THE POLITICS OF FINANCIAL LITERACY
- munyumba mutwale
- Oct 20
- 6 min read
KEY TAKEAWAYS
Financial Literacy Is the Foundation of Good Citizenship: A nation that understands money produces citizens who make better political choices and demand sound economic policy.
Economic Awareness Creates Accountability: Financially literate and asset-owning citizens feel policy impacts directly, making them more critical of populist or short-sighted politics.
Ignorance Is Expensive: When voters don’t understand the economy, they vote for policies that feel good but fail in practice, leading to inflation, debt, and underdevelopment.
In today’s world, where economics shapes every aspect of society, the link between financial literacy and politics has never been more critical. The ability to understand money, not just how to earn it, but how it moves through an economy, determines how wisely we vote, how effectively we hold leaders accountable, and how sustainably our nation grows. Financial illiteracy doesn’t just breed personal poverty; it breeds poor politics. When voters don’t understand the real cost of “free” promises, they empower leaders who trade long-term stability for short-term applause.
The Financial Literacy Promble Is Actually A Political Problem
In a recent episode of Real Time with Bill Maher on October 17, 2024, billionaire investor Mark Cuban and journalist Andrew Ross Sorkin discussed a topic that often flies under the radar in political discourse: the direct connection between financial literacy and the quality of governance. The conversation highlighted how young voters, especially Gen-Z, are increasingly drawn to promises of free housing, free transportation, and cheaper groceries, policies that sound appealing but are economically unsustainable.
As Sorkin pointed out, this isn’t just a matter of political ideology; it’s a symptom of a deeper financial literacy crisis. Without understanding how money works, both personally and on a national scale, voters cannot evaluate the feasibility or consequences of economic promises. This phenomenon is not unique to the United States. Right here in Zambia, our lack of widespread financial and economic literacy directly impacts political decision-making, national policy, and ultimately, the trajectory of our economy.
The Roots of the Problem: “It’s the Economy, Stupid”
Back in 1992, James Carville, a political strategist for Bill Clinton, coined the phrase, “It’s the economy, stupid.” The slogan underscored that the primary concern of voters is how the economy affects their personal finances. While this became the de facto guiding principle for the Clinton campaign, its relevance extends far beyond the American context—it applies to Zambia and every other nation.
Economic promises without economic understanding are empty. When voters have no grasp of how rent stabilization, subsidies, or free services impact supply, inflation, and private enterprise, they become susceptible to policies that sound good on paper but fail in practice. Sorkin explained it clearly: if developers anticipate rent control, they stop building, reducing supply and driving up prices. Yet, the average voter might not understand this mechanism. The result? Well-intentioned but economically disastrous policies gain political traction.
Financial Literacy is a Pillar of Good Citizenship
Booker T. Washington, one of the most influential Black leaders in post-slavery America, in his autobiography Up From Slavery, articulated a principle that resonates even today:
“Political activity alone cannot make a man free. Back of the ballot, he must have property, industry, skill, economy, intelligence, and character.”
Washington’s philosophy emphasized economic empowerment as the foundation for meaningful civic participation. In other words, to vote wisely and participate effectively in society, citizens must first be financially and economically capable. The same principle applies to Zambia: a well-informed, financially literate population makes better voting choices and, in turn, encourages better governance.
The Zambian Context: Why Many Cannot Vote Wisely
Let’s be honest about the state of our nation. The majority of Zambians are not financially or economically literate. Consider these statistics:
Only 0.3% are business owners
25% - 29% have completed secondary school
13% are financially healthy adults
24% are financially literate
15% pay income tax
12% live above the USD 5 PPP poverty line
Most homeowners operate informally
The result? Most Zambians have little “skin in the game.” When a policy fails, they have nothing to lose and make decisions based on immediate relief rather than long-term sustainability. Voting becomes an exercise of the stomach, not the head. Liberal politics without prior economic self-sufficiency often leads to cycles of dependency and poor national policy.
Financial Literacy as the First Step to Political Empowerment
So, what role can financial literacy play in building a stronger, more politically aware society? There are three key pathways:
Financial Literacy Helps People Understand The Economy
Before citizens can evaluate economic policies, they must first understand money and investments. This is mainly because the mechanisms of how money and assets work is closely tied the mechanism of how the economy works because, money comes from the economy, is invested in the economy and is highly sensitive to the economy.
Engaging with personal finances, saving, budgeting, investing, teaches people the value of resources, the consequences of economic decisions and the impact of economic dynamics. Financially literate individuals have a foundational understanding of how policies affect the economy because they need to know how they will impact their assets.
Financial Literacy and Ultimately Financial Participation, Gives People Skin In the Game and If It Goes Wrong A Share In The Pain
When people own assets, stocks, property, or businesses, they experience first-hand how government policies affect their wealth. Taxes, inflation, interest rates, and regulatory changes are no longer abstract concepts; they directly impact personal portfolios. Financially literate citizens can therefore judge politicians not by promises but by policies’ real-world implications.
Financial Literacy Reduces “Stage One Thinking”
Economist Thomas Sowell warned about “Stage One Thinking”, proposing expensive solutions to social problems without considering long-term costs and consequences. Financially literate citizens ask the tough questions: Who pays? Who benefits? What are the unintended consequences? Without this knowledge, voters are susceptible to populist promises that sound good today but harm tomorrow.
Financially literate people, financially disciplined, and well invested tend to operate in a long-term view and assume personal responsibility. This helps them avoid falling for the fantasy of give away policies and focus on what works and also look at the cost of things that are being offerred by politicians.
The Path Forward for Zambia
If Zambia is to thrive politically and economically, we must prioritize financial literacy as a pillar of citizenship. A nation where the majority are economically empowered, educated about money, and invested in the system is far less likely to fall for empty promises. The better our understanding of finances, the better our decisions at the ballot box, and the more accountable our leaders become.
As Sorkin observed on Bill Maher’s show: a society that doesn’t understand economics will continue to elect leaders who make policies based on exciting illusions rather than reality. In contrast, an economically literate society fosters politicians who govern responsibly, knowing that voters can distinguish between fantasy and feasibility.
One caveat is that financial literacy alone is not the solution but is at least part of the solution. In order to fully benefit we need citizens who are financially literate, disciplined with money and fully active in the asset markets. However this must be added to the fact that the citizenry must be highly skilled and/or entrepreneurial, intelligent and of high morals and character as Booker T Washington stated.
Closing Thoughts
Booker T. Washington’s advice from over a century ago still rings true: Acquire property, intelligence, and character. Economic self-sufficiency empowers citizens not just to survive but to vote wisely and participate in shaping a prosperous nation. For Zambia, this is not just advice, it is a necessity. Financial literacy is more than money management; it is civic empowerment.
If we wish for a nation of responsible, wise voters and sound governance, we must start by educating every Zambian about the very foundation of economic reality. Because until we do, political promises will remain magic tricks, and our democracy will continue to be an echo chamber for illusions.
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