More Money Podcast - 280 Seven Things We Need to Unlearn About Money - James Otteson, Author of Seven Deadly Economic Sins and John T. Ryan Jr. Professor of Business Ethics at the University of Notre Dame

Episode Date: May 12, 2021

This week’s episode seems more relevant than ever since we’ve been living during a pandemic and that’s why I’m so glad I get to share it with you all. My guest this week is the author of the newly released book The Seven Deadly Economic Sins, James Otteson. Our conversation explores everything from the impact of generational wealth to the economic history behind it. James has an undergraduate degree from the University of Notre Dame and a Ph.D. in philosophy from the University of Chicago. He’s currently the John T. Ryan Jr. Professor of Business Ethics in the Mendoza College of Business at the University of Notre Dame. His specialties include moral philosophy, the history of economic thought, and business ethics. Our conversation delves into the relationship between philosophy and economics and what kind of impact that has in the real world. James echoes a lot of my own feelings of wealth, in that it is a tool and not an end goal. This episode is full of food for thought, as is his new book and so I hope it gives you something to chew on today. For full episode show notes visit https://jessicamoorhouse.com/280 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello. Welcome back to the More Money Podcast. This is episode 280. And I'm your host, Jessica Morehouse. Welcome back. Don't you love a good even number? 280. That just makes me feel good inside. But, you know, just been locked in the house for a year. So that's what's going on with me. No, I've got an amazing guest for this episode of the show that you're going to absolutely love. He has a brand new book out. So I'm talking about James Otis and he has his book Seven Deadly Economic Sins just came out this April, actually. So grab a copy. And man, does he know his stuff? It was quite the read, I must say it was it was really a very different book from all the I mean, I read a lot of personal finance books, let me tell you, and it's always nice to see something very kind of different on the shelf. So a little bit about

James. So he received his undergrad degree from the University of Notre Dame and his PhD from the University of Chicago. And he specializes on moral philosophy, the history of economic thought and business ethics. And he is the John T. Ryan Junior Professor of Business Ethics in the Mendoza College of Business at the University of Notre Dame. So we're going to talk about why he wrote this very intriguing book about the seven deadly economic sins. And what are some things that we can kind of learn from all of his knowledge and research on economics? How can we kind of, I guess, take that into our own lives and maybe change a few things or just have honestly, we did get philosophical, I'm going to

warn you, we did kind of go there. And it really reading his book really kind of makes you think and I think so many times we're on autopilot, or so many of us personal finance experts or whatever you want to call us. You know, we kind of say a lot of the same stuff, same tips, the same advice. And sometimes we need to stop and think about things a little bit differently, maybe even a little bit more bigger picture. And so I think you're gonna like this episode. I sure did. So before I get to that interview with James, just a few words I want to share about this podcast episode sponsor. This episode of the More Money Podcast is supported by VIPKID. If you've been listening to my podcast since the very beginning, then you may already know that for me,

starting a side hustle in my 20s was a literal game changer. It was the reason that I was able to save up an emergency fund, start investing, travel, and achieve so many other financial goals that would have been very difficult if I relied solely on my salary. And in this weird time where many of us are still stuck at home or looking to find new ways to earn extra income, there's one side hustle I would have jumped at. Teaching students English online through VIPKID. VIPKID is a platform where people in the US and Canada can teach English as a second language to kids around the world.

All you need is a bachelor's degree, at least two years experience teaching or working with children, and that could be anything from nannying to coaching or mentoring, even parenting, and eligibility to work in the United States or Canada. Not only that, you can expect to earn between $14 to $22 US per hour plus incentives and you have 100% flexible scheduling. That means you can work when you want, wherever you want, all you need is a strong Wi-Fi connection. To learn more about VIB Kid, which was named one of Glassdoor's top 10 best places to work in 2019 and 2020, and the number one company for remote jobs, visit jessicamorehouse.com slash VIPkid. Once again, to learn more,

visit jessicamorehouse.com slash VIPkid or check out the show notes for this episode. Welcome to the More Money Podcast, James. I'm so excited to have you on the show. Thank you. It's my pleasure to be with you. Yes. So you have a new book out called The Seven Deadly Economic Sins. And it's a packed book, let me tell you. It's jam-packed full of information. So excited to have you on the show to kind of dive deep into it. To kind of start off with, though, tell me a little bit about yourself and your background and what kind of, you know, inspired you to write this book. Well, thanks for asking.

So I'm an academic. I teach in a business school at the University of Notre Dame. But I'm a bit unusual because my Ph.D. is in philosophy, not in a field of business. And I wrote my dissertation in graduate school on Adam Smith's moral theory, not his economic theory, but that got me interested in the economics that he was developing and that came out of the 18th century, which got me a little bit interested in the history of economic thought. And I began being interested in teaching and writing about business ethics. But one of the things that I discovered was that

a lot of people have very strong opinions about economic matters, even though they haven't studied economics. And that I thought was interesting and also a little strange. But I thought that maybe one reason for that might be that if you dive into an economics journal, any contemporary economics journal, it's all going to be a lot of formulas, a lot of math. And so it's very daunting and not very inviting. And so what I thought was that maybe having somebody from a humanities background who's grown to appreciate the insights of economics, but who can put some of the fundamental areas of agreement, you know Economists disagree about a lot, but there are some things that they do agree about. Putting that in a way that an educated person who's not already a

trained economist could understand that that might be a beneficial project. So that's really what led to the book. Yeah, I mean, you talk about that a little bit in the book, how everyone seems to have an opinion about, I mean, all all sorts of things but especially in economic matters but most people don't have any background or education on it which is concerning especially when you you always i mean i i i mean naively i guess assume that if you're in politics let's hope you probably have some understanding or background in that and that is unfortunately not the case anyone can run for office as we have seen in the past um and that is unfortunately not the case. Anyone can run for office, as we have seen in the past. And that is a big concern because obviously we want people that know what they're doing and know about the economy to make decisions about the economy. But that is not what is going on. What like what are your kind of thoughts?

