UNIVERSAL BUSINESS EDUCATION, An Elementary Approach to Economic Growth and Social Justice, by Steve Kmeco.  (An earlier version of this essay appeared in the June 2020 issue of The Mensa Bulletin.)

     A democracy starts to dig its own grave when it fails to teach all children how to prosper in the free markets on which it depends on its citizens to make a living.  The purpose of this essay is to convince America to stop digging its own grave and start teaching all children, especially our underprivileged students, how to prosper. That’s why I believe every public school in the United States should start blending business lessons into its curriculum. 
 
     Teaching all children how to succeed in a free-market economy would lay strong foundations for both economic growth and social justice throughout America.  Although some people think these are mutually exclusive goals I disagree.  I believe long-term economic growth actually requires widespread social justice, and widespread social justice requires long-term economic growth. Universal Business Education can help us reach  those goals.
 
     "All the math you need in the stock market you get in the fourth grade."  So wrote Peter Lynch, the legendary manager of Fidelity's Magellan mutual fund. In fact, many  common business functions besides investing in the stock market require only grade school math.  That's why I believe  every American school district should start blending business education into its schools’ curricula no later than the fifth grade, and our schools should continue teaching business principles through high school for three reasons. 
 
     First, fifth-grade students can grasp the ABCs of business because business is not exactly rocket science.  Far from it: addition, subtraction, multiplication, and division are the only math needed for many basic business functions.  Universal Business Education can start as part of math class with a few problems as simple as adding up revenues and subtracting expenses to calculate profits and losses.  To such basic exercises middle schools could then start adding accounting, the language of business, which students would find to be far easier than their Spanish or French lessons.  Then in high school students could confidently handle basic finance, management, and marketing courses.
               
     Second, more grade school students would take their education seriously once business lessons show them that rewarding careers lie well within their reach.  Learning that many ordinary accountants, managers, and salespeople earn six-figure salaries could be the epiphany that grabs the attentions of day dreamers and class clowns who might have previously never worked with such large numbers.  Visions of fat paychecks could fuel adolescent dream machines.  Teachers could turbocharge those vehicles by pointing out that two-paycheck families can double a household’s income.  Lucrative career goals would later motivate more students to avoid the self-inflicted wounds that often sabotage those dreams such as dropping out of high school, pregnancy, drugs, and police records. 
               
     Third, at home students’ business lessons would no doubt rub off on some spendthrift parents and motivate them to cut down on the conspicuous consumption and other bad habits that have financially crippled many families from generation to generation to generation.  Keeping up with the Joneses is an American tradition that continues to kill too many American dreams.
               
     Adding business education to our public schools’ curricula would boost not only business careers.  It would also help aspiring doctors and teachers, for example, perform the economic analyses in high school that help them steer clear of common pitfalls like college diploma mills and predatory lenders.  But the students who benefit the most from business studies might turn out to be those who aim for careers that require no college at all.  For example, auto mechanics and bakers must know how to manage costs and set prices to survive.  And both blue collar and white collar workers must show prospective employers they can help them turn a profit just to land jobs in the first place and then to earn promotions.  
 
    But "profit" is a dirty word for some idealistic, young minds.  Nevertheless, they must see that a grasp of basic business principles could help them pursue careers that have nothing to do with turning a profit.  For example, charities, art museums, political parties, and colleges must operate effectively and efficiently enough to convince donors their contributions will not be wasted.  Labor unions must carefully manage their members' pensions and benefits.  Government agencies must provide detailed financial plans to justify their budget requests.  And churches must manage their finances at least well enough to pay their utility bills.  Although none of these organizations tries to turn a profit they must employ competent people with a working knowledge of business principles to manage their operations.  
 
    Finally, regardless of the careers they choose all Americans as well as the nation itself would be far better off if everyone learned how to save and then prudently invest more of his earnings.

