Ask the Readers: What Are the Moral Implications of Spending?
Published on - May 6th, 2011 (Modified on - May 16th, 2011) (by J.D. Roth) Most reader questions I share at Get Rich Slowly are meant to solve a problem — somebody has a financial dilemma they’re hoping you folks can help them fix. But Rita sent a different kind of question. She doesn’t want to solve a problem — she wants to stir debate. Rita writes:
I ask myself “How much is enough?” several times daily. My husband and I make good money — over $100,000 in combined income — own a home in an expensive city, have two large dogs, and are able to buy most of what we want. I don’t have a problem with normal spending, but I often feel bad when I purchase something really nice (such as a nice purse, a collectible book, etc).
- On one hand, I can afford these things.
- But on the other hand, I still feel that it’s somehow wrong that I continue to buy this stuff while many people in the world cannot afford clean water and food.
Just yesterday, I read an article on an entertainment site about Steven Spielberg’s $200 million personal yacht. I think that this a a crazy, immoral waste of money. He could make a HUGE difference by using that $200 million for charity.
I guess my point is: Am I really any better? No, I’m not buying a yacht anytime soon, but I do buy luxury items. And someday I’d like the satisfaction of being able to buy my husband a Range Rover. (He loves those damn cars.) My husband doesn’t feel guilt for having these things, but (if I’m being completely honest with myself) I do. Oddly enough, I majored in finance in college and am currently studying for the CFA exam, so the topic of “efficiency and equity” is really on my mind.
Four years ago, prompted by this thoughtful essay in the New York Times, I asked: What should a billionaire give, and what should you?
In this essay, philosopher Peter Singer discussed the magnitude of charitable donations from the two richest men in the world: Warren Buffett contributed $37 billion to charitable foundations, and Bill and Melinda Gates gave $30 billion. Singer wrote:
Philanthropy on this scale raises many ethical questions: Why are the people who are giving doing so? Does it do any good? Should we praise them for giving so much or criticize them for not giving still more? Is it troubling that such momentous decisions are made by a few extremely wealthy individuals? And how do our judgments about them reflect on our own way of living?
Singer’s article discusses the ethics of giving, and tries to establish some guidelines. (It’s a fascinating read but it’s long, so budget half an hour or so.)
After years of dithering, I’m finally moving forward with philanthropy in my own life. I’ve been researching (and finding!) causes to support. I’ve been exploring the possibility of volunteer tourism. And one of my goals for Awesome People is to donate all profits to charity. (I’ll share more about my forays into philanthropy in coming months.)
But Rita’s question is about more than just giving. It’s also about consumption. When we buy things, there are ramifications across a vast economic web. This is why some people are willing to pay a premium to buy local or to buy organic. It’s also why some people insist on buying American and others boycott specific items. (Some people refuse to buy diamonds; my high-school social studies teacher refused to buy bananas.)
On a basic level, every time we choose to buy a comfort or a luxury, we’re also making the choice not to use the money to help somebody else — whether in our own community or in the world at large. To what degree is this acceptable? To what degree is this reprehensible?
xkcd tackles the morality of spending…
This goes beyond just the personal level, of course.
- Today as I drove into downtown Portland, I passed the $37,000,000 Mercy Corps building. I winced when I saw it. Mercy Corps does great work, but how much more great work could it have done with the money it spent for its new headquarters?
- Or what about the humble country church my family attended when I was in high school? About a decade ago, the congregation spent tens of thousands of dollars to pave the parking lot and to build a new kitchen, gymnasium, and office. Is this what Jesus would have done? Or would he have used the money to help the poor?
I used to think there were clear answers to questions like these. Now I’m not so sure. What is right and what is wrong? What are the moral implications of spending, especially on Wants? (I doubt anyone would argue that we shouldn’t spend on our own Needs.) If I spend $1500 for a pair of season tickets to the Portland Timbers, is this immoral? What if I also contribute $15 to a charity to make amends? $150? $1500? And at what point am I just “buying” a mental pardon?
Some of you will argue loud and long that there aren’t any moral implications to spending. Others will argue just as loudly (and just as long) that every economic act carries a moral and ethical component, that our financial decisions have meaning. I can see both sides.
What do you think? What are the moral implications of spending? When is it okay to buy a $200 million yacht? Is such a decision ever justifiable? Always justifiable? If Steven Spielberg also donates $200 million to charity, does that ameliorate this obscene expense? And what about on a more mundane scale? Are there any absolutes? How do you decide?
