Again, for the sake of brevity, I have included just what I’ve written, along with quotes of what I am responding to, after the initial post, but if you are curios, feel free to click the link in the first post for everybody’s discussion.
« on: August 01, 2012, 12:07:04 PM »Purpose & Rationale For This Thread
Since nobody seems to have any real objections to the central argument in sol's thread on how your early retirement might be evil, and since the thread has morphed into a discussion about somewhat tangentially related matters (e.g. justifying charity, differing moral systems, the purpose/value of taxation, sustainable population levels, et alia), I figured it'd probably be be best to start a new thread to begin discussing practical ways of reducing or eliminating the evil in pursuing & maintaining early retirement.
Summarizing the Problem
Okay, so let's identify the areas (in italics) where evil can creep in to MMM/ERE-style early retirement:
MMM/ERE Early Retirement =df A lifestyle attained and maintained through frugal practices and investment strategies, whereby one keeps a high savings rate during one's working years, eventually reaching the point where return on investment from savings covers all living expenses at the very least, which enables one to forego working a conventional job and thereby free more of one's time in comparison to more conventional working careers.
The thesis is that in pursuing early retirement, each of the three italicized areas above could perpetuate an unjust inequality: viz., the manner in which one executes one's early retirement could support (or at least be dependent upon) a system that denies that same opportunity to others.
- Frugal Practices: If one seeks to maximize one's savings rate by purchasing the lowest priced goods at the best value, one might be supporting businesses that utilize exploitative business practices.
- Investment Strategies: Investing in stocks provides capital to companies that seek to maximize return on shareholder investment. Just as with keeping prices low for the consumer, many companies employ exploitative business practices to maximize that return. Investing in bonds provides capital to many of those same companies.
- Allocating Free Time/Resources: If we will early retirement as a value, it would be contradictory for us to maintain that other's shouldn't have that same opportunity. Merely refraining from perpetuating the system is not enough. We should do what we reasonably can to provide people that opportunity.
If we're concerned with reducing or eliminating this unjust inequality, then we'll have to a) choose frugal practices and investment strategies that at the very least don't exasperate the unjust inequality, and b) actively do what we can to help alleviate it. Below are some of the ideas I've come up with for going about doing this.
Responsible Frugal Practices
- Consume Less: Bakari pretty much nailed this one.
- Whenever Possible, Investigate and Factor In the Practices of the Companies and Vendors That Sell the Products You Buy: If this means that a product with an ethically benign history costs more than a product that was exploitatively produced, don't fret over how this negatively impacted your savings rate. Rest well knowing that your purchasing behavior didn't perpetuate unjust inequality.
- Reuse/Repurpose, Whenever Possible: If you're reusing and repurposing things, chances are you're eliminating the possibility or otherwise necessity of purchasing products that are produced via exploitative means.
- Grow/Make Your Own Stuff: You're producing goods for yourself or your household, which is about a 99.99% certainty of being not self-exploitative.Responsible Investment Strategies
- Consider Socially Responsible Stocks: Not all companies on the stock market are evil. If you invest in individual companies, make it part of the process of doing your due diligence to consider how the practices of the companies you're analyzing stand up to moral standards. If you're a more passive investor, consider socially responsible mutual funds.
- Invest in Tax Liens: Many counties across the country auction off or allow you to make an assigned purchase of tax lien certificates, which entitles you to any interest that the property owner owes as a result of being delinquent on her taxes. It's a win-win, in many ways. You buy the property owner more time to pay for her delinquent taxes, the county gets the money it needs to operate, and either you collect the interest (which varies by state & sometimes county, but tends to be pretty high) or, if the property owner doesn't pay the taxes, you get the property at no extra cost.
