Warts and All

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Just got off of the phone with one of my favorite people.

My friend Keiki and I were medical interns together. And he’s one of those people who when I think of, I think: “That guy is just a better person than I will ever be.”  (I know, I know, there are higher bars.)

He’s just a solid dude. Supremely thoughtful. Very ethical. Quite philosophical. Seemingly unselfish.

Amazingly, he pulls it off without being a drag, or in anyway boring. He’s truly a lot of fun.

Unsurprisingly we got to talking about the ethics of investment.

There is of course a conflict that one must come to peace with in order to divert more income away from spending and towards investing in the whole economy, warts and all.

By buying broad-based corporate stock indices meant to track the entire economy, You are investing in many things that run counter to your own personal values.

As an example, I am undoubtedly heavily leveraged in weapons manufacturers, fossil fuels, sprawling mega-chains, and Wall Street shysters.

coal_fired_power_planta>Important asset in my portfolio

So does this make me a hypocrite?

I admit it, it does.

But the question is; Is it worth avoiding this hypocrisy?

Framed another way, If I didn’t invest in the entire stock market what would the alternatives be?

1. I could give all my money away to charity.

2. I could store all of my money in boxes in my basement. I would be losing about 2% a year to inflation but at least I wouldn’t be investing in something unsavory.

3. I could just live my life, give some small amount of money to my 401(k) and not think about where it goes, and spend the rest.

4. I could invest in a personalized local endeavor. (The Miles Dividend Pizza Company?)

5. I could invest in individual companies that I feel to be ethical.

So one does have options. But of those alternatives, the only ones that seem in anyway accessible to me in my life are numbers 3 and 5.

The rest just seem theoretical, unapproachable, and divorced from my own reality.

Option 3 seems so much less worthwhile than increasing efficiency in life and investing the proceeds. After all what would the 401 K be invested in?  What would I spend my money on?

Option 5 seems somehow adolescent and delusional to me. It’s investing in the way I want the world to be, as opposed to the way the world actually is.

Am I feeding the beast? Of course I am. But I’m also feeding the alternatives to the beast. (Think alternative energy companies, social change empowering technology companies, and organic food distributors.)

Admittedly, there’s more market capitalization in fossil fuels, weapons manufacturing, and Wall Street so on balance, investing in the whole economy likely is an unethical act.

But Let’s be honest, we invest to make money.  And there is ample evidence that broad asset diversification in passive vehicles gives us the best chance at a good return on investments.

So I guess I am comfortable with a certain amount of hypocrisy in order to function in my life and keep it moving forward.

Compartmentalization is adaptive. If You want to accumulate money, then at some point you probably have to just focus on saving and investing money, and not be too distracted by the ice caps.

Does an ethical hermit living atop a mountain in perfect self-sufficiency have a smaller carbon footprint than I ever will?

Of course he does. But what difference does he make?

So here are my arguments for embracing the hypocrisy. Here are ways in which saving more, and investing the proceeds towards personal financial independence are good for the world.

1. Saving more puts a downward pressure on our own consumption.

Diverting income towards savings marginally moves us towards efficiency. This is a healthy direction to be moving towards, both for us and for the world.

2. Investing is fun. 

And because it is pleasurable it entices us to save and invest more. This creates a positive feedback loop whereby our own pleasure seeking nature fuels our drive towards efficiency.

3. The idea that consumption does not occur in a vacuum is a powerful concept.

Realizing that the personal choice to consume is a choice for “things,” and against “freedom,” inevitably moves us away from consumption for our own selfish reasons.

Saving is transformed from a deprivation (not buying those shoes because saving for my retirement is important) to a pleasurable act of consumption (not buying those shoes so I can invest more money and transform it into personal freedom).

And the fun of investing money is an important carrot in that equation.

4. Investing makes demagoguery more difficult.

There is some merit to the argument that corporations are not separate entities unto themselves and are, in fact, made up of people, and the millions of individual consumptive actions of people.

Investing makes it harder to set up false constructs whereby corporations are separate from us as individuals. This is a form of honesty.

tumblr_m74lvrskDq1r57lmxHe’s got a point.  Corporations are People.


5. Saving and investing is primarily a selfish act. But it’s got potential.

Just as capitalism harnesses peoples selfish motivations for aggregate progress, my hope is that this personal philosophy harnesses my own individual base instincts to move in a more productive, and less globally destructive direction.

The best compliment an advocate of the early retirement philosophy could ever hope to receive would-be something along these lines:

“Your philosophy is terrible. It’s destructive and self absorbed. But it’s the best philosophy we’ve got.”

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