And I guess part of the reason to write this book is maybe someone will pick it up and learn a thing or two. Yeah. But I but I think you're right that there are quite a few people who run for office. In fact, I think it would be almost depressing if you looked at the backgrounds of the people who in government are, you know, who are charged with things like regulating business, regulating markets, how few of them actually have any training in economics. And that's not to say, I mean, you know, to be fair to people, economists do disagree about many things, you know, and, you know, they have a hard time predicting things like, you know, when will the next recession be? What's the market going to do? Are interest rates going to go up or down? So there are lots of things that they don't, that they have disagreement about and that they

have a difficult time predicting. But that doesn't mean that there aren't some fundamental principles of economics that we have been able to figure out, principally by studying economic history. I mean, one of the things that I talk about in the book is that a lot of the advances, I think anyway, in economics have come from comparing different communities, societies, countries, nations, empires over the years and seeing, well, what kinds of institutions actually seem to encourage human flourishing, encourage prosperity? What kinds of institutions don't? And when you actually take a look historically, there are some clear patterns that emerge. And I think that a lot of people who might be otherwise put off by contemporary economics or maybe contemporary economists who always disagree or disagree about so many things might not appreciate just how much consensus there is about quite a few things, not everything, of course, but quite a few, especially in the fundamental basic things.

And I guess, you know, talking about looking back, I mean, I think that's very important to look at history as kind of a signal to what we should do or not do in the future. But I think you may agree with this, you know, especially when people are talking in the media, or even politicians, I feel like they're very selective with what kind of histories that they want to talk about, like you mentioned your books, you know, socialism. And it's interesting, because you mentioned there's some, you know, countries that follow those, you know, socialist principles, and they're thriving, they're doing well. And those are the countries that we're used to always hearing is they're the happiest place on earth, you know, year over year. But sometimes you'll see the countries like the states that will be like, oh, socialism,

socialism bad. And then they'll talk about, well, you know, the Soviet Union and Venezuela. And they'll be kind of selective. And it's like, well, those are just two countries. Like, is it just do you think even if people do kind of know about some of these fundamentals or even looking back at history, they'll still just be very selective to have a certain, you know, point of view or to get a certain message across for their own, I don't know, gain or political strategy? Yeah, I suppose I think you're probably right about that, that, you know, that's sort of the name of the game in politics is you just look for the things that support your side and you look for reasons to deny or despair to the other side. That's kind of how politics goes. But I think, you know,

one source of confusion is that people mean different things by the same term. So if you take the word socialism or the term socialism, well, you know, that can mean a lot of different things to different people. Same thing with capitalism and various other isms. It can mean a lot of different things. Take capitalism for a second. I think a lot of people who raise certain kinds of objections to capitalism, what they're really thinking about is what I would call cronyism. So, you know, that's a system of political economy where certain individuals or maybe families, companies, even industries get special favors from the government. So maybe they get protected from competition or they get their losses subsidized at the public expense. In other words, they're favored against their competition. Well, there are plenty of reasons

to be worried about that, but I would say that's more like cronyism, unlike, you know, a market economy where there's free entry and exit, anybody can compete with anybody else. That's a, that's a completely different system. But, you know, back to your point about socialism, you know, people, sometimes, sometimes people will think of when they hear that word, they'll think of the Scandinavian countries, you know, Norway, Denmark, Sweden. What's interesting about that is that if you actually look at the economic system, so what you get in those countries is you have an economic system and then you have a government system of wealth redistribution in the name of welfare, so a pretty robust welfare system. But the economic system itself in all three of those countries is actually a pretty

free market. It's surprisingly so. So what they have, they have open markets, they have robust private property rights, people can start businesses, they can trade across international borders. Taxes are relative. I mean, they're high to support the welfare state system. But then they have this other component, which is a pretty large wealth redistribution. Compare that to and contrast, I would say, that with a place like Cuba or Venezuela or North Korea, where there you have the state is in control effectively of everything. So nobody gets to open a business either at all or only with the permission, maybe the partnership of the government. So those systems, you know, are sometimes both in both

cases are called socialism, but those are very different kinds of economic systems. I wonder if it's also maybe even just a matter of relabeling things, because I know, you know, in the U.S., you know, they talk about socialism all the time or new democratic socialism or what have you. But really, it seems like people are all just talking about different things. And I think maybe it's just about maybe we need to relabel things because some of the old terms are just not maybe a good reflection of what the new meaning is. Yeah, you know, and I think maybe a slightly different and maybe more productive, you know, once people start using terms like capitalism or socialism, you know, oftentimes

you just get more heat than light. So, you know, people just start they sort of dig in their heels and they have just like in politics, you know, you have your side that you're going to defend no matter what. And you're going to there's the other side you're going to attack no matter what. But one of the things that I try to do in my book is to suggest that, well, maybe we could have a productive conversation if we focus on something that we share as a goal. So, you know, think about some moral values that we champion or maybe some problems in society that we all agree are things that need to be addressed. You know, so one of them might be prosperity. You know, if we think about poverty as being something that's bad and we would like to to the extent that we can, we want to minimize it, try to eradicate it. Well, the antidote to poverty is prosperity. So if we agree that prosperity ultimately is the antidote to poverty, then

what that suggests, and this is at least my argument, what that suggests is that what we should really think about is, well, what are the institutions that seem to enable people to rise out of poverty by increasing both their opportunity and the overall prosperity of society? That's something that I think people sort of across a political spectrum can agree that that's those seem that seems like a pretty worthy goal. And if you can begin there, then that invites then some of the, you know, the empirical and historical evidence that we were talking about a second ago, well, let's actually go take a look. What really are the institutions that have enabled those countries that have gone from poverty to wealth or relative poverty to relative wealth? What are those institutions? And what are the things that

