This morning The Herald published this article which, in essence, warned of a retail downturn caused by the downturn in the housing market and the recent collapse of finance companies. I’ve also run into some friends recently who have told me their tales of woe related to racking up debt (which we all know is so easy to come by) without any real chance of paying it off.

Maybe I’m stating the obvious but there seems to be a huge disconnect in our country. The educationalists among us wax poetic about skills based learning and real world experience, all the while our young people seems to pop out of the education system without the most basic of understandings of credit and economics.

It would seem there are two options here. One is the return to a regulated Muldoon-esque economy. Close the borders, tighten credit and generally decide what is best for the great unwashed. While I’ve been know in the past to say that democracy is a poor way to run the world and that benign dictatorships are much more beneficial, sadly it just isn’t going to happen in New Zealand.

With the “turning the back on the world” option then ruled out, what do we do? Simple really. We introduce the following as compulsory subjects starting at primary school level;

  1. Economics – a real world understanding of the financial system, how credit works, taxation and budgeting
  2. Civics – the low level of local government election returns is an indication that we’re (in general) an ignorant and apathetic country in terms of how government and administration works. Compulsory civics will bridge this gap and hopefully tie in with the economics education to produce a better rounded, more aware citizen (in the mould of the Scandinavian model I’d say)

Right – that’s the end of my fuddy duddy rant for the day!

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

  • And perhaps the web will be the delivery mechanism for those two points?

    Many economists do not understand how the financial system is constructed or works which isn’t really helpful to our students. But with P2P lending and microfinance on the up people are now starting to see these processes in action in an open and transparent framework.

    As for government, surely the less of it the better? again the web may present us with different forms of democratic participation.

    We need to start asking serious questions about the way our lives are organised and the two points you have made are the crux of the matter.

  • Ben I agree that the NZ education system fails to deliver broad-based life skills such as money management. You can add inter-personal relationships, childraising, ethics and self health care to the list of much needed training. I also agree that the Scandanavian education system turns out model citizens who are a pleasure to be acquainted with. But it seems like parents need to be involved too and I’m not entirely in favour of devolving all responsibility to schools.

    And I can think of only one country which has thrived under a “benign dictatorship” and that is Singapore. Arguably, the tiny nation state would have done equally as well under a fully democratic system anyway, because of its enviable geographic position, captive labour force and proximity to huge Asian markets.

    What Singapore lacks however is creativity. It has been crushed by the lack of intellectual freedoms and an overbearing parental State. Let’s not go there.

  • Hi Ben,

    Sorry for bringing a dead thread back to life, but I’ve been running through the various topics on your blog and this one is something I’m particularly passionate about.

    As Raf stated above, even economists and politians at least profess ignorance about the design of our finance and banking system so at least INHO its a bit too much to expect the average Joe to be aware of it and how it affects them. As you alluded to in your comment the quality of our education has a lot to do with this sad state of affairs, but there are powerful interests who have great interest in ensuring the continued ignorance of the rest of the population.

    What we need to do is faciliate an environment that is condusive to personal responsibility and the last thing that would do that would be to devolve even MORE responsibility to the State.

    At the very least we need credible alternatives to State education and the State mandated bank finance monopoly, because the Establishment are inherently reactionary and only ever take action to avert or reaction a crisis and when the do act they often don’t take the best option available to them, because they have to take into account diverse and often conflicting agendas and interests.

    An excerpt from a Reserve Bank document that I stumbled across would explain why the economy is so slanted to property investment and ownership.

    “In essence, it states that for every $100 of loans, a bank should have at least $8 of capital, of which at least $4 must be permanent equity. Because loans secured over residential property were seen to be less risky than other loans, they only had to have 50% as much capital. Loans to banks from OECD countries were seen to be less risky still, so they only had to have 20% as much capital, and loans to governments denominated in their local currency 0%. There were several other categories and treatment for off-balance-sheet exposures.”

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