At what point does financial optimisation become an ethical question?

[mrmoonymartian]

If it's legal, it's perfectly acceptable. Otherwise what's the point of pollies? And if everyone else is doing it, you'd be a mug not to. If slavery was legal and lots of people owned slaves, there would be no problem with making money from slaves too.

Is there something else besides our time and money that we should be considering as part of our optimisation strategies?

Have you ever taken or declined an investment or other financial arrangment for ethical reasons? Or advocated policies against self interest for the betterment of others? At what point did you decide ethics>$$$? How do you balance ethical ROI against financial? If you are poorer than average is it ok to not worry about it - are ethics only for the well off? If you will what is left to charity, does it mean that making as much as possible while alive is an unambiguous good?

Or have you taken a different view that they are completely separate things (how can it be)? Or even that there are no ethics, only $$$? Or that $$$>ethics?


Background is I just read some socialist propaganda in the financial review. They should put a warning label on that thing.

"Negative gearing has allowed mums and dads to get ahead, the question is, ahead of whom? And that answer is their own children," Mr Eslake said.
http://www.afr.com/real-estate/is-australia-doing-enough-to-curb-property-speculation-and-spruikers-20180319-h0xos3

"Australia's obscene dividend imputation debate about who is poor"
http://www.afr.com/opinion/columnists/australias-obscene-dividend-imputation-debate-about-who-is-poor-20180319-h0xnun

[Fresh Bread]

Those articles are both behind a paywall. Is AFR a left wing paper? I've never really read it.

Yes I put ethics ahead of $$$ to some degree. I pay more for the more sustainable option, got solar panels after the high feed in tariff ended, that sort of thing, plus we don't go out of our way to minimise taxes, haven't ever structured our assets to our best advantage and so on. I like paying my way and I like paying for my externalities because I can.

But we just shove $$$ into Vanguard without worrying that the companies we are investing in are aligned with our values. We invest in companies that we don't do business with so that's hypocritical. At least it's not a massive % of our wealth...

There's a poster in the private health thread that doesn't buy private healthcare because he believes in universal healthcare. I do too, but I need there to be universal toilet hygiene before I'm sharing a bathroom, so I'll stick to paying for my private room with ensuite.

[mrmoonymartian]

Sorry, forgot about the paywall. Not very important anyway, just explaining what led me to thinking about such things. According to wikipedia "Since the 1970s, the Financial Review has been associated with economic liberalism in Australia, driving a consistent editorial line favouring small government, deregulation, privatisation, lower taxes and trade liberalisation. However, the opinion columns publish a wider range of views."

Nice to hear your thoughts and actions.

I suppose the Vanguard question is why there are social/ethical funds springing up. I need to investigate those some more - anyone have any insights?

Another thought just occurred to me randomly, about FIRE itself being an ethical pusuit in times of underemployment - as in, now and in the forseeable (robotic) future.

[Llewellyn2006]

Yes I put ethics ahead of $$$ to some degree. I pay more for the more sustainable option, got solar panels after the high feed in tariff ended, that sort of thing, plus we don't go out of our way to minimise taxes, haven't ever structured our assets to our best advantage and so on. I like paying my way and I like paying for my externalities because I can.

It's rather refreshing to find someone that feels the same as I do WRT tax around here. I don't go out of my way to pay more than I have to but I don't aggressively structure my affairs to pay as little as possible either. The money has to come from somewhere and I'm prepared to pay my share, even if I don't always agree with some of the ways that it's spent. So many people seem to view tax as govt theft while still wanting all the services .

That will probably earn me a facepunch, but hey ho.

[Fresh Bread]

Yes I put ethics ahead of $$$ to some degree. I pay more for the more sustainable option, got solar panels after the high feed in tariff ended, that sort of thing, plus we don't go out of our way to minimise taxes, haven't ever structured our assets to our best advantage and so on. I like paying my way and I like paying for my externalities because I can.