encourage the kinds of activity that we would like to see? And what discourages it? And there, I think we can make some progress. Yeah, absolutely. I know, like, you know, the big kind of point of your book is really to hone in on some, I think, some myths or misconceptions. And there are so many that I've, you know, heard a lot in the media and the news that seem like they've been around for years, even though there's so much evidence to disprove them. I want to kind of talk a few of them, some of them that stuck in my mind is especially like the progress is not inevitable. You mentioned, you know, if you're a millennial, it may seem like, you know, progress, you know, it just, I mean, yes and no, you know, depending on when you're a millennial,

like I'm a millennial, I'm 34 and I experienced the recession that, so that there was a lot of, a lot of not prosperity for a while in my life, but still, but still you look at the charts, you look at the indexes, things have gone, you know, up, up, up. And, uh, I think we're used to that. Um, especially younger people who haven't, I mean, now we're in a pandemic still. know, up, up, up. And I think we're used to that. Especially younger people who haven't. I mean, now we're in a pandemic still. So okay, we're still but even still, things are still going up. They're crazy. I'm in Toronto, the real estate market is absolutely bonkers, the stock market is continuing to rise. And so it gives us this kind of false idea of Oh, well, things will continue to go up forever, progress is forever. And it just

seems like there's no way this can continue to go up forever. There's always got to be some balance here. So do you want to kind of talk a little bit more about that chapter in your book about how progress is not enough for me to kind of change some of our thoughts about this? Yeah. I mean, I think you've hit the nail on the head. In many ways, I think wealth can actually be a bit of its own enemy. So the wealthier people become, then the easier it is for them to sort of insulate themselves from any bad consequences that might ensue from bad decisions they make. If you make a mistake, well, you can just pay to fix it. And the wealthier you are, the easier it is to do and the more kinds of mistakes you can just pay to fix.

And if you think about it sort of generationally, so you mentioned the millennials. Well, their parents were much wealthier in real terms than their parents, so your grandparents. Overall, I'm speaking in generalities, but overall, and one of the things that the, you know, the parents of the millennials, which I guess might be the boomers or getting close to the boomers, one of their main goals, sort of cultural goals, was I want to make the life of my children easier than the life I had. So a lot of wealth was generated, and a lot of that wealth went to, as I say, sort of insulating their children from a lot of the hardships and difficulties that they themselves had faced. That all sounds like, you know, what could be wrong with that? That all sounds great.

But I think one of the unintended consequences, maybe unexpected consequences of that, is that that can enable us to sort of forget about what the institutions are and what the requirements are to actually generate that wealth. So we start to think that, well, wealth is kind of a naturally occurring phenomenon without realizing that wealth has to actually be created. One thing that I sometimes say to students that I mentioned in my book is that the discipline of economics is usually thought to have, you know, we trace it back effectively to Adam Smith and his book, The Wealth of Nations, came out in the 18th century. But the, you know, the title of the book is, and the full title is An Inquiry into the Nature and Causes of the Wealth of Nations.

Well, you know, think about this. Notice that it's not an inquiry into the nature and causes of the poverty of nations. Um, you know, what do you have to do to be poor? Well, to be poor, all you have to do is literally nothing. If you do nothing at all, you will be poor. If you create nothing, do nothing, you will be poor. So it's wealth and the creation of wealth that requires all the explanation. Um, and that means that we have, and it's relatively recent. I mean, I mentioned this in the book as well, that, you know, for the vast majority, over 99% of human life on the planet, people were relatively equal, but they were equally poor, desperately poor. In fact, they, you know, they lived on about

in between one and $3 per contemporary dollars, one in three US dollars per person per day. I mean, just think about that, you know, over 99% of our existence, you know, could you live on $3 a day? That's not very much. You know, you would never have an opportunity to think about, well, you know, where are my kids going to go to college? Or, you know, can we vacation in the islands or something? You know, you would just be thinking about, can I get food today? And you better hope you don't get sick. But, you know, what began to happen around the 18th century is that wealth began to increase for the first time in human history. And now it's reached levels that it has never seen, totally unprecedented levels. So you and I are blessed to live in a time when there is

more wealth in the world than there has ever been in human history. But the fact that that is so recent in human history, just the last less than 1% already suggests that that means something strange happened, something totally different changed. And it's, I think, a combination of sort of our moral attitudes towards one another and also the institutions. And that means if we get the wrong institutions or we change our moral attitudes, that can go right back, that can regress right back to the norm of previous human existence very quickly. Yeah, that's a scary, scary thought. I think also, too, when I was reading that passage, it also, because it makes sense. My parents definitely were like,

we want to have, you know, give you a better future than we were provided. You know, both my parents, you know, were modest means or whatever growing up. And so, you know give you a better future than uh we were provided you know both my parents you know were modest means or whatever growing up and so you know and that's like most parents they want your kids to to thrive and so you do whatever you can which is kind of an unsustainable thing because then your kids you know now my age i'm you know uh if i want to have kids then i kind of want to do the same thing and it just seems impossible which is why there's so many millennials who i feel like we're ill prepared to enter the real world. And don't maybe understand how do I get to the point where I'm also building wealth or generating the wealth that my parents were able to. So now we're at there's just like this

generation of people, maybe not the Gen Z before, I think they're a bit smarter, they have the internet. We didn't for a while, but you know, we were kind of thrust into the year, the, you know, real world. And we got our university degrees, like we were told to, and then we're kind of given a roadmap for what you're supposed to do based off what our parents accomplished. And even our grandparents buy home, get a job, get a degree, you know, and have that white picket fence and you'll be great. And it did not work out. And I think that's why there's a lot of disillusionment in my generation of being confused

with the path that was set out for us and the reality that we're living in. And a lot of it, I mean, my kind of, you know, solution for that is like, we just need to change our expectations and change that, like throw out that handbook that we were given, because we're in a different world. But also, yeah, preparing for, you know, we are still in a prosperous time, we need to do what we can today to prepare ourselves for if something doesn't happen. And also, there's another side to it is, especially in the personal finance world, there are so many, you know, younger people or even Gen Xers, who have been coming out with, you know, books or their money experts touting that they're, you know, oh, you know, I was able to achieve such success in, you know, building wealth,