     Prudent investing requires thrift.  As the saying goes, "It's not how much you earn; it's how much you keep."  Teachers must emphasize that fat paychecks build no wealth at all for those who spend money as fast as they earn it.  Infinitely worse off are people who spend money faster than they earn it by using credit cards to bury themselves under mountains of debt.
 
     Yes, thrift matters.  Students must learn how even moderately thrifty habits have allowed many working class heroes to help themselves to healthy slices of corporate profits.  Even boring, old S&P 500 Stock Index mutual funds have let many proletarians cultivate seven-figure portfolios.  Just one example is the over 75,400 federal employees and retirees who had retirement accounts of over $1,000,000 by the end of 2020.  Such investing is just one reason there were over 21 million millionaires in the United States at the start of 2022.  That's 6.3% of the population; one out of every 16 Americans  owned assets of over $1,000,000 then. The millionaire next door can these days turn out to be a sheet metal worker, a forklift operator, a mailman, or a teacher.  When that lesson sinks in even some of the budding socialists among our students might start chanting, “Workers of the world, invest!”
 
     Results?  Expect no quick fixes or panaceas; leave such promises to career politicians, professional activists, and bureaucrats.  Instead, expect Universal Business Education to produce steady, enduring progress for individuals and for the nation.

     Within a year?  Universal Business Education would show students a glimpse of the real world that would help them outgrow their childhood fantasies and start dreaming about the rewarding careers within their reach.  More kids going to school in September fully expecting to someday become the next Tom Brady or Rihanna would soon start thinking about attainable careers in, for example, medicine, the building trades, or commerce.  More students would start taking their classes in reading, writing, arithmetic, and history seriously when they realize those lessons can help them reach new adult goals. 
 
     In just a few years?  Fewer grads would be waiting tables and defaulting on college loans.  That’s because by  senior year of high school most kids would have learned better than to pile up massive debt to pursue one of those college majors for which the job market will never show much demand.  America does not need more baristas with college degrees.  Contrast their plight to the clear sailing enjoyed by engineering grads, few of whom ever have trouble paying off their college loans.  By the way, I suspect the lucrative engineering and pharmacy salaries mentioned in business classes would draw more high school students into science and technology careers than all the programs specifically designed to interest them in STEM. Majors matter! Underprivileged students who choose the wrong major can turn a college education into a real poverty trap. The wrong major can turn college debt into a ticket to an American nightmare instead of a ticket to the American Dream.  
 
     Within a decade?  Fewer grown men and women would be struggling to support their families with minimum wage jobs and food stamps.  That’s because they would have learned in their teens that career planning usually works better when it starts well before leaving high school rather than anytime afterwards.  They would have also learned in school that successful family planning – especially birth control – is a key ingredient for successful career planning.  
 
     Within a lifetime?  Just a little business savvy would help more Americans nurture the careers and the thrifty habits that have let some Baby Boomers ride the longest bull market in history into the middle class and beyond to early retirement.  Credit the aforementioned prudent investing.  When a 56-year-old worker’s investment returns surpass his wages two or three years in a row early retirement starts to look pretty good.  He realizes he does not have to work anymore unless he wants to.  Too many other Boomers who apparently never learned about piggy banks as kids or about IRAs as adults still struggle paycheck to paycheck well into their 70s.   Some seniors do not see how they can ever afford to retire. Lottery tickets hold the retirement dreams of some seniors. 
 
     From generation to generation?  Universal Business Education would help many underprivileged children break free of the cycle of intergenerational poverty to start cycles of intergenerational prosperity.
               
     I believe Universal Business Education would eventually turn the overeducated waiter, the minimum-wage head of household, the elderly wage slave, and the victim of intergenerational poverty into vanishing species on the brink of extinction in America. 
 
