SNL made a wonderful infomercial in 2006 about point 3: avoid debt. Depending on your location you should be able to watch it in [1] or [2]. During my years in the US it always puzzled me that, upon reaching my credit limit, it would not just increase without any interaction, but sometimes double! American "plastic", as hailed in "The Graduate", was a significant lesson for me.
'avoid debt' is too simplistic. Debt is simply an opportunity increasing instrument. You have no money to make certain investments that create a net benefit, debt gives you access to that opportunity, and it comes at a cost. If that opportunity is worth the cost, debt is great. Of course it makes sense to say 'avoid needless debt', or 'be careful taking on debt', but just to just say avoid debt is to also say avoid taking opportunities that you should be taking and throw out the baby with the bathwater. One could very well say 'avoid debt for needless consumer spending', buying a new TV with debt, usually at some ridiculous APR, just makes no sense.
For companies, debt is even more interesting, because in corporate finance you'll find that debt is subsidised through tax rates. It sounds a bit weird but it's true, and so there is an incentive to take on debt. In some countries due to the tax systems, this applies to individuals too, e.g. for mortgages, the cost of debt reduces effective income and thereby reduces tax liabilities further than if you saved up first and then bought the house without debt, such that in some countries people did not pay off their mortgages because deductible interest payments were attractive.
Debt sucks, I know, I hate the debt culture as much as anyone and as a European the American creditcard industry is something I pity, but the discussion on debt today is extremely one-sided.
'Avoid debt' is an apt title. The points the author makes agree very much with yours, including the clear warning the infomercial gives against compulsive, superfluous spending:
"I do not speak of merchants buying and selling on credit, or of those who buy on credit in order to turn the purchase to a profit. The old Quaker said to his farmer son, "John, never get trusted; but if thee gets trusted for anything, let it be for `manure,' because that will help thee pay it back again.""
One of the great western habits I inherited after living in the US for 15 years, is the use of the credit card for everything, and then just paying a single bill (the credit card) every month. If you do it properly, it can really increase the quality of your life - rewards, points, etc. - and it can also be very, very dangerous for the undisciplined and income-averse ..
For those I know, including myself and my partner, the habit to strive for is spending less, and I agree that credit can be a useful tool if used wisely, but never really know when life can throw a curve ball. For now, we use credit cards, but manage to eliminate our debt by paying everything soon after incurring debt. Call it using debt for leverage I suppose. For any big purchase (which is rare), we aim to use credit when no interest penalties are present and pay off before any are incurred. A small house, inexpensive vehicles, and thrifty habits even with the use of credit cards allowed us to save quite a bit in contrast to those heavily in debt with terrible credit, but it is still a gamble. I don't blame others for having debt. There are many reasons for this. Without any major life events this system works for us...until perhaps it doesn't.
The #1 rule is, stay cash-positive: don't spend more than you've got in the bank to cover the bills, but be willing to defer the payment and continue income in the interim, because .. after all .. nothing feels better than having all bills paid and still having a net positive every month, to save away ..
By income-averse, I mean those who are averse to generating the incoming required to pay the current bills, and alas this is a subtle but simple difference between solvency and debt. I never really carried much debt, between payments.
But I sure did borrow a lot, to cover my monthly budget.
They are acclimatised to debt - most westerners can't imagine not having a credit card - when I tell folks I cut up my first and last card at 17 they assume I'm a delinquent, broke, punishing myself - for in this society we have managed to redefine debt as wealth.
Here in Sweden, people have a debit card or use a debit app. Most people here easily get through life without a credit card.
While I don't think it's true that "most westerners can't imagine not having a credit card", I don't have a sense of how much other Western countries use credit cards as compared to debit-based systems. http://news.bbc.co.uk/2/hi/business/5380718.stm from 2006 says that UK has the most credit card debt of any European country. "The average British resident owes £3,175") while "The average European owed just £1,558 in unsecured debt."
> Most other countries tend to be more cautious with their credit, opting instead to use debit cards (like in the UK and France) or online bank transfers (like in Germany) rather than to charge up a card. And when it comes to charges calculated per year, Europe makes us look like we spend with abandon; French people charge less than $300 each on their credit cards each year, on average. And Germans seem to eschew the “buy now, pay later” mentality as well, only charging an average of $158 per person per year to their credit cards.
