Want to correct financial literacy? Focus on billionaires and politicians

Agata Soroko, doctoral student, Faculty of Education, University of Ottawa / University of Ottawa.
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Shortly after the COVID-19 pandemic plunged the global economy into crisis in March 2020, I wrote an essay expressing my hope that the ongoing financial collapse would not be used to to justify a push for more financial literacy education in schools. But it has happened since.

In May 2020, the Organization for Economic Co-operation and Development (OECD) announced its Program for International Student Assessment 2018 results with the following question: “With unemployment rising and the threat of a global recession, it is more important than ever to ask: Are adolescents educated about money matters? ”

Ontario recently added financial literacy to Grade 9 math study programme. Some researchers have pointed out the relevance of financial literacy education in the context of the current economic crisis of COVID-19.

Financial literacy, as defined by the OECD, is “a combination awareness, knowledge, skills, attitude and behavior necessary to make sound financial decisions and ultimately achieve individual financial well-being.

My research of high school curriculum documents in Canada and the United States shows that financial literacy education frames financial results in an individualistic way rooted in the ideology of merit. Traditional financial literacy pays little attention to the broader economic and socio-political contexts in which taking control of finances is increasingly difficult for hard-pressed families because difference between the rich and everyone continues to expand.

Post-recession flare-ups

In the aftermath of the 2008 recession, financial literacy gained ground in Canada and the United States.

Education researcher Laura Pinto argues that the negative economic effects of the 2008 financial crisis were less pronounced in Canada than in other OECD countries. Yet the links made by governments and the media between the state of the economy and the need for financial literacy among citizens have led to the development of a financial literacy education policy across the country. .

In 2010, a Toronto Star The columnist summed up: “After the last stock market crash, the federal government realized that people needed help spending, saving, investing and, of course, borrowing.

In both industrialized and emerging economies, the OECD stated that a “lack of financial literacy was one of the factors contributing to uninformed financial decisions …”. followed suit.

These recommendations and the government’s efforts suggested that it was the spending habits of the general public at large that were at the root of the recession, despite the fact that a lack government regulations and reckless and illegal behavior in the financial sector were important contributing factors.

Financial irresponsibility?

Today, some proponents of financial literacy are focusing on how the COVID-19 recession exposed the financial irresponsibility.

In the United States, the Charles Schwab brokerage, whose billionaire CEO, is one of several financial services companies that produce financial education resources.

Results of the company going online investigation, conducted by the Harris Poll of over 2,000 American adults in June 2020, is reported on the Schwab Money Wise website, which promotes school lesson plans. The survey found that 89% of respondents agree that a lack of financial education contributes to poverty (58%), lack of employment opportunities (53%), unemployment (53%) and inequality. wealth (52%). According to the company, the findings expose the “serious impact” of the “lack of financial education during COVID-19”.

Economic and racial injustices

Advocates of financial literacy education continue to link individual financial know-how and behavior to deep-rooted social and economic issues, even in the face of a financial crisis caused by a pandemic and a year of global civil rights protests following the murder of George Floyd in Minneapolis.

The pandemic and protests have forced the public to consider the racial wealth gap in both United States and canadian, and economic racism in Canada’s pandemic response and recovery.

Economists like Darrick Hamilton and William A. Darity, Jr. showed how deeply rooted economic and social structures, such as inheritance and intergenerational wealth transfers to whites, perpetuate wealth inequalities and racism in the United States. Yet, they write, accounts of financial literacy imply that poor decision-making or poor financial literacy on the part of black Americans is the root cause of poverty.

Political economist Chris Clarke noted how, in response to economic crises, financial literacy education appears to serve as a coping strategy that makes people more resilient in the face of inevitable market failures.

But by positioning financial crashes as inevitable, the contradictory elements of this reflection become evident: Market compliant the behavior endorsed by financial literacy education cannot ultimately guarantee the economic well-being of its subjects.

As Clarke writes, recipients of financial literacy training learn to “learn to fail.”

Key takeaways from COVID-19

Challenge the idea that if we learn to manage our money better, we can prevent or thrive in the next financial crisis.

On the contrary, the pandemic reminded us that we are not autonomous but that we are part of a collective. What we are seeing now is a compelling case for a strong social safety net that includes paid sick leave, affordable housing, unemployment insurance and a strong health care system.

Years of austerity policies and a disinvestment in the welfare state before the pandemic, however, only exacerbated the effects of COVID-19 in Canada.

At the same time, the Canadian Emergency Response Benefit (CEP) have shown that economic restructuring and redistribution of wealth are possible once a problem is viewed as a crisis.

Bad decisions of those in power

Instead of focusing on student financial education, let’s reframe the discussion around deep illiteracy of those in power.

Poor policy making allowed canadian billionaires increase their wealth by $ 78 billion during the pandemic as nearly three million Canadians lost their jobs in March and April 2020 only.

Those working in low-paid essential industries that couldn’t afford time off, were bearing the burden of infections and deaths from COVID-19.

Today, as the planet keep burning and many people in the world waiting for vaccines, we see hoarding and wasting resources. Amazon founder Jeff Bezos, who raised almost $ 70 billion since the start of the pandemic, recently made headlines when he celebrated a private space race.

Teaching children better budgeting will not solve inequalities. Address the financial literacy of politicians and key decision makers who make policies that let CEOs like Bezos avoid federal income taxes or allow wealthy Canadians to spend money on offshore tax havens just might.

This article is republished from The conversation under a Creative Commons license. Read it original article.

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