     Those extinctions would have moved much closer to completion by now if our public schools had been teaching business fundamentals in recent decades.  But instead, those extinctions still lie down the road somewhere beyond the next horizon because America has relied on solutions such as “It Takes a Village”, “No Child Left Behind”, and “Common Core”.  How are those solutions working out so far?  Some people believe those "solutions" have actually helped produce the mess we have now.  Too many students still graduate from high school and from college unprepared to make a living.  Too many unemployable college grads still probably feel their resumes have been saying only “Kick me!” to prospective employers.  Too many graduates still default on their college loans.  Too many grads would still make better poster children for promoting Universal Business Education than poster children for promoting careers in their college majors.  
 
     As for our senior citizens, we should expect no drop in the levels of elder poverty anytime soon.  Even before the COVID-19 pandemic started draining savings and retirement accounts nearly half of all Americans in their mid-50s had saved less than $12,000 for retirement.  That's peanuts!  Too many Americans will need financial help when they retire, and politicians will compete to satisfy their needs if only because older people vote.  When Generation X starts joining the wave of retired Baby Boomers in the next decade our government will have trouble helping the Social Security Administration send out monthly payments as well as trouble paying down our soaring national debt.  The government will also have trouble funding all other parts of our tattered social safety net. 

    That’s why it’s way past time our public schools started producing more self-sufficient, prosperous taxpayers. And that’s why it’s way past time our schools started teaching students that in America’s mixed economy it is not only their own self-interest but also their civic duty that requires that they learn how to earn.  

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    "The Universal Business Education Essay" mentions that some working class Baby Boomers have ridden the longest bull market in history to early, financially secure retirement.  "The Grade School Math and Money Essay" that follows describes how many Boomers used two popular personal finance tools developed in the 1970s to finance that trip.

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GRADE SCHOOL MATH and MONEY, by Steve Kmeco

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    "Money makes money.  And the money that money makes makes more money."  - Benjamin Franklin

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    Retirement funds prudently invested in the stock market don't just add up over time; they multiply.  That accelerated growth explains how for the first time in history many working class heroes have taken early retirement with the help of million-dollar nest eggs that continue to multiply for years if not for decades after they retired. 

 

Grade School Math

    When it comes to building a retirement nest egg addition is good but multiplication is much better.  Although savings can add up over time, if a worker just stashes his greenbacks under his mattress those savings do not earn any extra cash.  But when a worker invests in a solid retirement fund his savings multiply, or "compound", instead of just adding up.

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    For example, take the most popular type of retirement fund, the S&P 500 Stock Index fund. Solid S&P funds are available from reputable firms such as Vanguard, Fidelity, T. Rowe Price, and Charles Schwab.  While the S&P's growth rate varies greatly from year to year it has averaged about 9% to 10% per year over the last half century, and it will probably continue to average 9% to 10% for the next half century.

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    At 9% per year the value of an investment doubles every eight years.  So while $1 stuffed under a mattress adds up to exactly $1 after eight years, $1 placed into an S&P 500 Index fund should double to $2.  That $2 doubles again to $4 in the next eight years.  That $4 doubles to $8 after twenty-four years.  By the thirty-second year of his investment the worker's initial $1 has grown to $16.  And after forty years the dollar invested upon high school graduation, for example, will have doubled again to $32 by the time the investor reaches his fifty-eighth year.

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    Meanwhile, that dollar stuffed under a mattress is still just a dollar after forty years.

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    If our worker adds another dollar to his retirement fund every year for thirty-two years then at a 9% average annual growth rate that investment snowballs to $164.  It doubles again to $328 after forty years.

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    Now, instead of investing only $1 per year for our example, plug in $1,000, $3,000, or any other amount to see how the compound growth of their investments has been turning many proletarians into millionaires. 

 

    Contributions of $1,000 per year (averaging just $2.74/day or $83.33 per month) produce balances of only $164,000 after thirty-two years and $328,000 after forty years when our high school grad will have turned fifty-eight.  If he works to full retirement age at sixty-six then our worker's nest egg will double again to $656,000.  Improvement needed!

