John W. Rogers, Jr. discusses the importance of financial literacy for all in his speech to the American Academy of Arts and Sciences
American Academy of Arts & Sciences
October 11, 2014
Thank you all for the honor of being inducted into this esteemed Academy. I’m privileged to represent Class V. However, the honor truly belongs not to us – but to the people who led us here; the mentors and role models who pushed us and supported us and believed in us every step of the way. So I would like to dedicate this moment to my father, who passed away this year at the age of 95.
My father backed up his beliefs with action. He believed in serving his country, so he trained hard and piloted 120 missions as a Tuskegee Airman. And he believed in teaching me about the value of money, which meant that each year on my birthday and Christmas, I didn’t get toys. Instead, my father gave me certificates of stock.
You can imagine the look on my face the first time this happened!
I was lucky to have a father so far ahead of his time. It’s hard to believe that a man who grew up as an orphan during the Depression was able to make himself more financially literate than most American adults are today. But he worked hard at it because he believed that financial literacy wasn’t just about numbers and money. It is fundamentally about empowerment and opportunity.
Now, as my friend Mellody Hobson is fond of pointing out – if you polled most Americans on what the S&P 500 is, they’d say it’s a racetrack. The truth though is, these financial acronyms – from TARP and HAMP to IRAs and 401ks – really do matter – they factor into our individual fortunes and national prosperity in profound ways.
Finance is simply too important to remain the domain of a privileged few – especially today. It’s no longer enough for us to coast along on a basic understanding of savings accounts and credit cards. As pensions are rapidly being replaced with defined contribution plans, Americans now have to act as their own portfolio managers. The economic crisis that devastated millions didn’t just stem from an imbalance of power between the financial industry and the rest of America. It was fueled by an imbalance of knowledge.
Greater financial literacy isn’t just about learning how to invest in the market or manage our student loans. It empowers us as citizens in a democracy. It allows us to better participate in critical policy debates that could shape our future for decades to come. It helps us hold our leaders in government and business accountable.
Today, as this economic recovery remains hobbled by historically high wage inequality, a public school curriculum that teaches financial literacy can also help address the growing wealth gap that persists in most urban and minority communities.
In my role as Chair of President Obama’s Advisory Council on Financial Capability, we worked with Education Secretary Arne Duncan and Treasury Secretary Tim Geithner and many others, to embed financial education within our public schools starting as early as first grade.
Part of the Council’s work led the Department of Education to participate in a global study conducted by PISA to measure the financial literacy of our 15-year-old students versus their peers around the world. This study was the first of its kind, and getting it done was harder than you might think. The data showed that our students, from the richest country in the world was just average, with students from China, Australia and parts of Europe all well ahead of ours.
Getting to the head of the pack isn’t just a job for our government and our public schools. We believe business leaders and financial executives can partner with urban schools to enhance financial education, provide role models and mentors. So that’s exactly what we’ve been doing in Chicago. I’m proud to note that my company, through the Ariel Community Academy, has been at the forefront of this effort. For the past eighteen years, our program has provided students in grade school with real dollars to invest, along with an innovative curriculum that exposes kids to investment terms like P/E ratios and beta.
Our work has inspired forty other financial institutions in the Chicagoland area, working with the Big Shoulders Fund, to invest in stock market education programs in local schools. And through the work of the President’s Council, we’re learning about an incredible array of other impactful programs across the country, and hope to replicate their success wherever we can.
The long-term value of these programs – especially those in our public schools – will accrue even faster than compound interest. It can help empower our children with greater knowledge and opportunity as they take greater responsibility for their financial future. It will help more students grow up to be business leaders and entrepreneurs, which creates more economic stability and more jobs for urban communities. And it will mean a more informed citizenry, ensuring that our uniquely democratic vision of capitalism continues to drive America’s greatness.
Tonight, I consider myself incredibly fortunate to be part of this remarkable community. After all, it was one of this group’s earliest members, Ben Franklin, who instructed us that, “an investment in knowledge always pays the best interest.”