- Buy Rental Properties and Be An Upstanding Landlord: That is, keep the property in nice working order, give the tenants a fair market price, treat them well, consider how your rental behavior affects the greater community, etc. You've got a lot of control if you own rentals. This one is really only exploitative if you make it so.Responsible Allocation of Free Time/Resources
- Volunteer: Help others develop skills that might make them more self-reliant, help distribute resources to those in need, help organize and develop systems that facilitate the missions of non-profits/charitable organizations.
- Donate to Non-Profits/Charitable Organizations: Many non-profits/charitable organizations need money and resources more than they need your assistance. Do your due diligence when you donate, but donate what you can.
- Donate on a Peer to Peer Level: There's no need to think that charity is restricted to giving to an institution. Most of my own giving is direct to the person who receives the aide (e.g. giving or buying clothing, bus tickets, food, providing shelter, etc., to the homeless/needy). Bakari's giving customer's a discount by not charging for hours worked is another example. In my experience, I've noticed that this builds one's charitability muscle more effectively than, say, having money directly withdrawn from my paycheck or including a dollar donation for the Save-The-Trees Foundation when I buy tofu at our local co-op. That doesn't mean its more effective to the recipient of aide, just that it's more effective in cultivating virtuous character.
- Invest in or Start Social Businesses: This whole "responsibility" thing is about making the world a better place, and donating to charities and non-profits are one way of doing it. But they're dependent on the generosity of others to sustain their activity. Sometimes that generosity may run dry. Social businesses address many of the social maladies that charities and non-profits address, but they're not dependent on donations. As a business, they seek to preserve themselves by charging a fee for their products and services. However, their motive is to treat a social malady rather than maximize return for their investors, which allows them to keep their prices down. Any social business will, however, pay back any money invest in it, which effectively makes it a no interest loan. As an investor, you can then allocate that returned money to another social business, or to a charity.
- Do What You Can To Not Be a Burden To Others: The less liability you have, the less risk you have of being dependent on others. Obviously someone who has reached early retirement is so asset positive that they're unlikely to be a financial burden on others, but what about emotionally, psychologically, physically? Take care of your health and seek ways to improve in these areas. Of course, others may need help in these areas even if you're okay, which brings me to my last point...
- Share MMM/ERE-Style Early Retirement and Social/Moral Responsibility Ideas and Practices With Others: What others have said (e.g. gooki & James81, to an extent) is true - If early retirement is an alternative to the typical consumerist Western lifestyle that perpetuates the unjust inequality even more so than pursuing early retirement in a moral vacuum, at least you're doing something that currently alleviates that inequality (less consumption of resources, opens up a position of employment for another) by promoting MMM/ERE-style early retirement as better serving one's own self-interest. I reckon that if everybody began to pursue FI, the world would be a different and probably much better place. The message of FIRE isn't merely early retirement; it's also one of self-reliance, and by letting others know about it and explaining/teaching/helping others to get it, you're not only helping to make the world more just, you're also making the people in the world more happy. This is the motivation behind the blog that my wife and I started, and I suspect this is true of MMM, too, given the whole "save the world" undercurrent (even if somewhat in jest, it's still somewhat in jest).
On another note, I was scheduled to write a post for our blog (i.e. the blog of my wife and I, not MMM) today, but this seemed more important and I'm kinda tired after writing all this. Would you guys mind if I used this as a basis for a near-future post on Real Sustainable Habits?
Also, I wanted to say thanks to everybody who has participated in the other thread so far. The discussion has inspired quite a bit of introspection on my part, which has been fruitful.« Last Edit: August 01, 2012, 05:44:39 PM by darkelenchus »
I ask because we've previously discussed what would happen if everyone retired early, and I still think that an entire society based on people being full time parents isn't sustainable in our industrial age. We need some people to work long hard careers or the whole thing falls apart. By this metric, my early retirement would be necessarily evil because it's not possible for everyone to have that which I have willed as a value.
The issue though isn't "could everyone in society never work?"
It is "could everyone in society work less than 40 years?"
I think the answer is unquestionably yes.
