President's Advisory Council on Financial Literacy
In a timely move (and ironic, given the blog posting I had already written for today) which I hope was caused by Brian Caplan and me and others repeating so frequently that the average voter is economically illiterate, President Bush on Tuesday signed an executive order forming the President's Advisory Council on Financial Literacy.
The 19-member group, which will be chaired by Charles Schwab, will advise the president and the Secretary of the Treasury on how to improve the economic and financial literacy of Americans.
As far as the government's creation of councils, task forces, etc., this is one that I think could be quite a good idea.
There is no doubt that many Americans believe a lot of incorrect things, such as that increasing free trade and (legal) immigration are net economic losses for the country, or that the Bush tax cuts were a gift to "the rich". Particularly on economic issues, ignorance can be very damaging since the ignorant can vote for politicians who share their views.
My only real concern with this council is that in his announcement on television, President Bush mentioned three example constituencies who would have representatives serving on it: Business, non-profits, and faith-based organizations. Of course charities and churches have an interest in the economy and to some degree in financial literacy, but any groups which rely on the tax code to "encourage" citizens to spend on them rather than on other things has an interest in perpetuating certain economic myths or parts of the tax code which modify what people would do, left to a system which were more economically free and rational.
For example, charities tend to lobby against repealing the Death Tax because they believe that people donate to charities in order to lower estate tax liability. Of course, it's true that some gifts to charities are for that reason, but that does not mean we should conclude that charitable giving would decline if people got to keep more of their own (or their parents') money. In any case, it isn't a proper role of government effectively to force me to give to charity.
I hope that this council will really work toward increasing objective financial and economic literacy and not toward reinforcing the tendencies in our tax code which simply serve the interests of council members.
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