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The Jacobsen Group with Jon Jacobsen · Mon Aug 18, 2025
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Thanks.
Welcome to our show today.
My name is Peter Jacobson.
I'm the Gortney Professor of Economic Education and Research.
Joining us we have Dr. Russ McCullough, the Wayne Angel Chair of Economics and founder of the Gortney Institute.
as well as Dr. Justin Clark, the Menard family professor of philosophy and ethics.
All right, well, there's various political arguments going on.
I don't know if it'll still be going by the time this podcast airs, but the gerrymandering argument down in Texas and always a variety of political arguments.
And Dr. Clark is going to lead us through maybe some ways of diffusing them, I guess, and kind of analyzing.
So what do you got, Justin?
Yeah, in general.
I've kind of come to a point in my life where I think arguing with people is often pointless, but sometimes
it's not.
Sometimes you can't really get out of it.
And one of the things that I think philosophy does well is analyze things.
And so I think if we're actually really clear about what a political ideology or a political theory is,
and what its parts consist of, it can help us when we get in political disagreements with people because we can kind of break it down and realize, okay, where is the disagreement and what would constitute an answer or convince the other person that one person is right or maybe there's nothing that we can do to convince each other.
So the way I think of, you know, if you get in a political argument with somebody, it might be about, you know, to take something that's like current inclusion of
trans people in whatever gender sports or something like that or you know this the rhetoric around this is really heated and you'll find it on like what on you'll find it on both sides like oh do you want you know this this person wants to deny the existence of this person or this person wants to you know hurt hurt all women or this person it's very inflamed and you can also find you know the same types of inflammatory arguments about the minimum wage or reducing
Medicaid or whatever.
So I think it's important to take a step back and think about like what a political ideology is because when you disagree with somebody about any particular policy matter, it usually means you have a different political ideology than they do in the sense that I'm going to elaborate.
So I think of a political ideology as consisting of three parts.
One is the way you want society to look like,
good ideal.
And I think a lot of people think that that's
all there is to political theory.
And I think that's a mistake because the other two parts are more important.
And I think those other two parts are actually, for reasons that we can get into in a little bit, maybe where most of the argument should be done if there's going to be an argument.
So part three is the way we want society to look like.
And then part one and part two are what is actually the case right now?
That's part one.
And then part two of a political theory is the things, the steps that you think one ought to take to get to your ideal.
And there's actually more in part two.
It's actually a series of counterfactual claims.
If we do this, this will happen.
If we do X, Y will happen.
So again, it's a belief about the way things are right now.
And then it's a set of beliefs about what will happen given what we do.
And then it's a set of beliefs about where we ought to aim.
Right.
Yeah.
So it's like, uh, where you're at right now, the destination and the path, right?
Like those are the three things.
Yeah.
And, uh, you know, different political ideologies are going to disagree about the path.
So it's, it's not just like what the good path is, but it's also why all the paths that we think are bad paths are bad paths.
Right.
I couldn't help but think, um, how the news channels now really work on your beliefs now, like what they call to your attention in order to
I guess, catch your attention and get you thinking that they're following your plan here, your steps in that way to shape your beliefs so that then they can maybe bring you down the path of whatever ideology they're supporting.
Do you have an example in mind?
Oh, like, let's say MSNBC highlighting things of the environment or mistreatment of certain subgroups.
race, whatever, Fox News highlighting other aspects of, you know, immigration or things could be so much better if this wasn't the case right now.
So if they believe that, you know, the border being overrun.
So I think kind of steering things towards that direction is what the news media does.
So what I hear you say, Russ, is that one of the things that the media does is
they try to put our initial position in people's brains in such a far place from what everybody thinks is good, that it would move in the direction of what the people who are behind the news make, more or less.
And so one way to manipulate the conversation is to get us in such a strange starting point that everybody wants to go in the same direction.
So if we show that our country's totally crime-ridden and ridiculously high murder rate,
you could easily then say, well, everybody believes in law and order at this point, or the flip side, you know, if you show 500 cases of children whose parents get deported and then, you know, they don't know what to do or something like that, then you frame it almost the opposite way, right?
So
anyway, it just came to mind while you're saying that, that I felt like that's kind of what the media does.
Yeah, I think you're correct.
And I think
different media organizations have different, just have different ideologies, right?
So they will disagree about where we are.
They'll also disagree about where we ought to end up.
And therefore, they'll portray the path that the other one is trying to take as, of course, something's going to lead us straight into the pits of hell, right?
Right.
Yeah.
But I think that the really important thing to kind of glean from like dividing things up into these three
sets of beliefs is to think about like the way we arrive at or check or test those types of beliefs and We have different methods for testing each of these types of beliefs so
This reminds me of like David Humes is ought dichotomy right where he goes like well you know moral claims about what you ought to do those are different from claims about what is the case because if we're worrying about what is the case we can just go out and check what the case is and find out whether those beliefs are true or false whereas our moral claims Hume thought at least.
aren't amenable to truth or falsity in this way because we can't kind of check them.
Now, I don't necessarily agree with you on that.
I think that we check moral claims in a different manner than we check factual claims.