It's rather refreshing to find someone that feels the same as I do WRT tax around here. I don't go out of my way to pay more than I have to but I don't aggressively structure my affairs to pay as little as possible either. The money has to come from somewhere and I'm prepared to pay my share, even if I don't always agree with some of the ways that it's spent. So many people seem to view tax as govt theft while still wanting all the services .

That will probably earn me a facepunch, but hey ho.

Sometimes when I read / hear people talk about the government it's like they are all bad guys - either crooked or just wasteful. Well, I know a people working at all 3 levels and they are just trying to do their job with limited resources, same as anyone else in the private sector. I don't see how minimising my taxes and then giving the difference to charity would help, I don't think individuals should be deciding where help is needed, I for one don't have all the facts. My opinion could change I guess if our government swung really violently to the right, but then they would probably drop taxes anyway, eh?

[middo]

Yes I put ethics ahead of $$$ to some degree. I pay more for the more sustainable option, got solar panels after the high feed in tariff ended, that sort of thing, plus we don't go out of our way to minimise taxes, haven't ever structured our assets to our best advantage and so on. I like paying my way and I like paying for my externalities because I can.

It's rather refreshing to find someone that feels the same as I do WRT tax around here. I don't go out of my way to pay more than I have to but I don't aggressively structure my affairs to pay as little as possible either. The money has to come from somewhere and I'm prepared to pay my share, even if I don't always agree with some of the ways that it's spent. So many people seem to view tax as govt theft while still wanting all the services .

That will probably earn me a facepunch, but hey ho.

No facepunch from me.  My wife was a local government councillor and the arguments within the community that made no sense.  Don't raise rates, but spend more on sporting facilities.  Lower rates, but put in more footpaths.              *Shakeshead

Tax in Australia is actually fairly low on an OECD basis, as I understand it.  Our services are also fairly good.  Someone is doing something right most of the time.  I may disagree with some of what is done, generally in Australia we do OK.

[middo]

If it's legal, it's perfectly acceptable. Otherwise what's the point of pollies? And if everyone else is doing it, you'd be a mug not to. If slavery was legal and lots of people owned slaves, there would be no problem with making money from slaves too.

Is there something else besides our time and money that we should be considering as part of our optimisation strategies?

Have you ever taken or declined an investment or other financial arrangment for ethical reasons? Or advocated policies against self interest for the betterment of others? At what point did you decide ethics>$$$? How do you balance ethical ROI against financial? If you are poorer than average is it ok to not worry about it - are ethics only for the well off? If you will what is left to charity, does it mean that making as much as possible while alive is an unambiguous good?

Or have you taken a different view that they are completely separate things (how can it be)? Or even that there are no ethics, only $$$? Or that $$$>ethics?


Background is I just read some socialist propaganda in the financial review. They should put a warning label on that thing.

"Negative gearing has allowed mums and dads to get ahead, the question is, ahead of whom? And that answer is their own children," Mr Eslake said.
http://www.afr.com/real-estate/is-australia-doing-enough-to-curb-property-speculation-and-spruikers-20180319-h0xos3

"Australia's obscene dividend imputation debate about who is poor"
http://www.afr.com/opinion/columnists/australias-obscene-dividend-imputation-debate-about-who-is-poor-20180319-h0xnun

I wouldn't put money ahead of ethics, and at times it has financially hurt me.  When I first graduated from Uni I was offered a higher than average paying job for my profession, sort of by word of mouth.  it turned out to be in the tobacco industry, and they were aggressively enlarging production for export into Asia.  I could not be part of that, even though it was all legal and above board.  It cost me around $15,000 per year, in 1992 dollars.

My superannuation is not place in an "ethical" fund though.  I have looked into some of them, and one persons idea of ethical may not be anothers.  Is it ethical to invest in cigarettes?   How about alcohol?  It causes significant harm.  What about oil?  Mining?  Mining of coal, and the same company may mine lithium.  It gets complicated quickly.

