Can Socialists teach Capitalism and captivate the kids?

Last week I suggested a need for our children to leave school with a financial blueprint.  An understanding of basic financial management and the procedures for control, confidence and financial certainty.

A lot has changed since my years in secondary school through the sixties.  What has not changed is the education system and its adaption to economic issues which flowed on from oil crises, high inflation, banking products development (mortgages credit cards), retail consumerism, technology development and softer lending criteria.  Society, economically and financially speaking, is markedly different to the low inflationary times and the highly subsidised primary producing country that we baby boomers grew up in, through the fifties and sixties.

Mortgage finance was inaccessible unless borrowers had contacts with legal firms.  Lawyers held sway.  Banks’ lending criteria was “Presbyterian”, to say the least.  Stock brokers controlled direct investment into the NZ equity market.  Banks were commercially available for business and corporates — their products and market, not being individuals and families.  More conduits for cheque clearance, business loans, and currency (notes and coins) upgrade (old for new).

ATM’s, credit cards, managed funds (investment products), bank insurance, did not exist.  Personal loans, the exception rather than the rule — student loans unheard of.  So the 70’s saw wage and price freezes, carless days, 20% interest rates and double digit inflation.  No wonder “housing” became the favoured investment.

In the 80’s central bankers and politicians throughout the western world were forced to combat the inflationary effects on Keynesian economics.   Thatcher in the UK, Reagan in the US and David Lange’s Labour Government in New Zealand.  Through this time, the financial institutions in NZ underwent substantial change.  Banks, insurance companies and stockbrokers commenced selling each others’ products, and institutions merged to form larger and larger enterprises (the big banks, the less insurance companies).  Technology through digital communication changed banking from a relationship business to a transactional enterprise.  Products multiplied, lending softened, and ease of functionality embraced the consumer demand for transparency and speed.  The banks won the battle — their systems beating competition for the markets’ convenience.  They remain the leading financial market providers in all areas, except relationships.

Our children either leave school and are dazzled in the headlights of consumer credit as they become intoxicated by their first pay cheques, or head to university and are attracted and aroused by interest free student loans (government provided), interest free personal loans (bank provided) or interest free consumer credit (retail store provided)..  A lolly scramble of Romanesque proportions.

Now enter a “grown up” reality check of living within one’s means, or attempting to buy a house or understand the need to invest for one’s future, or secure one’s income or assets, and we have the state of affairs which exists today:  financial naivety and a dysfunctional economic system of corporate profit, private and public debt, and the redistribution of wealth and welfare.

If it wasn’t so harmful to watch and live amongst this, one could take advantage of such poor financial behaviours and continue to profit.  Of course institutions and organisations are doing just that, and we watch the profits soar to the lenders housed in Asia and Australia. The government is doing it.  Students are doing it.  Families are doing it.  Individuals are doing it.  Borrowing to speed.

Research shows that health and wellbeing is dramatically affected by financial stress:  45% feel their level of financial stress today is high to overwhelming; 61% cited money as their number one stressor; 56% indicated distress over financial matters contributed to irritability, fatigue, and sleeplessness.

Is it any wonder that 87% of the same employees interviewed in this research desired financial education?

The problem is that they should have received it 20 or 30 years’ earlier.  Not in a “home economics” budgetary, boring class of conservative clap trap.  But the wonders of how to grow your wealth, where to invest, how to buy and pay off a home, the eight great investment mistakes, why equities outperform all other asset classes over time, how work and capital combined can build businesses and production, how “conscious capitalism” is far superior to cronyism — why politics and economics are intertwined, and the importance of understanding their effects upon markets and social structure.

Do I anticipate a change to school curricula?  Yes I do, but the passion with which it is delivered is crucial — no different to our own school days.  Quality teachers = attention and interest, followed by good marks.  And there lies a fundamental issue:  as Roman Catholic schools don’t teach Church of England theology, so socialist teachers will struggle to embrace capitalist economics and finance:  they are philosophical opposites.