Finance for Artists (part 2) Spreading the risks, moral hazard, philanthropy, human capital

Why study finance? To become incredibly rich, to become super wealthy, to be free, to be able to live your dreams, to never have to work again? you might think these are the answers. However, finance has a much more noble goal, that could change the world. For example finance can end poverty, give people enough food, help global warming, make people more happy because no one has to sacrifice their dreams in order to survive. Instead, I believe that finance will allow people to have more fulfilling and fruitful lives.

How do I know that? I know that because the goal of finance has been to minimize the risks for people, to spread the risks between all the people in the world. And that in turn would make any financial misfortune that happened to one person feel almost invisible for that person. By using statistical methods and mathematic formulas for probability, we know now, that every person in the world will go through a series of financial shocks in their lifetime. And finance can minimize the risks by sharing these financial risks with the whole world. For example, there are 6 billion people in the world, and let's say one family lost their $50K for a year income. Now that's a huge financial stress on a family especially if they have no savings. Now let's just imagine, that every person in the world will donate to that family 0.01 cent.
Then we have 0.01 multiplied by 6 billion and divided by 100 (since there are 100 pennies in each US dollar), we will get 600K for that family. Of course, we do not need that much, but I just wanted to show you an example, that we can prevent poverty by spreading out the risks in finance and collaborating with the whole world.
Why would you want to share? Sharing is great because when you are in trouble "spreading our risks" will save your life too. Actually, this idea for finance to spread out risks comes from Socialism. Of course, we know now that socialism does not work.
Why? Simply because some people will behave badly and take advantage of other people. When people take advantage of other people for their own personal financial gain it is called Moral Hazard in Finance. Socialism is a great idea, but when it comes to a real life some people will behave badly and it will ruin the whole harmony of Socialism, making it impossible. For example, let's imagine we live in a commune where we share everything, and we work equally.

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Education

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• Finance
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• Artists
• (part
• 2)
• Spreading
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• risks
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• hazard
• philanthropy
• human
• capital
• socialism
• margarita
• shamrakov

[TheFaustianMan]

Oh and, cool/horrible story about your grandmother and socialism. I mean, it was great you made it clear how socialism works in reality through personal experience. And it sucks she had something she built torn down.

The suppression of individuality is a key feature of Asiatic societies (India, China, and so on), but bad for Occidental (western) ones.

The conflict of the Occidental and Oriental are still very much in Eastern Europe, Central Asia, and former Communist countries.

[MargaritaShamrakov]

@TheFaustianMan I think there should be more fairness in sharing! I think I am not saying that what my grandma did was necessarily right, but I understand her anger she had to share with people that were much more richer than her, but they wanted to get stuff for free. I think she would have gladly shared with people in need!

[TheFaustianMan]

Pretty cool stuff! I never took one finance or economics class in school. It never appealed to me. You actually made finance interesting. I watched the whole thing. Awesome outfit by the way. Your style rocks!

[MargaritaShamrakov]

@TheFaustianMan

I think times have changed, we live in the world where most of us will be multitaskers, and we will need to do many more things in our lives. I think there a lot of boring teachers out there! Thank you for listening. I made this video long on purpose it was suppose to more like a radio, where people can listen and multitask:)

Thank you!

[akai454]

I understand Your stance, and it's cool to see that You know some of the big names like Madoff. And I am a Democrat. Take Care Ms. Shamrakov.

[MargaritaShamrakov]

@akai454

yes of course there are people that take advantage of other people, that's why we have to create financial inventions that would prevent people from stealing and fooling other people! THank you for your comment