[Fresh Bread]

Oh the tobacco jobs!!! Every time my hubby is on the market some recruitment agent asks him if he'd do it. The pay is so tempting. I have a friend who says she'd do it (hypothetically, since there wouldn't be a job in her field), she reckons people can make their own choices and it wouldn't bother her. We have to respectfully disagree on that; we don't know what sort of underhand tactics the marketing team are employing. I wonder how well the marketing / sales teams sleep at night.

This dicussion reminds me of that movie "Thank you for smoking". So funny.

[krustyburger]

Sorry, forgot about the paywall. Not very important anyway, just explaining what led me to thinking about such things. According to wikipedia "Since the 1970s, the Financial Review has been associated with economic liberalism in Australia, driving a consistent editorial line favouring small government, deregulation, privatisation, lower taxes and trade liberalisation. However, the opinion columns publish a wider range of views."

I'm by no means an expert (or even interested) in this area but I thought these things were the opposite of socialism? Happy to be corrected tho
If a right leaning publication is talking about needing to change negative gearing and dividend imputation because rich people got too rich at the expense of others then maybe the inequalities are worse than I thought?

[mjr]

AFR is a Fairfax publication.  Left-leaning.

[krustyburger]

Ah okay, I guess I've always associated privatisation and trade liberalisation with the liberal party.

Interested to know if the articles are socialist drivel (as per the OP) or do we actually need reform in these areas?

[Llewellyn2006]

.......... or do we actually need reform in these areas?

Negative gearing......definitely needs reforming. IMO negative gearing is the greatest investment myth that's ever been foisted on the Australian public. As for the proposed changes to dividend imputation - very likely that they need changing but not quite as urgently as NG.

[mrmoonymartian]

Interested to know if the articles are socialist drivel (as per the OP) or do we actually need reform in these areas?

Or are they socialist propaganda and we actually need reform in these areas? Propaganda doesn't mean drivel, it means attempting to influence to further an agenda. If there is an important ethical concern, it might be the right thing to do to attempt to influence others so that they help address it. Whether that is justified would depend on the soundness of the argument.

Hence the question, at what point does financial optimisation become an ethical question? Is the argument sound that we have reached that point with such things as negative gearing and imputation credit refunds? How do others make such judgements in their daily lives? I don't have any easy answers, but I have enjoyed reading the responses so far.

I can say that I will never take a tobacco job. I'd rather starve :)

[marty998]

Interested to know if the articles are socialist drivel (as per the OP) or do we actually need reform in these areas?

Or are they socialist propaganda and we actually need reform in these areas? Propaganda doesn't mean drivel, it means attempting to influence to further an agenda. If there is an important ethical concern, it might be the right thing to do to attempt to influence others so that they help address it. Whether that is justified would depend on the soundness of the argument.

Hence the question, at what point does financial optimisation become an ethical question? Is the argument sound that we have reached that point with such things as negative gearing and imputation credit refunds? How do others make such judgements in their daily lives? I don't have any easy answers, but I have enjoyed reading the responses so far.

I can say that I will never take a tobacco job. I'd rather starve :)

I'm sorry what? No one is advocating socialism, not least Saul Eastlake. And the Fin Review is most certainly not left-wing (whatever the hell the left stands for these days). Go visit China for a year and come back and tell me we are in danger of turning socialist. That's just unhinged to think the Fin Review is advocating we turn our economy into China's.

IMO there is no longer a left and right in Australia in the economic sense (socialism vs free market). The right won that argument decades ago, it's just the politicians who continue to shadow box their grievances from history.

You've got a fringe left and a fringe right that get a disproportionate amount of media attention. Then you've got 95% of people who are a spectrum of centre left to centre right (ranging from socially progressive to socially conservative) who largely agree on most things, but differ on a couple of fundamentals (welfare state, tax, marriage, refugees etc).

I will continue to take my franking credits as they are offered. I do not invest purely for a tax benefit as IMO that is a stupid reason to invest.