But I think the point still stands that when we have a disagreement about what is actually the case, the way we can answer that is just by looking.
right?
And we might disagree about what we find if we look, but if we know that that's actually the place where the answers are, is out there in the world, then that at least maybe gets us a step closer to our resolution about
what is actually the case.
We might even agree about what is the case and want to describe it in different ways.
But if we're trying to defuse a political disagreement, figuring out whether or not our disagreement is about where we are or where we want to go or what will happen if we do certain things.
And so where we are or what is the case, we can check.
We can look.
Somebody can disagree.
We can disagree about how many illegal
illegal immigrants are currently in the country, or we can disagree about, you know, how many women die from complications and pregnancy, those kinds of things.
And we can check, right?
That's the beauty of disagreements about, you know, those first class of disagreements.
The second one, these are more difficult.
These are disagreements about what the correct path is to take.
And these are like counterfactual claims.
These are claims like, if we raise the minimum wage, unemployment will go up.
And there are a bunch of different ways to think about these counterfactual claims.
One of them is we can look at, well, what happened when we did something like this in the past?
Do we have any past experiences like this we can go off of?
What does logic tell us?
Well, if we assume that people do X, Y, and Z, what do we think will happen?
What happened the last time we thought people would do X, Y, and Z, and then we implemented a procedure like this?
So those are slightly more difficult in that
Establishing the truth of a counterfactual is a little bit more difficult, usually, than a claim about what is the case, unless it just falls from like pure logic.
And then the third type of disagreement is a disagreement about where we ought to go, right, or what we ought to aim at.
And these are more difficult to resolve.
People will say things like, well, that would result in an increase in inequality or something like that.
Or this would result in more people being worse off, right?
And note that those two statements, this would result in an increase in inequality and more people being worse off.
Those are...
two different kinds of goals that we might have to weigh against each other.
And so figuring out whether or not you have a type one disagreement versus type two disagreement or type three disagreement is, I think, a pretty big key when you have a political disagreement with somebody.
So if I'm understanding you properly, Justin, it seems like the way that you're going here is that these type three disagreements are the most difficult to resolve.
And they also
might be the most difficult to resolve.
And they're also the thing that people tend to jump towards.
So people love to argue about where we should go in the future.
But it's also very difficult to have a resolution for where we should go in the future.
And I think what you're claiming is that
Parts one and two are oftentimes actually where the disagreement is rather than part three and people kind of get themselves confused ignoring parts one and two.
Yeah, I think that's correct.
I think people should focus more on parts one and two because I think that's where you can actually
It's one of the places where these conflicts are easiest to resolve, right?
A lot of times people who are in political disagreements don't actually want to resolve them.
They want to serve them, which is another reason why I think they're generally best to be avoided.
But if you want to actually have an argument with somebody, a productive one, then you focus on the areas in which one of you could at least in principle bring the other one around to your position.
That's the point of an argument.
And those
two areas seem like they're more fruitful in that manner.
The third thing, the other problem with the third is that, you know, we have a name for works that purport to show us what we ought to aim at as a political idea or ideal.
And those works are called works of utopia, right?
Just describing a perfect future.
And, you know, like some of them are satires.
But the problem is that we don't
Usually have a general agreement on what we ought to aim at and we recognize that we value a bunch of different things and those things all.
seem to have trade-offs with each other.
And so if you are going to be in an argument with somebody about this third type of thing, that's going to result in inequality or that's going to result in a lower standard of living, right?
You can point out that, well, these things actually do have trade-offs against each other.
And I know you're, for instance, all concerned about GDP or whatever, but would you still like think GDP answers all the questions, even if it resulted in an inequality where our
1% had 99.99999% of the wealth or whatever.
Or I know you're super concerned about equality.
How would you still follow that equality, that focus on equality all the way down to a world in where everyone's equal because everyone has exactly nothing, right?
So since these things have trade-offs against each other, pointing out that usually when people are arguing, they have a kind of
cartoonish version of what they're aiming at.
And so recognizing that for most rational people, if you think about it, that target is going to be vague and there are going to be trade-offs among all the things that you value.
And you're probably just going to disagree about the weights that you assign to the things that you want to value rather than what thing is, you know, this sole thing that you value over everything else, if that makes sense.
Yeah.
All right.
Well, this looks like a good spot for a break.
You reminded me of one of Milton Friedman's quotes.
That's one of my favorites.
And he said, a society that chooses equality before freedom will have neither.
And a society that chooses freedom before
equality will have generous amounts of both.
And so I liked, we know which path he wanted to choose, but it kind of highlights how what you just said on, even if we all have zero, which is where we were for the past 4,000 years or so, or more, or since the beginning of time, makes that short of the last 200 years.
So all right, don't want to get sidetracked.
Maybe that'll be a little cliffhanger talk.
We'll be back in just a bit.
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If you enjoy economic analysis but want to see how economic laws interact with moral principles, if you are interested in politics but want to explore how economic and ethical realities constrain our political choices, you should consider the PPE program at Ottawa University.
The Gordon Institute at Ottawa University is the best place in the Midwest for free enterprise education and its contribution to human flourishing, faith, and economics in action.
