(Financial) Literacy by the people, for the people

April 3, 2015 1:46 PM

Literacy education is not a de facto instrument of personal and economic liberation. The dark side of literacy is social control. Reading can only promote genuine inclusion when people are allowed to engage freely with text on their own terms, and that is not a given. The goodness of literacy ... “depends in part on whether it is used as an instrument of conformity or of creativity.”

Martha Poon and Helaine Olen use the history of traditional literacy to look critically at the notion of financial literacy [PDF, 13 pages], and how hard it is to “teach our way out of population-wide financial failure.”

Helaine Olen, previously.

posted by Banknote of the year (19 comments total)

And a similar critique on MeFi of the concept of financial literacy, previously.

I work in adult education and part of what I do is teach learners with low literacy levels. A great deal of my work outside the classroom is advocacy about the social conditions that create educational inequity. I will have to look for it, but recently I read an article that said, essentially, we tend to aporoach this issue backwards: we act like low literacy is a cause of socioeconomic inequity, but really it is a symptom. We won't be able to create higher levels of literacy without dismantling the structures that create and maintain poverty and social inequality. Financial literacy is no different.

I agree 100% that the promotion of literacy without attention to the socially constructed inequalities that create low literacy rates is irresponsible. My literacy colleagues are passionate about social activism, and we spend at least as much time lobbying for policy change as we do teaching reading, writing, and numeracy. I don't believe it's possible to work effectively in the literacy field without being an advocate and ally to marginalized people.
posted by hurdy gurdy girl at 2:19 PM on April 3, 2015 [16 favorites]

The financial literacy 101 line would tell us that Minch never should've had such a large balance in the first place. Pay off your revolving variable lines every month is the mantra, precisely because of the risk of the unexpected.
posted by jpe at 2:20 PM on April 3, 2015

But individual banking now seems to exist merely to bilk people with high interest rates on credit card debt. Had the bank really had their customers' financial welfare at heart, they wouldn't have allowed such a large balance to build up in the first place.

But the expression “pulp finance” from the article is a good one.
posted by scruss at 2:51 PM on April 3, 2015

The banks aren't our parents; their job isn't to look out for our best interests. And that's exactly why financial literacy is important: it's so people don't just sign credit card agreements because they assume the bank will make everything OK.
posted by jpe at 2:57 PM on April 3, 2015

The financial literacy 101 line would tell us that Minch never should've had such a large balance in the first place. Pay off your revolving variable lines every month is the mantra, precisely because of the risk of the unexpected.

Oh, well thank god you were able to clear all that up using the limited information given. What would we ever do without you? We'd probably have to discuss the deeper content of the link, and who wants that?
posted by kagredon at 2:59 PM on April 3, 2015 [1 favorite]

The financial literacy 101 line

Which is what, "don't be poor"?
posted by RogerB at 3:04 PM on April 3, 2015 [10 favorites]

This critique of traditional literacy (which the critique of financial literacy is built on) seems incomplete. It talks about the ways in which elites have characterized literacy as a vehicle for economic improvement or social control, which is fine as far as it goes, but skips over the move to literacy from non-elites and how they have viewed things.

Frederick Douglass has something to say about it:

Very soon after I went to live with Mr. and Mrs. Auld, she very kindly commenced to teach me the A, B, C. After I had learned this, she assisted me in learning to spell words of three or four letters. Just at this point of my progress, Mr. Auld found out what was going on, and at once forbade Mrs. Auld to instruct me further, telling her, among other things, that it was unlawful, as well as unsafe, to teach a slave to read. To use his own words, further, he said, "If you give a nigger an inch, he will take an ell. A nigger should know nothing but to obey his master — to do as he is told to do. Learning would spoil the best nigger in the world. Now," said he, "if you teach that nigger (speaking of myself) how to read, there would be no keeping him. It would forever unfit him to be a slave. He would at once become unmanageable, and of no value to his master. As to himself, it could do him no good, but a great deal of harm. It would make him discontented and unhappy." These words sank deep into my heart, stirred up sentiments within that lay slumbering, and called into existence an entirely new train of thought. It was a new and special revelation, explaining dark and mysterious things, with which my youthful understanding had struggled, but struggled in vain. I now understood what had been to me a most perplexing difficulty — to wit, the white man's power to enslave the black man. It was a grand achievement, and I prized it highly. From that moment, I understood the pathway from slavery to freedom. It was just what I wanted, and I got it at a time when I the least expected it. Whilst I was saddened by the thought of losing the aid of my kind mistress, I was gladdened by the invaluable instruction which, by the merest accident, I had gained from my master. Though conscious of the difficulty of learning without a teacher, I set out with high hope, and a fixed purpose, at whatever cost of trouble, to learn how to read.