When a generation leaves the work force at age 60, it doesn't cause the economy to collapse. Other people take the places of the people who left. The fact that someone retires eventually, and goes on living another 30 years, doesn't mean they didn't contribute to the work that needs to be done in society.
Right now we have something like 8% unemployment (and that number only reflects those people who are both able to and want to work), so right off the bat everyone who is currently working could work 8% less and society would not slow down even a little.
That 8% could be in the form of working 37 hours a week, or it could be in the form of retiring 3 years sooner - in the long run they would both be the same thing. Each worker works 8% less, giving everyone else an opportunity to have a job.
At the same time, mustachian style ER involves consuming less.
In this thought experiment we are talking about everyone retiring early, so we can assume everyone is consuming less.
That interrupts the whole consumer cycle, as people buy less things. In turn companies produce less stuff, because there are no buyers. Which means there is less work to be done.
Lets say, just as a random example, everyone cut their consumption to one fourth (and lets pretend that manufacturing is domestic - ha!) Now the sectors that produced all the various stuff lay off 75% of their workforce.
Of course, there are other sectors which wouldn't change much, if at all - emergency services, utilities, farming, plenty of things society is still going to need. But that 75% of people now need to be redistributed into the remaining workforce. That means that everyone currently employed can work even less still, and everything that needs to get done will get done, while having nobody who wants to work unemployed.
On the one hand, people would make less money. On the other hand, they would need less money, because they are spending less. It is obviously possible to spend enough less that you don't have to work as much, because that is the entire point of frugality based FI.
The reason this all works is productivity. The 40 hour work week was developed over a century ago, when people had to work with a century ago level technology, and everything got done. Today each worker can produce 20 times as much value in the same amount of time, yet we still have everyone work the same amount of hours for the same number of years.
The result of that is we need to find crap to produce just to keep everyone employed! That's why you have politicians urging people to go shopping to help the economy, and why people think the only healthy economy is one that is growing.
What would be impossible is for every single person to inherit massive wealth and just live on dividends for a lifetime. Then nothing would get done. As long as you spend some time contributing via work, then you existing the workforce just leaves a job open for an unemployed person to take.
It is "could everyone in society work less than 40 years?"
I think the answer is unquestionably yes.
While your post is thoughtful it fundamentally ignores the principles of economics. There are many flaws in the logic, even if they do sound logical, and is somewhat along the unintended consequences logic. For instance, if all the older people stopped working to free up jobs you are right that it would create opportunities of younger people. It would also deplete a significant portion of the labor force and would result in income inflation (supply and demand of the resource), which isn't a bad thing for those benefiting from it but would be terrible for those older people that you just kicked out of the workforce because inflation would kill their savings/fixed incomes. Just like anything else there will be winners and losers.
Then, at some point in time it was invented.
It didn't kill old people's savings from inflation.
We have inflation currently.
I agree it would tend to increase wages, but I don't think it would necessarily result in inflation. That increase in wages could, at least partially, come from lower corporate profits.
If we have a system where everyone is employed, everyone can retire early, and everyone has the same effective income they have now, that sounds like a pretty friggin perfect system!
Just like we didn't transition from an agricultural to a manufacturing economy, or then from a manufacturing to a service economy overnight. When certain jobs are made obsolete by technology (or outsourcing, or corporate consolidation) the unemployed may need to go back to school and learn a new skill set. It is a natural consequence of capitalism and technology. Why would it be any more of a problem in the context of reducing everyone's lifetime labor hours?
Creating more unemployment is the goal
Its just that this unemployment would need to be equally distributed throughout society.
Instead of having some people be employed for 80,000 hours (40 years of 40 hours weeks) and other people working 0 hours, there is no inherent reason we as a society couldn't choose to have everyone work 40,000 lifetime hours.
Less environmental damage and waste, more free time for everyone, nobody wastes their life chasing the carrot.
Utopian fantasy? That's what all the capitalists said when some radicals proposed a 40 hour work week too.