That makes it seem like credit card use and debt more a US issue than a more generally Western issue.
Funny thing is, as a European I never saw the point in credit cards. So when I lived in the US I didn't get one for a few years. Finally my girlfriend pushed me to get one for the free cash back, but the application was denied since I had no credit history (yet a high-paying job and $100k in the bank...). Just weird. You have to be in debt to show that you're responsible enough to handle debt.
You don't have to be in debt, paying your credit card in full each month is an excellent way to build credit, and you will never pay a cent in interest as long as you pay in full without fail.
I can see how it all appears to be a silly game if you never actually need credit, however there are material benefits (cash-back, rental car insurance, etc) of playing the game. In some cases the benefits you receive are nonsensical until you realize they are subsidized by irresponsible individuals paying huge sums of interest. There's a special kind of smug pleasure reserved for those who are financially responsible in America.
Sure, although the age of credit accounts is a significant factor in your credit score, so it's not advisable if you are trying to build credit.
Personally I have enough practice that I treat my credit cards no different than I would treat my checkbook—it's not that hard to avoid trouble if you just have the mentality of only spending money you already have. In other words, I personally don't think cancelling the credit card is necessary, but YMMV.
I've never had credit card debt (I just pay back once in a while, or every few hundred euros, to keep the balance out of red) but I've found good way to categorise my spending using credit cards. For example, I use one of my cards for personal expenses whereas we use a joint debit card account from the same bank for household expenses only. Then we have another joint credit card that we use on holidays etc. for shared expenses that aren't strictly household expenses or personal expenses... Very convenient. Also convenient is that instead of keeping lots of money on my day-to-day debit card account I'll just top up the c/c balance once in a while. The opposite would be to move money to my debit card account beforehand, and let it sit there even if I'm not sure I'll spend it in a week or three weeks.
If you pay all your credit card debt on time, there is really no reason to not have a credit card. Sure, you have the capacity to spend a lot of money, but I view that as a benefit and not a curse. Also, I feel a lot safer, since if there are any unauthorized purchases made with the card, the company takes care of it.
First, there is a fundamental law, from which no one—neither the great nor the small—is exempt. In substance it is: "Every 'Standard Oil' man must wear the 'Standard Oil' collar."
This collar is riveted on to each one as he is taken into "the band," and can only be removed with the head of the wearer.
Here is the code. The penalty for infringing the following rules is instant "removal."
1. Keep your mouth closed, as silence is gold, and gold is what we exist for.
2. Collect our debts to-day. Pay the other fellow's debts to-morrow. To-day is always here, to-morrow may never come.
3. Conduct all our business so that the buyer and the seller must come to us. Keep the seller waiting; the longer he waits the less he'll take. Hurry the buyer, as his money brings us interest.
4. Make all profitable bargains in the name of "Standard Oil," chancy ones in the names of dummies. "Standard Oil" never goes back on a bargain.[9]
5. Never put "Standard Oil" trades in writing, as your memory and the other fellow's forgetfulness will always be re-enforced with our organization. Never forget our Legal Department is paid by the year, and our land is full of courts and judges.
6. As competition is the life of trade—our trade, and monopoly the death of trade—our competitor's trade, employ both judiciously.
7. Never enter into a "butting" contest with the Government. Our Government is by the people and for the people, and we are the people, and those people who are not us can be hired by us.
8. Always do "right." Right makes might, might makes dollars, dollars make right, and we have the dollars.
If you are Standard Oil and are vastly larger than whoever it you are trading with, have a huge legal team and no doubt some friendly judges handy.
Mind you - I have worked with very senior people who would avoid putting things in writing and then a few months later always have a notably different account of conversations than I did. At first I thought I was actually forgetting things until I realised it's a trick used by overly political types.
The list (and book) was written by a guy who suffered from his financial dealings with Standard Oil and he is essentially explaining how they were able to get him over the barrel. It is a very cynical list.
