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The New Vogue for Financial Literacy

by David Clandfield

There was a time when calling for a curriculum that emphasized critical literacies was thought of as progressive, radical, even subversive.

But these terms have been co-opted into mainstream educational policy. They are even used by governments and political parties that were once deeply hostile to these ideas.

How could this happen and what can we do about it?

Let’s look at the current talk about financial literacy.

Just about everyone seems to be endorsing it. All member states of the OECD have proclaimed financial literacy as a goal for all their citizens. In the USA, the Bush administration set up the Financial Literacy and Education Commission in 2003, which leading to a National Strategy on Financial Literacy in 2006 and a President’s Advisory Council on the subject a year or so later. President Obama has agreed to support the work of this Council, which earlier this year recommended mandating financial education in all US schools from Kindergarten to Grade 12 and consideration of a financial literacy test as a condition for receiving student loans to attend colleges and universities.

Here, the Canadian Conservative Government is “onside” with a Financial Literacy Task Force in its 2009 Budget. Not surprisingly the new leader of the Ontario PCs, Tim Hudak, is making it a major plank in his education policy. And of course, the Ontario Liberal government is not silent on the issue. The Financial Services Commission of Ontario has a Financial Literacy Portal on its website, and financial literacy is a declared goal of the business curricula of the Ministry of Education.

The idea in its current form goes back to the mainstreaming of free market fundamentalism, i.e. the Thatcherism and Reaganomics of the 1980s. In Canada, for example, Social Enterprise and Development Innovations (SEDI) was set up in 1986 as a non-profit agency to help “low-income earners gain financial independence through financial literacy, asset building and entrepreneurship.”

It is easy to see how such a program appeals to conservatives in a time of free market-driven globalization. Touted as a poverty reduction program, SEDI promotes the belief that if only everyone could be trained to be savvy investors and entrepreneurs, then everyone could aspire to a wealthy life. It is a free market alternative to the welfare state and the social safety net. It leaves out the understanding that the free market economy is based on competition and possessive individualism. In other words, the system provides for winners and losers – and indeed, far more losers than winners.

The suggestion that the key to long-term financial security is individual investment overlooks the fact that the safest and most reliable instrument for most Canadians is the Canada Pension Plan. The suggestion that everyone could and should become an entrepreneur overlooks the fact that the vast majority of Canadians are needed to work for someone else and will continue to do so, – and not so much for the private entrepreneurs who got there first but for the corporate giants who dominate our private sector.

So, in fact, universal “financial literacy” is currently being touted as one of the ways to reduce the role of the government and the public sector in providing for the future well-being of its citizens. It is also a response to the concern that a disturbing percentage of the population is drowning in debt and defaulting on loan repayments. One of the reasons so many of our banks give prominence to Financial Literacy training initiatives on their websites is to reduce the risk of lending people money. “Financially literate” customers will be better investment vehicles, and banks can thus improve their bottom lines even further.

But at the same time, many progressively minded thinkers have also been advocating financial literacy (or financial education) for all. Their goal is not to make people into safer investment vehicles but to enable them to take control of their own lives. The great French teacher and pioneer of Co-operative Learning, Célestin Freinet, identified financial understanding as a key application of the mathematics curriculum. His 1940s survey of what people thought they ought to know by school-leaving age, for example, included the critical understanding of pay slips, health benefit calculations, and the way in which taxation worked as far as they were concerned. When you read the Canadian curriculum portion of Ken Osborne’s 1988 book Educating Citizens, you do not find Financial Literacy listed as a separate item but nevertheless an understanding of poverty and its causes, of large economic systems, of regional economies and of international trade is seen as an essential part of preparing students to be citizens. As recently as this morning on CBC Radio One (September 14, 2009), Jim Stanford, the CAW’s best-known economist, could be heard proclaiming his passionate commitment to financial literacy, but only if it meant providing the vast majority of Canadians with the means to take control of their lives through a critical understanding of the economic system of which we are a part. This would be so much more valuable than the suggestion that we can all become independent entrepreneurs and wealthy investors.

There is a real danger that the conservative endorsement of Financial Literacy in an individualistic, competitive market economy will drown out the kind of financial education that we all need to build a better society for all. Education Action:Toronto must join others to give voice to this alternative vision.

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