We have some great high school student programs like PPE Fest.
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All right, so we're back and Justin you had something about in terms of trying to diffuse but then maybe end a political argument you wanted to have?
Yeah, so I think this way of ending it is kind of a way of diffusing it.
Like if you have a disagreement about the way things are, right, you can check, right, or you can go and maybe you want to agree after you check on what you're actually seeing and that's fine too.
Then you can agree to disagree about that.
If you have a disagreement about these second areas where you're disagreeing about what will happen if we do X or Y,
I think a lot of people in political arguments tend to act like if they convince the other person society is going to do X or Y. They're not, right?
Me convincing my best friend to vote on the same side as me isn't going to get my candidate to win.
So I tend to think like a better thing to do when you're in disagreements about arguments in area two is to just
accept that you're in that disagreement and go, okay, well, then let's just make some bets, right?
And I'm not talking about like, do this to win money or whatever.
But this is kind of the way I think you should think about type two disagreements as a version of like epistemic probability where you go, I think according to my theory that I have about the world, the way it is the way it works, given that we are in situation s, if we do x, y will happen.
And your friend might say, I
we're in situation X or S, but I think if we do X, Z will happen.
Look, it's a counterfactual.
So there's a certain sense in which you're not going to be certain what's going to happen ahead of time, but you can go, okay, well, we'll agree to look and find out.
And then you treat it like the Lakers are playing the nuggets or whatever, right?
Wrap this kind of issue that you and your friend have to have like some falling out over.
the old agree to disagree.
Until your irrational friend says, well, it's stupid.
You're just stupid.
You don't see my way.
And then it's pretty
hard to end anything at that point.
Yeah.
So I'm sympathetic to Justin's attempts here, but I'm going to offer maybe a level of disagreement to what he's saying here.
And I could even be convinced past this.
But here's maybe like a counter to this, which is that
I think Justin's project here assumes that people are interested in coming to the correct answer, uh, with respect to politics.
And I don't know that that's the case.
There's very little benefit to coming to a correct answer with respect to politics personally.
Like, you know, what, what does it matter if you get your politics right?
Most people have very little influence on the political environment, so there's very little benefit to being right about things.
And so I guess, weirdly as an economist, I'm going to do the thing where I'm going to at least partly claim people are irrational now.
We could argue whether it's true or rational, but at least from like the layman's perspective, which is that I'm going to say, I don't think people are super interested in coming to a right answer.
I don't know exactly what leads people to be hyper focused on part three.
But I think that's where all of people's political interest actually resides as part three.
And I'm cynical enough that I think part one and part two are just like battlegrounds to sort of like...
Pretends like we're not talking about part 3 even though we are.
And so this kind of relates to Russ's point earlier.
It's like why is it that every like 15 years we get a new story about how if we don't address climate change the world's gonna end in 10 years?
Like why does that keep happening?
One explanation is like people keep getting number one wrong.
They keep thinking that climate change is gonna end the world and they're just wrong every time and if they could just get it right we fix things.
I don't think it's number one.
I think it's number three.
I think the people want a world where we don't use oil, gas, whatever.
For whatever reason, maybe they want global communism.
Maybe they really like trees and they somehow in their mind have decided that by worshiping the tree god, they must.
sacrifice oil or whatever.
I don't know.
But regardless, I think people just really wants to not use oil or not use electricity or at least virtue signal that they're not using those things or don't want to use those things.
And so as a result of that, they try to position that while we're in this world with number one, where if we don't do something, we're all going to die.
And so they've radically shifted number one to this crazy
no man's land that's not actually true of like you
have
to join with me because number one says if you don't join with me we're all gonna die tomorrow the question is are they actually getting number one wrong or are they so committed to number three their goal that they'll say number one is whatever they have to in order to get people to join with them and I sort of think it's the second thing like I don't think they're actually getting number one wrong
I think they want number one to be that the world's gonna end if we don't address climate change, not because they believe that's true, but because they want to address climate change, right?
It's that the internet meme that's going around where they're like, oh, you know, we have to get off oil and natural gas so we can address climate change.
And someone responds and says, hey, here, here's a nuclear power plant that will do exactly this.
And person says, well, I don't want a solution.
I want to be mad about climate change, right?
And I think that's sort of what's going on.
So I don't know, Justin, feel free to, you know, respond now.
I
we think the average person's beliefs are even simpler than this and I don't think simple is a bad thing for the record.
I'm not trying to like poo poo on everyone.
But at least like on a pundit level, I don't think people are interested in one or two.
I think one or two are these places where we sort of proxy war all of our different threes, all of our different goals.
Do you remember how I started the conversation?
No,
you
led
with number three.
I
was confused with the
numbering.
They're for the most part not useful.
I think you should avoid them.
Because I don't think that most people, you can change their minds.
So I actually 100% agree with everything you just said.
I think that most people started, and I'm glad that you said that thing at the end about how you think most people are even simpler than that, because I think that's correct too.
I think it would be an improvement if most people started at three and had an accurate picture of their ideal world and then worked backwards from it, which would still, I think, be doing it wrong.
I think most people just go, okay, what am I supposed to hate or love for today?
