Reckless Capital: A Collection of Terrible Financial Advice From Dave
By David Metcalfe
February 8, 2018
A few days ago, I was at the university having lunch with some students and they asked me if I’m a student. I said, “I’m a student of life”. And they were like, “what does that mean?”. So I explained to them that I’m a self-declared “bohemian academic” and I just study and write articles to send to publishers for free. They were weirdly intrigued, and asked me a bunch of questions about life. I felt like some kind of guru or something. Problem is, I’m not actually that wise, so I hope they didn’t take any of my advice. Some of the questions they asked that really got me thinking were:
Does money bring happiness?
Can someone actually live in voluntary poverty and refuse to be “in the system”?
Is capitalism better than socialism?
Well, for those students who started following this blog, I hope this answers your questions. I also hope you don’t take any financial advice from me, unless you aspire towards being poor. The conclusion sums up my thoughts well, and the body is more in depth into some of the nuances of things, so it’s only necessary to read if you have an interest in this sort of thing.
Chapter 1: Does Money Bring Happiness?
Philosophers Are Terrible Financial Planners
Financial planners earn a good living, do meaningful work, and are valued members of society. People often work very hard for their money, but it can all be for nothing if it is not handled properly. The result of even an hour with a financial planner can change someone’s life in amazing ways. It can reduce stress, increase freedom, and provide new opportunities they never thought possible. That one hour can be the difference between a senior citizen working night shifts at Wal-Mart, or relaxing in Hawaii. It can be the difference of whether a young man or woman can afford to go to college. It can be the difference of whether someone sits at home watching TV, or travels the world experiencing real life adventures. (Did I mention this blog is brought to you by TD Bank?).
But if you see some crazy philosopher like myself for financial advice, you will be left more confused than when you came in. You’ll start to wonder what “work” or “vacations” even are. Heck, you may start questioning whether you even exist, and honey, that don’t pay the bills (I went “sassy black woman” for a second there).
Chances are, if I was a financial advisor, my conversations would go something like this:
Me: Hi, Mr. Johnson! Welcome to Dave’s Financial Group! What can I help you with today?
Mr. Johnson: I have some extra money, and I’m hoping to invest it.
Me: Excellent! I just have a few questions for you as we get started, is that alright?
Mr. Johnson: Sure
Me: What is money?
Mr. Johnson: Uhh…something you use to buy stuff.
Me: And why would you want to buy stuff?
Mr. Johnson: Because…it’s good to have things.
Me: Are all things good to have?
Mr. Johnson: Well, not all things; just the stuff I want.
Me: What makes you want certain things as opposed to other things?
Mr. Johnson: There are certain things that make me happy.
Me: Is happiness the ultimate goal of life?
Mr. Johnson: Umm…maybe. Can we talk about the investments now?
Me: But why invest if there is no goal to attain toward?
Mr. Johnson: Look, I’m just here to increase my money.
Me: So that you can use it to attain happiness?
Mr. Johnson: Uhhh…is there someone else I can see?
Me: I’m the only one who works here.
Mr. Johnson: Have you ever actually helped anyone make money?
Me: Other than you, no.
Mr. Johnson: But you didn’t help me make any money.
Me: Hmm…ok, then it’s zero people thus far.
I’d Like To Purchase Two Ounces of Happiness, Please
So yes, studying philosophy has ruined yet another career opportunity for me. To me, the why questions are very valuable, whereas most people just want the how. There are literally thousands of best-selling books on “How To Get Rich” and “How To Save Money”. But how many best-selling books are there on “Why We Should Make Money”? And the reality is, the vast majority of thinkers who do bother to ask why we should make money end up thinking we shouldn’t really care about making it.
Adam Smith, basically the inventor of capitalism, once said,
“What can be added to the happiness of the man who is in health, who is out of debt, and has a clear conscience? To one in this situation, all accessions of fortune may properly be said to be superfluous.” (Smith, 1759).
You might be thinking “this is the guy who invented capitalism!?!? That’s not what a capitalist would say!”, and you would be right for thinking that. Can you imagine some Wall Street broker, or some Mexican hating, over-sized oompa loompa President saying something like that? (Say what you want about Trump, but we all have to admit, he is very orange for some reason…?)