I can teach you the way, you know, oh, I'm a genius, but really, a lot of it had to do with like, wow, you were born at the right time and started investing at the right time. And, you know, and so that also causes this disillusionment with lots of millennials who are like, well, I didn't start investing, you know, during the last market crash. suppose for some millennials that the white picket fence and, you know, living in suburbia, that sort of image that the boomers had, you know, maybe that, you know, that is the right sort of happy life for them. But for a lot of them, I think it's not. I think you're right. It's not. And that's largely because of cultural changes. But, you know, I guess one way that I would say, you know, I don't want to be too sort of, you know, avuncular giving advice to the younger generation, you know, but I think one way to think about that is that it's been a perennial. It is a perennial challenge for any human being to figure out, well, what exactly are my unique gifts that I have and what's the way the best way that I can use them, not just to benefit myself, but to benefit other people. And that, you know, thinking about my relationship to other people in that way, I think that's

actually, by the way, one of the keys to what caused the increase, the unprecedented increase in wealth that began around a couple hundred years ago was people began to sort of shift their thinking instead of thinking that, um, well, what matters in life to me is benefiting myself or maybe, you know, the people I care about my family or my tribe or something. Um, but I can do so at other people's expense, you know, um, and that that's fine if I do it at other people's expense, because what matters is I'm benefiting myself and the people I care about.

Um, and that really is, you know, that's the story of human history. You think of any great civilization in the past, you know, the pharaohs with their pyramids or the Romans with the Colosseum and the aqueducts, you know, that took a lot of capital to build all of those things. How did they get all that capital? Well, slavery, theft, conquest, they were just taking it. They were benefiting themselves at other people's expense. And so one of the things that began to change in the 17th and then the 18th century and really began to take off after that was in some places in the world, people started to think, well, maybe instead of trying to benefit myself at other people's expense, maybe what I should do is ask their permission. And, you know, before I take something from them or enter into an association with them. And if I do that, then that means that I have to think about them in addition to me. And I think that's really one of themselves at the expense of others,

so extracting wealth from others. What are those institutions? Well, we protect your personhood so nobody can attack you or enslave you or kill you or put you in jail without cause. Your property and possessions, whatever is yours, you get to keep. Nobody else can steal it, trespass on it, destroy it without your permission. And then, you know, this idea of a contract, of a promise. If you make an agreement with somebody else, then you're both held to that agreement. It's really, you know, those three things, your person, your property, and your voluntary promises. It's a simple recipe, but what that does, if you have institutions that protect those, then suddenly everybody, in order to, if I want to succeed in life, the only way I can do that is in cooperation with others who have to voluntarily agree, which means that I now have to think about you. I can't only think about me. I have to think about you. What can I offer you that you think is sufficiently, would sufficiently compensate you for whatever you'd have to give up your time, your treasure, your talent, whatever it would be to get what I'm offering you. And so now these voluntary partnerships are completely different.

Now I benefit myself, but only while at the same time benefiting you. And it's the same on your end. So now, you know, coming back to the, the point you were making about millennials, I think a lot of the real human challenges that previous generations have faced, you know, that were daunting in some cases they thought couldn't even be solved. Like, how do we solve diseases? Well, how do we make affordable housing? How do we get everybody to have clothing? How do we stop people from having toothaches? Well, you know, we've solved those problems. You know, we have things called toothbrushes and toothpaste and people actually use them and they're so cheap that everybody can get them. Housing has become significant. So a lot of those kinds of, you know, food, clothing, shelter problems that have been really the mainstay of humanity's challenges on earth, a lot of those have been addressed. So now you millennials, I'm going to

talk to you as a millennial, but you know, now the challenge to you is, well, what's the next frontier? What are the, the challenges that still remain where I can make my own life better, but only by making somebody else's life better. And so I think it does, it will, you know, I have no answer to that, but I think to the extent that anybody, including, you know, younger generations today, if they want to have a chance at a flourishing life that they themselves think is happy and has meaning and purpose, there's going to have to be some challenge that they face, some difficulty they face and that they attempt to overcome. And I think one of the mistakes, I mean, you can tell me if I'm right about this, but I think one of the mistakes we often make, all of us can easily make,

especially as our wealth grows, is we think, well, maybe the happy life is really the one where I sit around doing basically nothing. So, you know, I just in an idle life where I sit on my couch and, you know, watch Netflix or something, you know, that I think can give us a kind of momentary pleasure. But, you know, human beings as Aristotle on down, people from Aristotle on down have understood human beings are an active species and they have to contend against something and you won't be happy unless you're actually challenged and contended and challenged in a way that you might actually be facing the risk of failure or risk of loss. So I think the challenge for younger generations today, especially in a wealthy place like the United States, is, well, what are the problems that I can actually contribute

to with my own effort that I'm not sure I can fix, but I want to give it a shot, benefit myself and benefit others? And that I think is a real challenge. Yeah. And I think it's never been more clear. I feel like that this is kind of the next step. The next chapter is experiencing this pandemic. And everyone is affected. And I feel like for a while before that, because, again, we were just in this prosperous time. Everyone was making money. Everyone was relatively OK in general.