And it's not consistent over time.
And they don't really care.
And they want to be mad at the things that their friends are mad at and cheer for the things that their friends are cheering with.
Yeah, I would agree with you.
My ultimate conclusion is that there's like some social determination at the end of the day going on.
Yeah.
So my only project here is like, how to if you're going to have a political
disagreement with somebody.
It seems like the only way to make any progress is to move those type three disagreements into disagreements about areas one and two, because those seem to be the only areas where we could even in principle have a productive in the sense of bringing one person over to the other person's side.
And I think it's flag that the person that you're
trans discussion with isn't interested in having that kind of discussion.
If you can't get them to have type one and type two beliefs in a way that seem like they're falsifiable.
I'm trying to think of how the, I can't remember, Peter, maybe you can help with the, I don't think it's over competence bias, but when the ownership bias, when you own that thought when it's yours, it'll kind of make you feel better that
you're defending it.
And so again, kind of comes back to not really trying to solve a problem, but to protect your your thoughts you own.
I talk about the endowment effect.
Yeah, yeah.
And but in a little bit different way that it's that you're owning those thoughts or that belief, and that you're getting more benefit from defending it in a sense rather than attempting to really have a rational conversation and come to a solution.
Yeah, I think, I think you're right.
I think that people get wedded and tashed, especially this happens with like teenagers and young people in general a lot where like, and actually to Justin's credit here, and I think he already explained himself well, but even to add to it a little bit, I think people become more type one and type two people as they get older to type three is the realm of like the ideologue and like people get really ideologically interested when they're, I don't know, 13 to 30 range and maybe even a little bit past that.
So that
That's why you, like teenagers are anarchists a lot, right?
Because like they're just embracing the logical inclusion of their ideology of liberation.
Whereas like you meet very few 45 year old anarchists because it's like, well, there's anarchy.
I'd lose my 401k.
So I don't really want that, right?
It
doesn't
want to maximize freedom.
Right.
Yeah, exactly.
Exactly.
And so I would agree people kind of will really fight to hold the beliefs that they otherwise want to hold.
Ultimately, and we don't have to get too far into psychology in the podcast, but I really think a large part of people's worldview is dependent on what their parents believed and their relationship with their parents.
Like those two things can determine a lot of where someone starts.
And then I think Russ is right.
People try to fight to maintain the thing that they believe they try to make acts which support their
worldview be semi-coherent or you know people are always looking for like an epistemic way, first principles way to just like confirm their system so that I don't have to think about it more.
All right well this has been a production of the Gorton Institute here at Otto University.
I'd like to thank you all for listening.
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Hi, this is Dr. Russ McCullough, Professor and Wayne Angel Chair of Economics here at Ottawa University.
That's Ottawa, Kansas right here in the Midwest.
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be fruitful multiply.
Thanks.
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And I remember as a young lad, 50 years ago, I was just learning to drive my car, go back 50 great years, circa summer of 75.
And again, we'll hear those strains of Cracklin' Rosie and Neil Diamond in the background with Kurt and Norma.
Let's take a quick listen
here.
I can't believe it.
Let them surprise you.
Hey, the home is
beautiful.
You know, Barbara, it's pretty awesome to hear that, and let's hear part two of that.
If you're looking for a home, a home that fits your style of living and your budget, a home that's easy to live with, practical and affordable, an attractive home that you can own with pride.
This is the one.
You've come to the right place.
Curt and Norma Hames can show you just the home you're looking for.
Help with financing too.
Hames Mobile Homes, Marion, Iowatha, and Iowa City.
The Homes People.
Oh, Barbara, your dad bestrelled the world like a colossus seeing him in his prime along with your mother.
They built a beautiful foundation for a business that is literally doing, I can't think of a better vocation in life than to bring safe, affordable, beautiful homes to families.
Oh, Don, that brings back so many memories.
What a great commercial.
Thanks for playing that.
Yes, my parents started this business in 1969 when they retired from the Army.
They didn't know anything about housing.
They didn't know anything about Iowa.
Mom is from Indiana, Dad's from Missouri.
but they knew that people would always need good, safe, affordable housing, and they were right.
I don't know if I ever mentioned this to you, John, but Hames has sold over 14,500 homes.
Incredible.
In 15,000 homes, my goodness.
Yeah, and you know how we sold them?
We sold them one at a time.
Yep.
Matching the right buyer with the right home one at a time.
through all the years and it really has paid off.
We have sold multiple homes to the same families.
We have sold multiple families that all want to live together in our neighborhoods.
We love that.
And I think it just reinforces that we are a family business.
We're a three generation family business and we love serving families in eastern Iowa.
Here with Barbara Hames Bryant, who is truly one of Iowa's premier
business leaders both in her industry nationwide, but also as the head of some statewide civic organizations, Barbara Hames Bryant, daughter of Kurt and Norma, bringing us this comfort, beauty and value in eastern Iowa.
It was not lost on me, Barbara, that we just hit that fifth year anniversary last week of the Dreaded Durecho and you guys stood.
strongly, proudly, and tall.
You know, there's that Aesop's fable about the wolf and the little pigs, and the house of straw, the house of wood, and the house of bricks.
