What (if anything) does a person's finances say about them?

[Peter Parker]

The following quote (from Sim) on the Navra thread ( http://somersoft.com/forums/showthread.php?t=7776&page=7 ) raised some general thoughts about character that I think are worth teasing out outside that thread or the individual mentioned.

Being personally bankrupted doesn't say terribly much about a person other than they ended up owing more than they could possibly repay, which can happen for any number of reasons.

Ruminate on that thought for a moment.

I'll now list some views that I suspect are widely held on this forum and implied in numerous posts.

It is better to support yourself by working than draw unemployment benefits.

Success is rarely accidental or inherited. It more commonly comes through personal sacrifice, discipline and hard work.

Even people on average incomes can educate themselves, save and invest to build above-average wealth.

People should not make promises they cannot keep. Those wronged are at liberty redress through the legal system. 'Promises' includes loans that cannot be repaid.

All of these views come anavoidably bundled with some sort of moral or character judgement. There are older concepts of honour (or the modern term 'accountability'). Plus western values of free-will, agency and reward for effort. Yes, even right and wrong, which brings us back to judgement.

Now go back to Sim's quote about bankrupcy not telling us much about a person. This view asks us to suspend the judgement that we may often be impulsively rushed to make.

We are instead invited to see bankrupcy as something that 'just happens'. As if it was random and beyond your control - a bit like receiving a deposit from a flying bird overhead - although even here a hat may have helped.

According to the definition given, bankrupcy comes about when one makes a promise (to repay borrowed money) that one cannot keep.

Judgement is difficult to repress. In this case there may be thoughts about the bankrupt's greed, lack of character or lack of judgement. If reported in the popular press there may be cynicism about 'hidden millions' stashed away from creditors (another invitation to make moral judgement).

Though maybe the bankrupcy really was just bad luck.

The problem is that if you accept 'accidental bad luck' explanations for many bankrupcies, does not this also make it easier to accept 'accidental good luck' explanations for success?

Which is contrary to the common views listed above that you may have just agreed to (which stressed agency, hard work, effort etc)?

If you do accept 'accidental good luck' more than 'hard work' explanation of most success, then this lowers the legitimacy of your gains. For the nexus between effort and reward has been weakened. Ditto for honour, accountability and the power of agency.

High taxes no longer seem so unfair if the gains were windfall, and not through effort. And fatalism rather than agency becomes a more common explanation for why we are where we are. Will this cause us to lose the will to achieve and lead to a sort of stagnant socialism?

To finish with the thread's title - what does a person's financies (or more accurately their history) say about them? Is it linked with character? If not, what are the implications for incentives to work and the legitimacy of private property?

 

[Aaron_C]

It depends on what the bankruptcy was for. Prima facie it just indicates what Sim said - that the person owed more than they could repay.

 

[HiEquity]

Hi Spidey

Great post! My first thoughts are that a person's finances shows next to nothing about them. I know not whether Gina Rinehart (for example) deserves her fortune or whether she just won the (genetic) lottery of life. I don't have anywhere near enough information to cast judgement on that. I also know not the trials and tribulations faced by the mentally ill on the park bench sleeping rough or the dark skinned fellow who broke into my dentist's house. I cannot begin to imagine their lot in life so I don't try.

Someone in another thread said that we all get similar opportunities in Australia - the only difference is what we make of them. So I guess that means the students at Shore High School in Sydney have the same opportunities as those at La Grange community school in Bidyadanga? This is self evidently not the case...

Rushing to judgement is one of the most common character failings going around. Of course one needs to make judgements about people we go into business with or invest with or entrust our children or ourselves with. We make judgements with our own stereotypes and if we get it wrong, well that's too bad so sad - our obligation to our own financial and physical wellbeing is paramount and we need all our skills of judgement for that.