 

    How about annual contributions of $3,000?  That's $8.22/day, or $246.60/month; some people spend more than that on cigarettes. Contributions of $3,000 per year produce balances of $492,000 for our worker after thirty-two years, $984,000 after forty years, and $1,968,000 if he likes his job well enough to work to sixty-six.  That's more like it!

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    Better yet, annual contributions of $4,000/year ($10.96/day, or $328.80/month) produce nest eggs of $656,000 after thirty-two years, $1,312,000 after forty years, and $2,624,000 if he works until he turns sixty-six.

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    Cultivating a fat retirement fund is only half the battle.  The other half involves further cultivating that nest egg so it keeps growing for years if not for decades after the worker retires.  The part of his retirement fund he decides to keep invested in an S&P 500 index fund  can keep doubling on average about every eight years for the rest of his life.  That continued growth is the key to a financially secure retirement.

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    These numbers look good in theory, don't they?  For many workers they look good in real life, too, especially for families with two wage earners each of whom has his or her own nest egg.  The seven-figure retirement funds of American workers help explain how the number of millionaires in America swelled to over 21 million in 2021.  In a population of over 332 million that means  6.3 percent of the population were millionaires.  One out of every sixteen Americans owned assets of over one million dollars.  These days the millionaire next door might well be a sheet metal worker, a forklift operator, a mail man, or a teacher.  

 

    Even if his employer matches the worker's contributions to his retirement fund dollar for dollar some workers cannot add $3,000 or $4,000 to their nest eggs every year.  Life can get in the way of thrifty resolutions: children, illness, unemployment, divorce, not to mention expensive habits like keeping up with the Joneses and addictions like alcohol, tobacco, drugs, and gambling.  Nevertheless, I suspect that many of the older workers who have saved almost nothing for retirement would find ways to make the sacrifices, the career choices, and the lifestyle choices necessary to cultivate seven-figure retirement accounts if they had their working lives to live over again.   

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    Get the picture?  The thrifty worker's investment returns eventually surpass his wages.  At that point he can start to prudently consider early retirement.  The worker realizes he does not have to work anymore unless he wants to once he realizes that his retirement funds can continue to multiply for years, if not for decades, after he retires. 

 

Two 1970s Financial Tools Launch A Revolution

    Baby Boomers are the first generation in history to have had the chance to invest for most of their working lives with the help of two personal finance tools developed in the 1970s.  Those tools are stock index mutual funds and Individual Retirement Accounts (IRAs).  Those revolutionary tools have helped the Baby Boomer generation prove that million-dollar retirement funds lie within the reach of the average American worker.  

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    First, stock index funds allow the worker to prudently invest in a widely diversified stock portfolio without having to know much about stocks.  He just has to realize that the overall stock market will probably continue to grow at an average rate of about 9% to 10% per year in the next half century the same way it has in the past half century.  No expertise is required because stock index funds manage themselves as far as buying and selling shares of individual companies are concerned.  For example, in the case of S&P 500 Stock Index funds the S&P has dropped old dogs like Sears from The 500 to make room for shares of young pups like Amazon. 

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    Second, while the worker's stock index fund is managing itself the other revolutionary tool, the IRA, turbocharges his investment by sheltering his growing nest egg from taxation.  No part of his investment is siphoned off every year by the Internal Revenue Service.  In the case of the traditional IRA the federal government taxes only the annual withdrawals a worker makes after he retires.  The balance that remains in his account continues to multiply for years if not for decades for the rest of his life.  And in the case of the Roth IRA the Internal Revenue Service never takes a dime.  

 

Accidental Millionaires

    Some Baby Boomers learned this history lesson almost by accident while they themselves were unwittingly making this history.  They gradually learned by watching their nest eggs grow while they habitually plowed five percent, ten percent, or more of every paycheck during their working lives into retirement accounts invested in one of the popular S&P 500 Stock Index funds.  Yes, almost by accident.  After all, who can now claim with a straight face that they knew when they started working in 1986, for example, that the S&P 500 Stock Index would rise from 209 to 4,766 at the end of 2021 or that the DOW Jones Industrial Average  would rise from 1,537 to 36,338 by then?

