Finology, Climate Change, and the Insect Apocalypse! – Part 1

Introduction:
What is Finology? Here we explore our personal relationships with money, money’s nature, and how we exchange value in daily life. Grounding ourselves in the liberal arts, we explore financial planning 3.0 from the inside out, addressing money as the most powerful and pervasive secular force on the planet. Mysterious money merits study.

Jake Wagner:
Hi, this is Jake Wagner co-founder of the What is Finology Project. If you’re new here, we highly encourage you to listen to episode zero, in which we share where the project started, where we’re going, and some of the intellectual basis that we’ve used to build our body of work. We are grateful that you are a part of the conversation. Please visit www.whatisfinology.org to share your comments and questions. Now back to the episode.

Natalie Wagner Willis:
Well, I want to start by saying thank you so much for being here. This is my first time being a part of the podcast. Jake’s done those three recordings but Dick, you’re my first.

Dick Vodra:
Well, I’m honored.

Natalie Wagner Willis:
I am likewise.

Dick Vodra:
So what’s our objective today?

Natalie Wagner Willis:
So our objective today is to explore the question, what is finology and explore what you, Dick, bring to this question so that we can chip away at this vast amount of information and questions and purpose that we have to reveal what is finology and use that to expand our understandings of the personal relationship with money.

Dick Vodra:
Sure.

Natalie Wagner Willis:
So why don’t we start with talking a little bit about who you are and what brings you to this conversation.

Dick Vodra:
Okay. As you recall, but the other folks may not, I went to college with your dad at the College of Wooster, in Ohio and he was a religion and philosophy major as I recall and I was an economics major. We both went to law school and then in the mid 1980s, I changed careers and started doing financial planning, which has been a total difference from what I had been doing, somewhat of a difference between what I’ve been doing from what I’ve been doing before. And got involved with the then Institute of Certified Financial Planners, went to a conference in, I think 1991, and the speaker was the national president who was your dad.

Dick Vodra:
So we reconnected and we had both been doing variations on, what is financial planning and how broad can it be and that it’s not mostly about the numbers, it’s about where money fits in life. So at the 1994 retreat where he and George Kinder did the talk on money and the meaning of life or whatever the specific title was, he and I talked about the role of finance as a liberal art and financial planning as a liberal art. So that the next year when he and George convened the initial Nazrudin meeting, I was one of the invitees. So I’ve been with the Nazrudin project from the beginning and I sort of took over the role fairly early of being the convener and the keeper of the flame. So my role in Nazrudin, my initial role and ongoing role until this past year was keeping it a safe and sacred space for people with different viewpoints to feel like they could explore the questions they had with folks who respected them, whether or not they agreed with a specific topic of mine.

Dick Vodra:
And the Nazrudin project has been an amazing success considering that it is not in any way corporately sponsored, we don’t have finance, we don’t have officers or staff, we don’t give CE credits and yet we’re about to have our 25th annual meeting. And in talking to other people in other professions, nobody’s aware of any kind of a group like this anywhere that is self-creating. And most of the folks who go now are not the people who went at the beginning. So it’s an ongoing process. At some point I will stop going, I retired seven years ago, but I’m sure that the organization will continue even after all of us who were in the first few classes have decided to do other things which are more relaxing, if less interesting.

Dick Vodra:
So convening is one of my roles in life and another is the sense that in the finance world we take numbers way too seriously, we pretend we take investing way too seriously so that when I’m with people and say I’m a financial planner, it’s always, “Well what should I be investing in or what’s going to happen to the market?” Or things of that nature, as opposed to the kinds of questions that your dad developed and are integral to life of, “What do you want to be when you grow up and how do we have finance and your money be helping in those goals?” And that the life goal is the important thing, the finance is a support where in most of society it seems to be the other way around. So I’ve written some articles lately this year and working on some more about how unpredictable the world is, how precision doesn’t work and find out what people want to do in their lives and help make their finances support that is something that is what financial planning ought to be about. So yeah…

Natalie Wagner Willis:
So, to back up just a little bit for folks who are listening who may not know, my father, and Jake Wagner is also a part of this project, our father is Richard or Dick Wagner who passed away a little over two years ago. But the reason why we are referring to him here on the call is because he really was a thought leader in financial planning and in this very serious question of how do we use money to support life. So he’s been a huge inspiration for this question of what is finology and was indeed, actually the founder of the term finology. And Dick would I hear you saying is that rather than taking the numbers or the investments too seriously, what we need to take seriously, and I’ll let you repeat this in your own words, is what people want in life and how we make money rise up to meet that.

