Essays and Musings on Animals and Society

Wednesday, August 27, 2008

Where Does Your Money Go? (Part 2) 

Introduction

Here's the distillation of Aaron's Wissner's talk at AR2008, as I remember it:

  1. You buy some mahogany moulding at Home Depot. There are a lot of Home Depot stores. There are 20 within a 50 mile radius of my house. According to their web site, they've opened 33 new stores in the last six months. So if there's not a Home Depot near you, there will be one soon.

  2. Home Depot imports the wood from Brazil, perhaps through one or more third party importers / wholesalers.

  3. The importers pay ranchers in Brazil for the wood.

  4. There's a lot of money in cutting down trees in Brazil. But not everyone is happy about destroying the rain forest. Some people mount protests, and try to influence public opinion and policies to restrict cutting down the forest, and to prevent the gross inequities between wealthy ranchers and poor peasants. I'm leaving out many details here.

  5. Some of the ranchers and/or other profiteers from cutting down trees in the rainforest hire murderers and kill Dorothy Stang, who fought on behalf of the poor and disenfranchised, and for a fair, sustainable economy. According to this web site, Ms. Stang's killer said he was hired by a rancher, and that he and a partner were offerred $25,000 to kill Stang. The web site also states that "ranchers...have killed over 750 farmers in the past 30 years," and that since Stang's murder in 2005 another 30 farmers have been murdered by ranchers.
So a seemingly innocuous purchase ends up contributing to greed, environmental destruction, slave labor, corruption, and murder.

Lessons and Inferences

Granted, it's not that every time 50 bucks flows out of your hand, someone gets murdered. But there are some lessons that one can infer from Aaron's presentation of the above scenario and his subsequent comments at his talk.

So what can we do?

Spending Less Money

The first thing that comes to mind is spending less money. However, this option is not too feasible for many people, such as the unemployed and those living on social security. The individual running a cat, dog, or rabbit rescue, feeding and paying for veterinary care for animals that others abandoned or rejected, strenuously trying to find homes for those animals, doesn't really want to hear "spend less." If you've got kids, well, you know that's a huge long-term financial commitment. And the average Joe or Jane likes to go out to eat every now and then, and maybe take in a movie—not to mention go on a vacation sometimes. All that stuff costs money. At least in our current economy.

Furthermore, some spending is really an investment to ultimately save money: new furnace filters, energy-efficient windows and appliances, health insurance, and so forth. The money spent on other items, such as vitamin pills, physical exams, alarm systems, electrical generators, and new tires, may be justified in terms of its ability to improve health, safety, or peace of mind.

So there are limitations to the "spend less" option. Nonetheless, for most of us, there may be more ways than we realize to reduce our spending, because we've become so conditioned to spending, and very likely haven't given much thought to many of the alternatives.

The freegan philosophy challenges the spend / throw away / buy something bigger and better culture, and adherents to freeganism walk their talk. This page lays out many freegan practices. Granted, not everybody is going to dumpster-dive or hitchhike, but I bet there are at least a couple of ideas on that page that are definite possibilites for every reader. For example, I've been using Freecycle for the past two years; it's a great system and I highly recommend it.

At the other end of the spectrum is the Kiplinger organization, which is all about investments, business, economic reports, and so forth. And yet...check out this page. It's basically white-collar freegangelism. In its context, it's practically subversive. Actually, Kiplinger has some great ideas for spending less money.

As you probably know (or could easily find out), the web is filled with sites on how to save money. I think some are quite good. For instance, there's GasBuddy.com, which helps you find the cheapest gas in your area and offers tips on how to use less gas.

What To Do With the Money We Don't Spend

OK, so we spend less money. But if our income is the same as ever, what do we do with the money we're not spending?

If you put it in the bank, then the bank, in effect, spends it for you, through their investments. Depending on the type of account you have, the bank will invest your money in government securities, Government-Sponsored Enterprises such as Freddie Mac, corporate bonds, or other investment instruments. Basically, when your money's in the bank, you're helping to fund the government or corporations.