The most uncertain investment in the world is anything that can be changed by a politician. Everything is always up for review at an annual budget.

You should enter an investment on it's own merits. Tax structuring should be the secondary consideration.

[krustyburger]

Sorry, drivel was a bit harsh, I meant it tongue in cheek. I lean pretty left for environmental policies, although I'm not quite socialist? (I don't really know)

I kind of associate propaganda with advertising, I'd prefer just the facts so I can make my own decision without the manipulation.

The ethical question is difficult, personally I don't invest in an ethical fund so I feel like a bit of a hypocrite.
The job thing is interesting, I've never been in an outright unethical job, but I've also never been starving. I have a suspicion that ongoing hunger would override my ethics pretty quickly.
As a researcher, if I was in a position where I had to do questionable science I'd definitely refuse and quit, although thats easy to do when I've only got myself to worry about and the social safety net has my back. 

[krustyburger]

Interested to know if the articles are socialist drivel (as per the OP) or do we actually need reform in these areas?

Or are they socialist propaganda and we actually need reform in these areas? Propaganda doesn't mean drivel, it means attempting to influence to further an agenda. If there is an important ethical concern, it might be the right thing to do to attempt to influence others so that they help address it. Whether that is justified would depend on the soundness of the argument.

Hence the question, at what point does financial optimisation become an ethical question? Is the argument sound that we have reached that point with such things as negative gearing and imputation credit refunds? How do others make such judgements in their daily lives? I don't have any easy answers, but I have enjoyed reading the responses so far.

I can say that I will never take a tobacco job. I'd rather starve :)

I'm sorry what? No one is advocating socialism, not least Saul Eastlake. And the Fin Review is most certainly not left-wing (whatever the hell the left stands for these days). Go visit China for a year and come back and tell me we are in danger of turning socialist. That's just unhinged to think the Fin Review is advocating we turn our economy into China's.

IMO there is no longer a left and right in Australia in the economic sense (socialism vs free market). The right won that argument decades ago, it's just the politicians who continue to shadow box their grievances from history.

You've got a fringe left and a fringe right that get a disproportionate amount of media attention. Then you've got 95% of people who are a spectrum of centre left to centre right (ranging from socially progressive to socially conservative) who largely agree on most things, but differ on a couple of fundamentals (welfare state, tax, marriage, refugees etc).

I will continue to take my franking credits as they are offered. I do not invest purely for a tax benefit as IMO that is a stupid reason to invest.

The most uncertain investment in the world is anything that can be changed by a politician. Everything is always up for review at an annual budget.

You should enter an investment on it's own merits. Tax structuring should be the secondary consideration.

Thanks Marty, thats what I thought. I agree, the vast majority of Australians are so central that we can barely elect majority governments of either the left or right persuasion

[marty998]

Sorry, drivel was a bit harsh, I meant it tongue in cheek. I lean pretty left for environmental policies, although I'm not quite socialist? (I don't really know)

I kind of associate propaganda with advertising, I'd prefer just the facts so I can make my own decision without the manipulation.

The ethical question is difficult, personally I don't invest in an ethical fund so I feel like a bit of a hypocrite.
The job thing is interesting, I've never been in an outright unethical job, but I've also never been starving. I have a suspicion that ongoing hunger would override my ethics pretty quickly.
As a researcher, if I was in a position where I had to do questionable science I'd definitely refuse and quit, although thats easy to do when I've only got myself to worry about and the social safety net has my back. 

Ahh I wasn't having a go at you with that response :)

But you're right... there's too much opinion masquerading as news these days. I guess you get what you pay for and when people are no longer willing to pay for news society is poorer for it.

I'm disappointed that so many people simply cry "socialism" when they see an economic argument that is a fingernail to the left of the status quo. It's lazy. Especially when the current system will soon break with a generational problem of inequality about to blow up.