Somewhere, someone has a ham radio listening for Morse code on a specific frequency. The right Morse code will probably make some equipment do something.
The trick is just figuring out who, what, where, and on which band....
It's interesting how flat human nature stays over time, how advice given 136 years ago is still perfectly applicable today. Over the course of centuries life has changed dramatically, but we still think, worry, feel and act like our ancestors did from a millennium ago. I'd bet you could easily find advice given in the roman empire times that would still be relevant today.
There are things from 1000's of years ago that are still relevant.
But I think it's mostly survivorship bias. The very few things from long ago that we still read, are still relevant today. That's why we know about them! Take a random book from from most periods of history, and it will be uninteresting, if not outright unintelligible, to a modern audience.
> Take a random book from from most periods of history
I'd be very interested in doing in doing just that. How would I go about it? Weighted by popularity in that era would be fine, but not weighted according to current popularity.
I'm sure you can find old books scanned online [0], or you could go to library--especially if you're in a town with a lot of history (Boston, NYC)--even better if you're in Europe.
Librarians are fantastic for this kind of thing. Tell them what you're trying to do, and they're marvelous and helping you find a way to use books and other resources to help you.
I've thought about this a lot on a philosophical level. A person goes through life repeating the same mistakes their parents made and their grandparents made before them, and so on. We spend so much time re-learning things that have already been learned. And doing things that have already been done. Imagine how life could be different if we didn't have to start over each time.
I listened to a talk on counterinsurgency given by David Kilcullen (I am about 90% sure, it could have been Nagl), but he asked the audience about whether it was better to learn from experience or from academics. The audience was about evenly split but with a lot of abstainers, and he said academia was the better choice of course, because no on ever died from reading a book.
While "teachable moments" in most contexts aren't fatal, the overall point that it's better to learn from other people's mistakes remains the same.
It's a completely different matter between learning from theory and learning in practice. What's sorely missing from theoretical teaching is context - knowing when and how to apply this knowledge - and the actual experience of using it, which is critical to remembering what was taught.
From my experience on this planet, purely theoretical teachings tend to be forgotten in favor of things you've actually used and done.
This logic always sounds good but I have a hard time really placing times when even in retrospect I lacked some wisdom from doing in order to apply the theory.
I've had plenty of times where I lacked both the theory and the scraped elbows (creating shared state clusterfucks that seemed clever at the time), and times when I was missing the theory alone (mechanically reaching for the OO hammer because there was a nail-shaped screw in front of me).
In all programming instances I can think of where I had the theory but not the experience I knew that there was a lot I didn't know and read about the implementation issues and went and bothered smarter people about it. Of course I wr[i|o]te plenty of shitty code in various contexts. I guess we can say that's the experience happening, but that's a bit unsatisfying as a model.
With the theoretical learning you get measurably better: if you've literally never even heard of time complexity, or read the latency numbers everyone should know, you're more likely to write some code with some garbage performance. Once you know about it you're unlikely to write grossly nested loops making unnecessary un-batched requests to servers 12 timezones away, or if you do you'll at least feel gross about it and it will be a (bad) choice not a mistake.
With experience with a particular technology you do as well. Knowing the Widget API inside out and knowing which Widget calls are lazy vs eager and which get cached or whatever are going to improve your code and get it written faster, but the gains are much more marginal than the theoretical knowledge. With enough practice learning new APIs gets easier. Remembering arbitrary incantations is something everyone eventually gets fairly good at. I think most of HN would do very well at Hogwarts. Assuming you already know how to program, I bet just reading something like Clean Code is likely to improve your JS quality more than an equivalent time spent churning out new JS (even though the example language in CC isn't JS so any benefit would be ported through theory).
It's very cheap to implement theoretical concepts in practice and I think a lot of dismissiveness towards "theoretical" things are defensive insecurities and/or lazy, probably at the same rate that "premature optimization" is utilized in such causes. Software has a very narrow gulf between practical and theoretical.
In domains where experience and theory are farther apart I propose that it's not so much experience being better than theoretical knowledge, rather the theoretical knowledge is frequently just plain wrong or extended beyond its applicability.