You could invest the money in an IRA, or in the stock market. I'm all for IRAs but you're still spending money, and, assuming you're putting your IRA money in mutual funds like most people do, you're turning over spending decisions to the fund managers. Granted, you have a choice of which funds in which to invest. So maybe you feel more comfortable investing in a "socially responsible" fund. Now, the investment company's definition of "socially responsible" may be different than your definition of "socially responsible", and in this "socially responsible" fund you may be investing in companies such as Johnson and Johnson and pharmaceutical companies. Great, you're investing in companies that perform horrid animal tests and advertise drugs every five minutes on TV. Still, at least there are some criteria that companies in "socially responsible" funds have to meet.

You might also want to choose a "green" fund. Again, the same basic caveats apply.

You may want to invest in a "small cap" fund that invests in smaller businesses. Not tiny businesses like the flower shop on the corner but businesses that are big enough to be publicly traded but aren't anywhere near the size of a Wal-Mart or Lockheed-Martin. You may feel that, on average, a bunch of smaller companies does less damage than a cabal of huge powerful ones. I think there's some logic in that. The wealth and influence is more spread out. Plus, I think the business executives who are most power-hungry, ruthless, and domineering tend to grow their companies more than the modest small business owner. But you still might be unwittingly investing in companies that engage in offshore oil drilling, animal cloning, sweat shops, you name it. Many smaller companies do business with the big behemoths, anyway.

You could invest in particular companies. That gives you a lot more control than putting your money in a mutual fund. But most people don't have the time or know-how to do this.

So when you park you money in a checking account, a CD, a mutual fund, government or corporate bonds, or the stock market, you are still, in effect spending money. Granted, most of us need to do this with some of our money so that we will not be destitute when we retire.

So is there no way out, other than socking your money under the mattress and hoping for good health and no accidents, and for kindhearted people to take care of you when you're old or sick or unable to earn money?

Partial Solution: Pay Attention to Where You Spend Your Money
As Aaron points out, once that money leaves our hands, we have very little control over how it is used. But at least we can perhaps delay its inappropiate use by supporting ethical businesses as best we can. If I buy a product at an all-vegan store, chances are better than average that the owners and employees of the store will, in turn, spend that money ethically, and so forth.

Sometimes it costs more to buy products and services from ethical companies, because they're not doing things like using sweatshop labor or cutting environmental corners to reduce costs. On the other hand, an ethical business is not likely to try to gouge or gratuitously "up-sell" customers or pay outlandish salaries to its directors.

Another partial solution is to eat a healthy diet, and to generally take care of yourself. Sickness can be expensive. Granted, you can still be ill or injured due to genetics or bad luck, but you can control your diet and usually make time to do some physical activity each day, and both of those aspects of your life are major determinants of your long-term health.

Making Less Money
One way to spend less money—directly, or indirectly through investments—is to make less money. Of course this isn't an option for everyone. But for those not scraping by...

How many of you are in a job you don't really like but it pays well? It's easy to get caught in the rut...You must make more this year than you did last year. You start eyeing things you'd like to buy: a new guitar, or tattoo sleeve, or purse, or outfit, or extra bathroom, or second home. There's a bit of a rush when you get a raise. Maybe you're putting in a lot of overtime to meet deadlines. Maybe you tell yourself, "As soon as I've reached a certain financial comfort level, maybe I'll cut back on my hours, maybe work at a less taxing job, do some more reading, exercise more, maybe travel. Maybe I'll start hiking again, or learn to play guitar." Then you get back to your laptop, even though it's 9pm...you've got a meeting tomorrow morning to prepare for...

