Saturday, November 27, 2010

A Basic Financial Education

When I went to college I chose a liberal arts education instead of one more technically oriented because I had a sense that a broad survey of information rather than a super-concentration in a major would serve me well over my lifetime. Looking back almost forty years from my college graduation, I’m happy with my decision. I was a math guy and so I took some rather intricate mathematics courses, of which I now remember precious little. What those math courses did provide me was an opportunity to think logically and gain a deep understanding about how worldviews are based on assumptions. Math isn’t the only route to that understanding, I’m sure. I suspect had I majored in philosophy or religion I could have developed a similar set of skills. In my case I was more comfortable with mathematical symbols than word symbols, so mathematics it was—but I digress.

In a liberal education you should get a smattering of other stuff that, if taught well, will tweak interests for a lifetime. For example, Job figures in literature continue to fascinate me because one English class I took focused on the subject.

So what, I wondered as I was helping a friend work on her required math course for a BA degree, should be the elements of a math course if someone was going to take one and only one math course? I concluded that all the important math concepts can and should be taught with the objective of developing sufficient knowledge for healthy personal financial management. In short a person should be able to:

  • Balance a checkbook
  • Understand discounts and mark-ups
  • Deal with interest both from the standpoint of earning it on savings accounts and paying it on credit cards and loans
  • Understand the effects of late fees on the interest rate
  • Comprehend the basics of insurance (life, auto, car, consumer warranties) and realize what insurance is good for, what it is not, who makes money on it and how
  • Recognize what kinds of professions earn commissions and how the way someone gets paid can affect the advice you receive
  • Negotiate at the 101 level
  • Recognize when something falls into my catch-all category: “What’s missing from this analysis?” Develop a critical understanding of how numbers don’t lie, but marketers (of product or ideas) cherry pick data to support whatever they are selling.

Think what it would mean if everyone who graduated college had these basic understandings. [Yes, it should be a high school requirement, but in today’s environment of teaching for the test, that has no hope of implementation.]

Now be honest, wouldn’t what I’m suggesting be more useful than learning how to deal with logarithmic functions—whatever the heck they are?

~ Jim

Wednesday, November 17, 2010

“The Will of the People”

Shortly after the election results were in, we began to hear blathering about the “will of the people.” The winners claim that voters have clearly repudiated their opponents’ agenda and strongly support the one proposed by the winner. “The voters have spoken.”

Of course they have, but what is the collective message? For example, in the recent Florida senate race, republican Rubio won going away over independent Crist and democrat Meek. The margin of victory being 19.2%. Pretty convincing right?

Well, let’s consider this from another aspect. Rubio won 48.9% of the vote. Crist and Meek won a combined 49.1% of the vote. [I have no clue who or what got the remaining 1%—Mickey Mouse usually gets a few write-ins.] From this standpoint, the will of the people (by a slim margin) was to NOT elect Rubio. That’s the real shape of the republican landslide win in Florida.

In Alaska, Joe Miller’s challenge of Lisa Murkowski write-in votes with minor misspellings or somewhat illegible spelling is another example of how politicians subvert the “will of the people.” With my handwriting, had I been an Alaskan who wanted to cast a write-in vote for Lisa, I would never be able to get the Joe Millers of the world to agree I wrote Murkowski on a piece of paper. My cursive leaves even me wondering what I wrote and, at its best, my printing leaves vowels open to interpretation. Miller is spending considerable time and energy trying to convince a court that his strict interpretation of Alaska election law should strip the voters of their intent.

Our election system is a winner-take-all approach and, as much as I dislike many things about the way government runs in the United States, I prefer the results of our (generally) two-party approach over the gridlock in those nations with a party for every possible voting bloc. I would ask, however, that our politicians recognize that with few exceptions the best they can honestly claim is that a majority of those voting decided at the time they cast their votes that the winners were the lesser of two evils.

If politicians entered their governmental service with that humble recognition, they might indeed find a way to serve “the will of the people.”

~ Jim