You are not in favor of economic equality. Are you suddenly objecting to their being haves and have nots? Under the system I'm describing there would be more equality of opportunity (which we can all agree is a good thing, no?) as there would ultimately be less unemployment (
I'm was never suggesting that this system would make everyone equal, or that it should even be a goal. Just because I don't believe in unchecked capitalism doesn't make me a communist!
What I do think is the benefits of productivity gains would be more equally distributed allowing the already rich to skim less off the top of everyone elses labor. That still allows for some people to own the companies while others do the actual work, and the owners will still make the most money. They just won't make such ridiculous amounts. But I'll save more on that for your capitalism thread...
Your correct that this position is both widely held and logically consistent.
Nor is it necessarily even inherently immoral.
But it is inherently amoral.
Its just like how a predator killing its dinner isn't being immoral. The issue of morality simply doesn't apply.
If you are using the word "value" in the sense of "I value this item that I enjoy", then your correct about everything you wrote, but I think darkelenchus is talking about values, not value.
Given that these are discussions about morality, we are starting with an assumption that we aren't simply looking out for our own best interests.
1) Intentional or malicious harm is bad.
2) Theft of property is bad.
3) Exploitation of minors is bad.
4) Permanent enslavement is bad.
5) Usurious loans are bad.
6) Responsibility is good.
7) Honesty is good.
I'm not sure about #2.
You would have to clearly define theft.
If it means taking something which was previously acknowledged to belong to an individual without said individuals permission, then one could make the case that taxes are theft.
(In fact, a whole lot of people do make that case. They are called the Tea Party)
There are a number of areas in which even in America, probably the most individualistic large society that has ever existed, we do not consider property rights inalienable.
In addition to taxes, We The People see fit to confiscate property as punishment for even minor and/or accidental infractions of the law (e.g. fines for parking or equipment violations).
We redistribute property for alimony and child support.
If not for eminent domain the interstate highway system would not exist, which would have caused a severe hindered to economic expansion. The land owners get compensated, but giving up the land is involuntary, if it is needed for a public project.
Then there are questions that may be settled by law, but are grey in terms of morality.
If a person owns a plot of land which they have not done anything with for years, and have no intention of doing anything with, and someone else comes along and builds something there, are they a trespasser or a homesteader?
Inheritance undermines the American ideal of equal opportunity and concentrates wealth without adding value to society or the economy, as well as leading to a quasi-aristocratic class with the power to undermine democracy.
Yet many claim that the property rights of the newly deceased should outweigh the benefits to society of redistribution.
Some claim that none but Aboriginal Americans have legitimate claim to any land in the US. When a tribe occupied Alcatraz island, where they stealing property, or were they reclaiming what was rightfully theirs?
If someone acquired property through legal but unethical means, is it immoral if another person steals the ill-gotten property and returns it to the original owner?
At worst, a little bit of ignorance, but even that is debatable.
But James, no one here is saying "whitey is the devil".
No one is saying everyone of European decent is evil, and they have caused all bad things that ever happened.
And most of all, no one is blaming you personally, nor your family, nor even your ancestors, for things which some Europeans in a position of power have done.
Obviously many societies have done bad things to other humans throughout history, but for whatever reason there are some very notable bad things that Europeans have done in the relatively recent past that don't really have a parallel.
Slavery has existed nearly as long as civilization. However, in the majority of cases, slaves were recognized to be people. They were the losers of battles, or people who couldn't repay debts. There were rules to how their owners could treat them, and they often had rights - sometimes even property rights.
The US stands out as a rare (possibly unique) example of slaves being treated as farm animals.
Actually, if a modern farmer were to treat his farm animals the way slaves sometimes were, he would probably be shut down and fined for cruelty to animals.
This invalidates your argument that the African societies which captured and sold people into slavery deserve equal blame - they had no way to know the conditions they were selling people into. You don't blame the pet store owner when a kid tortures his pet, because most people wouldn't do that.
