Friday, July 25, 2014
One Degree of Emotional Separation
The idea is that by letting someone else make the hard decisions you can wash your hands of any situation by deferring to "the experts".
For example, if you hire an accountant to do your taxes then you have deferred to their judgment just how far you can bend the tax codes to apply for 'deductions'. This is something that had it been left up to you, likely you would have made different choices and the amount of money that they "find" in the process is motivated by the need to offset their own cost of services otherwise you might not come back next year...
Another example is investing - by having a financial manager oversee a fund that you invest in you have abdicated all effort of vetting those investments for not only just financial potential but also for moral issues like a track-record of pollution or child-labor.
Conversely if you have a situation where the CEO of a company is a populist and treats their employees well, providing a decent living wage & benefits - that company might be offhandedly penalized for 'under-performing' compared to the rest of the industry. You might actually agree ethically & philosophically with this policy - but that agreement would never factor into the criteria by which your financial advisor chooses to manage the fund containing your money.
Either way you have a complete disconnect between your personal ethics and how your money is voting for you.
It is interesting to note that while Hobby-Lobby recently went all the way to the Supreme Court to gain the right not to pay for medical procedures that they found religiously objectionable while at the same time they were only too happy to invest in companies providing those same services. This caused some embarrassment when it came out publicly but the easy-out was to blame it on the middle-man.
To be sure, there exists an entire niche-industry of white-washing middlemen companies that provide culpable deniability for corporations balancing cost-effectiveness with corporate ethics.
But the interesting question is "How often do we do this on a personal level in our daily lives?"
Out of sight is out of mind - but out of mind is Out of Control.