How Do You Think About Money?

I am profoundly lucky in that I read "I Will Fear No Evil" in high school. Not an assignment, I just like to read, and Robert A. Heinlein has always been one of my favorite authors.



A very few pages into the book, he has one of his characters toss off two fantastically good pieces of advice in quick succession, viewed from the point of view of thirty years later and multiple licenses in financial planning. He has one character, a lawyer no less, deal effectively and beyond challenge with two financial problems in quick succession. The first had to do with a very ill old gentleman with a will of longstanding effect, who doesn't want the existing provisions upset, as often happens to people who die with a new will. This extremely wealthy man has decided he wants to leave his secretary a million dollars.



The solution? A single-pay policy of life insurance. Problem solved. But once he's out of the room, the secretary protests, saying she'd just waste the money, or even get in trouble with it. She wants it given to charity.



Solution? Write it so she got an income off of it every week - essentially turn the lump sum into an income generating asset, with the additional advantage of a donation to charity when she shuffles off the mortal coil. She tells the lawyer she would never have thought of that solution.



His answer? "That's because most people think of money as something to pay the rent. They don't think of money in terms of what it can do."



Okay, I always was a math geek, but this concept was something I understood immediately, and it made a huge difference in the way I thought about money forever afterwards. Money wasn't just something to buy stuff with. Money could do things. Money could make more money. Money was potential, potential that got bigger all on its own if you only let it.



Now from a much later viewpoint, I see the flaws in Mr. Heinlein's plan. If you don't want your estate plan messed with, a living trust beats a will on every point. Furthermore, the interest rate imputed in the return of the life insurance proceeds was only a simple compounding at less than four percent - I can almost certainly do that much above inflation if I invest reasonably. Nonetheless, Mr. Heinlein grasped some very powerful concepts very well, and he was able to show the application to a teenager of no particular qualification. This is better than the vast majority of supposedly more sophisticated writers of serious "litracha" can usually do, and he did in almost in passing - no preaching, no granstanding, just one heck of an effective example, twice in the space of a hundred words or so that were completely aside of the main plot.



These days, I still love reading fiction where the writers show they really understand economics and finance. They're hard to find. I happened to be volunteering as an event coordinator at a con a couple years ago, and ended up assigned to a reading with an author who made a mistake so elementary it showed that he had done no research because it impacted a benefit that literally everyone gets - he just didn't know about it. It really was critical to the plot, and if he had made one phone call when writing the story, any professional he called would have corrected the error. I very tactfully (for me, anyway) informed him of this gap, and I recently ran across the story in print. He hadn't fixed the error. I'm not planning on buying any more of his stuff. Another highly hyped novel said that the author understood economics and finance. What the author understood was that illegal drugs were a highly profitable trade if there's no real possibility of getting caught. Well, duh. He blew it, otherwise, not even considering the constraints of the problem he had set up. Despite the fact that I really enjoyed most of his writing, I may not buy the sequel just because what he missed was so painfully obvious to me that it really destroyed the rest of the story. As long time friends have heard me say many times, "I'm willing to suspend disbelief, but not hang it by the neck until dead!" This stuff is more constant than even the laws of physics, unless you postulate that you're dealing with a non-human psychology, and even then they're still there. Don't even get me started on the stuff supposedly written for everyday, mundane situations.



Still, some do get it right. S.M. Stirling in his Island In the Sea of Time stories, and to a lesser extent in Conquistador. Poul Anderson must have gone back through merchant records in the early Age of Sail, or known someone who did, for some of his Polesotechnic League stories, because he more than once cites some of the same sort of brutally coldblooded logic that was present then. Many of his other stories bear this same kind of mark. I was pleasantly surprised about a year ago by a side plot in a stand-alone novel from Michael P. Kube-McDowell - although he always seems to do solid research.



Got some suggestions? I'd love to hear about more such authors, who manage to teach, or at least stay in touch with economic realities while they entertain. Those authors who do a good job of this perform a real public service, while those who ignore it so that they can tell their story unencumbered by mere facts often earn their work a ceremonial throwing - twice across the room.



Caveat Emptor.