Finance is not merely about making money. It's about achieving our deep goals and protecting the fruits of our labor. It's about stewardship and, therefore, about achieving the good society.
Interpretation
Finance transcends just profit-making; it encompasses fulfilling our deeper aspirations and ensuring the well-being of society.
In this quote, Robert J. Shiller emphasizes that finance is not solely focused on generating wealth. Instead, it is fundamentally tied to our broader objectives—personal growth, societal responsibility, and the preservation of the benefits of our efforts. Shiller advocates for a view of finance as a stewardship role, where the ultimate goal is to contribute to the betterment of society rather than mere accumulation of riches.
In practice
In a finance seminar discussing the broader impacts of financial planning.
Those on the downside of rising economic inequality generally do not want government policies that look like handouts. They typically do not want the government to make the tax system more progressive, to impose punishing taxes on the rich, in order to give the money to them. Redistribution feels demeaning. It feels like being labeled a failure.
Speculative markets have always been vulnerable to illusion. But seeing the folly in markets provides no clear advantage in forecasting outcomes, because changes in the force of the illusion are difficult to predict.
That's the world we live in: when it comes to economics, people have emotions; it's not like chemistry or physics.
Money management has been a profession involving a lot of fakery - people saying they can beat the market, and they really can't.
We should not be focusing on quick solutions. The really important concern for policymakers everywhere is to prevent disasters - that is, the outlier events that matter the most.
If we wait until income inequality is much more severe, we will have a whole class of new superrich who will probably feel entitled to their wealth and will have the means to defend their interest. That's already gone far enough. We shouldn't let it become more extreme.
There will always be bull markets followed by bear markets followed by bull markets
Entrepreneurs or international conglomerateurs, or large financial institutions buy or create mutual fund management companies to create a return on their own capital. It's capitalism at work, where the rewards tend to go to the managers rather than the investors.
Liquidity is a good proxy for relative net worth. You can't lie about cash, stocks, and bond values.
This is not a game, ... Debt has become a part of who we are. It's become that spoiled child in the grocery store with their lip stuck out: 'I want it. I want it. I deserve it because I breathe air.' And, well, that's an uphill climb in our culture right now, to go against that and say, 'Hey, let's be grownups here. Let's be mature, learn to delay pleasure, save up and pay for things.'
The world of derivatives is full of holes that very few people are really aware of. It's like hydrogen and oxygen sitting on the corner waiting for a little flame.
Investors have few spare tires left. Think of the image of a car on a bumpy road to an uncertain destination that has already used up its spare tire. The cash reserves of people have been eaten up by the recent market volatility.
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