Sorry, that is a rather “off-colour” joke. Let’s get back to the topic on hand.
It appears that a lot of modern American capitalism is driven by these two ideas:
1) Money brings happiness
2) You never have enough money
What these two ideas end up creating is actually the impossibility of achieving happiness. It sets up this weird idea that happiness is proportional to the amount of money one has. Now, no reasonable person actually thinks that money can literally buy happiness. You can’t go to a store and say, “Yes, I’d like two ounces of happiness, please.” What people think is that money buys you freedom and property, and that through increased freedom and property, one can become happy.
Chapter 2: Are We Victim To The System?
If I Can’t Buy Happiness Directly, Can Freedom and Property Get Me There?
Here in Ontario, there is like 3 feet of snow all over the place, and this evening I have to walk for four hours to get to and from the university. If I had a small amount of money, I could purchase a bus pass. If I had a medium amount of money, I could purchase a car. If I had a huge sum of money, I could just move to Hawaii or California, and be free from worry about the snow altogether.
In fact, if I had a great amount of money, I don’t think I would do much the same. I wouldn’t live in a tiny room in a weird part of town. I wouldn’t buy all of my clothes at the thrift store. I wouldn’t survive on crackers and popcorn for days at a time. And I certainly wouldn’t trudge through the snow for four hours.
If I had, say, 20 million dollars to spend, I would likely purchase a mansion in California, and another in Hawaii. I would buy expensive designer clothes. I would eat full course meals prepared by a personal chef. I would never see another flake of snow my entire life.
But would it make me any happier?
I’ve been very wealthy and very poor at various times throughout my life, and I can tell you this: money has never been the determining factor of my happiness. My happiness has always been determined by the ability to freely pursue my passions. All I want in this life is to be able to study, write, travel, and have a few friends. And those are not expensive things to do. The thing I really want to do, in a broader sense, is serve people to the best of my ability. I think, should I ever get any amount of money that is greater than what I absolutely need, I will find people to give it to who do not yet have their needs met.
The fact is, there’s no reason I have to live in Kingston and be a poor person. I could easily get a job in Vancouver and live a rich, warm life. But as long as there are poor people in the world, I will never stop struggling. I need to struggle hard now, so that the empathy I develop during this time will prevent me from being corrupted by wealth when I’m older.
So yes, I will continue trudging through the snow for four hours, and I’ll be all the happier for it.
The Rest Is Drinking Money
One of my friends here in Kingston is not what I would call “the most enlightened person I’ve ever met”. He spends most of his time playing video games throughout the day, and goes out to bars at night. I asked him how he gets money, and he explained how he gets checks from the government, and also some odd jobs with a temp agency. Now, the fact that an able bodied young man with time to spare is getting free money from taxpayers is beyond me, but that’s not the issue I’m concerned with for right now.
He was telling me about how the money he gets from the government covers all of his basic expenses, and anything he gets with his temp job is drinking money. My friend may not be much of a thinker, but I think he may have revealed a massive philosophical concept way beyond his intention. Most people would say, “oh this is some idiot who is stealing from taxpayers to waste it on alcohol”. And yes, those people are correct. But let’s look beyond that, and remember what Adam Smith said, that basically, any money we get beyond our basic needs is “superfluous”. Sure, this guy wastes his extra money on alcohol, but is he any more wasteful than anyone else?
Life On The Squiggly Line
This may just look like some squiggly lines, but for every person, it is actually the difference between life and death. It’s an electrocardiogram. It uses electrodes to detect electrical changes on the skin that arise from the heart muscle’s electrophysiological pattern of depolarizing and repolarizing during each heartbeat (Braunwald, 1997). Or, in other words, it’s a graphic representation of a person’s heart. If the line were to be flat, the person would be dead. That’s when the doctor would grab the defibrillator and be like, “CLEAR!” (or at least that’s what happens in the movies).
This is another squiggly line that is the difference between life and death for many people. It’s called “The Stock Market”. It’s a place where full grown men cry if a squiggly line on their computer moves down. In fact, if it goes down far enough, there are many people who will jump off bridges or overdose on medication. But unlike an electrocardiograph, it does not measure a necessary and direct application to survival. It measures money. Remember when I asked Mr. Johnson what money is? Well, I think he was right to say it buys you stuff. But this squiggly line is not actually buying anything for anyone. So, is it still money?
