Amit Paranjape’s Blog

The Illiterate 21st Century Consumer

Posted in Current Affairs, Financial Markets/Economics by Amit Paranjape on October 17, 2008



In the 20th century, illiteracy was something that was thought to be primarily confined to the developing world. Literacy was very simplistically defined as the ability to read and write. By this definition, nearly 100% of the developed world and an ever growing percentage of the developing world would be termed ‘literate’. In the developing world, it is often repeated over and over that one of the primary root causes of all the social, political and economic problems is lack of literacy. However, now that we are turning ‘literate’, are we really resolving these issues? I would like to argue that merely reading and writing doesn’t constitute true literacy. To be literate, one needs to really understand one’s world that we live in. Today, there are ever increasing tools of knowledge and information. Yet real knowledge is seen to be sorely lacking. This lack of basic knowledge about common things is what I would like to term as the ‘21st century global Illiteracy’. In this continuation in the series of articles on the US Financial Crisis, I explore this phenomenon.



Many of you must have seen the ‘Tonight Show with Jay Leno’. A popular segment in this well-known late night comedy talk show is ‘Jay Walking’. Here, Leno interviews regular folks who are walking by on the streets of Los Angeles. Questions are really basic like…”Who is the Vice President of the US”, or “What does ‘UN’ stand for?”, or “What is the currency of Europe?” It’s amazing the kind of answers you will hear! Many folks don’t have the faintest of clues about some extremely basic facts/questions about the world we live in.


This segment is really funny to watch and I really enjoy it. Now, I agree that this represents an exaggerated view of the knowledge of a ‘common man’ and I am sure a lot of editing goes into it to capture those ‘dumb’ moments. Often times though, this is not that far from the truth. It is a sad reflection of reality.


The modern 21st century consumer is living a dream life with all the benefits of developments in science & technology, social development, democratic governments and cultural freedom. The ongoing information technology revolution that started towards the end of the 20th century has placed any information, literally at their finger-tips. Still many are comfortably oblivious of their surroundings. This utter lack of knowledge of basic information, sciences, politics, history, economics and other disciplines is what I am terming as ‘21st century illiteracy’. No one is expecting the common man to be an expert, a PhD in any of these fields. All that is needed is some basic primary / middle school level grounding in these disciplines. Yet one rarely finds it today in many people.


A popular TV show that has run in different variants in many parts of the world, ‘Are you smarter than a 5th grader’ demonstrates this ignorance. Adults routinely stumble on basic primary school level questions. An interesting example that recently came to light in the US was that of the citizenship test on US history and government that is administered as part of the naturalization process for eligible foreign citizens. Apparently, nearly 70% of US adults ‘fail’ this test! Incidentally, when it comes to sports and entertainment, many of these same people excel at statistics and movie trivia.


Some would argue why this knowledge is even important. My response would be – Why was so much importance given to reading and writing in the 20th century? It was done so that we could understand the world around us and make informed and better decisions and choices. Are we really doing that?


Not just in the 20th century, but throughout the history of human civilization, mankind has progressed due to that constant desire to ask questions, and seek knowledge. “How can I master fire?”; “How can I manage cultivation?”; “What causes the planets and sun to appear to ‘move around’ the earth?”; “What causes diseases? How do we prevent them?” and on and on. Have we simply lost this desire today? Or has the current materialistic world completely taken our focus away? Or are we subscribing to these pronouncements ‘That is not my problem…Or as long as things are fine for me, why do I care!’


Unfortunately today, when it comes to financial markets and the global economy, things are not fine. And this is affecting each and every one of us – not just in the US, but in the entire world. How many people really understood the detailed mechanics of adjustable rate mortgages (ARMs)? How many really took time to analyze the potential risks of these instruments based on macro-economic factors? It is easy to now blame Allen Greenspan for keeping rates at historic lows and thereby contributing to very attractive rates on these ARMs at the beginning of this decade. But wasn’t the consumer simply making an assumption (if at all they understood some parts about the ARM…) that these good rates are going to stay on? Was it just wishful thinking? Yes, to some extent – most US consumers are optimistic in nature and prescribe to this ‘good times will continue’ philosophy. But being ignorant about the basics of economics was the primary culprit. There was also a ‘herd mentality’. Since ‘other people’ were taking these mortgages, why not me? How is this herd mentality different from that of illiterate village folks in a third world country?


Many people today invest directly or indirectly (through pension plans) in the financial markets. Yet many do not understand basics such as valuations, Price/Earnings, Dividends, etc. Even fewer understand bonds and treasuries. On a similar note, in a completely different knowledge discipline, how many patients really understand the most basic information about the prescription drugs that they are taking? If ‘Health’ and ‘Wealth’ are the most important things to most people, then this ignorance is appalling.


Lack of books and other reading material contributed to some illiteracy for deprived people in the 20th century. A bright student in a remote village would find it extremely hard to learn any advanced topics due to the lack of resources. However, today there are no excuses for the 21st century consumer.