 

   There's no mystery, no magic, no foul play here.  The S&P Index soared to those heights simply because of the steady growth of the 500 companies the S&P tracks.  Companies that satisfied consumer demand fueled much of that growth.  Household names in the S&P 500 include Best Buy's stock which rose from $0.36 per share in 1986 to $101.60 at the end of 2021.  Colgate-Palmolive climbed from $2.01 to $85.34 then while Target shares rose from $3.81 per share to $231.44. 

 

    Consider the irony.  On one hand, many thrifty Baby Boomers were almost by accident proving that million-dollar retirement funds lie within the reach of the average American worker.  On the other hand, at the very same time  many more workers - including almost half of all Americans in their fifties - had saved little or nothing for retirement.  

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    Why the huge difference between the Haves and the Have-nots?  Too many Have-nots never learned in school or anywhere else how much their personal career choices matter.  They never learned that students who fail to prepare themselves for gainful employment should not count on financially secure working lives let alone comfortable, early retirements.  They never learned in school that workers who start saving and investing on their first job right out of school can easily cultivate wealth over four decades, but workers who put off saving and investing until well into middle age have little chance to enjoy a financially secure retirement at any age.  And they never learned in school that two-paycheck families with one or two children can probably afford to cultivate not only hefty retirement funds but also other lucrative investments.  But single parent households with four or more mouths to feed?  Not so much.

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    Now that so many Baby Boomers have proved the value of those two wealth generating tools developed in the 1970s it would be a crime to fail to pass along these new facts of life to all children, especially to our underprivileged kids. Only Universal Business Education can make sure we pass along that knowledge to all children.  The sooner, the better.  In the process of teaching all children how to prosper UBE would eventually make not only a rewarding career but also a fat retirement fund and early, financially secure retirement the rule rather than the exception in America.  

 

    The best time to start learning about grade school math and money is not a decade or so before a worker hopes to retire.  The best time to start learning these lessons is at least a year or two before he graduates from high school so he can make informed decisions about education and career training.   Better yet, business education should start before he graduates from middle school or even from grade school.  "The Universal Business Education Essay"  points out that many business functions require only grade school math: addition, subtraction, multiplication, and division.  That's why I believe that every public school district in America should start blending basic business principles into the curricula  of its grade schools, no later than the fifth grade.

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    I believe grade school math and Universal Business Education would eventually help America to generate more wealth and to spread that wealth more fairly than anything we've tried in the past hundred years.  I believe that most of America's social and economic problems  would then start to solve themselves.

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     Florida's new financial literacy requirement for high school graduation is a big step in the right direction.  But  further steps towards a broader business education must follow that first step if students are to go on to prosper in the real world in the pursuit of their American dreams.

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 FLORIDA'S NEW FINANCIAL LITERACY LAW by Steve Kmeco

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    Florida passed a law in March of 2022 that will require students to pass a financial literacy course for high school graduation.  That's a giant step in the right  direction towards giving children a practical education that can actually help them pursue their American dreams.  But that giant step is still just a first step that will come up short of its goal if it is not followed by steps towards providing students with a broader business foundation.  

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    Two shortcomings of Florida's financial literacy requirement stand out.  First, financial literacy is just a small part of a basic business education because it deals primarily with managing assets one already owns.  For example, the Florida course will cover bank accounts, balancing checkbooks, interest rates, investments, insurance, taxes, inheritances, and credit cards.  In other words, it will deal with personal finance.  Those lessons will teach students what to do once they land a steady paycheck, but those lessons will not teach them much about how to land that steady paycheck in the first place let alone how to plan a rewarding career.  That's where a broader business education would help.  

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    Business education is much more than just personal finance. It means learning how goods and services are marketed, produced, and exchanged in the global economy.  In the process of absorbing fundamental business principles each student would also learn how to make more informed decisions about achieving his American dream whether that dream lies in commerce, medicine, the  construction trades, education, or any other field.  