And then this thing hit. And it affected everyone's, you know, in different ways. But we it was the first time I think for a long time, I had to really think about not just me, but also my community at large, like my city, my country, my province. And, and it was interesting. And I think we're having a lot of important conversations. Like you said, a lot of things have been solved, you know, not perfectly, but still it is more affordable like to get a toothbrush

and all these other kinds of things. That's not a problem anymore, but there's other problems. You know, healthcare obviously being a huge one, especially during this pandemic and a lot more conversations, especially here in Canada is, you know, the idea of having some sort of universal basic income. So because very well, and there's so many studies that show this, this isn't going to

be the one and only pandemic. There's going to be others down the road. And we need to have some sort of solution or something in place to kind of protect us. And so I think that's probably the next phase is taking a look at how can we continue to make our society more sustainable and get rid of this idea. And like you kind of talk about in the book of the zero sum game, which still, unfortunately, a lot of people think that if someone gains, I lose, or if I gain, someone loses, which you see, I think, a lot in the media when people are talking about things like,

no, I don't want universal healthcare, for instance, because I may lose or someone may lose, something like that. And that's really just not, in my view, I'm like, that's not the, I mean, in Canada, we have it and it's great. I would not give it up for the world. I'm so glad that we have it. There's lots of other countries that have it. And there's, you know, benefits to it. So I think getting, yeah, kind of, I think, and maybe this is still like kind of the socialist idea that a lot of people have, you know, problems with that term. But the idea of thinking about the broader community and you in it, and you're, you're kind of part in it, instead of just you as the individual on your own land, and all that kind of stuff. Yeah, yeah, we aren't, we aren't just on our own islands.

And I think more today than ever, we are connected to other people and other people's fate, you know, intertwines, integrates with our own and in ways. And I think you're right. The pandemic has brought that home to a lot of us. I think, I mean, I guess we're, you know, we'll see how attitudes change or, you know, and I think also, you know, one of the things that's going to be difficult and will be a challenge is, you know, what are the longer term economic impacts of the pandemic? You know, thinking about, you know, from my perspective in the United States, you know, we've had, you know, a nationwide shutdown for almost all states of the economy, you know, effectively of the economy, um, some states a little bit less than others. Um, and you know, some states now are sort of opening up, um, more states will probably, I'm sure we'll be opening up soon. Um, but if you just think about, um, you know, one aspect of that. So think about the, the recovery acts of

the bailouts and recovery acts. Um, you know, how should we assess that? And, and one of the things that I talk about in my book is what I call the good is good. Good is not good enough fallacy. Um, what I mean by that is, you know, if you, if somebody makes a proposal, here's something I think we should do. And if you say, why should we do that? And you say, well, here are the good things that would happen if we do that. Um, and let's just stipulate for the sake of argument that those really are good things. And we're, you know, it's likely that that's actually what will happen. That's not yet a complete argument to do it. And the reason for that is because you also have to compare, well, what else might we do? Are there other things that could have led to even more

good or maybe more efficiently? So we always have to compare the, ask the question, well, compared to what? And I think that is one of the, you know, the fundamental insights of economics is that any proposal, say for spending or regulation or anything else, sort of any policy proposal, just saying what we anticipate the good results to be is not yet enough because you have to ask compared to what. And one of the great stories in the history of economic thought is from Frederick Bastiat, who was a 19th century French parliamentarian. And he raised it. It's now a canonical story, but it's a little story that he talked about called The Broken Window. And he tells a story about a shopkeeper whose little son throws a rock through the window in the shop, breaking the window. And Bastiat says, well, is that a good thing for the economy or a bad thing? Because after all, now the, you know, the glassmaker has business,

you know, he has to make a new window. You know, money flows from the shopkeeper to the glass, you know, the glazier who makes the glass. And it looks like that could actually be productive of business if you look at only the window pain maker. But Bastiat says, but wait a minute, there's something else you have to consider. And that is, what would the shopkeeper have done with that money if he didn't have to buy a new window? You know, maybe there's something else that he would have preferred even more. And in fact, it looks like there, that probably is the case because if he wanted a new window, he would have already bought a new window. He didn't, he didn't want to spend money on a new window until he had to, which means there's probably something else he would have bought, you know, and Basia says maybe he would have bought a couple of books for himself or some new shoes or something, which means that those things he actually valued higher than the new window. And so that's part of the loss. It's unseen. You don't see it because he never actually bought the window or the shoes or the books. But when you're evaluating any kind of a policy,

you have to think about that too. So if you only look at, well, look at the good things, we're allocating or reallocating resources in this direction, and this industry is benefiting, or these people are benefiting. If you want to just do the cost benefit analysis, you also have to ask, well, where would that money have gone otherwise? And what good or bad? I mean, what, you know, it could be either way, but what else would it have done? And you have to compare those two. And that's very hard. And when you think about the spending, you know, so the United States, the federal government, over the year, you know, so the United States, the federal government, um, over the year, you know, just over a year that we've had the pandemic, um, you know, the total amount of recovery, um, spending at the federal level, um, is now it's something like $5 trillion. Um, and the $5

trillion is more than the total federal government budget just a couple of years ago. So, um, so that doesn't mean that there weren't good things that were done with it. But the question is, well, now we have this debt and what else? Somebody's got to pay that debt at some point. And what are the costs associated with that? And that's much harder to reckon. And that's an argument I heard a lot during the pandemic. You know, Kanda, we had some benefits from the government for people who, you know, lost work and stuff like that. And I mean, you know, on one side, it seems like a no brainer, of course, we need to help people who lost their jobs out of no fault of their own,

it was because, you know, the government shut down their businesses, because we're in a lockdown and stuff like that. On the other side, the other argument is, oh, but well, you know, one argument is, well, should people just get free money? And will they take advantage? I feel like it's a very small percentage of people that would actually do that. But yeah, it's people not wanting to, yeah, really, I guess, pay for other people's, you know, misfortune or lives. There's just kind of two sides of it, where it's like, we want to help people, but then we also don't want to help them too much. And also where's this money coming from? Like, that's the argument I see. Where is this money coming from? And it's like, well, yeah, it's probably going to come from higher taxes or something like that. But