Dick Vodra:
Yes, I think that’s a good start. I did a book a few years ago called Enough Money and the premise of the book was that nobody has enough money to do everything they want to do. Everybody has enough money to do everything they have to do. And you can’t solve financial problems with money. And most people think, “Well, if I had twice as much money as I… Or three times as much money as I have now, everything would be fine.” And then you ask them if they know anybody who has three times as much money as they do and do they think things are fine? And usually they go, “Oh, I guess you’re right.”

Dick Vodra:
But I think one of the things that Dick Wagner… One other point about Dick Wagner that your audience ought to know is that there is a award that the Financial Planning Association gives every year to someone who has had an outstanding career in financial planning. The initial awards went to people who were the founders of the profession back in the 1970s, that your dad was the first person in our generation to be recognized with that award. And that was really a generational change and a recognition of his fine work, and people ought to know that. And a lot of that fine work in being a thought leader is around finology and the role of money. But one of the things that he and I didn’t agree on, which is also useful-

Natalie Wagner Willis:
Please, yeah.

Dick Vodra:
I think he felt that money was sort of the central force in how the world gets along. That money allows us to deal with strangers from all over the world and have economic relationships that are not based on personal knowledge and trust the way it might’ve been several thousand years ago. And while that’s true, I think the other side of it is that we have come to believe that money defines value and that price defines value. So at markets that if oil costs $50 a barrel, then that’s what oil is worth. And because of the way we use debt in society and so on, and the things we choose not to count in price like pollution and depletion, the value of something like oil is vastly greater than the market price of it. And because of that, we tend to ignore or undervalue the role of energy and real resources in the economy more than we should.

Dick Vodra:
There’s a professor, Charles Hall who has developed the concept of biophysical economics in which she talks about the economy is primarily a physical system, not a financial system. And that as we use up research… That it is a matter of resource exchange, and ecology is more important than economy in the long run. And we tend to believe that that isn’t the case, that we can have growth forever. And I’m very worried that we have created a system that is totally non-sustainable and heading right toward either a wall or a cliff, depending on which metaphor you prefer.

Dick Vodra:
So one of the concepts that I’ve gotten is what I call Worldview. And I think this is probably the most important thing that I’ve developed, which is that once you have a set of facts that we agree on, we tend to say, “Well, given this, then these are our options.” You can, in a financial term, you can save more, or you can spend less, you can borrow, you can invest this way or that. But in the bridge between the facts and the options, the bridge between those is what I call Worldview, which is what are the things that we’re allowed to think about? How does the world work? Who and what is important? And depending on how you answer those questions, your options change.

Dick Vodra:
So we tend to assume that the next 50 years will be a lot like the last 50 years, even though every time we look at climate data for instance, we know that it’s going to be radically different. But when we talk about social security or we talk about an investment portfolio or we talk about education planning, we assume when we make those plans that the external environment will not change. And I think that that… So what I call Worldview Two is that we are in the middle of a massive change that will affect economics as well as everything else. But the prevailing view is that the basics of how society works will not change, there’ll be some inconveniences like Miami flooding over, but fundamentally that won’t really matter.

Dick Vodra:
So the money side, if you look at stock prices or interest rates are all saying everything’s fine, I’ll buy a 30 year bond because 30 years from now they’ll still be people paying it off. And from my perspective, it’s not quite as bad as the old joke that I’m not a pessimist but I don’t buy green bananas because we won’t be around long enough for them to ripen, it’s not quite that bad, but it is that we are in front of radical changes that we are not at all facing.

Natalie Wagner Willis:
So, this reminds me of a note that you sent me about what world are we planning into?

Dick Vodra:
Yes.