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    The second reason Florida's new law falls short is because learning even the most basic business fundamentals will require more than just the single semester that the Florida law mandates.  In fact, it will require more than just one year; and the earlier that business education starts, the better.  The "Universal Business Education Essay"  explains why fifth grade math class is not too early to start teaching kids about business.  Middle schools could then add accounting, the language of business, which students would find to be far easier than their Spanish or French lessons.   Then high school students could confidently handle courses such as finance, management, and marketing in time to help them avoid pitfalls like predatory lenders and college diploma mills when they start making career decisions. 

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    A financial literacy requirement for high school graduation is only the first step in the right direction towards teaching students how to make their way in the real world.  A broader business education must follow if students are to prudently explore that world in their quests for their American dreams.​

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GRASS ROOTS by Steve Kmeco

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    If you've made it through the essays of this website so far you probably expect an appeal for money right about now.  No such luck.  You can't get off that easily.

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    I would ask for money if I wanted the Universal Business Education Movement to grow into a formal organization with offices, employees, and bills to pay.  That is not the case.  Organizational development would soon require the UBE Movement to water down its message in order to broaden its appeal to try to make it mean all things to all people.  In that case this movement would eventually join the endless parade of good intentions that have become parts of the problems they were supposed to solve like "No Child Left Behind" and "Common Core".  America's high rates of crime, homelessness, and drug addiction show how well those solutions are working for us so far.

    

    Another reason I'm not asking for money is because I'm not trying to make a buck on this idea.  I'm not spending a buck on it, either.  Take a closer look at this website.  Does it look like I've paid for professional help?  After two years this site's pathetic forum tells you all you need to know about my tech skills. 

 

    No, the Universal Business Education Movement is not a professionally designed and managed  organization; it is a grass roots movement that is too important to depend on the skills of a technophobic geezer like me.  America's children deserve better.  The best I can do is to urge you to follow the advice near the end of the UBE Essay about sowing the seeds for this grass roots movement.  It bears repeating here: 

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    "I believe the least we could do to sow the seeds for those grass roots is to honestly share our thoughts on business education with family, friends, and colleagues whenever we take the time to discuss America's social and economic problems.  How difficult  would it be to persuade rational people that teaching all children how to succeed in the real world  makes sense in a democracy?   What valid arguments could there possibly be against  teaching all kids how to prosper?  Lame excuses only fuel more conspiracy theories about race, class, gender, and religion

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    "If that word of mouth approach works too slowly for you then the internet offers ways  to more quickly sow the seeds for those grass roots across America.  Or, you could instead concentrate locally to make sure your own children and grandchildren do not fall behind their peers for lack of a basic business education.  In that case you could go "old school"  by attending PTA and school board meetings  to ask why basic business principles should be treated like forbidden knowledge shared only with children privileged enough to attend better schools.  You could also pose that question to editors of newspapers and magazines.  You could ask political candidates for their positions on Universal Business Education.  And you could convince the activists, educators, and clerics who struggle to help children trapped in the cycle of generational poverty that Universal Business Education can help kids to finally escape that trap and start cycles of intergenerational prosperity."

 

    You can help spread the seeds of The UBE Movement to every school district in the nation by sharing your thoughts on this subject in forums and media that deal with social justice, economic growth, or education.  Universal Business Education in America depends on it.  The internet is big enough for more than just one UBE website.  So if you want to start your own website to promote business education in our public schools, more power to you.  You certainly have my blessing.  Knock yourself out.  Mention the link to

 

     www.universalbusinesseducationmovement.com

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if you think that would help.  

 

    But if you will not help spread the word then maybe you think Universal Business Education is not such a good idea.  After all, some people love the status quo even if it is turning our cities into drug infested combat zones.  Will The Universal Business Education Movement die when I die?  That's up to you.  The ball is in your court.  What do you think? 

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