Felix Salmon

The problems of financial illiteracy

I was keen to go to the panel on financial literacy, which was moderated by John Bryant, the founder of Operation HOPE and a member of the U.S. President’s Advisory Council on Financial Literacy. He’s clearly committed to this cause, and is doing a very good job of picking the low-hanging fruit: in some areas, for instance, only 25% of people eligible for the Earned Income Tax Credit actually claim it. Since it can be claimed going back three years, and since it can amount to $4,000 per year, families earning less than $40,000 a year can end up with a $12,000 windfall just as a result of some simple outreach and basic education. In many cases that’s “more money in many cases than they’ll ever see in their life,” said Bryant; “it’s transformational”.

Where’s the pessimism?

At last year’s Milken Global Conference, the mood was one of pervasive worry and uncertainty. This year, I had some hope that the assorted plutocrats would evince some measure of contrition in the wake of their precious “financial innovation” being revealed to have been the proximate cause of the largest financial and economic crisis in living memory.