Look at the FBI's terrible high-school surveillance program that was linked here recently. It's based off of really garbage pseudo-science concerning extremist radicalization. There is better, more modern research on the subject, which should be used instead, but even then caution should prevail and less theoretical and more informed logic and experienced based decisions might ultimately be wiser. In a healthy field of study and practice, as time goes on and more data gets accumulated theory increasingly approaches reality.
I think what flyinglizard had in mind were fields where learning occurs through theory first and foremost, and only secondarily through practice. Software obviously is a craft where the act of implementing is really the major part, and thus you are by default learning through practice with theoretical studying being the exception.
Now consider the math courses you take at college for example. Here the important part is to learn and understand deeply abstract concepts, but then you explicitly need to practice in order to tie them together so you are actually able to use this knowledge.
I think both aspects of assimilating knowledge are absolutely crucial in all domains, but often one of them is naturally the default, while the other requires some effort.
I think in such a case, say with humans with a 1000-year lifespan, we would have learned a lot of things that aren't so and stayed that way. "Progress in science happens through the old guard dying" and all that, and it's not limited to science. I've felt since forever that my views are ossifying every day, so that I must be increasingly hopelessly wrong in those areas where I'm wrong. I try to fight it but I'm not sure there's any cure to it remotely as reliable as death...
Like the other poster said, a lot of it is survivorship bias. There are tons of stuff that people did 1000 years ago that have just been discarded through time by being clearly ridiculous/wrong. We mostly never even hear about them anymore. Think of all the stuff people did and acted upon in the past based on superstition or baseless beliefs that was just passed on, but today has about a zero chance of being taken seriously if it were to be brought up.
I'd argue that most of life has been figured out by many, many people thousands of years ago. Greek philosophers had the exact same problems we do today, and over their lifetime they've been pretty successful at figuring out solutions. I'd even argue that most "self-help" books of today are just the same old solutions written in a different way.
"In this eye-opening account, Cal Newport debunks the long-held belief that "follow your passion" is good advice.
Not only is the cliché flawed-preexisting passions are rare and have little to do with how most people end up loving their work-but it can also be dangerous, leading to anxiety and chronic job hopping."
You'll still end up moving around until you find out what you're great at. Unless by some freak accident you know from the start. For instance, there's _something_ that I'm probably a world-class genius at - I have enough experience being me to suspect that - but I have a very hard time putting it into words what I do, and an even harder time trying to monetize it.
If you're not naturally good at any particular thing, then just doing something enjoyable is a good second. Perseverance is the key to success, and it cannot exist without passion.
I feel like this a matter of balance. Taken to either extreme, you could end up poor doing something you love. Or paid decent to do something you never got super good at cause you hate it.
Probably the best strategy is to select something within the venn diagram of things you like and things that are lucrative.
> The inordinate love of money, no doubt, may be and is "the root of all evil," but money itself, when properly used, is not only a "handy thing to have in the house," but affords the gratification of blessing our race by enabling its possessor to enlarge the scope of human happiness and human influence. The desire for wealth is nearly universal, and none can say it is not laudable, provided the possessor of it accepts its responsibilities, and uses it as a friend to humanity.
> So in regard to wealth. Go on in confidence, study the rules, and above all things, study human nature; for "the proper study of mankind is man," and you will find that while expanding the intellect and the muscles, your enlarged experience will enable you every day to accumulate more and more principal, which will increase itself by interest and otherwise, until you arrive at a state of independence.
> When a man's undivided attention is centered on one object, his mind will constantly be suggesting improvements of value, which would escape him if his brain was occupied by a dozen different subjects at once. Many a fortune has slipped through a man's fingers because he was engaged in too many occupations at a time.
"I have discovered there is enough money in the world for all of us, if it was equally divided; this must be done, and we shall all be happy together."
"But," was the response, "if everybody was like you, it would be spent in two months, and what would you do then?"
Yes, but the goods it can buy on the next round of division still don't come from the spendthrift vagabond, and if his way of life is incentivized while the producers' is disincentivized by this redistribution, then that circulation won't continue so innocuously.