I understand the skepticism people have around the push for financial literacy. And it's entirely true that some of that push, from elites, is either self-serving, naive, or both. But (apologies to Audrey Lorde), you probably need to know how to use the master's tools if you want to dismantle the house.
posted by feckless at 3:18 PM on April 3, 2015 [14 favorites]

And here, for lo these many years, I thought "financial literacy" was simply a metaphor for a spectrum of knowledge of basic-to-advanced accounting and finance (including consumer finance). Maybe it's just me, but I don't think 'literacy' is really the right word to describe financial knowledge.

But if it is, then I think the article fails to address a crucial factor: the ability or lack thereof to discern and evaluate the credibility of a source.
posted by Short Attention Sp at 3:21 PM on April 3, 2015

Aha, found the piece I was thinking of. It's from Harold Alden's Illiteracy and Poverty in Canada: Toward a Critical Perspective (1982):

As we have seen, both the liberal and conservative perspectives see deficiencies and shortcomings of the poor as a primary cause of poverty and unemployment. According to this "deficiency model", labour markets and the economy in Canada distribute success and failure more or less 'fairly' based on effort, abilities and qualifications. Therefore, the difficulties experienced by individuals in achieving adequate employment and income can in large measure be attributed to their personal shortcomings, which in the view of liberals mainly consist of lack of basic education, life skills and job skills ("human capital"), and in the view of orthodox conservatives consist of more fundamental deficiencies which cannot be easily or efficiently corrected, if at all.

In contrast, the critical perspective rejects the personal deficiency model. Its adherents share the view that the Canadian economy and its labour market are far from fair, and that in fact they constitute the primary source of poverty and unemployment. In effect, a new explanatory variable--i.e. the capitalist economic structure--is introduced into the discussion of illiteracy and poverty. (from Chapter 4, p. 2)

I think the (excellent) article linked in the post above fits perfectly with this broad perspective. Both conservative AND liberal perspectives on financial problems are based on the idea that people in poverty just don't have the skills or knowledge (the financial literacy) to understand how to avoid them. Therefore, the idea is that if we can just help people attain these skills/knowledge (that is, educate people on financial literacy) to change their behaviour around money, they will stop going into so much debt and stop living in financial precarity.

The critical perspective--that individuals really have far less control over their financial situation--is frightening to most people because it challenges the "just world" fallacy. Traditionally, capitalism relies on giving us all a nice false sense of control. If you do the right things you will prosper, or at least be OK. If you are not OK, it must be you who are failing the system, rather than the other way around. It is far easier and more comforting for people to believe we just need to get everyone to fit into this system, than to consider that the system itself needs to be radically altered or perhaps scrapped and rebuilt.
posted by hurdy gurdy girl at 3:26 PM on April 3, 2015 [12 favorites]

Maybe if we had decent usury laws in this country, it would lower the outrageous amount of "literacy" required not to get hosed for life.
posted by overeducated_alligator at 3:27 PM on April 3, 2015 [11 favorites]

feckless: I understand the skepticism people have around the push for financial literacy. And it's entirely true that some of that push, from elites, is either self-serving, naive, or both. But (apologies to Audrey Lorde), you probably need to know how to use the master's tools if you want to dismantle the house.

Yes, I agree that literacy can be a powerful tool for dismantling the master's house. However, the problem is that the tool (literacy) itself is seen as the end goal, when in reality the end goal should be the dismantling. I have come across many well-meaning people who believe that once we raise marginalized populations' literacy levels, then we will achieve socioeconomic equality. This is a very common perception.

No one is saying we should not be teaching literacy, numeracy, and financial skills. But what I and many others are saying is that viewing literacy as the end goal can lead to not only complacency but victim blaming:

"We offered you high school completion courses but you still can't get a job? Well, you must not be working hard enough. You took financial literacy workshops but you're still in debt? Well, you must not have really absorbed those lessons. We tried to raise you up but you just refused to cooperate. These literacy programs just aren't working; the rates of success are too low, so we're going to stop funding them."
posted by hurdy gurdy girl at 3:29 PM on April 3, 2015 [11 favorites]

Financial Literacy is a propaganda tool by the rich, to convince people that they are poor because they are stupid. Even the concept "literacy" implies that you need education because you are illiterate. It teaches them a lie, that they could become rich if they were not stupid.