The derecho, I think, blew down all three of those, but the Hames Homes withstood the tide.
It is so ironic, John, that 140 mile an hour winds.
for 40 minutes here in Southwest Cedar Rapids.
None of our homes blew over.
None of them blew away.
A couple of them had siding and shingle damage, you know, of course.
And of course we lost a lot of trees, but the only major damage we had was to our own office, which is a brick office.
The roof flew off.
It's ironic.
It's ironic.
Well, one thing that never flies off are those American flags, the Iowa blue, white, red eagle with our.
our liberties reprised and our rights we will maintain in that POWMIA flag, always remembering our veterans.
Barbara, you guys come from a service family and two of the issues that seem to resonate nationwide in all of the polling these days, Barbara, are safety.
especially from crime, and then finances.
And the one-two punch that I believe the Hames Homes people deliver better than anybody out there are the safety of your communities and the incredibly lucrative financing options for people to afford to be in safe, beautiful, affordable homes.
As far as the safety of our communities.
I want to re-emphasize that people still need to be diligent.
There's no place on earth that's perfectly
safe.
But we go the extra mile.
We have security cameras.
We have unsolved managers, 24 hours a day, seven days a week.
We are installing brilliant new street lights so people can see their way around.
We also have additional police patrols that we pay for after hours.
So we do our best to keep
our residents as safe as possible, but most of all they keep each other safe.
People here really watch out for each other.
Now as far as the financing goes, there have been some banks and financial institutions that have started lending for manufactured housing.
They're starting to realize that mobile homes are not going to blow over and they're not going to go away and they're not going to be appreciate, so they're happy to lend to qualified customers.
that we've got some great financing options for anybody who'd like to come in and talk to our sales staff.
Curtis Haynes and Clint Haynes, excuse me, Curtis Haynes and Clint Alderman about matching them with the right home and the right financing.
Here with Barbara Hames Bryant and, you know, take it from Barbara, take it from me, but the testimonials, it's hard to top some of the testimonials that come in about the Hames communities at Summit View and at some point Grand View.
Here is Betsy Norris.
The past 25 years have gone by so fast.
I love living here.
Thank you so much for all of you and what you do.
And Emory and Frankie Sample, we are very grateful to the Hames family
for making our life happier in our golden years.
And then Lisa, nice, quiet, park, stop signs, good playgrounds and clean streets.
Jessica Simmons, very nice community.
very clean and well taken care of.
And Chantel Fries here saying, everything's kept clean.
And I think it's neat how Summit View hosts so many events, sometimes specifically for seniors.
I think it's adorable.
And again, from Alberta Bermuda's friendly, clean, professional, nice place.
Jim McDonald says, Hames runs a top shelf organization.
It's highly regarded everywhere.
And finally,
Turner.
Everyone here is so kind.
I love the extra things this neighborhood does for its residents, the food pantry, the clean lots, the play areas.
I could go on and on.
Susie Heffern is a lovely place.
We like to call home.
And Tony Aglar, very customer-oriented, service and friendly.
It never stops, Barbara.
They love you.
That's the greatest testimony of all.
Our mission in life is to provide clean, safe, affordable places where people want to live.
Barbara Hames Bryant, how do we find you?
I know how to find you, Barbara.
I drive by.
I know that Marianne Legacy number, and I know how to find you on that beautiful website.
We've got this awesome blog, and the blog articles have been fantastic of late.
You guys have done some magnificent things about comparing, for instance, condo and townhome buying.
versus the advantages of being in the manufactured homes.
Barbara, how'd they come by for a visit, call you, or find you on the web or on Facebook?
We've had the same phone number, John, since 1969, and it is 319-377-4863.
That's 319-377-4863.
Most people look for us first on our website, though.
HamesHomes.com.
That's H-A-M-E-S-H-O-M-E-S.com.
We're also open seven days a week at our sale center at the corner of Wilson Avenue and West Post Road Southwest in Cedar Rapids.
That's Wilson Avenue, West Post Road, Southwest Cedar Rapids.
Here with Barbara Hames Bryant and guys, you all belong in a Hames home and
Go to that beautiful website.
They've got such an excellent blog, Articles Weekly.
Right now I refer you to part three condo shoppers and owners.
Barbara is always a joy to visit with you and hey, for those folks living in Iowa City, working at the hospital, going to be spending some time at the hospital or taking classes at any one of the great colleges and schools at the University of Iowa.
You're just a stone's throw away.
Hames Homes is a viable alternative to an expensive dorm or Iowa City apartment.
You couldn't have said it better, John.
Thank you.
Barbara Hames Bryant is always a joy to have her on with us.
We're at a midpoint of the show here on Saturday morning on KXEL, the Jacobson group.
And we always thank Barbara Hames Bryant, the great people at Hames Homes for their collegial endorsement of our endeavor, current events, sports and weather on your weekends in East
This
is Dr. Russ McCullough, Professor and Wayne Angel Chair of Economics here at Ottawa University in Ottawa, Kansas, right here in the heart of the Midwest.
I founded the Gortney Institute, a think and teach tank back in 2018.
