Saturday, August 4, 2012

Conversation with the Chairman - A Teacher Town Hall Meeting

Updated Post (Including the taped broadcast of the event on C-Span)

I had the good fortune of attending the Federal Reserve’s “Conversation with the Chairman – Teacher Town Hall Meeting”. As you can see, I had a pretty good seat for the event. Chairman Bernanke addressed educators in Washington, D.C., and nationwide via video conference. His opening remarks focused on the need for personal financial education in the wake of the recent financial crisis. Following his remarks, educators from across the country asked a number of questions.

It was obvious the Chairman and the Federal Reserve are advocates for financial and economic education. Their website is full of terrific education resources, as are the websites of each of the individual banks. Chairman Bernanke did not have to take the time to do this, and his efforts are certainly appreciated.
A few takeaways from my experience…

First, the Federal Reserve does not set education policy, and thus the Chairman could not provide specific financial education policy direction. He did a great job advocating for the need for financial literacy in our schools, without diving into how he would prefer the instruction be delivered. He stated that every student should receive some sort of financial education instruction, but stopped short of articulating his preferred delivery of the instruction. He suggested a stand-alone course, integrating the concepts into various courses, and even brought to light the value in taking AP economics courses.

Second, as someone who has arguably greater influence over our economy than any other single person, I got the strong sense of his appreciation and respect for the free markets as the main driver for our economy rather than a single person. He addressed a question about the role of the “Invisible Hand” in the economic collapse, and you could see his face light up when he used Milton Friedman’s example of the magical free market forces that come together to just produce a pencil. He also pointed out that for markets to work, people need to understand what they are buying and selling. This was certainly not the case leading into the financial collapse, as the financial instruments that froze our credit markets were a mystery, as were the details of loans for many consumers.

Along those lines, he addressed growing student debt. At the micro-level, he accurately pointed out that students make debt choices, and guidance counselors need to serve as investment advisors for students who are going into debt to investment in themselves. Students should consider what they are spending relative to anticipated future income upon graduation. At the macro level he pointed out that most student debt is owed to the federal government, which may not lead to the complicated problems following the housing crisis but will lead to future fiscal burdens for taxpayers.

Third, I was surprised he was as direct as he was about our broad education challenges. He believes that the inequality of education is leading to economic inequality. I was pleased he pointed this out, and hope policy makers recognize appropriate ways to address the problem. As it relates to the purpose of the town hall meeting, this paper cites a direct correlation between unequal financial education opportunities and economic inequality.

Lastly, he responded to a question about whether he believed future generations are going to be worse off than previous generations. Among other factors, he believes America’s entrepreneurial culture and innovative technologies will continue to drive our economy to prosperity. I hope he is right, but as Yong Zhao points out here, current education reform policies could become an obstacle in developing future entrepreneurs and innovators.

Click here for the taped broadcast of the event on C-Span.

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