But there's a whole swag of summary judgements being made for which there is just no need. In this case whether we are right or wrong will make no difference to ourselves - it just hurts the person being judged. And when we get it wrong then we have just hurt others unnecessarily. I have no idea whether Gina Rinehart is rich through devious, fortunate or laudable means and it doesn't effect me either way so her fortune says nothing about her to me.

If it did effect me of course I would find out a lot more information than just her finances before passing judgement, so the point still stands - the finances still say very little on their own. Likewise the guy who took a risk and is now worth many millions compared to the other guy who took a very similar risk and lost everything including his family and friends. The difference can easily be the equivalent of a toss of a coin.

BTW - I agree with all your quotes except the one that says success is rarely inherited. I have seen too many examples of that for it to be considered "rare" to me.

 

[redwing]

It depends on what the bankruptcy was for. Prima facie it just indicates what Sim said - that the person owed more than they could repay.

Bad Management rather than Bad Character or Bad Luck then Aaron?

 

[Aaron_C]

Bad Management rather than Bad Character or Bad Luck then Aaron?

Could be any of them, redwing. Like I said only if you delve into the particulars of the bankruptcy do you know which type it is. The only people who think bankruptcy shows bad character are those who are too scared to take any kind of risk themselves. Businessmen understand that for every success there are 100s of failures...bankruptcy is just the consequence for some of those that fail.

 

[Peter Parker]

Could be any of them, redwing. Like I said only if you delve into the particulars of the bankruptcy do you know which type it is. The only people who think bankruptcy shows bad character are those who are too scared to take any kind of risk themselves. Businessmen understand that for every success there are 100s of failures...bankruptcy is just the consequence for some of those that fail.

Let it not be forgotten that behind every bankruptcy is a failure. A failure to keep a promise. In an esteem-obsessed world, speaking of failure may be unfashionable, but failure it is.

It's a consequence of wanting things for which inadequate provision has been made to pay.

Every bankrupcy leaves dozens of people who did work or supplied goods but not received payment for them.

Our economy works through people doing work or supplying goods and getting paid.

Every time a transaction is completed is a success of capitalism. It is a reinforcement of the trust that is required to keep people getting out of bed, working and being productive.

Conversely every bankruptcy is a breach of this trust that keeps things going. Too many only poisons relationships and generates suspicion, doubt, conservatism and even an unwillingness to take risk.

Some here seem to take the view that people should brazenly charge ahead, gear to the hilt, insufficiently consider risk and consider bankruptcy a minor mishap of no one's fault. And bugger everyone owed money or concepts of personal responsibility.

It seems respectable here for people to criticise the unthrifty or the unemployed for their failures, while lionising the successful. Both being effectively moral or character judgements.

But when the shoe is on the other foot, there seems a resistance to accept bankruptcy as a failure or caused by anything in particular, despite it being a poison to the trust and relationships indispensible to commerce.

 

[Aaron_C]

Spiderman,

With all due respect that kind of thinking is what led to the creation of 'debtors prisons' for those who could not pay their debts. They were locked up in jail until they could repay their debts....but how is one supposed to do that if you are in jail?

Bankruptcy is necessary in capitalism just as is property law. Sure, it is an unfortunate consequence that in bankruptcy that creditors do not get paid and some work that people do for others is wasted. But that's life. Only PAYG employees expect to get that paycheck on time, every fortnight. In business that doesn't happen - many people spend weeks/months chasing up payments for work long after they have occurred.

 

[Sunfish]

Let's face it. Many bankrupts simply have big punts with OPM. The rewards are big if they make it, their suppliers/workers carry the can if they fail.

No way am I suggesting all, or even most [I wouldn't know] but certainly many that could be described as "a big fish in a little pond" and make the headlines of the local paper.

 

[willair]

Let's face it. Many bankrupts simply have big punts with OPM. The rewards are big if they make it, their suppliers/workers carry the can if they fail.
.

