It’s hardly surprising that people think that “financial literacy” will be some kind of palliative for our economic crisis. But one Massachusetts boarding school seems to be taking this a bit too far—it’s building a trading floor right on campus!
The Wall Street Journal reports:
Wilbraham & Monson Academy, a boarding school in Massachusetts, will officially unveil a classroom that simulates a stock-market trading floor. “Students can use state-of-the-art financial-markets software to learn to research, analyse, and decipher patterns in the context of a financial trading environment,” the school said. “Class discussions will complement the analysis, focusing on issues such as business ethics, economic development, and the interconnected global financial system.”
Oh, and awesomely, this is the school that graduated former Lehman Brothers CEO Dick Fuld.
The Wall Street Journal is probably correct that “a lack of financial literacy played a large part in creating the problems that drove the U.S. economy into the recession.” But it goes to far when it approvingly quotes Ben Bernanke arguing in support of programs to increase financial literacy.
“In light of the problems that have arisen in the subprime mortgage market, we are reminded of how critically important it is for individuals to become financially literate at an early age so that they are better prepared to make decisions and navigate an increasingly complex financial marketplace,” Ben Bernanke said in a speech last year.
Bernanke, like many educated people and almost all professional educators, overrates education. Reality, however, is less enthusiastic than the Fed chair about the efficacy of education. Take the example of civics class and “social studies” in high school. Despite decades of this stuff, the broad public remains shockingly ignorant of even the most basic political facts. There’s little to suggest that financial education can make a meaningful difference in overcoming financial illiteracy in all but a select few. Many people are illiterate because they are, for all practical purposes, uneducable.
What’s more, it’s questionable that even a financially literate people could have avoided the mistakes that led, say, to the mortgage mess. Some of the most financially literate people on earth lost billions on Wall Street betting wrong on mortgages and derivatives. If a Wharton education can’t prevent these kind of colossal errors what are the odds that a trading floor in a boarding school would?