nations. National accounting statistics show that the U.S.’s 67% national debt/national income percentage is average compared with other modern economies. Moreover, the level of U.S. national debt as a percentage of national income (67%) is at the same ratio as it was back in 1997 and 1992, and is much less than it was in 1950! The ‘”trick” is that debt must be benchmarked to income. It interesting that if someone knows that Bill Gates owes someone $10M they quickly can figure out that he’s probably fine, but if the guy at Starbucks finds out that the U.S. owes $9.6T they think the country is fiscally out of control!”

Ø Pre-Econ Course Citizen Quote: “International trade is hurting our economy as we have lost millions of jobs to lower wage countries. NAFTA (North American Free Trade Agreement between U.S., Mexico, and Canada) has really hurt us by having million of American jobs being lost to Mexico.”

Ø AP Student’s Response: “I challenge you to find me a reputable economist who will tell you that NAFTA, or any other free trade agreement for that matter, has not been beneficial for the United States, Mexico, and Canada. Over the past 15 years, independent and numerous studies show that free trade agreements increase employment, incomes, and standards of living in ALL countries and NAFTA is no exception to this rule. Sure, free trade does cause certain industries to lose out to better competitors but, overall, international trade increases competition with the nation’s citizens benefitting through increased product quality, lower product prices, and increased incomes and standards of living.

I really hope you work hard in your economic course so that, you too, will see your nation’s economy, and our global economy, in a whole new light. As an AP Economics’ teacher in the U.S., I see it as an especially “sweet year” for a first time economics’ student due to a presidential election.

Let the YouTube video-analysis clips of Barack Obama and John McCain begin! Our “economic analysis” hats are on… and we are ready to apply what we have learned and conclude on their economic positions.

At $4, Everybody Gets Rational - Washingtonpost.com

Here is another excellent gas price article containing accurate economic principles.

Yes, the non-economist (ie, average citizen) doesn’t get it on how higher gas prices will ultimately lead a nation’s economy to conservation, energy independence and efficiency in the long run.

Hey, I’ll be honest: I don’t like higher gas prices any more than I do going to the dentist, but I am glad they are rising as I see and read about SUV purchases falling off a cliff, driving habits changing right before my very eyes, and the quantity demanded for gasoline falling fast.

By CHARLES KRAUTHAMMER | Posted Friday, June 06, 2008

So now we know: The price point is $4.

At $3 a gallon, Americans just grin and bear it, suck it up, and, while complaining profusely, keep driving like crazy.

At $4, it is a world transformed. Americans become rational creatures. Mass transit ridership is at a 50-year high. Driving is down 4%. (Any U.S. decline is something close to a miracle.) Hybrids and compacts are flying off the lots. SUV sales are in free fall.

The wholesale flight from gas guzzlers is stunning in its swiftness, but utterly predictable. Everything has a price point. Remember that “love affair” with SUVs? Love, it seems, has its price too.

America’s sudden change in car-buying habits makes suitable mockery of that absurd debate Congress put on last December on fuel efficiency standards. At stake was precisely what miles-per-gallon average would every car company’s fleet have to meet by precisely what date.

It was one out-of-a-hat number (35 mpg) compounded by another (by 2020). It involved, as always, dozens of regulations, loopholes and throws at a dartboard. And we already knew from past history what the fleet average number does.

When oil is cheap and everybody wants a gas guzzler, fuel efficiency standards force manufacturers to make cars that nobody wants to buy. When gas prices go through the roof, this agent of inefficiency becomes an utter redundancy.

At $4 a gallon, the fleet composition is changing spontaneously and overnight, not over the 13 years mandated by Congress. (Even Stalin had the modesty to restrict himself to five-year plans.)

Just Tuesday, GM announced that it would shutter four SUV and truck plants, add a third shift to its compact and midsize sedan plants in Ohio and Michigan, and green-light for 2010 the Chevy Volt, an electric hybrid.

Some things, like renal physiology, are difficult. Some things, like Arab-Israeli peace, are impossible. And some things are preternaturally simple. You want more fuel-efficient cars? Don’t regulate. Don’t mandate. Don’t scold. Don’t appeal to the better angels of our nature. Do one thing:

Hike the cost of gas until you find the price point.

Unfortunately, instead of hiking the price ourselves by means of a gasoline tax that could be instantly refunded to the American people in the form of lower payroll taxes, we let the Saudis, Venezuelans, Russians and Iranians do the taxing for us — and pocket the money that the tax would have recycled back to the American worker.

This is insanity. For 25 years and with utter futility (starting with “The Oil-Bust Panic,” the New Republic, February 1983), I have been advocating the cure: a U.S. energy tax as a way to curtail consumption and keep the money at home.

In May 2004 (and again in November 2005), I called for “the government — through a tax — to establish a new floor for gasoline,” by fully taxing any drop in price below a certain benchmark.

The point was to suppress demand and to keep the savings (from any subsequent world price drop) at home in the U.S. Treasury rather than going abroad. At the time, oil was $41 a barrel. It is now $123.

But instead of doing the obvious — tax the damn thing — we go through spasms of destructive alternatives, such as efficiency standards, ethanol mandates and now a crazy carbon cap-and-trade system the Senate debated last week. These are infinitely complex mandates for inefficiency and invitations to corruption. But they have a singular virtue: They hide the cost to the American consumer.

Want to wean us off oil? Be open and honest. The British are paying $8 a gallon for petrol. Goldman Sachs is predicting we will be paying $6 by next year. Why have the extra $2 (above the current $4) go abroad? Have it go to the U.S. Treasury as a gasoline tax and be recycled back into lower payroll taxes.

Announce a schedule of gas tax hikes of 50 cents every six months for the next two years. And put a tax floor under $4 gasoline, so that as high gas prices transform the U.S. auto fleet, change driving habits and thus hugely reduce U.S. demand — and bring down world crude oil prices — the American consumer and the American economy reap all of the benefit.

Herewith concludes my annual exercise in futility. By the time I advocate the tax floor again next year, you’ll be paying for gas in bullion.