What I'm finding with my friends who said this in their 30s and who are now in their 50s is that the mythical "financial comfort level" that is supposed to allow them to get off the merry-go-round and enjoy life a little more never happens. It keeps getting delayed, or re-defined ("Well, we just took out a second mortgage, so maybe after we get that paid off." "As soon as this project at work is done...") Or they're offered a new position at work with a 15 percent raise—can't turn that down.

If you really want a lifestyle change, you just have to do it. Two years ago I took a big pay cut to work at a job I love, and which is more in line with my ethics. My wife and I have had to make some adjustments. We eat out much less. I scan the sale papers and, all other things equal, I buy the store brand instead of the name brand. I'm scrupulous about eating leftovers and using every last drop of everything. And so on. Lots of little day-to-day things have changed.

Granted, it's generally much easier to make this switch if you're not the only breadwinner in the household, and I realize I'm fortunate in that my wife has a decent job (although her company is downsizing and moving jobs halfway across the country, so we'll see how that goes...). But there are a lot of people in this situation. I have to say, every time I learn about an individual or family who decided they could take the cut in pay in return for having more time and peace of mind, they are undeniably happy about their decision and have no regrets.

Another great time to make the decision to favor quality of life over maximum earnings is when you're young, just starting out in your career, relatively free of obligations (except perhaps for student loans), and not yet used to a certain material comfort level.

Again, I want to reiterate that I realize this option is not suitable for everyone.

But if you are at all contemplating doing something you really love, even at a cut in pay, or have been telling yourself "I really need to find a better job" but are so busy you don't even have time to get your resume together, let alone go on interviews...let me close with this:

How many of you have ever had a conversation roughly like this...

One spouse or partner to the other: Remember when we used to have picnics in the back yard? We'd make sandwiches—sometimes just peanut butter and jelly—and you and I and the kids and Baxter (the family dog) would find a nice spot in the grass, and we'd lay out a blanket...We'd be eating our sandwiches, and Baxter would be eating his dog food—al fresco—and then we'd give him our plates to lick. We'd look up at the sky and say what the clouds reminded us of. If a bird or a plane flew overhead, we'd make up stories about it. Then afterward we'd play fetch with Baxter, and then we'd all walk down to the schoolyard. Sometimes the kids would fly kites...Baxter would run around...those were great days. Man, I miss them.

How long has it been since we did that? How many years? These days it seems like we're both working so much that all we can do on the weekends is catch up on chores—and sleep. It's funny, we had less money then, and just a tiny house that we rented, and a lot less stuff, but we did so much more.


You may find that if you take that job that pays less but is much closer to home, or is much lower pressure, or is more in line with your ethics...even if you make less money, you'll adjust, and you can have those days back again. You'll have fewer material goods but will have gained some things that money can't buy.

And with less stress, you'll probably be healthier, and as a consequence you may end up saving so much money that you'll come out financially ahead, too.



Next: A special announcement.

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Comments:
Gary,

Firstly, let me congratulate you on a very well structured post.

With so much garbage in the blogoshphere these days, I admire the way in which you separate each of your points so clearly.

Let me make two comments in relation to your posts:

First, I do believe in both ethical consumerism and socially responsible investing. I do believe that we should, where possible direct our consumption and investment dollars toward those companies whose business practices meet reasonable ethical standards.

However, I believe there is a limit to how much we should be concerned about such issues. You mentioned about the store owner and employees potentially spending income earned from our consumer dollars - in my view, we should focus predominately on what we ca on our own spending and investment practices.

What business owners then go and spend the money which we give them is beyond our control. In my view, our each of us as individuals is responsible for what we can influence and control - we are not responsible for the subsequent behavior of others.

Secondly, I believe a lot of what you are saying boils down to simplicity. When you made that change two years ago, it seems to me as though you decided to simplify your financial needs as well as your life.

In terms of financial and material needs and wants, I think simplification is a large part of the key. Focusing upon fewer, more important things from a material perspective is a great way not only to save money but also to save money without compromising on what is important to you and your family.

Cheers

Andrew
 
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