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This article is about Ask the Readers, Choices, Consumerism, Giving
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You should read The End of Poverty by Jeffrey Sachs. It really makes a person reconsider what is “immoral” spending. Seriously a great read and highly applicable to this debate. I would love to summarize it for you, but it’s honestly too much and I wouldn’t give it proper justice. (And I’m aware this sounds like a cheesey ad, but if you’re seriously interested in this topic, you should be reading books by economists, not just theorizing based on general moral questions.)
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I found this article VERY interesting! I have not read others comments and I may or may not. I think the Lord remembers are frame and that we are dust. I think He doesn’t expect us to be lofty in our commitments of giving, yet, if we have more excess than we need why would we spend such excess on something that isn’t a need. I think it is good for each of us to “ponder our path and let all our ways be established”. What type of an example are we setting? We can’t take any of the stuff with us, so wouldn’t we be blessed of much greater amount to give it away and bless someone else? Help someone else who can’t be helped? I think so! I don’t think that means don’t enjoy your money, but I think it can be enjoyed on a level without being out of balance. I think you made a good point about what would Jesus do? We are to strive to live our lives like he would…though we will fall short, it is the goal. Makes me want to analyze my life a bit more and reflect on what my goals are. Thanks for such a great thought provoking post!!! Excellent to get us to think. Most people don’t think. They just act. They spend because of guilt. Wants. Not because they want to share their expensive boat with all the poor people who will never ride on one. May we each stop and consider these questions and take responsibility as we should.
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I think we’ve lost touch with personal conviction. It is completely appropriate to follow one’s own convictions and give as much as one desires/can give. It is completely inappropriate to attempt to make someone else follow *your* convictions (yes, even your children). Too many people get so caught up in their “rightness” of their own convictions that they fail to see that their convictions are personal.
On another note: I’ve worked for many non-profits and I understand why people outside of the non-profit world don’t see the need for a new church or a multimillion dollar headquarters, but I can tell you from personal experience that a comfortable workplace is the least paramount to doing the good work that these organizations do. Too often we expect people who have dedicated their life to service to live and work as paupers. I think this expectation is meant to make us feel good about the work these other people are doing…but living and working under extremely poor conditions, for appearances sake, is stupid and ultimately wasteful!
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Yes, there are moral implications to spending – but I think ultimately you have to follow your own beliefs and not worry about what Bill Gates or Steven Spielberg are doing. You have been entrusted with the income you make, and you are responsible for usnig it wisely. Find a cause or charity you are passionate about, and support it. Nobody can save the world, but all of us can do something to make it better.
And as for buying expensive goods – after years of buying items (shoes, purses, sunglasses etc.) that were supposed to be fairly good quality but fell apart quickly, I spent some money on some expensive shoes and a good quality purse. Both have held up very well – meaning I’m wasting less money and throwing fewer things into landfills. So yes, buying quality does matter.
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JD –
I like the new comment format! It is more interactive and there is continuity. I like the color getting darker too. However, the darkest green is too bright for me…hurts my eyes. Maybe the gradation can be slowed down…
-Charlotte
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Hey JD, I know you’re probably over and done with this topic, but I wrote a response to it today that I think you might at the very least find interesting as I took a strict numbers-only approach. http://mutantsupermodel.wordpress.com/2011/05/10/why-spielbergs-200m-yacht-purchase-is-not-a-crazy-immoral-waste-of-money/
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I applaud him for spending $200M on a yacht. He should spend his money on whatever he pleases. And if doesn’t want to donate a dime of it, that’s his business.
He has no moral obligation to anyone.
If anyone tried to guilt trip me on how I spent my hard-earned money, I’d have some very choice words.
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Speaking of Gates and Buffet … I was wrestling with this when they both began their crusade to get the super-rich to donate much of their money. While I’m glad for the sake of the people that will be helped by their donations, I question why they accumulated so much money in the first place. Would it have been better to donate more all along, instead of waiting until they have “enough” to feel comfortable donating half? These men did not just luck into their wealth, they pursued it diligently and ruthlessly. I don’t think there is any way to know if they could have done more good by making less money (ie, could they have paid more to their least paid employees? given more benefits? paid for all benefits so their employees didn’t have to pay premiums?) or now, by giving so much of it away. Bottomline, I’m suspicious and I guess, disappointed that it took them tens of billions of dollars to feel comfortable giving money to charity.
Even so, I find it more immoral due to dishonesty to ONLY give to charity for the tax deduction than to indulge in the conspicuous consumption of buying a 200M yacht. Seriously. I’m sure charities love their donations, no matter their donors’ motives. And I agree to an extent, but at least that 200M yacht is an honest expression of Spielberg’s desires. I don’t find anything inherently immoral in consumer consumption or indulging in our wants. It is my luck to have been born into a more developed country and I do not feel guilty for buying things or doing things that are not available to others in this country or others. If our places were reversed, they would do the same.