Sure, many societies throughout history have conquered others. But there are very few examples of a society (with no historical claim to a given land) coming in and deliberately and systematically killing or displacing the entirety of the indigenous population. In South America there was a mixing of cultures and widespread intermarriage that lead to the modern Latino. But in the US there was very little intermarriage, and a lot more of the deliberate spreading of smallpox. If the new comers tried to spread leprosy, but accidentally spread measles instead, I'm not sure how it makes anything better. (If you shoot someone, and the shock makes them die of a heart attack, does that make you less guilty?). How many places can you find tiny patches of the least useful land set aside as reservations for the few remaining aboriginal inhabitants?
Maybe the only reason the first settlers to the US did these things and not anyone else was an accident of circumstance - they were the first with the means to do so. Maybe if someone else had ocean worthy ships, horses, and guns, they would have done the same thing. But that's not what happened.
What I first said that lead to this whole tangent was just that the land of America was taken by force. Whether or not other cultures have done similar things is irrelevant to my point. My point was to call into question the supposedly inalienable human right of private property.
Giving the goverment additional assets further increases the power of the government. I would argue the transferring assets simply transfers power from a smaller entity (the family) to an even larger entity with more resources (the govt). I'm not convinced that's a good thing.
Additionally, with regard to family owned businesses and farms, the inheritance tax can have the impact of harming the community (ie job cuts) as the owners struggle to pay the tax via what may be illiquid assets.
The United States of America is a democracy.
It may not be a perfect democracy - it isn't direct, there is some corruption, and its size necessitates a less than ideal level of bureaucracy.
It is still a democracy.
So when you talk about "The Government", try to remember that you are talking about us, all of us, the citizens of the US.
If "The Government" is a bad steward of the nation's resources, there is no one you can blame for that but We the People. We choose the specific individuals doing the stewardship.
Yes, I think a democratic government is a better steward of resources - given the goal of bettering society overall, for everyone - than a private individual family, who's primary goal is bettering their own lives.
If we were to return massive estates to the community upon a successful person's death, it would allow the tax rates on the living to drop enormously. The wealth currently held by the top 0.5% would be enough to not only cover the deficit - it is enough to cover the ENTIRE DEBT. This in turn would mean interest on the debt (which is one of the single biggest uses of taxpayer dollars) would drop to zero, which would in turn mean the government would have to collect even less total taxes - which means they would need to be stewards of a smaller amount of resources.
People talk about the government like its some giant lumbering beast out in the forest somewhere, that no one has any control over. Wealth redistribution doesn't mean the government gets to hold all this money so it can play with it and do what ever it wants. Roads and courts and jails and firefighters and mosquito abatement and police and bridges and utility infrastructure all have to get paid for somehow. These things benefit everyone, and the free market won't create on its own. That's why we (humans) invented government in the first place.
Your argument is circular - people don't vote because they don't like the people who are in office!?!?
Much of the way in which money drives politics is campaign donations. If people didn't vote on the basis on TV commercials, campaign donations would have much less influence.
But what is the alternative? A benign dictatorship? Not a bad solution, but it only works if you get lucky and have a dictator who genuinely wants what is best for the country and not just himself. Arguably could apply to Castro, but very few of the dictators of the world. Otherwise, the best we got is democracy.
The taxes that get paid now don't all just evaporate. Some of it goes to transfer payments, some of it gos to services, and some of it goes to infrastructure. The existence of that infrastructure and services make it possible for citizens to create value. And if you read my last post carefully, I wasn't suggesting giving additional money to government. I was suggesting that we could lower income taxes on the living if we replaced that money with wealth held by people who can no longer use it anyway.
How many people are under the impression that being rich is going to allow them to live forever? God is the one who decides to one day take everything away from us, not the government. Ultimately everything gets taken from us. That's just reality.
But if someone feels that it isn't worth it to become rich because he can't pass his money down to his kids, and therefore chooses not to, fine.