Even 15 years back in the US, if you wanted to get some basic grounding on some discipline and learn something new, or brush up some old stuff, you probably had to take some time off and head to the local library. There you were mostly reliant on a good librarian to find the right books/journals for you. And then you had to navigate through the big reference books (often times, on library premises) to get to what you were looking for. Compare that with today’s world. How far have we come in such a short period? Almost all of that information is now available at a click of a mouse! And ‘search’ has become so easy! And yet this 21st century illiteracy continues to thrive.


I find it extremely hard to understand why the same people who spend hours online on social networking sites can’t find time to learn something new about economics. Or about basics in medical sciences. Ultimately, your financial health and physical health are amongst the most important things in the world we live in…Aren’t they? I think first we need to acknowledge this 21st century illiteracy phenomenon. Then, we need to understand it and start actively addressing it. A big change is needed, first and foremost in our attitudes towards knowledge. This change is one of the primary steps to create smart, intelligent consumers who truly understand the global world they live in, and make informed choices.

 [You might want to read these related posts; ‘US Financial Crisis – Who Is To Be Blamed’ and ‘The Clueless Global Leadership’ ]


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8 Responses

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  1. hemant said, on October 18, 2008 at 10:18 am

    You mentioned Internet as instant source of information and people not still using it to fullest extent. May be “value” of information has reduced as it is easily available. When one had to toil for it, people took pride in finding it.

    Another thing which may have reduced our urge to ask fundamental questions is our reliance of computers. Computer does all kinds of analysis for you (so you presume) and answers all your questions, why bother about knowing what it actually did? So computers have become means which push one guy’s (presumed) knowledge to another and another seems completely at ease with not verifying it. So if I ask for 20 year prediction on my loan rate on some website and it gives me some numbers, I am fine accepting it!

  2. gabhijit said, on October 18, 2008 at 11:21 am

    I had argued some time back that the world in which we live is a consequence of “western approach to knowledge.” Let me explain what I mean by this – the western approach to knowledge is that of commoditizing it, where as eastern approach (mostly in eastern civilizations in India/China is to let those have the knowledge who deserve it and are willing to earn it). It started with Guttenberg’s printing press. (I believe it was the single largest infliction point in our civilization, even bigger than the following industrial/information revolution.) What it ensured that “information can be made a commodity”. As we know when anything becomes commodity – we start taking it for granted. This applies to some very mundane things like – Water/Electricity to some not so mundane things like information about things we _should_ know. We take it for granted, that it’d be available somewhere. I’d not have to bother about fighting for it. This is one primary reason for our apparant apathy for willingness to know few basic things. I am not smart or competent enough to argue whether this approach is right or wrong and I’d not even go on to question it, I just accept it and move on.

    Second argument is – Our civilization is reaching a stage where “perceived value is becoming far more important than intrinsic value.(social networking eg.)” a previous argument can be one possible reason. Another reason is most of our generation has not seen a serious war, hence does not understand or appreciate what a war means what destruction of life / property means. Hence we live in a belief that such a things are a matter of past (they might indeed be). Consequently, instead of valuing and appreciating life today we are all become dream chasers and when someone is luring us into the dreams we’r happy to follow the path. (just like the rats that followed the piper).

    I am afraid there are no easy solutions to this and it might sound utterly selfish, but the way I look at it is – I’d solve the problem for myself and do my little bit to spread the awareness (that sounds somewhat presumptuous I guess). Eventually time will have a solution.

    Very recently I had a talk with one of my friend where we were discussing that we are perhaps living at a time where western civilization is depicting a blow-off top (eg. Nasdaq 2000). It’d be a while before I have a complete argument ready. Will be happy to share when I have that.

  3. Sanjay said, on October 20, 2008 at 12:38 pm

    Good article,I also want to talk @it when we meet this week.

  4. Mark said, on October 21, 2008 at 1:29 am

    How true that technology is driving us backwards instead of the other way 🙂

  5. […] my previous article on “The Illiterate 21st Century Consumer”, I have attributed some of the causes, to the role that media plays today. I thought of writing this […]

  6. Edward McGuire said, on November 7, 2008 at 10:45 pm

    It is not technology that is driving us backwards. In part it is deliberate manipulation through the media.

    After Freud demonstrated that people are motivated to a large degree by impulses which are irrational and which they are not even aware of, this was turned into the practical application now called Public Relations (because the word Propaganda is currently in disfavor). The modern practice of Public Relations was the creation of Edward Bernays, a nephew of Freud. Bernays believed an enlightened culture should take advantage of the new scientific knowledge for the good of the people. He showed how the public opinion could be very deliberately manipulated based on their unconscious desires and fears to achieve a desired outcome.

    Unfortunately people who learned from Bernays did not always have the same good motivations. Goebbels read Bernays and made effective use of what he learned but for a horrific purpose. Today’s widespread ignorance really reflects what is and is not useful for the masses of people to know. It is more important to the Public Relations machine that people know what their breath should smell like, what fabric they should be wearing this year, and which political candidate is in alliance with the devil.

  7. […] blog ( is focused on Indian Business. Amit Paranjape also has a series of posts (one, two, three) that you might find interesting. He also writes about Pune’s history, restaurant reviews, […]

  8. […] might want to read these related posts, ‘The Illiterate 21st Century Consumer’ and ‘US Financial Crisis – Who Is To Be Blamed’ ]Subscribe to Amit Paranjape’s Weblog by […]

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