 

[kathryn d]

Being able to declare bankruptcy is too easy.
It allows people to rack up all the debt they want, without any consequence. Even better, they probably had lots of trips, restaurant meals, movies that can't be taken away..unlike a car.

I don't want debtor's prison. I want the people to pay their bills, even if it takes a lifetime. I'd rather have $10 a week payment for life, than nothing at all.

What does it say about their character?
They are selfish. As long as they have a "fresh start" that is all they care about. F*** the people who were relying on getting paid.

Depending on who is owed, and how much, it can have the domino effect, causing financial problems for many.

Bankruptcy should abolished.People need to be held accountable.

 

[redwing]

Bankruptcy Overview

If you are not already bankrupt we recommend that you
visit the Debtor’s page to learn more about other options.

If you are unable to pay your debts and cannot come to suitable repayment arrangements with your creditors, you may voluntarily petition to become bankrupt. At the time of petitioning, you must be present in Australia or otherwise have an Australian connection (eg you ordinarily live in Australia or are involved with a business operating in Australia).

Creditors can also apply to the court to make you bankrupt if they can satisfy the court that you owe them money above a minimum amount.

Bankruptcy generally lasts for a period of three years but can be extended in certain circumstances. There is a permanent record of your bankruptcy on the National Personal Insolvency Index (an electronic public register which can be accessed by anyone for a fee).

Your creditors are notified of your bankruptcy and unsecured creditors should stop pursuing you for payment of your debts.

A trustee will be appointed to your case. In order to pay your creditors, this trustee will:

• sell your assets (although you will be able to keep certain types of assets)
• mandate contributions from your income once you earn over a certain amount
• investigate your financial affairs and may recover property or money that you have transferred to someone else for inadequate consideration

The duties of a trustee are specified in legislation and trustees have to adhere to certain standards while administering your estate. You can choose to appoint a registered trustee by obtaining and providing their consent when you lodge your petition to become bankrupt. If you do not choose a trustee, the Official Trustee (ITSA) is initially appointed to administer your estate. Your creditors may choose to change the trustee at any time.

 

[oracle]

Being able to declare bankruptcy is too easy.
It allows people to rack up all the debt they want, without any consequence. Even better, they probably had lots of trips, restaurant meals, movies that can't be taken away..unlike a car.

I don't want debtor's prison. I want the people to pay their bills, even if it takes a lifetime. I'd rather have $10 a week payment for life, than nothing at all.

What does it say about their character?
They are selfish. As long as they have a "fresh start" that is all they care about. F*** the people who were relying on getting paid.

Depending on who is owed, and how much, it can have the domino effect, causing financial problems for many.

Bankruptcy should abolished.People need to be held accountable.

+1.

Cheers,
Oracle.

 

[Deltaberry]

Many giants have been bankrupt. John Elliott comes to mind. So does Eddy Groves.

A very close friend of mine the other day was hanging out with a prominent sharemarket guru from the 1990s (the sort who shook the world and made headlines around the world briefly). The guy used to be worth hundreds of millions, then blew it all. Went to jail for a year or so for insider trading and market manipulation. Was declared bankrupt in the mean time. I won't mention who he is as some of you might even have read his bio.

Since he's been out of jail, he's punted again and as of late been pulling in around $20m a year. But he spends big. The other week he dropped by in Melbourne for the Australian Open he allegedly blew $600k.

Point is, this guy's been bankrupt. But he has made a come back. He's not a good saver. Is a big splurger. So what do we take from this? Nothing. Just that he's a big punter, that's all. And good for him. It doens't mean his management skills were any worse than the guy who's never been bankrupt. It just means the guy who's never been bankrupt either has had a good wicket if he's a risk taker or, like most people, have never taken any real risks. The guy in topic once said (if you read his book), he spends as much as he can, takes as much risks as he can, because that's what keeps him going (from reckless risks like piloting planes on his own for the first time to trying to jumping off a waterfall). Otherwise he gets bored.

 

[kathryn d]

.