Does Money Even Exist?
Money doesn’t really exist. It’s freaking complicated, but basically, money is not tied directly to anything. It never has been. It’s always been a representation of a certain thing. For example, if someone has $100, it is a representation of a certain acquisition process they went through. People can acquire money either in exchange for labor or property. So, they may have served burgers for eight hours, performed laser eye surgery for 10 minutes, sold their bike, etc. in order to acquire that $100. They can then use that $100 to get other labor or property. Money is essentially the representation of a middle man between labor and property.
Labor, Property and Freedom
As I mentioned earlier, people believe that money gets you freedom and property, which can then lead to happiness. But there are tons of problems with the relationship between labor, property and freedom, and money only exacerbates them. There are three main issues:
1) Labor can corrupt freedom
2) Money for labor is not a fair trade
3) Money for property is not a fair trade
I will proceed to go through some problems, and attempted solutions for each.
1) Labor Can Corrupt Freedom
Labor in and of itself is not antagonistic to freedom. However, when it is done for money in an authoritative structure, it usually is. Anything you do because someone tells you to is tyranny, and anything you do of your own volition is freedom. The more a job conflicts authority with the worker’s own volition, the less satisfaction the worker will have.
Say, for example, that you are a doctor who is against abortion, and loves delivering babies. Delivering babies pays $100,000/year, and performing abortions pays $200,000/year. This person is now choosing between the importance of superfluous income and their freedom. And what do you think will result in greater satisfaction?
Well, of course, it would be a matter of the values one has. If the doctor was an avid and vehement pro-life supporter, she is more likely to take the lower paying position delivering babies.
However, if she was a very casual, “whatever” kind of pro-life supporter, she is more likely to take the higher paying position performing abortions.
Capitalism, in its truest form, operates on the principle that money is valued above all else. Since pursuit of money and proper virtue are often at odds, capitalism and morality fail to peacefully co-exist. This is a systemic issue that exists in all capitalist societies to at least some extent.
If labor is for the sole purpose of money, it has the potential to justify all kinds of evil. A true capitalist ethic would support African slavery in 19th century America, because it was financially advantageous. But if one labors for the sole purpose of morality, they will at some point lose potential profit. Labor either corrupts morality or money, and you have the freedom to choose which to corrupt.
And in America, we rarely find morality chosen over money. Look no further than televangelists, prostitution, pornography, drugs, Wall Street, etc. Even your average American would sooner steal money than earn it for their own merit. In a country where people are taught the value of a dollar as soon as they can walk, and have making money drilled into everything they do, is it any wonder that money causes so much social and moral degradation?
For someone to do well financially, they have to value money at the cost of many other things. This is actually a form of tyranny that steals your time, energy, joy, and ethics.
Attempts at a Solution
What many people do to avoid the potential corruption of freedom by labor, is find a job that is in accordance with their own desire to spend their time, energy, joy, and ethics. Nearly every person who works for a charity, for example, has some kind of story about how they could have been rich doing something else, but they gave it up to selflessly help others. Of course, that makes them feel more credible, but the reality is, they are still serving themselves, just in a slightly more effective way.
Basically, their values developed enough to the point where they valued their altruistic views as more important than money. Once that shift occurs, just like in the case of the doctor, they can only be satisfied in work that is consistent with charitable values. So really, they are still working towards their own job fulfillment, but they are now doing so in a way that is helping others.
That’s why every successful organization has well established values that everyone adheres to. If you don’t like the values, you are free to quit. But if you serve money, you may disagree with the values of your organization and yet continue working for them. Limiting your freedom to live out your own values in favor of money is one of the surest ways to be unhappy. Of course, if you have no values, then working solely for money will be of no detriment to you. However, having no values beyond making money carries a whole host of problems that I don’t even have time to get into right now.
Even then, that only works if you can make money from something that is a value to you. Many altruistic aspirations are void of economic production, and must be subsidized. This leads to a different kind of tyranny, where the altruist is at the demands of their patrons.
2) Money For Labor Is Not A Fair Trade
When you work at a certain job, you put in labor that leads to production, and in return, you receive an amount of money. But what determines that amount of money?