[runbikerun]

The left/right dichotomy is applied so often that it's lost quite a bit of meaning. Policies that aren't inherently left or right get caricatured as one or the other - for example, there's an extremely strong principled argument for a 100% inheritance tax from the right, but increases in inheritance tax are derided as socialist.

[mrmoonymartian]

Interested to know if the articles are socialist drivel (as per the OP) or do we actually need reform in these areas?

Or are they socialist propaganda and we actually need reform in these areas? Propaganda doesn't mean drivel, it means attempting to influence to further an agenda. If there is an important ethical concern, it might be the right thing to do to attempt to influence others so that they help address it. Whether that is justified would depend on the soundness of the argument.

I'm sorry what? No one is advocating socialism, not least Saul Eastlake. And the Fin Review is most certainly not left-wing (whatever the hell the left stands for these days). Go visit China for a year and come back and tell me we are in danger of turning socialist. That's just unhinged to think the Fin Review is advocating we turn our economy into China's.

That paragraph of mine was to refute the false dichotomy of propaganda OR need for reform, and to assert that the focus should be on the soundness of the argument regardless of the messenger or the medium. I also have been using 'socialist' tongue in cheek as clearly we are not talking about socialising the means of production. Seems tongue-in-cheekedness does not translate well in a forum format, so I hereby apologise unambiguously :p

So back to the ethics of financial optimisation...

In the book Predictably Irrational, a set of studies on human behaviours was described in which cash was handed out according to how many correct answers were given, and in some instances it was made possible to cheat (for example by self assessment). Furthermore, in some cases instead of being paid immediatly the participants were given tokens to walk accross the room to exchange for cash. Cheating was found to rise significantly as soon as there was any abstraction or steps between the act and the cash. Several financial scandals were cited as evidence of this phenomenon in real life.

MMM in his talk said that the pursuit of happiness is our raison d'être, and that helping others makes us happy. In effect, we can be optimally fulfilled only by incoporating a good dose of selflessness in our lives. Presumably the exact size and frequency of the dose depends on the individual.

These things make me wonder if when talking about taxation and political issues such as negative gearing and imputation credit refunds, whether people focus only on the proximate fact of the government taking their money instead of the good that is subsequently done with it, and therefore never feel the reward from helping others. Perhaps they would feel happier if there was a way to be more directly involved so they really feel like they are handing over cash directly for worthwhile things.

[middo]

Sorry, drivel was a bit harsh, I meant it tongue in cheek. I lean pretty left for environmental policies, although I'm not quite socialist? (I don't really know)

I kind of associate propaganda with advertising, I'd prefer just the facts so I can make my own decision without the manipulation.

The ethical question is difficult, personally I don't invest in an ethical fund so I feel like a bit of a hypocrite.
The job thing is interesting, I've never been in an outright unethical job, but I've also never been starving. I have a suspicion that ongoing hunger would override my ethics pretty quickly.
As a researcher, if I was in a position where I had to do questionable science I'd definitely refuse and quit, although thats easy to do when I've only got myself to worry about and the social safety net has my back. 

Ahh I wasn't having a go at you with that response :)

But you're right... there's too much opinion masquerading as news these days. I guess you get what you pay for and when people are no longer willing to pay for news society is poorer for it.

I'm disappointed that so many people simply cry "socialism" when they see an economic argument that is a fingernail to the left of the status quo. It's lazy. Especially when the current system will soon break with a generational problem of inequality about to blow up.

I think your point about "socialism" is a worthwhile one to make.  My son describes himself as a "socialist" as he likes policies that are for the greater social good, such as medicare, a universal welfare system, opportunities for education for all etc.  However, those in the U.S. tend to see socialism and communism as the same thing.  Australians may be a bit more nuanced in their thinking?

I also wonder how a Menzies or even Frazer government would be described these days.  While that may be socially conservative, they would definitely tick the socialist box on many of their economic policies.  Anyway. I digress.