A very close friend of mine the other day was hanging out with a prominent sharemarket guru from the 1990s (the sort who shook the world and made headlines around the world briefly). The guy used to be worth hundreds of millions, then blew it all. Went to jail for a year or so for insider trading and market manipulation. Was declared bankrupt in the mean time. I won't mention who he is as some of you might even have read his bio.

This says a lot about his character as well. It's all theft.

 

[redwing]

This says a lot about his character as well. It's all theft.

And there's a huge difference between personality and character

 

[Deltaberry]

This says a lot about his character as well. It's all theft.

According to the law that is.

If stock market manipulation is theft, why isn't real estate market manipulation theft?

If I posted a fake ad up now on domain or realestate.com.au to create the impression that rents in an area are higher than what they really should be, is that market manipulation?

 

[kathryn d]

And there's a huge difference between personality and character

From a quick google, this seems to be the general difference. If I am wrong, please tell me different. I stand by my statement, of showing about his character.

"Personality is on the surface; character is deep inside.

You have a great personality if you are out-going and always know the right thing to say to people.
You have a great character if you are honest even when it's difficult to be so.

You can almost fake personality, but you can't fake character.

The difference between personality and character is somewhat like the difference between weather and climate.

"

 

[kathryn d]

According to the law that is.

If stock market manipulation is theft, why isn't real estate market manipulation theft?

If I posted a fake ad up now on domain or realestate.com.au to create the impression that rents in an area are higher than what they really should be, is that market manipulation?

Not my rules...

 

[Aaron Sice]

If I posted a fake ad up now on domain or realestate.com.au to create the impression that rents in an area are higher than what they really should be, is that market manipulation?

yep.

but then, if you're not offering a house to rent, then that would be like writing a naked put.

there's nothing illegal about writing a naked put, so why would it be illegal to write a "naked" rental advert....?

lets investigate further.

you want to rent a place cheap as chips. but the rent is "too damn high" ("the rent is too damn high" - sing it with me).

so you wish to acquire a house at a lower rent, you flood the market with naked rental adverts to show the listing agent that "hey, there's stacks of place to rent, i want yours at $50pw less". agent obliges.

you then buy back your own naked adverts and the price reverts to normal. no-one has lost any money at the end of the transaction, except as a brokered deal between yourself and the lessor which is defined as "market forces".

not really any different to the share market, silver market, oil futures.

could go the other way, too.

you want to rent your house but there are too many adverts.

you ring all the agents, offer them $50pw more than advertised if they remove the listing now and send you the paperwork.

they remove listing, you hold paperwork for 5 days (1 to print, one to send, 1 to receive and 2 for it to get "lost in the mail") - meanwhile, you've removed all the listings and made $50pw on your rental because of the lack of stock. it's all to do with "market forces", see.

you decline all rentals verbally agreed to and you've just secured a better price.

other than timeframes (5 sec versus 5 days), this is different - how? - to the stockmarket....

 

[shuggy]

Being able to declare bankruptcy is too easy.
It allows people to rack up all the debt they want, without any consequence. Even better, they probably had lots of trips, restaurant meals, movies that can't be taken away..unlike a car.

I don't want debtor's prison. I want the people to pay their bills, even if it takes a lifetime. I'd rather have $10 a week payment for life, than nothing at all.

What does it say about their character?
They are selfish. As long as they have a "fresh start" that is all they care about. F*** the people who were relying on getting paid.

Depending on who is owed, and how much, it can have the domino effect, causing financial problems for many.

Bankruptcy should abolished.People need to be held accountable.

Agree, well said. The guys pulling dodgy deals and taking things to the limit are usually selfish and motivated by greed. Not being racist, but every white Sth African i've met who landed in Oz is greedy. These guys are lucky they're in Oz where they're innocent until proven guilty. In the the US it's guilty until proven innocent. I'd like to see the same standard applied in Oz for cases of financial fraud, white collar crime etc.