People say that it’s at the whim of the market, but more so, it’s at the whim of the employers. Since they own the means of production, they are able to set the prices at whatever the market will bear, but they do so on the backs of the workers.
Let’s say I get a job at McDonald’s. For every hour I spend working, I earn $14. But that is not equal to the economic production of my labor. My labor actually earns about $20/hr. $6 dollars of it is being stolen by the people above me. I agree with Frederich Bastiat’s definition of plunder,
“When a portion of wealth passes out of the hands of him who has acquired it, without his consent, and without compensation, to him who has not created it, by force or by artifice, I say that property is violated, that plunder is perpetrated. If the law itself performs the action it ought to repress, I say that plunder is still perpetrated.” Frederich Bastiat, The Law, 1850
Bastiat is actually a vehement capitalist, but I’ll get more into that later.
The point is, when I work, I am paying someone else money, simply because they “own” the means to production. And wouldn’t working at McDonald’s be an enjoyable thing for someone to do? Giving people excessive fatty food, being bossed around by a barely literate guy with a power complex, and having your earnings stolen by some rich guy to spend on his mistress…
That’s right you poor souls, “love the opportunity” to be exploited for your labor. Now, if you’ll excuse me, I’m going to my local to McDonald’s to distribute copies of The Communist Manifesto. (Marx and Engels, 1848).
Attempts at a Solution
Increasing the minimum wage is a sad attempt at restoring worker’s rights. Basically, since the power is still entirely in the owner of the means of production, it’s basically just mitigating the exploitation, but at the cost of the lower class in other ways (The Communist, 2017). Here in Ontario, we’ve seen the minimum wage increase to $14/hr. I was visiting a McDonald’s here in Kingston, and I sat next to a worker on his lunch break. I asked him how the minimum wage has affected them. He said they basically cut everyone’s hours and benefits. I asked if they were hiring, and he looked at me like, “what? Of course not!”.
Same thing happened at Tim Hortons, and a variety of other low end fast food and minimum wage worker places. Basically, some rich guy takes a break from screwing his mistress by the fire of hundred-dollar bills to check on the income he’s garnered from exploiting workers. He notices, “oh, the government increased minimum wage, that’s fine, there’s lots of other avenues to exploit” and the process continues.
Another solution is not to fix the problem, but rather encourage a different attitude towards it. If the problem is that hard working people are being stolen from by rich people above them, we can simply view it as a process of “climbing the ladder” in which everyone has their fair shot of being able to exploit others later on in their life. The idea is that you can serve your time in the low class, and through hard work and talent, you can rise up the classes. What this does is encourage a spirit of competition at the detriment of fraternity. If everyone you work with is vying for the same manager position, how well are those people going to get along? It creates a class structure, which basically says you are as valuable as your reception of wealth that the system gives you.
The final thing I’ve heard for this is that the owner of the means of production “deserves it” since they provided the means of production for the worker in the first place. But I have to ask, at what point does this become exhausted? It’s like if your 3rd grade teacher asked you for a percentage of all of the money you make.
“Well, you never would have passed 3rd grade if it wasn’t for me teaching you, so I deserve a percentage of all your earnings” -the bourgeoisie teacher
Whatever point it is that the worker should be free from “thanking” the owner of the means of production, it is currently way past.
3) Money For Property Is Not A Fair Trade
“Accumulation of personal property is, in many instances, the effect of paying too little for the labor that produced it; the consequence of which is that the working hand perishes in old age, and the employer abounds in affluence.” -Thomas Paine, Agrarian Justice, 1797
Let’s continue the example of my theoretical job at McDonald’s (which will hopefully remain theoretical). So, I work and make $14/hr, while $6 is stolen from a rich guy. Then, I go and purchase goods with it. Here’s where I lose all of my money, and then some. If I worked 10 hours and made $140, I could purchase a chair. But as soon as I leave the store, that chair is no longer worth $140 dollars. Optimistically, I could probably sell that to someone for half the price.
So, I worked for 10 hours to produce $200. $60 got taken from some rich guy, and $70 got taken when I purchased the chair. I now have no money, and $70 worth of property. So I’m at $7/hr. But it doesn’t stop there! As the chair gets older, it gets a rip, a stain, gets outdated, etc. Eventually, it will be worth next to nothing. I worked for 10 hours, and the end result is nothing to show for it.
