The Money Jungle
Most Americans — and I hope to excuse the broadness of this claim by absolutely, unreservedly including myself — are really, really bad with money.
This is not to say that they are simply stupid about their finances, or that when they are, it’s their fault. As has been widely discussed here and elsewhere, when you are poor in a country that is not, you develop extremely self-destructive habits when it comes to saving and spending money. What I’m talking about here isn’t the financially suicidal binge-and-purge patterns of the toiling classes; I’m talking about the fact that, in America, the knowledge of how to handle money is treated like a state secret, and largely made available only to those who have been prejudged as capable of understanding it — usually by virtue of having money already.
I’m hardly the first to observe that most people do not learn a single useful financial skill during their high school education (which, for the majority of Americans, is the highest level they will attain). It was a topic being discussed with much hand-wringing when I was in high school, and that was back when Mission of Burma was merely united instead of re-united. Since that time, things have only gotten worse; the degree to which the average person is beholden to creditors, financiers, and operators of arcane monetary sorcery has increased by orders of magnitude, while it is still rare to find a public school that teaches even the basics of balancing a checkbook, understanding a mortgage, or figuring the operation of compound interest.
My own experience may not be typical, but it may be instructive. Like many people of my generation, I came from a broken home; my mother was good with money, but never had any, while my father pissed his every penny away through incompetence and waste. By the time I was old enough to need to know how money worked, my family didn’t have any. High school was no help; economics class covered only the basic abstractions of market capitalism, and while there was counseling offered about potential careers, they focused exclusively on how to get a job, not on what to do with the money you earned from that job. In college, I learned a lot more about macro-economics (though it was largely self-directed learning) due to my political leanings, but I still knew next to nothing about practical matters like how to buy a house, how to buy a car, how to save for retirement, or how to invest money wisely. The only thing I ever heard about such things came in the form of advertising, which can be trusted as much as anything else that comes from someone trying to sell you something. As a result, I left school and entered the workforce so completely ignorant of even the most basic financial skills that by the time I actually started making money as a freelancer, I found myself nearly crippled by the workings of a tax system I had also failed to learn anything about.
What surprised me even more is that I wasn’t alone. Not only did many of my peers, even ones more educated than I was, lack an essential understanding of finance and business, even people who had gone to school for that very purpose had received the most slapdash learning imaginable. Economics majors were taught strictly the neo-liberal canon; in later years, I found myself agog when people who worked in the profession of banking were ignorant of even the most basic concepts of Marxist economics, such as the labor theory of value, rentier capitalism, and commodity fetishism. Business majors were taught the principles of the market, but many of them, whether self-directed or steered in that direction by teachers, saw the process of getting an MBA as more or less a means to game the system. They learned precious little about practical methods or big-picture planning, and instead, like their big-boy doppelgangers in law school, figured out the shortcuts, manipulations, and loopholes that would make them rich. It can scarcely be a surprise that this was the generation that resulted in WorldCom, Enron, and a dozen other disasters where ‘the smartest guys in the room’ turned out to be getting rich off of imaginary money and engaging in phantom business.
What’s particularly stunning about this — about the fact that half our population learns only a very narrow interpretation of economics, and the other half learns no economics at all — is that there is no country in the history of the world that loves money the way America does. We are uniquely and unprecedentedly obsessed with the accumulation of wealth, and so completely consumed with the idea that the market should govern every aspect of human activity that we reflexively reject government programs that every other nation considers a basic part of a functioning society. Americans operate on the assumption that if you can’t put a price tag on something, it doesn’t even deserve to exist; and yet we don’t find it necessary to educate our students in even the most rudimentary aspects of banking, trading, or taxation.
The result of this Janus-faced approach has been entirely predictable: it places us at our current point in history, where economic policy is dictated by a handful of wealthy people who understand finance enough to rewrite the laws to their own benefit, and then imposed on hundreds of millions who can’t even articulate how grossly they’re being screwed. This leads to situation where:
- We accept as perfectly normal interest rates that were once sensibly referred to as usurious.
- We allow things to be referred to as “costs” which are better understood to be “fees”, or better yet, “fines”.
- We support a system of government revenue where workers are routinely taxed at a rate two or three times greater than their employers, who make 50 to 100 times as much money.
- We have entirely abandoned the notion, endorsed by no less devout a capitalist than Henry Ford, that it should be commonplace and not rare that workers who build houses and cars should be able to own houses and cars.
- Our rentier class has come to dominate the entire economy, with virtually none of our national product coming from manufacture and the vast majority of it coming from “services” and the movement of largely phantasmal assets from one company to another.
- Even the most simple financial transactions have as many opportunities for additional cost built into them as possible.
- The whole conception of the purpose of banks has been upended, as they collect literally thousands of times as much from penalties and transactions fees as they pay out in savings — to the extent that for many customers, it is literally not worth saving money.
- We are accustomed to hearing the corporate class rail against socialism, while they strive endlessly to privatize gain and publicize risk.
- We greet with placidity the existence of things like payday loan services, auto title loan companies, and other forms of predatory lending. Pawn shops have become a form of popular entertainment.
- It has become routine for banks to charge its customers for providing fewer services, to the degree that many banks actually make you pay them for the privilege of speaking with a teller.
It all adds up to what seems to be a stunning paradox: in a country more concerned with money than anything else, we have raised generation after generation of people who don’t know a thing about finance. But in a way, it’s perfectly in keeping with our approach to other aspects of society: a country founded on freedom of religion that grows ever-intolerant of any religion but Christianity; a country that valorizes participatory democracy, but in practice, allows governance by only two increasingly similar parties; a country that places great value on learning, but privatizes it incessantly, ensuring that the quality of your education depends on how much money your family has; a country that built its reputation on science and technology but lets ideologues ban critical thinking from schools and denies climate science for purely ideological reasons. In the end, maybe it’s nothing to worry about; austerity is coming, and why bother learning how to use money when there’s no more money left to use? If we keep on letting the bosses gobble up our public wealth for their personal gain, finance and economics might turn out to be as useful as Latin.