I mean, I can't imagine what would happen if we didn't do any, if the government didn't provide any sort of financial, you know, benefit? What would the alternative, what would happen? What would our world look like then? Or what would our country look like then? Yeah. And those are exactly the kinds of counterfactual questions I think you have to ask. And if you want to have, you know, a mature or a serious discussion about these things, that's exactly the, those are the questions you have to ask, but then also try to answer. And it's not easy. I don't want to make it seem as if it's easy because you're trying to speculate. Well, you know, if there were no government response, would there be charitable responses

or would there be private initiative? Well, presumably, but how much, what kind, to what extent would it be sufficient? It's very hard to know those sorts of things. And, but, you know, and, and even if you take a full reckoning of both the direct costs of, say, a recovery act, the direct costs, the spending, and then the indirect costs, these are the, what are we giving up that we otherwise would have done? Even when you take a full, if you take a full reckoning of all of that, it doesn't necessarily mean that we shouldn't do it. And I think that's an important thing to keep in mind because, you know, I mentioned Frederick

Basiat a second ago. One of the points that he makes is, if you want to, this is the way he puts it, if you want to have an honest discussion about, you know, any kind of spending, say, government spending proposal, well, then you have to look at not just the direct costs, but also these unseen indirect costs as well. But once you do that, it doesn't necessarily, you know, suppose the unseen indirect costs are, you know, much higher. And, you know, when you add it all up, it seems like it's extremely costly. So suppose that's the case. It's just very costly.

That doesn't necessarily mean you shouldn't still do it. And I think that's an important point to keep in mind. It just means we need to go into it with open eyes because sometimes doing the right thing requires sacrifice. It actually, you know, in fact, I'd say that virtue generally, if it's real virtue, it requires cost on that. You have to incur some cost. It should, if it's costless or if you, if you actually benefit from it, then it's not real virtue. It's like you're getting paid to be nice or something. Um, you know, it's not real virtue. It's like you're getting paid to be nice or something. That's not real virtue. And I think sometimes when we talk in economic terms about costs and benefits, I mean, I agree with economists to the extent that they say we need to have a full reckoning and often we don't pay attention to the indirect costs or the unseen

costs or the debt. The United States debt is very large and we just sort of pretend that it's not there. That I think is dishonest. On the other hand, it can still be the case that we might think, yeah, this is costly, but it's worth the cost. I mean, in the same way that, you know, if you were talking about college a while ago, you know, if you're thinking about sending your kids to college, you might say, well, you know, it's going to cost this much to do that. But, you know, over their lifetimes, they're going to, it's going to help their productivity this much. And they're going to have, you know, more meaningful lives in this many ways. You know, suppose you do that kind of cost benefit analysis and it turns out, well, you're not actually sure that the benefits will actually outweigh the cost. I mean, you know,

college education is expensive. So if you, maybe you think, well, in monetary terms, it doesn't actually outweigh it. Well, but sometimes it's still the right thing to do. And so you should just say, you know, it is a cost. It will be a net cost to me, but it's worth it because this is something I believe in. And I think there are cases when, you know, making a sacrifice and incurring a cost that is a real cost is the right thing to do. Yeah. And I know you talked about in your book, too, profit versus people. And I know you talked about in your book to profit versus people. And I think that is also an argument I hear a lot is people really focus on profit, profit, profit, because maybe that's just, I don't know what just is on all our minds, or it's just like the

messaging that we hear over and over. And when someone does something counter to that is actually putting people instead of profit, usually it's the enemy. There's like, oh, that person is doing something wrong. I recently had a guest on my show who, I think it was five years ago now, he kind of went viral because he and in his company, he's the CEO, instituted some minimum wages. So basically everyone almost earns about $70,000 per year. Everyone thought he was crazy. Yeah, everyone thought he was crazy. He's going to lose all his money. His business

is going to go down, all this stuff. They said, basically, you helping people providing more income to your workers is going to affect your profit for your business. And it actually, you know, so many years down the road has not. His company thriving. So it's, it's, it's profit positively. Yeah, absolutely. And he, you know, but he's still to this day, even though it's been so many years, and he's continues to do this, he's still like, I follow him on Twitter, he's still pushing the same message, because he still has so many people that are just don't understand and don't believe, you know, just are in disbelief. They're like, well, you're an anomaly. And it's like, no, we need to pay people more money. I did it myself and it's working. So we need to maybe not think about just profit, but also people. And maybe

if you really take care of the people, profit will also follow. Yeah. See, I think, yeah, that's one of the, I like the way you put that at the end, that if you take a pair of people, profit will follow. I mean, I think maybe one way to sort of have a meeting of the minds between, you know, moral philosophers on the one hand and economists on the other is to say, okay, it's all right to seek profit, but let's take this word profit and expand it just a bit. Let's, you know, let's think of it in terms of human well-being, so that the purpose of exchanges, transactions, partnerships, starting businesses, or starting any kind of an organization or a group project is we want to create value in the world for other human beings, and maybe not just human beings, but also for the world itself. But if we think about profit as really being just a species of a larger category,

what I would call something like value or well-being, well, then you can see that, oh, all right. So there might be some cases in which the organization you start, well, what they're really interested in is only profit understood in a certain kind of way. Fair enough. But then if you think about, well, what's the goal of human life or a human being in a society? What we want to have is a life of meaning and purpose, a flourishing life of virtue. Well, then having wealth can be instrumental in that, can help that, but it's not equal to it. And there will be plenty of cases where we think at the margins, and that's using an economics term again, but at the margins, seeking more money might actually come at the expense of your

happiness or of your virtue or of what really matters to you, like your family or your friends or your community or something. And I think those kinds of large, so at a slightly higher level, those kinds of judgments are what's actually required from a life that is committed to something like virtue. You have to ask yourself, well, there are lots of tools in the world and many problems and things I would like to accomplish. Most of them I can't accomplish if I have no wealth. So, you know, wealth enables a lot of things, but wealth itself is not the same thing as a virtuous life of happiness. So you have to really think about, well, where are the trade-offs that I'm willing to make? And then you have to be honest about it. If you make the mistake,

and I think this is a mistake that can happen, especially in a market-based economy, that some people can begin to think that having wealth, wealth is not just a tool that enables me to do the things that truly matter in life, but that wealth is the end itself. That's a mistake. I think that's a category error. Wealth is a tool. It's a powerful tool, and it can serve a lot of different ends, but it can serve ends that are both good and bad. And I think you have to step back and ask yourself, well, what's the kind of life I'd like to lead? And going back to what we were talking about before, if one of the things you want to do is to improve other people's lives, well, you're going to have to have wealth and able to do that too.

