Sophie, you didn't tell us you had been replaced!

[Cortopassi]

I began talking about frugality, Mr. Money Mustache, and the like, and pointed out a few examples of how easy it was for our family to substantially reduce our spending in a variety of meaningful ways.

We watch that Tiny Houses show every now and then and it makes me think if the majority of Americans were as frugal, or are becoming as frugal, as most here seem to be, I wonder how America ever gets out of this low growth/no growth phase of the economy.  I know it won't be me spurring the economy on with large purchases of anything!

[Pointedstick]

Mr. Really Narrow Streets has the answer:

http://www.newworldeconomics.com/archiv ... 91910.html

Our national GDP statistics make no distinction between goods and services. Ten gallons of gasoline, at roughly $30, counts just the same as an hour of surfing lessons. A week at Club Med, for $1200 let's say, counts just the same as a hundred sheets of plywood. Nevertheless, we imagine, for some reason, that producing goods is the only "real" economic activity, and that services don't count. I said this was a little like when industry first began to appear. People thought that agriculture was the only "real" economic activity, and that manufacturing didn't count. All the wealthy people were agriculturalists -- the landowning aristocracy. They probably imagined the "economy" as being like a giant farm. After a few industrialists became more wealthy than the landowners, people's views changed such that factories making widgets were the focus of attention. I would even say that this is a major component of the Heroic Materialist style in all things -- that more is better, and more means more stuff.

Today, most people see an "economy" as a sort of giant factory. They assume that "growth" means the same thing as today, just more of it. So, if the "economy" is generating 370,000 tons of steel and burning 4 million barrels a day of oil, they assume that, after a period of "economc growth," it will generate 450,000 tons of steel and burn 5 million barrels of oil. The "Peak Oil" types also assume that, if only 3 million barrels of oil per day were available, then the "economy" would also contract in perfect proportion. It's like there's a slider with More of the Same on the right and Less of the Same on the left.
[...]
One reason I bring this up is because I think that the unintended consequences of More of the Same, having built up over decades, have finally reached a point where many people can no longer call "growth" a good thing. Do we need more McMansions and big box stores, with more SUVs to drive around in and parking lots to park in while we burn more oil and kill off more of the natural world, not to mention our own cultural heritage as we gradually decay into a nation of "consumers"? This is why I go on and on about the end of the era of Heroic Materialism. We are so done with that Heroic Materialist crap.
[...]
Previously, I brought up the idea of an economy that is centered on performing arts. Performing arts count as "economic activity" just the same as paving parking lots. This was an intentionally whimsical idea to get people to think about what a "service economy" is. A "service economy" is about people doing things for other people, instead of making things for other people. You could imagine an economy which had an enormous output of performing arts. We would spend a lot of our income on watching live performances, several times a week. Consequently, we would have lots of people employed as performers, and in related jobs. We can see that this has practically no resource component. An economy whose output is performing arts doesn't require natural resources, doesn't consume much energy, and doesn't pollute. You could have "growth" in the form of -- not more -- but better performing arts. (Most manufacturing is about more but most services are about better. You can't eat two dinners at once, but you can go to a better restaurant.) In that case, growth would be Better of the Same, which would of course be more highly valued (think of an expensive restaurant compared to a cheap one), and which would then turn up in the standard economic statistics as "GDP growth."

[Xan]

I began talking about frugality, Mr. Money Mustache, and the like, and pointed out a few examples of how easy it was for our family to substantially reduce our spending in a variety of meaningful ways.

We watch that Tiny Houses show every now and then and it makes me think if the majority of Americans were as frugal, or are becoming as frugal, as most here seem to be, I wonder how America ever gets out of this low growth/no growth phase of the economy.  I know it won't be me spurring the economy on with large purchases of anything!

Does it mean I'll be able to buy a nice big house for cheap?

[Cortopassi]

Does it mean I'll be able to buy a nice big house for cheap?

I'd place a bet that you'll have a darn good opportunity again in the next few years.

[Pointedstick]

Anyway, I ran across this article today (free!) that speaks to this point:

Secret Shame of the Middle Class
-- Rod Dreher in The American Conservative

The article linked to from that one is incredibly depressing. It also reinforces the fact that it's not really an income problem, it's a spending problem. There is a large measure of personal failing here, but yeah, the rest of society contributes too. Buy buy buy! Consume consume consume! You don't want to look poor, do you? What, you mean you haven't watched all the trendy TV shows?

