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.
All the time and effort people devote to picking the right fund, the hot hand, the great manager have, in most cases, led to no advantage.
Observing that the market was FREQUENTLY efficient, EMT Adherents went on to conclude incorrectly that it was ALWAYS efficient. The difference between these propositions is night and day.
When our financial system - essentially our money managers, marketers of investment products and stockbrokers - put up zero percent of the capital and assume zero percent of the risk yet receive fully 80% of the return, something has gone terribly wrong in our financial system.
When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold.
There are no shortcuts when it comes to getting out of debt.
The basic story remains simple and never-ending. Stocks aren't lottery tickets. There's a company attached to every share.
Subscribe for the occasional hand-picked quote. No noise.