We've been building and building on student programs.
We have a capital campaign right now.
for our goal of one million dollars.
It's going to take small donations and big donations to make that happen, but it's all part of an overall capital campaign for Ottawa University.
The Institute includes two other professors, Dr. Peter Jacobson in Economics and Dr. Justin Clark in Philosophy.
Where else can you find a place that has student programs of debates, movie nights, speaker nights,
book clubs, colloquiums, and game nights.
These event topics include stuff like immigration, federalism, the Constitution, individual freedom, Bitcoin, voluntary exchange, free enterprise, rule of law, faith, family, community, and local self-governance.
Where else could you find a university that's providing that kind of education to students?
If you want to learn more about what we believe and teach, check out our Faith in Economics podcast.
It's available on all the major channels.
You'll see that the titles we have really show what we discuss with students on a daily basis.
This capital campaign is important.
Donations big and small are welcome.
Contact me directly at Russ McCulloch at Ottawa.
edu.
That's r-u-s-s dot m-c-c-u-l-l-o-u-g-h at Ottawa o-t-t-a-w-a dot edu.
Or just call me directly 785-242-2558.
That's 785-242-2558.
Love to chat with you more about our programs and what we do for students here at Ottawa.
Thanks.
Economics is the study of human choice in the world we live.
Faith is confidence in what we hope for and assurance about what we do not see.
By investigating faith in economics, we can learn how they lead to human flourishing.
This is the Faith in Economics podcast, a presentation of the Gortney Institute at Ottawa University.
Welcome to our show today.
I'm Peter Jacobson.
I'm the Gortney Professor of Economic Education and Research.
Joining us today, we have Dr. Russ McCullough, the Wayne Angel Chair of Economics, and also the founder of the Gortney Institute.
All right.
Well, Peter and I had an opportunity to talk to some of his church members.
They had a special meeting and just related to personal finance.
And then coincidentally, I also got asked by Wallet Hub to
given opinion on some of the questions they had relative to budgeting.
So we ended up talking about budgeting here a couple times thought it'd be a good topic for podcasts.
So what I addressed on the Wallet Hub app or WalletHUD.com article was nearly three in four Americans think more people should start using a budgeting app.
according to a recent Wallet Hub survey.
Do you agree?
And I basically agreed in in terms of needing to do a budget is where I responded back.
I don't think you really have a good chance at financial success except with a little and I mean true making it happen.
financial success without, you know, just kind of stumbling into some luck without having a zero based budget.
And so there are a number of apps out there and I use an Excel spreadsheet.
and Peter uses a spreadsheet and so it doesn't have to be an app and so I mentioned that in my comments too and I've also counseled people that did a notebook paper and pencil I mean you can literally write it out if you keep it fairly simple it doesn't have to be elaborate if it's too complicated then people tend not to do it but of course the nice thing with a app or a spreadsheet is it does all the math for you and you can kind of set it up so so yeah I did definitely agree with that there's just a number of things
we can get into related to that I think kind of come out of the exercise of doing budgeting.
Yeah I tend to agree that with Russ that financial success for the average person is pretty dependent on having a budget.
So I want to start off immediately by getting into like sometimes people will
the kind of poo poo on budgets and the way that they'll do this is they'll say you don't really need a budget to get rich because the people who are really rich don't get rich by you know saving pennies they get rich by starting businesses and all that and let me begin with like there is a great a grain of truth there but it's not actually an accurate picture the grain of truth there is it's true that they're ultra rich people in the world people who are multimillionaires and billionaires you know we're talking tens of millions of dollars in net worth plus those people get rich by creating something and selling it usually
and one form or another, right?
Or they find some sort of opportunity that people haven't before, essentially.
That's true.
But the United States has lots of millionaires made over every decade, and usually it's over the course of somebody's life.
Their wealth accumulates beyond a million dollars.
So, you know, if you've got a $300,000 house and, you know, you've got a 401k that has, you know, a high valuation, you can start to add up those numbers and realize, oh, you know, it actually makes sense by the end of somebody's life that they could reasonably be a millionaire.
In fact, the US adds millionaires every decade.
Now, some of that's due to inflation maybe, but a part of it's just because
the way that the average person becomes wealthy is by slowly accumulating wealth.
So it is true that the ultra rich get there by inventing something, but that doesn't mean that that pathway is open for everybody.
That's, it's actually really bad advice to say, well, if you really want to get rich, you should just like start a company and sell it for millions of dollars.
It's like, yeah, if you give that advice to a hundred people, maybe like one of them, not even one, probably out of a hundred would be successful, right?
But.
It's a surefire strategy that if you want to accumulate wealth over time and improve your position, having a zero-based budget, monitoring your expenses, that's the way that people
on average tend to build wealth.
So any comments on that Russ?
Yeah, for sure.
And people who are my brother does credit repair, actually.
So Chad McCullough, A plus, I'll put a little plug in for armor credits.
And he has lots of clients.
He just baffles them that he'll have people making 200,000 plus a year that are broke.
And they have bad credit on top of it.
They're trying to buy a house.
So they're and these are sometimes doctors and lawyers and professionals.