So you can't do it without wealth. So wealth, I think, is necessary, but it's certainly not sufficient. And it's certainly not sufficient to be able to look back on the life. If you think about yourself at the end of your, when you're 120 years old, looking back on your life and you ask yourself, well, was that a life worth having been lived? What you probably won't say is, well, you know, um, what was my retirement portfolio? You know, how big was it? That doesn't mean that's not important, but it's certainly not the only thing it's, it's going to be one element among many others. And I would say there are others that are even more important. You hit the nail on the head there because that's

exactly like the kind of messaging I'm always trying to get across in the podcast is all the, the information I'm putting out on here is just to help you use money as a tool, but it is not the end goal because there's so much, there's so many people we can look at that are celebrities or super wealthy people. And you find out what's really going on in their lives. You're like, oh, they're not happy. They're not, you know, money doesn't solve all problems. It can solve some problems. Absolutely. But if you just keep on chasing wealth and ignore everything else, it's not going to end up well for you. And yeah, no one dies or is on their deathbed saying, I'm so glad I worked really hard and got all that money. They're more thinking, oh,

the experience is the family. I hope not. Otherwise, I'm probably no one's at their deathbed because they burned some bridges, I'm sure. But yeah, what's going to be important is to always keep that perspective that money is a tool. What's actually important is whatever your personal values are, family, friends, children, experiences, teaching others, whatever it is. We always need to have that foundation to come back to because money can be very enticing and it can be very easy to forget, why am I doing this in the first place? Yeah, and I think you're absolutely right. And I think, you know, I would even add to that, you know, it's not just thinking about, you know, what really matters to me, my family, friends.

But I would say, you know, now, especially given, you know, how interconnected we are in the world today, we have the opportunity to really create some good in people's lives, even people we don't know. And so, you know, I think we have to think carefully to go back to what we said, you know, a while ago about millennials. I think we have to think about, well, you know, we're born into a world with a lot of, you know, there are problems, but there's also a lot of wealth and a lot of opportunity. You know, each of us has some gifts. Well, how can I be worthy of the opportunity I've been given? How can I be worthy of these gifts? And how can I use them to benefit, you know, to create well-being, not just in myself or even my family or, you know, the people right physically next to me. But are there ways that I can actually use my gifts to benefit people on the other side of the world, people I don't know at all? And I think we're living in a time now where we actually do have, almost uniquely in human history, an opportunity where an individual can improve the life of another individual 5,000 miles away that you don't even know and have never even met and will never met and won't even learn anything about. But we can find ways to improve their lives too. So wealth is very important to that and increasing wealth. And we, you know, we don't want to destroy wealth. But on the other hand, you know, I think

it's really a means to an end. It's not the end itself. And the end itself, I think, is really something like, how can I create the best version of my own life while at the same time helping others achieve everything they can as well? How can I leave this best version of my own life while at the same time helping others achieve everything they can as well? How can I leave this world a little bit better than when I entered it? Or how can I have be a positive impact, even if it's just a little one? It's I think, yeah, I think again, I mean, I'm so glad you brought that up because I'm like, what I said was correct. However, it did really kind of just talk about you and your life. But it's like we need to think beyond that, don't we? And I think that's a big reminder. Yeah, I think we

can now. But yeah, it's a big reminder, we need to think outside of ourselves. Remember, we are in a community, a small one, you know, a bigger one in your country, the world, and we need to really be reminded of that. And if you're in a place of privilege, like lots of us are in these developed countries like Canada and the US, how can we use that to better others that maybe don't have the same, you know, opportunities or wealth of us? How can we help, you know, I think we have a positive obligation to which means, you know, if we have enough wealth, that would enable us to more or less go along and get along, you know, to make our lives comfortable. The life of just sort of comfortable inactivity is not enough. I think that's that's not saying that's not giving full due to all of the gifts and blessings we have, many of which we got through

no dessert on our own. We didn't deserve them ourselves. We just got them. And I think that gives us a positive moral obligation to use those opportunities to create the most value in the world for others as well that we can. Absolutely. Well, I think that's the perfect place to end it on a nice positive note to people, you know, get people to reflect and, and yeah, think about what can I do to make this world a little bit better? Thank you so much for taking the time to be on the show, James. Where can people find more information about you and your new book, Seven Deadly Economic Sins? Well, thank you so much, Jessica. It's been a pleasure being on the show. So I have a website where you can go find out about just about everything about me. It's just my name, jamesodison.com.

Perfect. So you can go there and see about my books and other things that I do. And I'd be pleased to, and there's a way to contact me too, if anybody would like to contact me and continue the conversation. Amazing. Well, thank you again for taking the time to be on the show. It was such a pleasure having you. Thank you so much. And that was episode 280 with James Otis. You can grab a copy of his book, The Seven

Deadly Economic Sins, right now, pretty much wherever books are available. You can grab a copy right there. You can also follow him on Twitter. He is on Twitter, at JROII. I'm going to spell this out for you. At J-R-O-I-I. It's, man, if I didn't have my glasses, I would definitely say it's J-R-O-I-I. But no, it's this J-R-O-I-I. I'm following him. So you can always probably find him through me or something like that. And of course, you can also find him on LinkedIn if you're into that. And he has a website, of course, James Otison. That's O-T-T-E-S-O-N.com. So lots of exciting things to share. Oh, I should also remind you if you want to learn more about James, and I'll include a bunch of links and things that we talked about, including this book, just check out the show notes for this episode, jessicamorehouse.com slash 280.