Accumulation of property is like throwing money down the drain.
Attempt at a Solution
This is why, instead of accumulating property, people make investments. In this scenario, I work 10 hours, make $140, and spend that $140 on an investment. This investment earns 5% interest compounding annually. By the end of 5 years, I will have $180. So, that’s better for me than buying a chair that leaves me with nothing by the end, because this way I’ve actually made $40.
However, I never actually made that extra $40. What I’ve just done is placed myself in the loop of stealing from people who did work. Now, a little percentage of all those workers being stolen from is going to me. As I gain more money, I can make more investments. And the more you invest, the more you can steal from the workers at the bottom. Eventually, you will be on your way to riches! You can purchase a fancy house and car, go on lavish vacations, and purchase mistresses, all on the sweat of the working man’s back.
Chapter 3: Socialism vs. Capitalism
Is Socialism The Answer?
Where in capitalism, your money is stolen from rich people, in socialism, your money is stolen by powerful people. Instead of giving your money to the fat cats in corporate, you’re giving it to the fat cats in Washington. There are advantages and disadvantages to each.
If you give your money to the fat cats in corporate, you are funding lavish expenditures for frivolous things, and hoping that they might be philanthropic. People say, “oh look how generous Bill Gates is”. Ummm…what? Someone who steals a bunch of money from a gas station, and leaves $5 behind is not being generous. Bill Gates earned a fraction of a percent of that money through his own merit. The rest is stolen money, and he owes it to the sweat of hard working Americans to give it back.
But the sad thing is, Bill Gates is one of the best rich people. The others are absurd in their expenditure, and yes, it creates some jobs, but they are crappy jobs where labor could be put to better use elsewhere. Like, why are there 10 servants cleaning a 20-million-dollar yacht when there is garbage all over downtown Los Angeles?
That’s where it is advantageous to give money to the government. Since they are accountable to the people, they will repurpose the money somewhere that it is needed. So, if there is a lack of skilled trade workers, the government will give free schooling for skilled trade programs. If there is litter all over a city, the government will sponsor a cleaning and recycling program, etc., etc.
Socialism gives the government a lot more power, which comes with potential drawbacks. Should we trust the government to handle it responsibly? A socialist dictatorship is a very dangerous thing. It gives the government all of the money with none of the accountability. The only way a socialist economy can serve the people is if the government is very accountable to the people in how the money is repurposed.
The other issue that potentially arises with socialism is that the government is then making a lot of decisions for the majority of the people, and certain minorities lose representation. If the government decided to fund abortions, for example, that might be fine for the majority of people, but many would be upset with that. You would then be forcing a pro-life advocate to give money to fund abortions against their will. Or, if someone doesn’t support giving to a recycling program, and thinks the money would be better spent on roads or libraries, they have no direct say in that. By stealing money and putting it wherever the majority wants, it has the potential to severely limit individual freedoms.
And when the government is the only operation in the country running projects of any kind, there is no more competition. This competition, which yes, causes lack of solidarity among workers, also drives people to work harder, and businesses to spend in the most effective way possible. If private charities compete against each other, the best one will win, and they might be far better than the charity the government would have made. But if there is not sufficient pressure from individuals, there may be some charities that don’t even exist at all, because no one cares enough to make them.
Property, Freedom, Happiness
There is a lot more detail than that, of course. I’ve read 8 books on capitalism and socialism over the last couple weeks, and I still don’t know anything about economics…but don’t worry, if I can survive long enough, I will figure it out. My number one problem with the capitalism vs. socialism debate is what it seems to often be centered around: the idea that money creates happiness.
I said previously that the idea is in capitalist economies, but it’s funny, even socialists often make the case for socialism by saying that since it makes more people are rich, overall happiness is increased, rather than just happiness for a rare few. But that’s just the wrong debate to be having, in my opinion.
