America faces one of its greatest challenges in putting its economy back together. But first, we must identify what really caused our economic breakdown.

I grew up during the great depression and have now taught kids for 58 years. This vantage point convinces me our breakdown is rooted in how we have been preparing American youth for leadership and life.

We were somewhat lucky in our recovery from the 1929-1939 breakdown. World War II transformed us into a nation of character, and beginning with the “greatest generation,” our economy was being led by leaders who, whatever their faults, had character. Their leadership built the most powerful economy the world had ever seen.

With the launching of Sputnik in 1957, the educational system that had nurtured these leaders introduced a new focus away from character and toward a rigid test-proven academic achievement. That focus remains so powerful that today our goal is to make 100% of American students “academically proficient” by the year 2014.

This has now completely overwhelmed any meaningful development of character in our schools. In a recent annual survey by the Josephson Institute of 29,760 students of randomly selected American public and private schools, 64% admitted during the past year to cheating on a test and 30% admitted to stealing from a store.

Even more disturbing, 93% said they were satisfied with their personal ethics and character. To them, these have become qualities to be determined by the individual.

So today, we have too many leaders whose decisions serve themselves, not their broader communities. Our leaders used to take pride in building institutions that stand the test of time. Now we have too many leaders who view those institutions simply as vehicles for success in the present. For example, Lehman Brothers was founded in 1850, grew to America’s fourth largest investment bank, and disappeared in a flash in 2008.

Regarding our economic breakdown, our national leaders didn’t lack the necessary intelligence. They lacked the necessary character. This becomes very clear by examining the forerunner to our collapse: Enron, a company Fortune Magazine named “America’s most innovative” for six consecutive years.

Enron’s God was their intelligence. As the documentary Enron: “The Smartest Guys in the Room” depicted, Enron’s leaders simply drew up a business plan built on their creative ideas that plotted at least 15% yearly growth, and then arrogantly directed their organization and financial statements to honor their plan, regardless.

The fact that Enron was able to enlist government agencies, banks and other organizations into their Ponzi-like pyramid as long as they did speaks to the lack of character that had developed in America. Greed, a lack of concern (eg: a tape of Enron traders gleefully celebrating how they screwed widows in California out of their pensions,) integrity and the courage to pursue the truth or do the right thing had become the norm.

This lack of character had been reaffirmed by our schools. As just one example, by focusing our schools almost solely on achievement, while virtually ignoring that most students were cheating to get the results, we unwittingly made a powerful statement to them that the end can justify the means in life. Enron business moralities became inevitable.

I saw this lack of character development in our schools in 1962, and set out to find a better way to prepare American kids for life. I founded the Hyde School in Bath, Maine to develop Courage, Integrity, Concern, Curiosity and Leadership in students. Today, there is a network of five Hyde Schools: another private boarding school in Woodstock, CT; K-12 public charter schools in Washington, DC and South Bronx, NY and a public high school in New Haven, CT.

Character development has permanence because it reaches students at a deeper level. Once students truly internalize qualities like courage, integrity, concern and curiosity, they become motivated to pursue further experiences. And as they internalize these qualities, they develop both a conscience and the self-confidence to become a leader.

The focus on character moves the achievement emphasis away from comparisons with others more to comparisons with the best in oneself. This new emphasis on attitude and effort draws out the deeper potentials of each individual student.

Transforming American schools to develop character will in the long run actually produce stronger academic students.

Home-schooled students are motivated by the character quality of curiosity instead of the school motivation of competition. A University of Maryland study of 24,000 home-schooled students found them scoring by 8th grade, roughly four grade levels above both public and private school students on national proficiency tests.

When we become committed to making character development America’s highest educational priority, students will willingly follow our lead. At a deeper level, they know that is the way it should be.

Joe Gauld

Founder of Hyde Schools

Bath, Maine