08 August 2008

Teaching Children How Debt Is Good

"Cent$ational Harry and the Balance of Life" is a play for primary schools to improve children's financial literacy. It was initiated by Ethical Investor with sponsorship from the Bank of Queensland.

Very admirable, but I was concerned when reading the "plot" or storyline of this educational play. I'll quote the sections of concern:

"They must first learn from Harry the way earthlings move, talk and dress so they can embark on their quest. But, Harry tells Ali and An, to achieve anything of value on earth you must first have money. “What’s money?” the ET’s ask. Harry must then teach these na├»ve characters the basic concepts of what money is and how it works.

However, each money making scheme, such as labouring, earning interest, making a profit and so on, requires time, and the aliens tell Harry, they need money NOW, for in 5 days they will expire. The only way to spend money without first making it, Harry realises, is through the use of credit, and he undertakes to use his credit card to make the journey to find the Berkelium.

Harry, however, mismanages the challenge, being seduced into purchasing unneeded computer games, mobile phones, fashionable garments and accessories, and he falls into the pit of despair and hopelessness."

So the message I would read into this if I was a kid was that you don't have to wait for money and work hard first, if you want something NOW, go and get credit. Now from the last paragraph it appears that there is a lesson coming about wasting money on useless things, which is good, but then we get:

"Harry must learn that he can only balance his finances if his expenditure equals his income plus his savings. He can't over spend on his credit card if there is insufficient money coming in to cover his repayments."

So it appears to me that the end point or lesson is not "don't get into debt" but assumes you are going to be in debt and that this is OK, so "learn to balance income and expenses". Where is the "pay off the debt" message? Couldn't the storyline be reimagined to show how debt is bad and to be avoided and that patience and savings are good?

Naive expectation of course, considering that it was sponsored by a Bank. I'm sure they love the central theme that credit cards play in the story. Sometimes I despair about where society is and where it is heading.


  1. Excellent blog sir. I applaud the teaching of financial literacy but it is very important the message given should be to work smart and build assets that work for you. The use of debt should only be introduced once this message has been delivered. Debt should only be considered as a mechanism to drive positive cash flow not something to be serviced on a continual basis.

  2. Very true. When I said debt is bad I meant when used for non income producing expenditures of course (one does need to be clear, lesson for future blogs). Antal Fekete explains debt/interest thus:

    "what happens when a man with income to spare but who is in need of wealth meets another with wealth to spare but who is in need of an income?" (http://www.fame.org/HTM/Fekete_Anatal_Whither_Gold_AF-001-B.HTM)

    The key being "income to spare"

  3. Alas, as this debt-financed financial system depends on debt for the very existence of money, to discourage debt would also discourage the creation of money, which would not be good for the economy. A growing economy, increasing debt, and a growing amount of money go together in our current system. Hence the importance of encouraging, or at least not discouraging debt. To change things would require no less than changing the entire debt-based international financial system - a huge task, but not impossible.