So long as there are people without food, healthcare, and education, I’m not interested in talking about how to make more people rich. I’m interested in talking about how to make less people poor. What I want is an economic system that allows for individual liberties while not forgetting our obligation to care for the poor and the needy. That’s why, although I don’t agree with Bernie Sanders all that much, I loved his book Our Revolution (Sanders, 2016). His entire campaign was centered around looking out for people who have been tossed aside by ruthless American capitalism. He focuses on the poor working class, and finally gives them a voice. American politics is so often run by corporations looking to buy elections. Whether or not Russia meddled in the election, we know for a fact that Trump was backed by majority of big corporations, who couldn’t care less about the working poor.
I think the greatest liberty actually comes when we stop worrying so much about what money can get us, and start thinking about the greater purpose of it. It is a representation of the middle man between labor and property, and it is through this middle man that wealth can be distributed.
Adam Smith said in his iconic book The Wealth of Nations that,
“Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indignance of the many.” (Smith, 1776).
Whether it is of our own volition, or done by the government, rich people need to be restricted from buying more private jets in favor of school children having current textbooks. People need to be restricted from going to expensive resorts in favor of orphans having proper food. I could go on, but my point is, whether by their individual conscience or by the collective conscience of the American people, we need to take rich people down a couple notches if we are going to enable every American their proper rights.
Thomas Paine said in his book Agrarian Justice that,
“The contrast of affluence and wretchedness continually meeting and offending the eye, is like dead and living bodies chained together. Though I care as little about riches as any man, I am a friend to riches because they are capable of doing good.” (Paine, 1797).
It’s awesome that business geniuses are able to create a means of production to provide millions of people with jobs. The millions of people who work with computers every day are able to because of the genius of certain business people throughout the 20th century, especially Bill Gates and Steve Jobs. It’s not that business itself is bad, or the money that comes from it is bad. What’s bad is when there is severe economic inequality, and rich people refuse to help. It is like seeing “dead and living bodies chained together.” However money is made and distributed, it needs to be for the betterment of all people.
I’ve read through the work of Adam Smith, the father or capitalism, and Karl Marx, the father of communism, and I have to admit, I agree with both of them. They are actually both moral philosophers more than anything. They are both writing for people to be able to get resources and go on to live happy lives. They simply go about it in different ways. What way I personally think is best is interesting to think about, but what I care most about is that we are having the right debate.
From watching political talk shows and reading through magazines, the current debate in America seems to suggest people care about their own happiness more than morality. In addition, they don’t even know how to be happy. Modern America is full of unhappy, selfish people, and the government is no exception.
I personally refuse to be gainfully employed, have investments of any kind, or indulge in the supposed “pleasure” that money brings. Instead, I want to work as hard as I can every day, and hopefully help the world through the gifts that I have. That’s a unique calling though, of course, and I don’t recommend it for everyone. I would make a terrible financial advisor.
Karl Marx once said that, “Capital is reckless of the health or length of life of the laborer, unless under compulsion from society.”
Whatever economic system we have, I want a moral compulsion to develop in the heart of every person to help the less fortunate and work hard at their God given talents. And no, helping others in poverty is not going to help your retirement savings plan, your mortgage rate, or get you a better return on your investments. Using your money to serve others is terrible financial advice in today’s culture.
“Continuity of purpose is one of the most essential ingredients to happiness in the long run, and for most men this comes chiefly through their work.” -Bertrand Russell, The Conquest of Happiness, 1930
May we work hard to fulfill our purpose, and let our wallets be empty so our hearts can be full.
Bastiat, F. (1850). The Law.
Braunwald E. (ed) (1997), Heart Disease: A Textbook of Cardiovascular Medicine, Fifth Edition, p. 108, Philadelphia, W.B. Saunders Co.
Marx, K., Engels, F. (1848). The Communist Manifesto.
Paine, T. (1797). Agrarian Justice.
Russell, B. (1930). The Conquest of Happiness. ISBN 978-0-87140-673-6.
Sanders, B. (2016). Our Revolution.
Smith, A. (1759). The Theory of Moral Sentiments. Retrieved from http://knarf.english.upenn.edu/Smith/tms131.html
Smith, A. (1776). The Wealth of Nations.
The Communist Manifesto- Bourgeoisie and Proletariat. (2017). Learning: Dreamers and Dissenters. Retrieved from http://www.bl.uk/learning/histcitizen/21cc/utopia/methods1/bourgeoisie1/bourgeoisie.html