Marilyn Manson said it pretty well in an interview in Bowling for Columbine: https://youtu.be/cYApo2d8o_A?t=3m10s

I think the best ambassadors for a reduced consumption financially secure lifestyle are ultimately not people like Jacob Lund Fisker, Mr. ERE (no car, lived in an RV, cookware consisted of one plate and one fork, etc) but people more like Mr Money Mustache who look like they have not only a totally normal life, but a fabulous one--and under the hood, it's really inexpensive and he's rich.

[Pointedstick]

The basic thing that comes out in these sorts of stories is that a lot of people have aspirations that are bigger than their means--aspirations that are are tied up in a self-image that is very resistant to being changed. You don't want to be the kind of person who isn't able to send each of your children to the college of their choice. You don't want to be the kind of person who has to live with only one car or considers eating out a luxury or doesn't go to Disneyland or Paris every year.

Americans are constantly being told that we're the richest and most powerful country in the world; that optimism and hard work are all that are needed for us to have everything we want; that we're the good guys in the movies of our own lives and we we know kung-fu and shoot all the bad guys and get the girl in the end and always win no matter what (There's the Trump appeal right there). It seems that a lot of people never question these messages or stop to consider that their cultural birthright alone isn't enough to provide all of these things; that they're still going to need to be canny and thoughtful and plan well and not bet the farm on unrealistic dreams. This is why even people or families making six figures wind up in trouble. No matter how big your means are, your aspirations have no limit.

The author of that article definitely fell into that trap. He wanted it all: house in New York, two cars, private school and two fancy college degrees for his kids, but he was a freelance writer without a steady income, and a wife whose employability atrophied after she left work to become a mother.

[MachineGhost]

People keep stretching themselves to pay for these things despite the fact that everyone emotionally understands that they're now disconnected from your actual status because you don't need to be rich to make the payments.

I sincerely doubt that.  You're applying a rational thought over envy.  Cars and houses are the ultimate status symbols.

We need to be the change we want to see in the world. The message of financial freedom through simple, painless changes is an exceptionally attractive one to most people, and you will become practically magnetic. We don't need to change the world; we just need to change one person at a time. And then they'll do likewise and sooner or later truck sales are in the toilet and Ford can't figure out what happened. Find people who are receptive to your message and spread it--gently, honestly, and with genuineness and integrity.

That took an extremely long time with marijuana and the fat lady hasn't even sung yet.  I've got bigger fish to fry than worrying about people's conspicious consumption.

And BTW, I'm not frugal by choice, I'm frugal because I'm poor.  And I dislike it.  I hate the discipline, I hate the limitations, I hate the stress and most of all I hate that in the social pecking order, I'm at the bottom of the totem pole and worse of all, I'm white not colored.  So my motivation in getting out of being poor is not to aspire to the same level of frugality while also being at the top of the totem pole.  That's just sheer treasonous, hypocrisy!  That would be like MangoMan dating heroin addicts while wearing lederhosen...

[Pointedstick]

People keep stretching themselves to pay for these things despite the fact that everyone emotionally understands that they're now disconnected from your actual status because you don't need to be rich to make the payments.

I sincerely doubt that.  You're applying a rational thought over envy.  Cars and houses are the ultimate status symbols.

They are? To be a good status symbol, something has to be genuinely difficult to obtain by low-status people. That's not true of fancy cars and houses. Honestly, the real status symbol these days is probably visibly good health and fitness. But you're probably right that a depressingly smaller fraction of people than I think have picked up on this.

[MachineGhost]

The author of that article definitely fell into that trap. He wanted it all: house in New York, two cars, private school and two fancy college degrees for his kids, but he was a freelance writer without a steady income, and a wife whose employability atrophied after she left work to become a mother.

Your career/vocation has to match your aspirations or you're just deluding yourself.

[MachineGhost]

They are? To be a good status symbol, something has to be genuinely difficult to obtain by low-status people. That's not true of fancy cars and houses. Honestly, the real status symbol these days is probably visibly good health and fitness. But you're probably right that a depressingly smaller fraction of people than I think have picked up on this.

If you feel insecure without a car or a house, there's your answer.  No need to mask it out of embarssment -- we all experience it.