[Fresh Bread]

Well this article is timely:

https://www.smh.com.au/business/the-economy/it-s-simple-i-m-australian-and-i-pay-tax-for-the-good-of-the-country-20180322-p4z5ql.html

[deborah]

Well this article is timely:

https://www.smh.com.au/business/the-economy/it-s-simple-i-m-australian-and-i-pay-tax-for-the-good-of-the-country-20180322-p4z5ql.html

If you want the same article, but not behind a pay wall (well, you get a few free articles a month in SMH, but Canberra Times is free) use - http://www.canberratimes.com.au/business/the-economy/it-s-simple-i-m-australian-and-i-pay-tax-for-the-good-of-the-country-20180322-p4z5ql.html

I don't pay any tax, and I think this is wrong. Granted, I paid tax as I put money into superannuation, but it was only 15%. Granted, I will never get the OAP, so I am not being a drain on society. Granted, I pay rates and GST on stuff that I buy. But why shouldn't I pay tax?

The problem is that Howard and Costello created a tax mess by bringing in payouts and reducing the tax on superannuation, and it was just not sustainable. And when someone brings back tax on superannuation, there will be a lot of people (my age) howling that it was ALWAYS tax free, when it wasn't.

I guess that if I really, really wanted to pay tax, I would take my money out of superannuation, but in a few years I wouldn't be able to put it back in (if I wanted to).

[BattlaP]

Tough question that the OP presents. Personally I manage my finances in a purely rational by-the-numbers approach which ends up putting me, if you equate legality with ethical, in ‘ethically’ dubious situations. However since my personal ethics barely align at all with the financial system in existence, I feel no remorse about my lifestyle. I’d be more supportive of a taxation system that came closer to leveling out incomes around an optimal level. The capitalist system leans ever more toward massively overvaluing careers that support the accumulation and preservation of capital rather than seeing the inherent value in having every part of society functioning in a healthy way. I’d like to see UBI or something similar. I vote in that direction where I can and try to spread the word but as long as the financial system is lopsided and dysfunctional, I’m perfectly happy to abuse it where I can, because you can be sure as shit that some rich fuck has his thumb on the other side of the scale.

[Eucalyptus]

Tough question that the OP presents. Personally I manage my finances in a purely rational by-the-numbers approach which ends up putting me, if you equate legality with ethical, in ‘ethically’ dubious situations. However since my personal ethics barely align at all with the financial system in existence, I feel no remorse about my lifestyle. I’d be more supportive of a taxation system that came closer to leveling out incomes around an optimal level. The capitalist system leans ever more toward massively overvaluing careers that support the accumulation and preservation of capital rather than seeing the inherent value in having every part of society functioning in a healthy way. I’d like to see UBI or something similar. I vote in that direction where I can and try to spread the word but as long as the financial system is lopsided and dysfunctional, I’m perfectly happy to abuse it where I can, because you can be sure as shit that some rich fuck has his thumb on the other side of the scale.

I work in Science Research, and the more I think about the worlds' big problems and the future of technology, the more I think that UBI is going to have to happen sooner rather than later. I struggle to see the negatives, in fact I think most of the negatives are relatively obvious and negate-able, while many positives are probably yet to be realized. A couple of areas in which I think we could see huge positives:
1. Mental health in the unemployed or underemployed. UBI switches the equation of value and stigma. It makes it clear that everyone knows its not your fault that you are unemployed and gives you the opportunity to pursue things that make you happy, benefit society, but are currently not valued in a fiscal sense. I think the rates of mental illnesses like depression and anxiety will come down, as will the productivity and medical costs to society.
2. Publish or perish is a massive problem in academia and research. Its incredibly competitive. But, many of the most cost effective benefits from science and technology to society and the environment, by their very nature, cost little to research apart from often the time of the researcher(s). UBI gives researchers with ideas that are risky but worth pursuing the opportunity to do so, where they otherwise wouldn't be able to feed themselves.


Sorry if I've digressed this thread.