Because about 1/2 the country is against legalization. In CA, where the percentage of supporters is higher, it has been legalized for medical use.
First of all, the company doesn't "produce" the job in the first place (see: http://biodieselhauling.blogspot.com/2012/06/poor-person-never-gave-me-job.html )
Also: Facebook just went public recently. The company was held in private hands, now it isn't. That didn't mean they fired all their staff.
Because the US is a great place to live. Because much of the rest of the first world taxes wealth higher than we do already. Because back when we had a 94% to income tax bracket and 77% estate tax, wealth didn't leave the US.
Another portion is tied up in privately held companies and farms. Many of these assets are ill-liquid and must be liquidated and/or burdened with debt in order to pay the estate tax. This often isn't good for the employees or the community.
Common theory, but not supported by real life: http://www.nytimes.com/2001/04/08/us/talk-of-lost-farms-reflects-muddle-of-estate-tax-debate.html?pagewanted=all&src=pm
But lets say a company did have to liquidate. That doesn't mean they would shut down - that wouldn't generate any revenue anyway. It means they would sell. Companies get bought and sold all the time. That doesn't mean all the employees get fired or the product stops getting produced. It just means someone else is sitting in the office at headquarters.
Agreed. Do you have a better idea?
We could split the country up into smaller units - say, each state it's own country? I'd support that.
Even if an heir did need to sell a company due to estate tax, the company wouldn't disappear.
It would just pass into the hands of whoever bought it. The heir has to do their own labor or innovation, and build their own fortune, and at the same time the existing business becomes an investment opportunity for someone else.
With the income brought it by estate tax, we could lover the income tax rate on everyone else, creating MORE incentive to earn money.
I think if you look at most invention and innovation throughout history, it much more frequently happens by people with a passion for what they are working on than people looking to become billionaires. As for capital investment, wealth distributed throughout the middle class can be invested just like concentrated in the hands of a few can be.
Given the topic of this thread, I'll bring this back around: one part of being responsibly wealthy is teaching your children to be productive members of society; make them earn their own wealth - it will be better for them and for society.
And just get on with your lives.
This is the internet. No one can foist their beliefs on you here. You have to actively open the page and read it. If you have no interest in learning from other peoples' values, why would you read a thread about being responsible?
When business owners know they are taking 100% of the risk of loss with their business, and that that a huge percentage of their business will be taken from them upon death, they will not risk their own capital to expand that business.
Also: businesses don't create jobs. That's just something that republican politicians made up recently to try to get the middle class to support tax breaks for the rich (see: http://biodieselhauling.blogspot.com/2012/06/poor-person-never-gave-me-job.html )
Further, the last several decades have shown us that economic growth is not always coupled with job creation or improvements in real wages. GDP has gone up substantially, yet inflation adjusted median income has not. The real wages of the working and middle class have been basically stagnant. So its hard to see why so many people still believe that economic growth is inherently good for everyone.
Its basically the old "trickle down" theory - let the rich get super rich, and this will make everyone a little bit rich.
But since the real world is complex, lets give the theory the benefit of the doubt, and say that allowing unrestricted concentration of unearned wealth benefits society as a whole.
Your same arguments about encouraging people to make longer term risks and investments could apply in a similar way to a Monarchy. If the king knows that he will not only keep his position for a lifetime, but also pass it down to his son, he has much more incentive to think long-term - as opposed to just the next election cycle. He wants to make sure his country stays stable, safe, and provides well enough for the people that they don't revolt.
Therefore, we should give up on democracy, and just trust that the Emperor of the United States will do what is best for the country, since it is in his own best interest to.
We could accept the trade off of short sighted politicians for the greater good of a democracy.
Even if lower estate taxes did provide some small benefit to the economy, is it worth the trade-off of creating an aristocratic class, destroying the potential for meritocracy, having to tax actual productive labor at a higher rate, and ensuring that every citizen has an equal shot at success if they work hard?
It didn't happen.