...and if you incentivized the producers (which is also redistribution) while disincentivized the spendthrift you will not be left with much of a population to keep redistributing from. Ultimately this is bad for the producers, I am not sure why they don't realize it. Short-term thinking and greed, maybe?
Increasing inequality does in fact encourage deflation. Redistribution in forms of common services and education (for um.. jobs) is very necessary.
I wouldn't disagree with you, but I think you're reading something into the quote which isn't there. The moral is that redistribution won't bring prosperity - not that it's good in some cases and bad in others. At the risk of adding more complexity to the parable than its pithiness merits for the sake of explanation (as I understand it): the spendthrift wholly consumes whatever he produces, and wants more. The producer generates a surplus. He may well consume an overall greater amount than the spendthrift, but he's still net positive. The "division" however, will only benefit the spendthrift, because producing is chosen for the sake of consumption, but consumption for its own sake.
I know it's still a gross oversimplification, but I think the general truth encoded in the parable should be appreciated for its own sake in general terms.
> The moral is that redistribution won't bring prosperity
Except that it does - up to a certain point.
That's one of the few repeatable, tested, and validated economical principle from the XX century. Counter intuitive as it is, there's just no point denying it.
If prosperity is "having wealth", then redistributing wealth does bring prosperity. But then you could also say that stealing brings prosperity. Could you not?
You could, but you should be aware that "stealing" is not an act per se, but a moral qualification of some other act. Namely, the redistribution of goods.
The only difference between theft and charity is your personal moral inflection.
A couple more definitions from Google.
Charity: voluntary giving of help, typically in the form of money, to those in need.
Stealing: to take without permission
I am an advocate for charity. But redistribution through taxation feels like stealing to me.
Redistribution through taxation feels like charity to me. Here's to kicker: why should anybody care about your feelings if they are wrong? Or if they only serve yourself?
If there's a good reason to think that redistributing wealth will improve people's ability to mitigate risk and make good decisions, then your feeling would really be irrational and should be ignored.
I counter your three with Denmark, Sweden and Norway. Now for the next round you hit me with three countries that have better standards of living than mine and that don't help the poor. 5 bucks a round?
I suppose you are pointing out that these are socialist countries and that poor people in them suffer a lot. Please correct me if I am wrong.
I think that they aren't really socialist countries, I would point to places like Sweden and France as closer to actual socialism than North Korea, which is really a Fascist dictatorship explicitly modelled on pre-second world war Japan.
Vietnam is an odd one out here because having suffered a total catastrophe in the years running up to 1975 (as in the complete physical destruction of the state, mechanisms of production and the labour force via being killed in large numbers) the Vietnamese state has made huge progress to become relatively prosperous. There is a lot to be admired in terms of economic gain, although not much to be admired about freedom and safety for those with contrary views.
Well, the first theory is by Keynes, it's on his book.
It's been revised and remodeled several hundreds of times, if you want to search Google Schoolar or something like that, look for "demand side" theories, or crisis of "aggregated demand". Also, if you search for NGDP, the biggest share of the papers will be about this.
There are many other terms that will lead to less results. It's a really widespread concept.
Mainstream yes, as in the majority believe so. But not without controversy. The Austrian School of economics is an opposing view which has brought just as many results of being the correct philosophy, and one may argue, is a simpler and more elegant approach of economics. And as one may say, clear ideas are easily expressed.
An obtuse mischaracterization of the poor; a more typical "sin" would be failure to hop over the ever-rising bar that denotes the ability to secure money by threatening to withhold labor.
Circulation goes both ways and it isn't the ability of producers to secure profits that seems to be most endangered at the moment.
> Why do you think it's a characterization of the poor at all?
Because they're the ones who the type of policy we are discussing would actually be intended to benefit. Voicing that side of the argument through a "spendthrift vagabond" is disingenuous at best.
> The working poor are themselves producers.
I was using the term with my tongue firmly planted in my cheek, I thought it would be clear enough from context that I was referring to capital-holders.
>>Because they're the ones who the type of policy we are discussing would actually be intended to benefit.
No. To be a spendthrift is a symptom of many problems. One of which means lack of respect for money or the effort required to earn it. Other wise one wouldn't be throwing it away.
