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A Word From Peace & Justice
Myth: Financial Literacy Education will fix inequality.
Recent articles appeared in a variety of media outlets around the world reporting greater inequality
between the wealthy and the poor.
The gap between rich and poor has grown even with programs in place to encourage a decrease. The articles cite statistics around insufficient income to live, housing
shortages, and food insecurity.
Most of the programs have focused on educating the poor. Wealthy folks have access to financial planners to assist with making good investments and getting all tax advantages that are available. Poor people do not have such advice and many are caught in scams involving finances. So financial education should help, right?
But there is no evidence that Financial Literacy programs help. Most poor can't get tax breaks because what income they have is too low to be taxed. And being poor is expensive! The poor only have expensive food sources available. (Just last week I read that the only chain grocery store that serves the entire Southeast DC area may be forced to close.) Not enough banks are in areas to serve the poor so they have to use check cashing places that charge high service fees.
Residents in poor areas spend 82% of their income on basic necessities. When one is in a dead-end job with no prospect of betterment it is hard to see the point of saving every spare dime. And with too few interest bearing accounts available it may not even be possible.
See the full article from the ARD.
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