Gyroscopic Investing

I read this article on Bloomberg this morning and although it is a little "pie in the sky"...it made me wonder what the alternative to our current American consumer-driven rat-race society is, and how a transition to a different economy that values free time and health in the same way that it does fast cars and expensive gadgets could take place.

http://www.bloomberg.com/news/2011-11-0 ... atker.html

American worker's productivity gains have been rather consistent since the 50's and in addition most households have added a second working income by having women enter the workforce post WWII. Despite this massive gain in productivity and a second working income, most American households scrape by paycheck to paycheck and continue to work 40+ hours a week with less vacation than in many other countries around the world.

This all makes me wonder....what exactly is our economy driving at? What is it aspiring too? Marketing and advertising seem to have convinced workers that an iphone is that much more gratifying than a free day at the beach with friends and family. A drive through the country in a new 80,000 dollar bmw convertible is so much more satisfying than a free bike ride around town.

I wonder how few people consider the quality of life sacrifices they make to achieve the lifestyle that companies tell them they want and need. And, how could our economy survive a reevaluation of our consumerist ways and a repricing of things like healthy relationships and free time? Study after study show that our tremendous economic progress in the United States in terms of material growth has failed to create happier people. What would the economic consequences be if people started asking their bosses that their productivity gains simply be paid in shorter work weeks or more free time? Why is it that capitalism can't find a steady state and must constantly be in a growth pattern?  

This would require a huge paradigm shift and is unlikely to occur. In fact, the system is rigged against it from occurring.

Look at how healthcare is paid for in the US. It's almost always tied to employment due to government subsidies. Buying insurance through an employer makes it exempt from 15% FICA tax, Federal income tax (average rate of 25% on the marginal level), State income tax (average rate of 8% on the marginal level).

That's almost 50% savings per $1 spent on healthcare through an employer. Of course, the employer won't buy you health insurance if you're working part time, so you need to work full time.

Jobs are highly technical and employers dont want to take the time to train 2x as many people to hire 2 people on a 1/2 time basis.

Unemployment and workman's comp insurance is based on the number of employees you have.

Essentially, if you took 1 employee, and split his/her work in half, and hired a second person to do the other half of the work, the total cost goes up 10% to 30% to the employer depending on the industry. Employers are incentivized to hire people full time.

Government has been artificially driving up the cost of higher education through subsidizing shitty degrees. The government made it illegal to offer discriminating rates on loans. Thus, the medical student has to pay 8% interest on a student loan in 2011, because that same rate has to be offered to the 17th century African Art History grad student. If discrimination could occur, the art history student would be paying 15% interest, and the med student would be paying 2%.

The "free money" train for school has driven up the cost of tuition because the easier it is to get money for school, the higher colleges can charge, and raise professors' salaries well into the 6-figures.

This means people have to take on higher debt to get a degree because the market has changed to make one required. So now people can't work half-time even if they wanted to, because they need to pay back their debt at ridiculously high rates of interest (new federal student loans in 2011 are issued at fixed rates of 7.5% that are non-dischargable in bankruptcy; why so high? government legislated themselves a monopoly and we have to risk pool the art history majors with the med students).

Jacob at Early Retirement Extreme describes a method whereby you work full time and bust your ass for 5 years while saving 80% of your salary because you live dirt cheap. Then you can retire and live off the interest and potentially just do part-time work for fun if you need extra discretionary spending money.

If I could negotiate to work 1/2 time, I'd work in perpetuity. But I can't, so I intend to retire in my mid 30s and live modestly, simply because I don't believe in needing to exchange my life energy for a new iPhone every year.

Jacob at Early Retirement Extreme describes a method whereby you work full time and bust your ass for 5 years while saving 80% of your salary because you live dirt cheap. Then you can retire and live off the interest and potentially just do part-time work for fun if you need extra discretionary spending money.

I'm a fan of Jacob's philosophy. I stumbled across his blog a year ago and was surprised that someone else shared the same perspective as I do. I am on the EER path and hope to cut back to part-time work (about 30 hours a week) in a few more years.

While capitalism is appealing in terms of the freedom and economic development it inspires, I can't seem to visualize how it transitions to a steady state system. After all, 3% annual compounded growth just isn't possible forever within a finite system. I think one way to address this is possibly to rethink our current methods of measuring economic statistics such as GDP to reflect quality of life measurements such as free time, clean air and water, health statistics, crime rates etc.

