September’s print edition of the Boston Occupier focused primarily on education—an area where the poor and underprivileged find themselves ingrained into a system of institutionalized inequality, both of opportunity and resources. The scandal of student debt and the gulf of educational attainment between the richest and poorest are indicative of the disgraceful unfairness which has come to define the American education system.
However, these issues just scrape the surface of the iceberg. The impact of a poor education on those who are underprivileged stretches far deeper, spilling over into all elements of their lives and threatening any premise of social mobility. The real scandal is something which is so often ignored by policy-makers and politicians alike: the scathing impact of “cultural capital”.
Cultural capital is an umbrella term for non-financial social assets passed down by parents or peers; this term describes things which are transmitted through osmosis from parents to the child, including ideas, knowledge, speech style and practices. This is an essential part of the entrenchment of class divides in any society, and this short article seeks to highlight one particular aspect of this which has come to light more prominently than ever in the course of the financial crisis – poor financial education.
A child born into a poor family suffers not only at the hands of a lack of finance, but also due to a lack of exposure to information which their parents possess.
The cultural capital of financial knowledge
When considering the outrageously low levels of social mobility in America, the issue of cultural capital is often neglected in favor of cold, hard income inequality. Rich parents can bypass educational fairness by ensuring their children get into top schools, giving them private tuition and buying them the resources that the State chooses not to supply.
However, this ingrained inequality goes far deeper. A child born into a poor family suffers not only at the hands of a lack of finance, but also due to a lack of exposure to information which their parents possess. Nowhere is this truer than in the field of financial education. Rich families – directly or indirectly – expose their children to information about investments, money saving, and accountants; invariably teaching their young ones how to manage money. In a poorer household where day-to-day living is defined by a hand-to-mouth philosophy, children cannot be exposed to this same information – they lack the cultural capital which is so central to social mobility.
This issue has been discussed at length by academics, and has led to the foundation of the Global Financial Education Program; an innovative scheme designed to spread financial awareness across the world’s poorest children and communities. However, this initiative focuses on third world and developing countries – consequently the problems at home are being underestimated and ignored.
How this has affected our poorest and most vulnerable
An example often cited is the issue of insurance. The link between income inequality and cultural capital has been discussed at length in relation to mortgage protection insurance – most recently by Boushey and Weller who considered the issue in the course of a study. They concluded that poorer households lacked insurance to safeguard their mortgage payments, and—absolutely essentially—their children were more likely to suffer the same problem in their adulthood. This is just one example of where a lack of cultural capital in the form of a poor financial education spills over into impacting on social mobility.
We could pull the net even wider by looking at the disastrous epidemic of foreclosures which are currently devastating much of the lower-middle class and poorer communities in America. This problem is not simply financial, as it infiltrates into other areas of life, one of which is education. Families who have not had the proper financial education can be more easily sold financial products they cannot afford (such as heavily leveraged mortgages), resulting in more economic stresses down the line – leading ultimately to a further devastating impact on social mobility.
Ideas for moving forward
In capitalist system filled with greedy banks selling complicated financial products, you need far more than the ability to read and write to get by.
It is submitted here that all state educational establishments should give their students a more detailed financial education. Teaching children from all backgrounds about how to manage money and what financial products entail would help to mitigate the power of cultural capital that is currently held in this area by the children born into the richest families. This has to consist of far more that what is offered by most schools at present; lessons resembling a form of advanced home economics should be enacted in all schools, regardless of the demographics of the school’s students. Schools need to be prepared to begin to teach children about mortgages, debt, credit cards, and their consumer rights in relation to financial products.
Although the greater involvement of this kind of education in schools will not solve the problem entirely, it will help mitigate the problem while other solutions can be enacted. By ensuring that the disparity in financial knowledge between rich and poor children is decreased, the children of the poor will no longer experience as large a handicap in this regard.
Through ensuring that all children, regardless of socioeconomic status, are given a sound financial education, we can ensure that these children are given a fair chance. In addition to increasing fairness, this program would ensure that it is far more difficult for unscrupulous bankers and financial institutions from victimizing these children once they are fully grown (ex. through offering sub-prime mortgages).