And so the bottom line is if you're not doing that budget and you're using the credit card to kind of try to manage things and something happens and you miss a few payments or whatever, if you are spending more money than you are earning, you are gonna be broke and running the risk of having some credit problems and having to talk to my brother.
So yeah, and that's what we mean by having a plan for your money.
And that's what the budget is, is just telling your money where to
go.
Spending it in advance as a way in this church discussion we're having Russ described it as basically all your money is already spent in a certain sense now
It doesn't
mean you immediately spend as soon as you get at
what it
means is all that money is accounted for at least in some category Maybe you don't know exactly, you know, if you have like a for example category for going out on dates, right?
You might not have a category that's like, oh, this is the Olive Garden date.
That's gonna be you know 49 90 like it doesn't have to be that particular But you should know like okay, I'm the you 60 of these dollars
to go out on date or 80 or whatever.
So that's what we mean.
I think Russ is exactly right.
That's what we mean when we think of a budget.
It's planning for the spending of your money ultimately.
That requires two things.
One, it requires you to make the plan in the first place.
And so let's talk practical steps here, Russ.
What would you say is the first step for anybody as they start to try to straighten out their finances in terms of getting the budget together?
What's the first thing they should start saving towards or building up towards?
What's your take?
Well, I do follow the Dave Ramsey system and I've been teaching it for, I use it personally and I've been teaching it for now.
well 13 years ever since I started the first class here at Ottawa University and I've taught the Financial Peace University at my church a handful of times.
I haven't done it for a while, I probably need to.
And their baby step number one is to build an emergency fund.
And so $1,000 emergency fund is a great step if you are running tight on money.
And when I say this kind of goes, you don't start saving $1,000 and then start doing what I'm talking about.
This is all kind of going together.
But mindfully, you're thinking, I need to have at least $1,000 to make any budget work.
And so I'm going to write down the places where I spend my money.
Here's where you could do a little bit of history.
I mean, go ahead and open up your account, whether if you've been using a credit card or you've been using your checking account, look at where your money's going and start to build these categories.
And I want to emphasize that.
Or build on what Peter was saying that it should not be that detailed or it will break.
it won't work So if you you know seem like you go out to restaurants and and you want to continue to do that make a restaurant category and Have a food category maybe for home groceries A lot of times it's good to keep those separate because that's a little easier to go to the grocery or cheaper usually to go to the grocery store and then When you start to run out of money, you might think oh, okay Well instead of going out to eat four times this week, maybe we only go out
two times or three times, right?
And so that's when you start seeing the trade-offs.
So I feel like we should back up a little bit just to make sure we're crystal clear on a zero-based budget.
It just means that all of your planned inflow of money, which means your paycheck coming in, but maybe you got, if you're a student, you got some student loans you've taken out, grandma gave you a loan, any money that's planning to come in in the next month.
is equally matched with your spending for that month.
So you have your planned income, which might be if you're just starting out, you have $750 and you're checking your account right now, start to give it an A.
Paychex coming next week, you got 750 account, take out a piece of paper or open up a computer and just start to spend that 750 until it goes down.
When I say spend now, I'm saying planning the spending, right?
So it's the planned outflow.
What are you gonna do with the 750 bucks?
And so then your inflow equals your outflow, which means your income minus your planned spending equals zero.
And that's our zero based budget.
And so by driving that number to zero now, when things come up during the week that, oh, I'd really like to buy this or let's jump on Amazon and do this or whatever, where's that money coming from?
It's got to come from one of those, but if you have 10 spending categories, that thing you want needs to come out of one of those buckets.
And so it forces a decision.
Do you kind of...
have the money or not takes on a different light because a lot of people, when they're like, oh, do I have the money to buy this thing on Amazon?
Well, let me open up my checking account.
The checking account balance says I have $750.
Yeah, I can buy the $160 item, right?
This is not what we're talking about.
Yeah, because you forgot about the rent
and the utilities.
You
forgot about the utilities, you forgot about the food.
So whether you have the money or not is actually determined by your zero-based budget now, not the amount of dollars in your account because every dollar has a name already.
And so I don't know how you go about this, but always in my budget, one of my categories is a saving category.
And whether or not I'm putting money depends on my situation.
So if I am very low on savings, like let's say that you've never budgeted before, you're just starting out right now, you start out really low on savings, you could have a savings category that maybe you're putting away, I don't know, $100 a paycheck.
It'd be pretty big for someone first starting, but that's a decent amount to put away.
And then you can start to build that towards that safety net, that nest.
Which, Russ, have we gotten into detail on that yet?
No, no, we haven't.
And then there's just a lot to chew on here, so I'm trying to put this in the right perspective early on.
So yes, with every dollar having a name...
Part of that could be part of money that you're saving.
And you might have a separate saving account that you're putting money into.
But I also wanted to highlight that your emergency fund is a kind of a form of savings, right?
It's money that's there just in case an emergency happens.
And then as Peter was saying, you might be saving for a car or school or something else.
And so Dave Ramsey's referred to this as the envelope system.
And it's not something he invented, it's something grandma invented.
Like literally they put money in different envelopes.