Natalie Wagner Willis:
So one thing that I really hear is a lack of having an ability to know, is that fair or do you feel like we do have some ability to wrap our heads around what that might look like?

Dick Vodra:
Well I think that the specifics are very unknowable. Just like the Arab Spring of 2011 was largely the outcome of a series of droughts and very bad harvest in the Middle East, which moved people from farms to cities and did a lot of other things and led to the Syrian civil war among other things. So how we will respond to a drought or rising temperatures or a shortage of oil is unpredictable. The idea that we’re going to have a radical change in climate I think is very predictable. And for people who say, “Well, we can’t be certain.” Their parentheses is, “Therefore we can ignore it.”

Dick Vodra:
And in fact, the fact that we can’t predict it, it ought to be paren, “And it might be even worse than we think.” The fact that we can’t be certain is not an excuse for inaction, but a lot of people take it that way because inaction… This is a great world, I mean, you look out the window, you sit down at dinner, we have warm food, we have indoor plumbing, we have the ability to travel, we have the knowledge of the world in our pocket, we live long lives, this is from a material standpoint for most people on the planet, as good as it gets.

Dick Vodra:
And I don’t want to give that up and go back to the way that people lived on average 300 years ago or 3000 years ago. But I don’t rule that out as an outcome, that we now use twice the resources planet wide as the planet is generating. And we get those from drilling down and using up oil and aquifer water and forest and soil that have taken thousands or millions of years to create. We can’t do that forever, but we can do it for a long time. It’s like if you inherited $1 million, you could spend $2,000 a month and all your checks would work for about 40 years. And then in 45 years you’d be broke. But in 38 years you’d still be doing great. So, we’re in the point where the checks don’t bounce yet but you can see that we’re drawing down the accounts faster than is sustainable.

Natalie Wagner Willis:
So in your view, Dick, what does this mean to our personal finological relationship? So in other words, in your view, what does this mean today about personal finance and our personal relationship with money?

Dick Vodra:
Well, I think that one of the reasons I retired seven or eight years ago was that I didn’t really feel that I had good answers for people who wanted to make a 40 year plan. The off the shelf ideas that everybody else uses, I could do that but that wasn’t what I felt comfortable with. There’s a phrase in science called cognitive dissonance in which you are holding two contradictory ideas in your head at the same time. And that’s really where I feel we are. On the one hand we still have people building houses and having families, starting careers, having lots of hope and that’s a good thing. I just got back from my 50th college reunion and they’re doing very exciting things at the College of Wooster. Anybody who’s got a kid looking for college there’s a place they should consider, that was not a paid ad, but what the heck?

Dick Vodra:
But on the other hand I look at what’s happening in the world and I don’t see… I see some radical and not very good, happy changes coming and I don’t know how to deal with the contradiction of those two. And so you get a dissonance and it’s hard to pay attention to both of those at the same time. So you can pay attention to how wonderful things are, you can pay attention to what the threats are. And I think that part of what needs to happen is creating relationships that are not materially based, that are community based so that you’ve got more resilience when the world… When there are problems that the current system doesn’t work well at and we’ve got to create new ones, have a network of friends, know where the food comes from, support things that can work with a lot less resource use than we have now.

Dick Vodra:
And if we do that, I think that we can have a relatively peaceful transition, if we don’t do that and it’s as an extension of every man for himself in a world where lots of people have big guns and we could be in a situation that gets very ugly very quickly. So I think one of my challenges is to think of ways where we can make the transition less painful than it would otherwise be. And I think that that is a challenge that I’m taking on and other people have taken on before me. But before you take it on, you sort of have to acknowledge that the transition is likely to be needed. And that’s where our society has a hard time acknowledging that.

Natalie Wagner Willis:
I want to thank the What is Finology team, co-founder and curator, Jacob Wagner, senior assistant, Natasha Hoggatt and project producer Gail Pelsue. This episode of the What is Finology? podcast is dedicated to our guiding light, the father of finology and co-founder of this project, Richard Wagner. Without you, this doesn’t happen. And thank you to you, our listeners, this conversation needs you. Please send us your thoughts and questions at whatisfinology.org or on Facebook. I’m Natalie Wagner-Willis, as always be well.