Doodle I totally agree. I think we are slaves to an economic system that has evolved in a way that damages us all. If people like flash cars etc then that's fine but our problem is that our system depends on ever more such pointless? consumption in order for the basics to be provided. Currently unless someone is ripping out a perfectly good floor and replacing it with a new one made from a pristine forest, then someone else ends up unemployed and doesn't get to send their kids to school etc. It also seems to me a tradgedy that it is often the most able and talented people who end up taking very early retirement. If work  seemed to have a point to it then such people might contribute what everyone needs?
The citizen's dividend that I keep wittering on about seems to me a potential way to decouple pointless consumption from ensuring everyone is provided for/ can be funded to do what they think is needed. To be honest, many university professors would do what they do for minimal pay. Emeritus (ie those over 67years old) Professors do not get paid in the UK but many work very hard just for the love of what they do.

doodle, "I think one way to address this is possibly to rethink our current methods of measuring economic statistics such as GDP to reflect quality of life measurements such as free time, clean air and water, health statistics, crime rates etc."

Infant mortality rate seems to me the closest thing to a measure of affluence. It seems an acurate readout of general screwed up-ness.
http://en.wikipedia.org/wiki/Infant_mortality

Free time is something that many people value but governments really don't seem to. Basically those who disaprove of free time get to dictate that outlook on everyone else because they beaver away at imposing their will over the (more sensible?) rest of the population.

Stone,

Interestingly enough there is a sizeable group in my generation who has started to place a high value on quality of life. They are not willing to make the life sacrifices that my parents (baby boomer) generation made in order to get ahead in life. The problem is that my group of peers has not yet understood that freetime and other quality of life improvements have an economic cost. They still seem to want to have their cake and eat it too. If they are willing to accept a simpler material life in exchange freetime and other benefits of having a less hectic, and stressful work life, then I think that society is capable of slowing down the present form of materialist capitalism which is rapidly consuming our planet.

I think the solution lies in reforming societies collective values through education and subtle subliminal messages. Advertising campaigns constantly tell us everything that we think we must have to live fulfilling lives. What we need is anticonsumerist propaganda and advertising that tells people it is cool and hip to spend less, have less, have more time for friends and family to have free and available parks and cultural activities at our disposal. Civil society badly needs a marketing campaign. It has to be cool though.....like hollywood stars taking vows of minimalism and eschewing bling in favor of basic necessities.

One of the biggest wastes of our present capitalist system in my view is the huge amount of genius and potential locked up in no value added wall street hedge funds. If we could unleash this potential on cancer or health care or other more socially redeeming functions it would be a big boon to society.

doodle, I don't think it needs propaganda it just needs some of the imperatives in the opposit direction to be slackened off. The Dutch example in your link showed that it worked well to simply have people no longer forced to work long hours. If people are forced to work long hours, then they will splash out because the money is burning a hole in their pocket. If they aren't forced to work the hours, then they will often take the free time and not miss the money.

I much prefer just letting people do what they want rather than trying to use propaganda etc. If people are free to do as they choose they will do what they want-which by definition is what "we" want since "we" and "them" are the same bunch of people.

Stone,

I don't mean "propaganda" in the negative sense of the word.... just spreading information showing people that there is another way. They of course are free to choose...but I don't think that a lot of people have taken the time to think about the benefits of an "alternative" lifestyle. They are swept up by the overwhelmingly powerful consumer "propaganda" message that currently exists and are therefore not exposed to other options.

Doodle, I don't think that the Dutch scenario required any information service, it just required people to have the choice. I think people at large are actually sane.

stone wrote: Doodle, I don't think that the Dutch scenario required any information service, it just required people to have the choice. I think people at large are actually sane.

Modern advertising is, however, a very subtle and sophisticated form of mind control.

We laugh at it, but it works really well at subverting what we might otherwise think of as what is best for us.

I think if you asked most people whether their idea of the good life is living as a debt slave in a state of malnourishment supplemented by poorly understood psychoactive medications in a home many miles from work amidst a large pile of decomposing consumer junk, they would probably say that, no, that is not their idea of the good life, even though this is the version of the good life most often sold (with great success) using modern advertising techniques.

Medium Tex, I think the answer might be curbs on adverts in general rather than adding doodle's "good" adverts into the mix. Doodle's idea sounds a bit like spraying some perfumed "air freshener" into a stink. In France you can't target adverts at kids (I think). I wouldn't mind not having adverts at all. Good stuff gets disseminated very fast without marketing.

Modern advertising is, however, a very subtle and sophisticated form of mind control.

I totally agree. I think that most people underestimate the how powerful an effect advertising has on one's desires and demands.

I think one of the more evident examples of this is how the western ideal of beauty and fashion tends to usurp the traditional cultural ideals of beauty and fashion once foreign markets are opened up.

If advertising were not effective at creating demand and shaping consumer appetites, companies wouldn't spend billions of dollars on it every year. 

Stone,

Limiting advertisements could be seen as a curtailment of freedom of speech...or outright censorship. Using reverse propaganda would allow these freedoms to be preserved.

