The latest fashion in education is a lot like most back-to-school clothing marketed to preteen girls it doesnt quite cover enough. If you dont believe me, just ask Barbara Goldstein, a Florida mother and education advocate.
Drowning in Debt
Teaching financial literacy is the latest fashion in education. Arne Duncan, the U.S. Secretary of Education, has been promoting it aggressively. A number of other leaders have joined in the chorus. And a recent report from the Government Accountability Office (GAO) found that 16 different federal programs now teach financial literacy to teens or other groups.
With student debt exploding and many young people struggling economically, its easy to see why educators want to give students a basic understanding of personal finances. And, surely, no one would question the merit of teaching teens about compound interest and maintaining a budget.
Yet, most financial literacy programs dont go quite far enough. To understand why I say that, consider the letter Barbara Goldstein read at a program in Tallahassee earlier this year. Written by a Holocaust survivor, the letter tells teachers, My eyes saw what no man should witness: Gas chambers built by learned engineers. Children poisoned by educated physicians. Infants killed by trained nurses. Women and babies shot and burned by high school and college graduates.
The point of Goldsteins letter that the acquisition of knowledge needs to be complemented with the cultivation of character applies to many disciplines. In the area of personal finance, it means that in addition to mastering money facts, students need to be developing an appreciation for a time-honored ideal that has fallen out of favor in recent years: thrift.
The Thrift Ethic
Mention the word thrift today and youre apt to get a blank stare or instructions on where to find the nearest used clothing store frequented by hipsters and homeschoolers.
But the word thrift actually has a rich history in American life and a far more robust meaning than many people imagine. In its American expression, the concept was first popularized by Benjamin Franklin. He emphasized industriousness and frugality in The Way to Wealth and other writings and he initiated programs for entrepreneurs built on the teach-a-man-to-fish-rather-than-give-a-man-a-fish principle of helping others.
More recently, social reformers in the early 20th Century celebrated Thrift Week every January (to coincide with Franklins birthday) as a way of encouraging the wise use of economic resources. Since the word thrift comes from the same root as thriving, these reformers saw the thrift ethic working hard, saving for unforeseen needs, and giving generously to others as a key to human flourishing.
In essence, they (like Franklin) promoted a secularized version of John Wesleys famous dictum, Earn all you can, save all you can, give all you can.
Now, no one wants to see public schools turned into Wesleyan academies ruled by finger-wagging schoolmarms. But as the Goldstein letter illustrates, we need to offer students an ethical framework that recognizes, for example, that some strategies for upward mobility (like being industrious) are far nobler than others (like trying to win the lottery).
Moreover, in a world where lifelong careers at one company are becoming as rare as pro ballplayers remaining with one team, we need to be giving particular emphasis to helping U.S. students develop the scrappy, can-do, entrepreneurial resourcefulness commonly associated with new immigrants to America.
So, lets be glad that many educators are promoting the need for greater financial literacy. We need students to acquire money management skills. But lets ask these educators to do something many preteen clothing designers wont: cover a little more.
After all, the 2008 economic crisis arose not because the folks on Wall Street lacked financial literacy. (Apparently, they understood high finance all too well.) No, our nations economic crisis arose because many Americans including our leaders in Washington failed to practice thrift.
William Mattox is a resident fellow at the James Madison Institute.