It comes down to knowing who you are and what you want out of life. If you’re not driven to be an ascetic, if you’re not driven to give away all of your and your family’s wordly possessions and dedicate your life to helping the poor, then why beat yourself up about your daily frou-frou coffee drink? or your Coach purse or your classic car or your comic books? Few people are so totally selfish that they don’t ever help the people around them either through direct action or charitable donation, so take the time to figure out where you want to be and commit to it. People on the outside can judge all they want, but the important thing is to know yourself and be comfortable with the decisions YOU make.
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We may never know why they waited as opposed to giving some along the way. But there is a definite benefit to working with larger sums of money. You can fund long-term research, set up foundations, open a soup kitchen and many other things with large sums of money. Donating smaller amounts wouldn’t have allowed them to do these things unless the organization was saving the money until it had a larger amount.
It works the same way on the spending side. If I gave you $5 a week, you’d probably just fritter it away, but if I gave you $250 all at once, you’d probably spend it on something you really wanted or needed.
Maybe Gates and Buffet were waiting until they could do something they thought was more meaningful.
Also, these 2 men are extremely wealthy so they probably didn’t have this concern, but some people may want to wait until they have accumulated enough wealth to be confident they and their family are well taken care of, before donating the rest. Not many people would want to give away so much that it made their own family worse off.
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Thanks Peter, I hadn’t thought of that angle. It’s true that large sums of money can often be more effective in the long-term. That’s not to say that smaller sums aren’t effective, but in a different way usually. I think I just struggle with the idea I’ve absorbed growing up that so much money accumulated is bad in some way. If I were that rich, I wouldn’t want someone telling me what is right to do with MY money (excepting illegal actions of course) and yet, I still instinctively judge others. I try not to, but it’s also the idea of how much good such sums could do for others that also drives the judgemental question of why haven’t they done more. And yet, even on my incredibly smaller salary I could do more and don’t always. It’s hypocritical, though I don’t feel too guilty about it. lol Morality and money, it can be complicated for sure.
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An aspect of spending money on luxury is the notion that it contributes to quality of life. I find it — on a simple scale — to be true that a, say, 150 dollar dress is nicer than a 15 dollar dress — and that it adds to my quality of life. Would never buy a 1500 dollar dress specifically because of this issue. It just wouldn’t feel right to me.
But I think there is also a bigger issue. That is time — how do we spend our time? I have begun to feel guilty — in what essentially could be retirement years — for pursuing a second career that is something I love to do — when the world needs more volunteers. Am I making a difference? That is the question that torments me. It does extend to spending money as well as time. The problems we are dealing with seem so huge: how to allocate ALL of ones resources starts to nag at one, if one is thinking. (Also worry — there is no end to this — that if suddenly no one bought in the material world, the economy would collapse big time; imagine the jobs created when Spielberg ordered that boat!)
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Your premise deals only with money. I find this to be a rather crass viewpoint of charity. Many people I know donate hundreds of hours of their valuable time and experience to charity as volunteers. Instead of depending on someone else to spend their money wisely, they are donating directly to those organizations and people in need. It is far too easy to write a check and far too often Americans believe dollars are the answer to every problem. I prefer personal involvement.
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You have to remember that when Spielberg spends $200 million on a yacht, that money doesn’t disappear. It goes to the yacht company, which uses it to pay its employees, who use it to pay their mortgages and grocery bills and so on, which use it to pay their own employees, and so on. Spielberg is injecting $200 million into the economy.
That’s why when Democrats tried to impose a yacht tax a while back to punish the rich, it ended up hurting the middle class. It didn’t hurt the rich–they just didn’t buy a yacht. Boo hoo. But since it greatly decreased the demand for yachts, that meant that the companies that made them had to lay off a lot of middle class workers in order to stay afloat. It’s similar to how corporate taxes, which are meant to punish big bad corporations, just end up being passed along in the form of higher prices and hurting consumers.
There’s a big difference between what something is targeted at and who it actually affects.
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All this hand wringing seems like over thinking. Warren Buffet gives $37B = good. Our personal consumption habits, in the big picture = a drop in the ocean. If one is concerned about helping others, vote with your feet and volunteer at a local charity organization.
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I choose not to worry about the things I can’t control. I can’t control how much Larry Ellison spends on his yachts but I can try to make good choices with my money. My view is that I work like a dog and deserve to have a few nice things as a reward, within reason. My vices of choice are a nice home theater and an occasional nice vacation. I offset these luxuries by “tithing” once a month to one of my favorite charities, lately donorschoose.org and Kiva. I figure that’s about the best I can reasonably do, and I’m content with that.
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