Driving Society Forward.
Finance and Fear: Lessons in Money and Debt
Glenn Rikowski, 27th July 2007, London
This article can be read as following on from others (e.g. Rikowski, 2007a, 2007b, and 2007c). It focuses on a now familiar topic in the national press: fear of debt in general, and student debt in particular. As I argued in Rikowski (2007a), as student debt and household and personal debt levels have increased there have repetitive calls for more emphasis on ‘financial literacy’ programmes for our schoolchildren. Now New Labour under Gordon Brown has given the depressing pedagogy of the debt educators something to cheer about: lessons in debt management.
Pawn Shop and Credit Card Classes
A few weeks ago, Rosemary Bennett in The Times alerted readers to New Labour’s debt management programme for school kids:
“Teenagers will be given formal lessons in how to manage their debts, under sweeping changes to the curriculum to be announced this week. A new subject called “economic wellbeing and financial capability” will be introduced to the curriculum for all 11 to 16-year-olds to help youngsters to prepare for financial pressures after leaving school” (Bennett, 2007, p.1).
It’s interesting how the emphasis is on ‘debt management’ and not ‘debt avoidance’. But faced with university fees of £3,000 per annum and rising costs for accommodation then debt management seems to be the name of the game. One might wonder what kind of existential state of grace young people might be in if they ever attain the nirvana of ‘economic wellbeing’. Perhaps only billionaires such as Roman Abramovich can really grasp what this concept might mean in practical terms.
Bennett (2007) also pointed to apparent ‘anxiety’ that young people will move from university study into long-term debt. However, she does not say who these anxious folk might be; perhaps mortgage lenders, bank managers and insurance companies on the one hand (who will have difficulties selling their wares to cash-strapped young people); and parents on the other hand – who may strive to help their debt-leaden offspring, if they are able. Bennett reels off a bunch of disturbing statistics that supposedly justify the new debt lessons: higher interest rates causing ‘misery for millions of households’ with mortgages and credit card bills; consumer debt at £1.25 trillion at the end of 2006; and bankruptcies a record 30,075 for the first quarter of 2007 (Bennett, 2007, p.1). She notes the government is under pressure to lift the cap on higher education fees and to charge ‘graduates commercial interest rates on their student loans’ (Ibid.). Again, she does not say where this ‘pressure’ comes from: university Vice-Chancellors?
The Minister for Children, Schools and Families, Ed Balls, attempted to justify the new addition to the curriculum by noting “that children had to be prepared to manage their money and careers in a competitive and fast-moving environment” (in Bennett, 2007, p.1). Balls argued that:
“Money plays a crucial part in all our lives. I want teenagers to start learning early how to make the most of their money and savings once they start work. Schools have a vital role to play in encouraging young people to aim high and to improve their chances of a successful career, understand about taking risks and develop a dynamic ‘can do’ attitude. They need to understand everyday issues, like opening a bank account, buying a house and saving for their retirement as early as possible, developing a sense of responsibility as citizens” (in Bennett, 2007, p.1).
The thought that young people should start to plan for their retirement ‘as early as possible’ is chilling. Perhaps the obsession with financial literacy might eventually extend down to primary schools and nursery provision. Young kids will need to think about investing their ‘baby bonds’, piggy bank contents and birthday money more judiciously in future. Father Christmas will have calls for stock options and some sharp action in the field of private equity rather than X-boxes or MP3 players, maybe. The future is ‘green’ for the ‘kids in the land of no dreams’ (Rikowski, 2005).
Financial Ignorance Advanced
As I have argued previously:
“Of course, there is an argument that school children should know about how finance capital and its various appendages actually work. Trenchant critiques of the banking sector (and its stratospheric profits), why city slickers get mega bonuses, the withdrawal of state benefits from young people, the higher education fees regime and much else financial would be all to the good” (Rikowski, 2007a, p.2).
Understanding what private equity is (and its effects for inequalities, social injustice and jobs) would be useful too. And hedge funds! Don’t sit on that fence! Tell the kids! Private equity is ripe for debate in the classroom, especially as Richard Lambert, Director-General of the Confederation of British Industry (CBI) is squirming and weaving to justify this wild, cowboy capitalism which he sanctifies as the “new capitalism” (in Odoi, 2007). However, Lambert is fearful of the inequalities this “new capitalism” generates insofar as there may be a backlash. To avoid this, he advocates that the government should ‘invest more in education and training’ so that more folks can benefit from the “new capitalism”. Again, education is dragged forward as a comforter so that the ‘highly incentivised managers’ (Lambert in Willman, 2007) of finance capital can do their dirty business and sleep easy at night. As Larry Elliott has noted, Adam Smith would:
“…have looked askance at an economy gripped by speculative fever, with the emphasis not on making things but on buying and selling, making a turn, churning, taking a punt, sweating an asset” (2007).
It seems education in Prime Minister Brown’s land fit for the New Capitalism has to play three vital roles. First, as millions will be in debt and graduates hugely so, then people have to learn the skills of debt management. Secondly, young people need to be educated to see the ‘benefits’ of private equity, hedge funds, the stock market, and (for Lambert in Odoi, 2007) globalisation. Thirdly, people must be conformed to become accommodated to obscene inequalities of income and wealth: they must not rebel against the power of capital, in general and finance capital in particular, to generate economic and social inequalities. Thus:
“The New Labour debt-mongers want compliance and fear. They want to increase not lessen the burden of debt, and make us feel guilty in the process” (Rikowski, 2007a, p.2).
Real financial learning, learning that exposes the power and shrieking mendacity of finance capital, will be out of bounds in the pedagogic framework of Ed Balls and Richard Lambert. The B Generation rules (see Rikowski, 2001) and infects succeeding generations.
Hopefully, teachers involved in ‘delivering’ “economic wellbeing and financial capability” can make something worthwhile out of the subject. If they can ensure that young people do not become fearful of the power of money and can gain critical tools and knowledge that calls into question the whole basis of the Balls/Lambert financial curriculum, then that would be a most beautiful set of lessons for the future.
Bennett, R. (2007) Children to get lessons in money – and debt, The Times, 9th July, pp.1-2.
Elliott, L. (2007) Plc: prerogative of the unaccountable few, The Guardian (Economics), 9th July, p.28.
Odoi, A. (2007) CBI’s Lambert offers private equity a defence strategy, The Guardian (Business), 11th July, p.26.
Rikowski, G. (2001) The B Generation, a paper prepared for the May Day Monopoly events in central London, 1st May, London, online at The Flow of Ideas web site: http://www.flowideas.co.uk/?page=articles&sub=B%20Generation
Rikowski, G. (2005) Kids in the Land of No Dreams, 7th October, London, online at: http://www.flowideas.co.uk/?page=articles&sub=Kids%20in%20the%20Land%20of%20No%20Dreams
Rikowski, G. (2007a) Education for Debt, 22nd January, London, online at: http://www.flowideas.co.uk/?page=articles&sub=Education%20for%20Debt
Rikowski, G. (2007b) Privatisation of Student Debt, 16th March, London, online at: http://www.flowideas.co.uk/?page=articles&sub=Privatisation%20of%20Student%20Debt
Rikowski, G. (2007c) Education the HSBC Way, London, 23rd July, online at: http://www.flowideas.co.uk/?page=articles&sub=Education%20the%20HSBC%20Way
Willman, J. (2007) CBI chief fears inequality backlash, Financial Times, 11th July, p.4.
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