[Pointedstick]

If you feel insecure without a car or a house, there's your answer.  No need to mask it out of embarssment -- we all experience it.

I don't feel insecure without a house or a car. In fact for years I have repeatedly devised and intermittently executed plans to get rid of them. My family certainly has a smaller amount of "car and house" than many seem to--and it's about the maximum I can stand.

[MachineGhost]

I don't feel insecure without a house or a car. In fact for years I have repeatedly devised and intermittently executed plans to get rid of them. My family certainly has a smaller amount of "car and house" than many seem to--and it's about the maximum I can stand.

Yes, but you're just weird.

[Pointedstick]

I don't feel insecure without a house or a car. In fact for years I have repeatedly devised and intermittently executed plans to get rid of them. My family certainly has a smaller amount of "car and house" than many seem to--and it's about the maximum I can stand.

Yes, but you're just weird.

Or maybe you're so suffused in poverty culture that its effects have become invisible to you. One of the most self-destructive financial habits that poor people engage in is chasing after perceived status symbols (dangled in front of them by psychologically-savvy marketers) instead of getting their financial houses in order to escape from poverty.

Didn't you ever read The Millionaire Next Door? The rich people are hiding in plain sight, unconcerned with status symbols.

[Libertarian666]

OT: At least women are half the population (not that I don't agree with you). Aren't many progressive policies rearranging society to the liking of small groups at the expense of larger groups?

Yes, but the people who are actually privileged by feminism are a very small part of society: unattractive women and highly attractive men.

Everyone else gets hosed.

Okay, I get the unattractive women part. How do highly attractive men benefit?

Because they get to have sex with as many attractive women as they want to, whereas under the old system that was highly frowned-upon to the extent of being hazardous to their health.

[MachineGhost]

Or maybe you're so suffused in poverty culture that its effects have become invisible to you. One of the most self-destructive financial habits that poor people engage in is chasing after perceived status symbols (dangled in front of them by psychologically-savvy marketers) instead of getting their financial houses in order to escape from poverty.

In fairness, they face highly regressive incentives in getting out of poverty.  But, I don't have an explanation for those people otherwise.  Nothing is stopping them from getting self-etucated especially with the Internet.  If the newly freed Negroes could grow watermelons and be proud of it, what's stopping them now???

Didn't you ever read The Millionaire Next Door? The rich people are hiding in plain sight, unconcerned with status symbols.

Of course I read it.  But the problem with the people in The Millionaire Next Door is they're fucking boring.  They're not the vanguard of anything.  They're not going to change the world for the better.  They don't lend out venture capital to risky startups.  They're ... conservative.  They work hard and not smart.  They simply don't matter in the great grand scheme of things.  If that's what someone wants to aspire to -- a rich but smug quiet life of not mattering to anybody but themselves and their immediate family and friends, well, that's not so far off from a life of quiet desperation really.  The only difference is in the mental attitutde in that they can bullshit to themselves: "Oh look, I have a six figure net worth and a six figure income, I drive a new used luxury sedan every three years, live in a modest home, all my children have gone to private schools, I'm more than set for retirement as a even more boring old fart couple, so I need not worry 'bout 'nothing.  All is well.  I am happy."  I like to think of folksly Buffett as a protypical example of these types of people except obviously Buffett is a hypocrite and a huckster since he says one thing and does completely the opposite, but I digress.

So, I say those people have a completely different expectations yardstick to judge success by than what I suspect most (young) PPers do.  They simply have low expectations, otherwise they would have taken more risk in life than frugally and painfully saving their way into financial freedom over a slow and agonizing 45 years and then they're too old and creaky to really enjoy all aspects of their new freedom.  I daresay that "Puritan work ethic" generation is going to be gone for good as soon as they die off.  People want to matter and have an impact nowadays, even if only to themselves.

 

[gizmo_rat]

But the problem with the people in The Millionaire Next Door is they're fucking boring.

Yep, when complete conformity (do well at school, get a good job in finance, engineering or law, max out your 401k, don't do anything "stupid", retire at 45 and play with your spreadsheet...just look at Buffet ) is presented as a counter cultural message for the young, you know we're fucked.

Historically anybody who did anything interesting (writers, poets, artists, scientists, inventors); did a lifetime of risky stuff and died up to their eyeballs in debt.

But I'm sure the kidz will work it out somehow.

