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Analysis & Opinion
13.09.11 Teaching It Rich
By Svetlana Kononova

President Dmitry Medvedev has called on Russia’s oligarchs to teach schoolchildren about their personal success stories. “I will call on representatives of big business, mostly people whose wealth starts, for example, at $1 billion, and say they should all start teaching in schools,” he told members of the Presidential Commission for Implementation of Top-Priority National Projects and Demographic Policy.

Medvedev added that he expects school principals to support his “success story” initiative, although it has sparked debate among Russians. Most ordinary Russians responded negatively to the proposal, claiming Russia’s oligarchs could only teach cynicism, moral bankruptcy and corruption. Experts, on the other hand, expressed a range of views, agreeing only that a lack of financial knowledge is a wide-spread problem in Russia.

Lyubov Dukhanina, the vice chairman of the Public Chamber’s Commission on Educational Development and the head of the educational firm Naslednik (Heir) welcomed the idea to involve successful businessmen in the education system.

“Russia’s elementary and high school education is often criticized for being too detached from modern life. After economic conditions in the country changed [in the 1990s] schools started to teach new subjects, such as economics. But the problem is a lack of practice-based programs – learning economics from a book is not enough,” Dukhanina said, “If top businessmen go to schools it will be a unique opportunity for pupils. It will be like a master class given by successful people from different areas of business who have a wealth of practical experience. Children would be able to ask them questions face-to-face, and pick up ideas and strategies.”

But Dukhanina said that this strategy will only work if children have regular access to successful business people, rather than one-off meetings. “Such lessons should be given on a regular basis, at least four times a year,” she said.

Dukhanina speaks from experience gained since she set up the Naslednik private school in 1992. The company has since branched out into other forms of education, and prides itself on teaching pupils more than just subjects that are a compulsory part of the curriculum. One of the school’s projects is the Regional Children’s Stock Exchange, where pupils can learn how to work with stocks, shares and other securities. It also offers courses in business studies, where pupils have to create, develop and defend a business plan. Experience gained in these programs can lead to future success at work. “Our graduates manage their own companies in Russia, the United States, Canada and France,” Dukhanina said proudly.

Yaroslav Kabakov, rector of investment firm Finam’s educational center is more skeptical about the idea of turning Russian oligarchs into teachers, saying that they would probably not be interested in telling their real life stories to anybody, including children. Russia’s oligarchs, who made their money by snapping up state assets at knock-down prices after the collapse of the Soviet Union, are indeed identified with the chaos and criminality that swept Russia in the early 1990s.

Kabakov does support increasing financial education in schools, however. “From my point of view, it is necessary to explain to children how the financial system works – how money works, what supports its purchasing power, and how to make a profit in the first instance. It would help them to differentiate real financial institutions from pyramid schemes in the future,” Kabakov said.

Fraudulent financial schemes remain a major problem in Russia, where more than 20 million people have become the victims of pyramid schemes, losing millions of dollars, since the early 1990s. Even today, according to data from the Federal Financial Markets Service, dozens of organizations which use pyramid schemes continue to operate in Russia, including a new project set up by Sergei Mavrodi – the godfather of Russian financial fraudsters.

“Children should also be taught how the banking system works, how banks earn money, what is a loan and how its value is determined. Maybe it would protect them from falling prey to a passion for easily-available loans and sliding into the debt pit,” Kabakov added.

The share of unrecovered consumer loans in Russia was recently estimated at about ten percent. Most of the country’s debtors are not fraudsters, but people who simply don’t understand credit conditions, forget about their obligations or cannot meet them.

Children should be taught all these things because the general level of financial literacy in the country still remains low, according to Kabakov.

“There is a widely-held belief in the existence of some ‘magic wand’ – an ideal solution, which will allow people to become rich without any personal efforts or risks. Many adults still expect to find such an ideal solution in the financial companies they go to,” Kabakov said.

In spite of this, Kabakov identified some positive trends. “Russians’ financial literacy is growing, but very slowly. Investment companies are contributing to this process by promoting educational programs, but they can only cover a small part of the country’s population and reach only those who have spare cash for investment. To achieve more significant results, the state has to make an active effort,” Kabakov said. He advised people who want to improve their financial knowledge to attend free thematic workshops and tutorials, ask lecturers for advice, learn and analyze information from online sources and improve their ability to conduct financial transactions using demo-accounts.

But belief in an easy solution to financial woes is still common. Most Russians still believe the best ways to become rich are forging a career in government, marrying a wealthy partner, winning the lottery or inheriting large sums of money from relatives. Much less popular ways to boost income are setting up a private business or carving out a career as a top manager. Moreover, according to the data of the Public Opinion Foundation (FOM), 43 percent of Russians with low incomes and 25 percent with middle-level incomes believe in magic and turn to sorcerers and fortunetellers to solve different problems, including financial worries. This is particularly worrying given that approximately half of the Russian population believe they are poor, two thirds have no savings and 97 percent believe that the government should provide them with food and money in the case of an emergency.
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