Hey I'm not stupid. I know why I'm poor. It's because the rich wrecked the economy. They need financial literacy.
posted by charlie don't surf at 3:34 PM on April 3, 2015 [12 favorites]

hurdy gurdy girl -- your "both and" viewpoint makes perfect sense to me, and the work you're doing sounds very important to that end.

The article, though, seemed like it was creeping up to actually really "saying we should not be teaching literacy, numeracy, and financial skills." Or at least strongly implying that such teaching is pointless, because our economic system is unjust. Which it is! But the teaching is still necessary.
posted by feckless at 3:37 PM on April 3, 2015 [1 favorite]

What would we ever do without you? We'd probably have to discuss the deeper content of the link, and who wants that?

There really wasn't any deeper content. The piece started from a false understanding of financial literacy and went nowhere from there.
posted by jpe at 3:52 PM on April 3, 2015 [1 favorite]

I think I see what you are saying, feckless. My reading of the article is that we should still ensure people are "financially literate," but that the current definition of financial literacy (driven by the banks and personal finance gurus) is not real financial literacy. As Poon and Olen note, there's nothing to say Minch was NOT financially literate; it's just that her version did not jive with the one that the establishment approves of.

The financial literacy that I (and I think the authors of the article) would encourage is the kind that opens people's eyes to the ways in which there are inequitable power structures that work to keep them poor. So instead of poor people internalizing all responsibility for their own financial situation, I would rather they learn to recognize and examine societal structures that favour the rich elite and maintain oppression and poverty for others.

As an analogy, in my literacy classes, we definitely work on reading and writing. But my classes include much more than that: it's reading and writing in a context of learning about human rights, about racism, about inequity, about how to advocate for yourself and others in your community. To me, those are skills that are every bit as important as being able to decode text or do math. I think the same can be done for financial literacy--the addition of awareness of the hidden economic structures that maintain inequality, rather than placing all the responsibility on the individual for financial "illiteracy."
posted by hurdy gurdy girl at 3:56 PM on April 3, 2015 [2 favorites]

Financial Literacy is a propaganda tool by the rich, to convince people that they are poor because they are stupid.

Cite?

I know of plenty of bright, expensively educated, middle to upper middle class people who make utterly catastrophic financial decisions that a moment's reflection, or a care for the day after, would have stopped them from making. Despite all the advantages they enjoy, prudence is simply not in them.

I'm all for teaching the young'uns how money works, how compound interest works, how banks work, how businesses work, but human nature being what it is, I'm under no illusions that doing so will turn the rising generation into a bunch of financial Frederick Douglasses. The ants will take the message to heart, the grasshoppers will not.

(Not quite getting all the story here anyway. BoA is indeed very bad, but she had a savings account with them. Unless maybe it was tax protected (we are not told that it was), she would have done better to pay down the credit card debt with the money at hand, or at least as much as she could spare. That having been said, I know an engineer in the exact same situation, solvent enough to pay off the rolling debt but too scared of dipping into capital to do so. Personality beats logic.)
posted by IndigoJones at 4:24 PM on April 3, 2015 [2 favorites]

But that's sort of the whole argument of the article. Your bright expensively educated friends are poor because the financial system is not prudent. The financial system itself has a grasshopper personality, and it's killing all the ants. On those terms.

That is how to begin to read this paper correctly, even if you don't agree with parts of it. The exercise is to question the individualist account of control/autonomy as mediated by capitalist ideology. But it's just an exercise in that one can take it or leave it.
posted by polymodus at 10:14 AM on April 4, 2015 [2 favorites]

Your bright expensively educated friends are poor because the financial system is not prudent.

Well, the last clause is true enough and I can't say enough bad about banks and the Fed. Regardless, nature beats nurture and said friends would still screw up financial even in a world of moral bankers and sane central bankers. (Not just bright expensively educated, I know bright working class types who are far more financially savvy than their overachieving coevals.)
posted by IndigoJones at 1:48 PM on April 14, 2015

So the article disappeared behind a paywall. If anybody coming to this late would like to read it, send me a MeMail and I'll e-mail you a PDF.
posted by Banknote of the year at 7:08 PM on April 28, 2015