[Pointedstick]

We're not talking about forward-thinking geniuses, innovators, and cultural treasures here; we're talking about people who aren't sure if they could come up with $400 in a hurry. I don't think this crowd is generating a lot of Van Goghs, Schuberts, Vermeers, and Mendels right now. But they are generating a lot of bankruptcy, depression, obesity, and excitement over Donald Trump. Focusing a bit more on the nuts and bolts of jobs and money and responsibility would be a huge life step up for the enormous amount of people who apparently do not adjust their lifestyle to their means, resist leaving expensive cities or economically depressed small towns, and are obsessed with costly status symbols.

[dualstow]

But the problem with the people in The Millionaire Next Door is they're fucking boring.

I'll take my excitement & entertainment value on the non-investing side.

[jafs]

Being frugal is definitely different if it's a choice, rather than a necessity.

Many people who grew up without much seem to find it hard to switch their thinking, and choose frugality.  I had a friend who didn't like "rice and beans" because that's what his family ate when they couldn't afford meat.  As a long-time vegetarian, I think of rice and beans as a nutritious inexpensive vegetarian option (if you use brown rice), and feel good about eating it.

It's a shame that he couldn't switch the way he thought about it.

[MachineGhost]

I'll take my excitement & entertainment value on the non-investing side.

I meant that about their lives in general, not just financial.  They are the proverbial Pakistanians that open up a Dunkin' Donuts franchise.  Working hard all the time is not exciting and entertaining -- that is a fact.

[MachineGhost]

Many people who grew up without much seem to find it hard to switch their thinking, and choose frugality.  I had a friend who didn't like "rice and beans" because that's what his family ate when they couldn't afford meat.  As a long-time vegetarian, I think of rice and beans as a nutritious inexpensive vegetarian option (if you use brown rice), and feel good about eating it.

Why am I not surprised by this? 

[jafs]

Perhaps because I've posted the information before 

[Tyler]

Being frugal is definitely different if it's a choice, rather than a necessity.

Many people who grew up without much seem to find it hard to switch their thinking, and choose frugality.  I had a friend who didn't like "rice and beans" because that's what his family ate when they couldn't afford meat.  As a long-time vegetarian, I think of rice and beans as a nutritious inexpensive vegetarian option (if you use brown rice), and feel good about eating it.

It's a shame that he couldn't switch the way he thought about it.

Two close boyhood friends grow up and go their separate ways.  One becomes a humble monk, the other a rich and powerful minister to the king.

Years later they meet.  As they catch up, the minister (in his fine robes) takes pity on the thin, shabby monk.  Seeking to help, he says:

“You know, if you could learn to cater to the king you wouldn’t have to live on rice and beans.”

To which the monk replies:

“If you could learn to live on rice and beans you wouldn’t have to cater to the king.”

(parable courtesy of jcollinsh)

[Mountaineer]

Many people who grew up without much seem to find it hard to switch their thinking, and choose frugality.  I had a friend who didn't like "rice and beans" because that's what his family ate when they couldn't afford meat.  As a long-time vegetarian, I think of rice and beans as a nutritious inexpensive vegetarian option (if you use brown rice), and feel good about eating it.

Why am I not surprised by this? 

MG, did you know that I'm a vegetarian?  I'm also a pescatarian, polloatarian, porketarian, a beefetarian, a BBQatarian, and a sushiatarian, but rarely an alligatoratarian, snakeatarian, or insectatarian. 

... Mountaineer

[jafs]

Being frugal is definitely different if it's a choice, rather than a necessity.

Many people who grew up without much seem to find it hard to switch their thinking, and choose frugality.  I had a friend who didn't like "rice and beans" because that's what his family ate when they couldn't afford meat.  As a long-time vegetarian, I think of rice and beans as a nutritious inexpensive vegetarian option (if you use brown rice), and feel good about eating it.

It's a shame that he couldn't switch the way he thought about it.

Two close boyhood friends grow up and go their separate ways.  One becomes a humble monk, the other a rich and powerful minister to the king.

Years later they meet.  As they catch up, the minister (in his fine robes) takes pity on the thin, shabby monk.  Seeking to help, he says:

“You know, if you could learn to cater to the king you wouldn’t have to live on rice and beans.”

To which the monk replies:

“If you could learn to live on rice and beans you wouldn’t have to cater to the king.”

(parable courtesy of jcollinsh)

Thanks - nice story.