Financial Literacy Education for Citizens: What form of citizenship and democracy?

Consumer financial literacy education• Financial literacy initiatives are proliferating in the wake of the

economic crisis

• In the face of an increasing individualization of economic risk, these initiatives support better individual money management

• However, they occlude the need for collective solutions or the creation of a new economy – the individualization of economic risk appears inevitable and natural rather than political

• These consumer financial literacy education initiatives are limited by the subjectivity they promote (the consumer) and the range of problems they choose to address (individual money management issues)

However, some initiatives expand the scope of financial literacy education (e.g. Ontario) The goal [of financial literacy education] is to help students acquire the knowledge and skills that will enable them to understand and respond to complex issues regarding their own personal finances and the finances of their families, as well as to develop an understanding of local and global effects of world economic forces and the social, environmental, and ethical implications of their own choices as consumers

Ontario Ministry of Education, 2011

An expanded financial literacy education?

• Additionally, a number of financial literacy initiatives aim to create financially literate citizens who are responsible, equal with other citizens and politically engaged

As important as reading and math and social studies and science, I think today more than ever financial literacy has to be part of that. To continue to have a population that is relatively illiterate in these matters I think has real negative consequences to our democracy.

United States’ Education Secretary Arne Duncan, 2011

If young people are to take an active role in society, it is vital that they have an understanding of their personal finances.

Tony Breslin, Chief Executive of the United Kingdom’s Citizenship Foundation, 2006

A civic financial literacy education?

Sounds great but….

• While it is positive that financial literacy education is acknowledged as a civic, political literacy, the particular form of literacy and citizen promoted should be analyzed

Questions

• What kind of civic responsibility do these initiatives promote?

• What kind of equality do they aim to bring about?

• What kind of political engagement do they attempt to foster?

Civic responsibilityCreate better financial products and promote economic stabilityFinancially literate consumers will demand financial products “more responsive to their needs . . . [and] encourage providers to develop new products and services, thus increasing competition in financial markets, innovation and improvement in quality”

OECD, 2005 Less strain on collective resourcesFinancially literate citizens will be “less vulnerable to job loss or the financial impact of accidents or illness” and thus fewer families will require “welfare or other social assistance programs”

Stewart and Ménard, 2010, March 15th CharityBeing financially able, being able to provide for ourselves and our families, also puts each one of us in a position to help others. The world’s disasters are a glaring example of the need for some to come to the rescue of others.

Ontario Ministry of Education, 2010

• This form of responsibility is limited and only fulfilled through the market or in ways that do not alter the functioning of the market

1. We indirectly improve the economy and others’ consumer choices through rational consumption

2. We are not a burden to others

3. We give to charity

• However, we ought to be responsible for the character of our economy and the outcomes it supports, allows, dissuades and bars

A consumerist civic responsibility

A socially just civic responsibility

• Understand the possibilities and limits of the consumer choices the economic system allows and supports and the choices it dissuades or bars (e.g. understand that under capitalism there will necessarily be poverty and inequality, regardless the consumer choices we make).

• Able to create a more socially just economic system or at least create collective forms of risk management (robust public pensions, unemployment insurance, free tuition, public housing, a living wage, etc.) to ameliorate the worst effects of capitalism.

Equality?

Today more than ever, citizens need to be financially aware, to know the characteristics and risks of financial products, to choose correctly. It is a matter of equity, it is a need for stability, a help for competition.

Tarantola, 2010

If you don’t understand the language of money, financial literacy, and if you don’t have a bank account, you are just an economic slave.

Bryant, 2010

• Equal Inequality

• Elites and citizens: A spectator democracy

Equality

Financial literacy education should support citizens who are: • able to collectively create the conditions for more equal

wealth outcomes

• are treated as having an equal voice in macro-economic decisions

Civic engagement as consensusThe financial literacy project offers education for choice (or freedom) and education for civic virtue. Responsible participation in the market combines choice and virtue. These become attributes of the financial citizen, the ability to make an informed virtuous choice. The citizen is no longer simply a political participant and creator of liberal democracy but also a participant in wealth creation and economic progress/development.

Pearson, 2005

The merchandising system of today is in itself a great consumer’s club, and the members vote in broad democratic fashion at great popular elections, the polls being open every day at a million or more retail stores.

Frederick, 1929

Political engagement is reduced to guiding the ‘invisible hand’ through knowledgeable consumption so as to “contribute positively to the local and national economy, improving peace of mind and national stability”.

Moore, 2008, Oct. 8

Police or politics?

• Disrupt the present – Jacques Rancière (police and politics)

• Claudia Ruitenberg (establishment of different hegemonic relations)

• Financial literacy education should support responsible, equal and politically engaged citizens who can struggle to question and change what is given in order to promote greater equality and democracy