How to pay for positive advertising is another thing....what capitalistic economic interest does it serve?

One of the things I love about Netflix is that I can watch things without having my mind polluted by advertising.

The kids shows on Netflix are terrific for that reason as well.

I'm mixed up about the whole advert thing. I love some TV adverts. I really love the Yeo Valley advert for yoghurt.
http://www.youtube.com/watch?v=qLySx6wSSmo

I really really loathe the UK gov adverts or the BBC adverts for themselves on the BBC or the incessant Nationalized Bank (RBS and LLoyds) adverts. I think "we are paying for this shite". At least with Yeo Valley, I can enjoy a good advert and I also choose not to pay for it by never buying the yogurt

We do have some advert limits eg no product placement on TV. No tobacco adverts.

Stone,

When consumer products tap into your genetic survival mechanisms it leaves you almost powerless. Combining this with overwhelming advertising is the knockout punch.

Food products created today by major companies are engineered to tap into genetic pleasure centers that make them almost irresistable to all but the most disciplined among us. For example, salt is not just a flavor enhancer in food but also a necessary nutrient for our survival. This flavor is exploited by food makers to keep us addicted to certain types of food. We are literally genetically predispositioned to be drawn towards them...

The documentary "Food Inc" talked a little bit about this.

TripleB wrote: ...Jacob at Early Retirement Extreme describes a method whereby you work full time and bust your ass for 5 years while saving 80% of your salary because you live dirt cheap. Then you can retire and live off the interest and potentially just do part-time work for fun if you need extra discretionary spending money.

If I could negotiate to work 1/2 time, I'd work in perpetuity. But I can't, so I intend to retire in my mid 30s and live modestly...

How does this ERE approach account for US healthcare costs?  The majority of USians that filed for bankruptcy, did so due to healthcare bills (especially from some catastrophic bill like cancer), and the majority of that cohort actually had health insurance.

It seems like retirement (or work as optional not required so-called "wage slavery" needed for survival) would be possible with an owned house (mortgage paid off) and ~$X00K ($500K?) in a Perm Port allocation, if it wasn't for healthcare cost risk.  Healthcare costs could easily eat up your $500K.  Offshored medical tourism to Thailand/Argentina/etc is not often feasible.  Eg. if your life is at risk due to a horrid car crash, you can't offshore medical tourist your health care.

It seems that in the US, no matter how non-consumerist, non-iPad owning, etc; one is, one needs to stack for the healthcare cost risk rainy day fund.

The other Anglo rich countries seem to understand it, even those countries Conservatives parties (Canada, England).  It seems that on healthcare, Can & England Conservative pols are more Progressive than both US parties including the "Socialist"-labeled Obama.

"The majority of USians that filed for bankruptcy, did so due to healthcare bills (especially from some catastrophic bill like cancer), and the majority of that cohort actually had health insurance."

I'm curious about how this works. Does the standard insurance not cover the full treatment? Also if you have had cancer in the past; does that make your future insurance more expensive as with crashing a car for car insurance?

Is it true that the US veteran's health care provision is US government run and yet one of the best health systems in the World? Is there any appetite in the US for letting non-veterans buy into such a system? I am asking as a UK citizen and we have a flawed, government run, system here.

stone wrote: Is it true that the US veteran's health care provision is US government run and yet one of the best health systems in the World? Is there any appetite in the US for letting non-veterans buy into such a system? I am asking as a UK citizen and we have a flawed, government run, system here.

I would be very sad if the only health care I had access to was through the veterans hospital system.

Medium Tex, I'm intrigued, what is not to like about the veterans hospital system? (I know nothing)

stone wrote: Medium Tex, I'm intrigued, what is not to like about the veterans hospital system? (I know nothing)

I have limited exposure to the VA system, but from what I can tell it's very crowded and has to manage a population with a lot of chronic illnesses.  Long waits for appointments, etc.  I think it may in a way mirror socialized medicine. 

i just started reading early retirement extreme, i haven't gotten very far yet so i will post my impression of it when i get further along, it starts out strong, describing a change of philosophy that i can definitely relate to, (i hope it tells me how to get a wife to think this way  )

l82start wrote: ...it starts out strong, describing a change of philosophy that i can definitely relate to...

Yeah, it's a good book for exactly that reason.  I don't think I'd be capable of making all of the life changes that Jacob Lusker did, but I love his overall message which is that you really don't need that much "stuff," materially speaking, to be happy.  Your time, relationships, and freedom are much more important, in spite of what all of the advertisements on television say.

Adam, am I right that the Veteran's hospitals have superb treatment outcome statistics though? Doesn't that make it worth putting up with a Greyhound Bus Station style ambiance (is that what it is like?)?  When I go to hospital I want to get well -period.