One was marked car, one was marked school.
and one was Marked Emergency Fund, right?
And so you've got the money partitioned, in this case, usually with cash, in a physical envelope.
Well, you can do that, and I do do that.
I show my wallet to my students that I keep a little post-it note tag on there.
So every dollar in my wallet has a name on it too, and it's usually house and other things.
And so if you have a single savings account, now you just keep track of if there's
$2,000 in your savings account.
Well, 1,000 of that is the emergency fund and 500 of it is the car and 500 of it is the school.
And so you've kind of partitioned like you did with a physical envelope, but now you're doing it with your savings account and you're keeping it.
on a notebook paper or on your Excel spreadsheet.
So all of that gets worked into the overall budget.
And eventually, when you get through having a nice size emergency fund, three to six months of your spending, and if you're debt-free, so I don't know if I need to go through all the Dave Ramsey steps here, but one is a $1,000 emergency fund.
Two is to pay off all your debts to become debt-free except for your house.
That's one carve-out for that, but no car loans, no school.
loans, no credit cards, no loans.
And then baby step number three is to beef up your emergency fund to three to six months of expenses.
And then baby step number four is to put 15% of your income towards investments.
So maybe in the second half, we'll start to get into investments.
But the point with all that is that to get it back to the zero base budget, all of that's driven by your budget.
Because if you're wanting to put money someplace towards something, it's all going to be accounted for.
And that gets you moving the right way and really seeing where your money goes.
Yeah, I think this idea of having these different categories of savings is really valuable.
It can also help you mentally catalog what...
safe for things like, you know, short-term investments, long-term investments, stuff like that.
Should I put my money in a CD?
Well, it's an emergency fund.
You really don't want it locked up in a 12-month CD.
But if you've got some extra money for savings, absolutely.
Yeah.
So I think that then kind of takes us into a lot of what we spent time talking about in the church.
And we could go other places too, Russ, if you want.
But a lot of the things we talked about during this church talk was the moral dimension.
Yeah, of what it means to budget.
I got one more thing before we circle that maybe that'll be second half because the the moral dimension is important.
I was thinking in relationships that you know your value if you start to look at where you spend your money it kind of shows your value system what are you spending money on and then working with your spouse on this can help eliminate does help eliminate all your money fights because you basically talk about it before it happens and then sometimes one person cheats a little and spends some money in one category doesn't tell the other spouse but then it eventually gets
found out because there's a trail, a money trail, so there's lots of interesting things, dynamics that come up with spouses related to that.
But I want to emphasize that this is work.
I think I made this comment on my post for the Wallet Hub too, that don't expect you can just pick up the app and get this done in three minutes because you have an app doing the work for you, which is just doing the math for you.
The harder part, I think Peter, you did a good job at the church presentation talking about the time that you put in.
and I think somebody asked.
you know, do you have to go line by line or something?
It's something about the detail.
And we said, yes, you absolutely have to.
You'd be surprised.
I think all three of the panelists commented that going line by line on what was spent is the way to really like, oh, yeah, I remember buying that.
And then all of a sudden it kind of sheds light on, I do kind of spend money dumb in dumb places sometimes, you know, or whatever.
All right.
Well, this has been a production of the Gorton Institute here at Otto University.
I'd like to thank you all for listening.
Five Star Rating helps other people find us, so otherwise just
us along to friends and family that might like to take a listen.
Hi, this is Dr. Russ McCullough, Professor and Wayne Angel Chair of Economics here at Ottawa University.
That's Ottawa, Kansas right here in the Midwest.
I founded the Gorton Institute, a think-and-teach tank here, and we have a capital campaign going on right now where we're trying to raise one million dollars total.
We need donations both big and small, and we hope that you'll
think it's a great place to invest your money where college education looks a little bit different than where it does in other places.
We have student programs like debates, movie nights, speaker nights.
Book clubs, colloquiums, and game nights.
Topics including immigration, federalism, the Constitution, individual freedom, Bitcoin, voluntary exchange, free enterprise, rule of law, faith, family, community, and local self-governance.
Where else are people sharing these types of ideas with high school and college age students?
If you want to learn more about what we teach and believe, check out our Faith in Economics podcast that comes out weekly.
There you'll see the types of things that we talk to students about every day here at Ottawa.
This capital campaign is important, so please contact me directly if you'd like to give.
That's Russ.McCullough at Ottawa.edu, R-U-S-S dot M-C-C-U-L-L-O-U-G-H at OttawaOTTAWA.edu.
Or you can just give me a call, 785-242-2558.
That's my direct line here at the university, 785-242-2558.
Other than that,
be fruitful multiply.
Thanks.
Thanks again, guys.
We are in mid-August and we'll be doing heavy football next week.
Hawkeyes, Cyclones, Panthers, Bulldogs, and tell your friends about the podcast, kxl.com slash Jacobson, J-A-C-O-B-S-E-N.
In the meantime, listen to all the wisdom of Jeff Stein during his weekday news and commentary.
And folks, always remember and never forget to be safe, be smart, be good.
Be strong.
Love Jesus Christ.
And God blesses everyone.
Till we meet again, have a great weekend and bye-bye.