But I've got some things to share with you. So let's get to it. Just a few words I want to share first about this podcast episode sponsor. This episode of the more money podcast is supported by VIP kid looking to level up your financial situation by adding on a side hustle. I'm obviously a huge fan of side hustles since not only did my own side hustle help me save and invest for my future at a faster rate than my salary could have allowed, it ultimately led me to a whole new career, this podcast. So if you're looking for a way to earn some extra money while shaping adorable young minds at the same time, you may want to check out Becoming a Virtual English Teacher with VIPKid. You can earn between $14 to $22 US per hour plus incentives, work whenever and

wherever you want, Get access to hundreds of workshops and classes to help you grow in your career. And the best part is you don't have to spend hours crafting your own teaching curriculum. As a teacher, you would get access to VIP Kids world class curriculum and all classes are one-on-one. So students stay super engaged and there is no class prep required. All you need to be eligible is a bachelor's degree, at least two years experience teaching or working with children, and eligibility to work in the United States or Canada. To learn more about VIPKid, which was named one of Glassdoor's top 10 best places to work in 2019 and 2020, and the number one company for remote jobs, visit jessicamorehouse.com slash VIPKid.

Once again, that's jessicamorehouse.comcom slash VIP kid, or check out the show notes for this episode. Okay, so like I mentioned in last week's episode, but in case you missed it, which, you know, I forgive you. So I am doing a webinar and I haven't done one for so long. It has been it's high time that I do another webinar. This one is going to focus on investing and building your wealth because this is something that I get questions about all the time. I mean, I built a whole freaking course on it. Wealth Building Blueprint for Canadians. You can find it on my website, jessicamorehouse.com slash shop is where you can find that info. Anyways, I'm doing a webinar hosting it on Tuesday, May 25th at 7 p.m. Eastern time. You can find information about it and you can sign up,

save your virtual seat at jessicamorehouse.com slash webinar. Also, you can check out the show notes for this episode. I will include a link. So it's very easy for you to do that. But not only will you learn quite a few interesting things about investing what you should do shouldn't do how to, you know, really tackle it as a Canadian investor. Yes, I should preface this is specifically for Canadians. If you're not Canadian, you of course can join the webinar, but I will be focusing on investing in Canada. But hi, this is a great opportunity for you to join the Q&A after the webinar and ask me your questions directly, which I love doing. I love a challenge. I love getting questions when I'm just thrown at them and I'm like, let's see, let's do this. Because if you told Jessica, like five, six years ago, that, you know, put me in, you know, a situation where a bunch of

people would ask me about investing, and I would have no idea what their questions would be in advance, I would be terrified and just goes to show everyone can learn this stuff. Okay, this is not for, you know, a select few, you know, brilliant minds, anyone can learn about investing anyone, it really isn't that complex. But of course, there is quite a bit to know. And sometimes it can feel overwhelming. And it's always helpful to have someone to, you know, ask questions to you, but also to have that specific blueprint for investing. Hence why I named my course Wealth Building Blueprint. Hopefully I see you there. Another reminder, I am running my big book

giveaway. So if you want to win a copy of James's book, The Seven Deadly Economic Sins, guess what? I'm giving it away. I'm giving that book away and a bunch of other books. So make sure to go to jessicamorehouse.com slash contests or go to the show notes, jessicamorehouse.com slash contests, or go to the show notes, jessicamorehouse.com slash 280. I will link it there as well. But again, hi, giving away books, this free takes two seconds of your time. And hopefully you'll be one of the lucky winners of the book. What else should I mention? Just a reminder to you may not know this because you just listened to me on the podcast wherever you know whatever device you're using or whatever platform you're listening on I also have a

YouTube channel that I've been uh you know putting out some videos on every single week about everything uh personal finance budgeting investing entrepreneurship um so it's kind of a different side of me actually because it really is me talking to you. I mean, you see me, so that's different. But also it's not interviews with guests. I'm sharing my knowledge, my expertise, my experience, just information that you may be helpful. And basically, if you have questions, I'm trying to, my goal is to make videos for all of those questions. So you can get the answers that you want to in, you know, a visual way on YouTube. So you can check me out Jessica Morehouse is just what my YouTube handle is. Or you can just Google me or just go to Jessica Morehouse.com slash YouTube, it'll redirect you right there. And the last thing too, I'm also on

Instagram and for the past several weeks, and I'm going to continue to do this forever, I think I mean, you know, forever is a long time, but you know, I put it in my calendar. So I never don't do it. Every Tuesday, I do an AMA. And it's usually on a different topic. So it could be on investing, it could be on self employment, it could be on budgeting, it could be on anything that I think of that I think people would have some questions about. So if you join me on Instagram, I kind of started at 12 noon Eastern Time every Tuesday, put up my, you know, kind of question box and you can ask me whatever the heck you want on my Instagram. So you can find me at Jessica I Morehouse. You can also follow the account for this podcast on Twitter at more money pod, but on Instagram, it's just at more money podcast. So yeah, if you just want to stay in the loop with

what new episodes are coming out, you can follow that as well. So that is really it for me. I've got how many more episodes do I got going on? 1234567 possibly more, but we're definitely in the books right now. We've got seven more episodes to go, which I'm very excited about. And I've also got an amazing guest next week. I'm so excited to have her I've also got an amazing guest next week. I'm so excited to have her on the show. I've wanted I've been wanting to have her on the show for ages, but it's honestly too freaking scared to ask her because she's kind of a big deal in the personal finance world. So I've got her on the show. Um, should I tell you who it is? Nah, I'm gonna leave you hang in so you can be excited about it next week. So thank you so much for

listening. And a big thank you and shout out to my podcast editor Matt Rideout. Yeah, I'll be back here next Wednesday with a fresh new episode of the show. So I will see you then have a good rest of your week weekend. See you next this podcast is distributed by the women in media podcast network