Value and efficiency can disappear though. I could spend 100 dollars on something that falls apart in a month, or spend 1000 for a functionally equivalently something that will last 3 generations. One of these choices is wasteful and hurts economic efficiency, one isn't.
Speculative (and unregulated) financial dealings by banks with your cash, leading to ruinous effects on the global economy, ruining much of the middle class in the process?
So it would seem. But I see a root cause for both of these: the centralized pyramid user hierarchy which is inherent in any paper based information system.
"It is part of the age-old habit of using new means for old purposes instead of discovering what are the new goals contained in the new means."
UBI just lifts the wealth distribution curve up a bit so the long tail approaches something above zero. You could also call it a "tax prebate" as in the FairTax proposal if that's more palatable. The poorest poor are going to get their basic necessities somehow, whether it's by participating in the economy or by digging through your garbage or your garage.
Or even worse engaging in activies that degrade your lifestyle ;)
I live in a society that has in effect a basic income (not very efficiently run, but that is another topic) and it allows the ultra rich and famous to walk around without fear. I have on more than one occasion met billionaires on the street who were wandering around without bodyguards or security. Once you have everything money can buy this is priceless.
I'm very interested in the concept of basic income, but I don't see any issue with this commentary from PT Barnum. It seems to be more of a statement of fact that some people spend their money more wisely than others. Basic income could be viewed as inline with this statement because you would get an income stipend at some small interval, like once a month, so even if you spent it all last month, this month arrives and you get that basic income again.
Even a cursory reading of the story should suggest to a reader a difference between the proposed action (divide equally riches amongst all), and UBI (fund a fixed-amount per citizen per annum).
Least of all, if one believes in the ability of capital to be reinvested to create more capital, it is obvious that the second case need hardly injure an economy while still helping the people who are broke.
The former case, of continual wealth division, of course may fail--luckily, that's not how UBI works.
> it is obvious that the second case need hardly injure an economy
I think an even stronger statement holds true: if you don't actively redistribute then you're effectively making an open-loop amplifier which will amplify noise (who happened to be in the right place at the right time) in preference to signal (effort input) -- which is just as harmful to the cultivation of a beneficial incentive landscape (i.e. one that promotes effort input, since that's tautologically all anyone ever gets to decide) as a failure to reward success would be.
Alternatively: it's often better to reduce the transition-state energy than to improve the final reward, which is exactly the opposite of what happens when decisions are made by people who have 1 metric shitton of money to invest in building a moat with the aim of returning 2 metric shittons of money.
Socialism in the traditional sense of the word refers to what people today would more likely call communism. Socialism these days refers to social-democratic movements that want redistribution within an at least somewhat capitalist system. She was taking a swipe at the British Labour Party and their counterparts on the continent, all of whom used the label 'socialist' but were really social democrats. Words mean whatever people think they mean.
There's a similar phenomenon with the word liberal. Liberal once referred to, and in some contexts still does, politics that advocates for human freedom from all kinds of government coercion. At least in the US, it has taken on a different meaning over the last hundred years. Now it refers to social-democracy.
The reason these ideas changed names is because of the political coercion inflicted on socialists. People advocating socialism had to look for other labels that were not tainted with diret connection to oppressive communist regimes.
Socialism is commonly used today to mean a large welfare state. See Bernie Sanders describing the kind of socialists he is, and you'll realize he isn't actually a socialist in the strict sense of the word.
"I don't know why so many people think Socialism is about welfare."
Its one of the meanings that the word socialism has come to denote through quotidian usage in media and within Amercian society. Democratic Socialism would likely be a more precise term for these common usage scenarios.
> Americans are not wrong to abhor the specters of socialism and big government. In fact, as a proud Finn, I often like to remind my American friends that my countrymen in Finland fought two brutal wars against the Soviet Union to preserve Finland’s freedom and independence against socialism. No one wants to live in a society that doesn’t support individual liberty, entrepreneurship, and open markets. But the truth is that free-market capitalism and universal social policies go well together—this isn’t about big government, it’s about smart government.
And yet incorrect. Democratic socialism is the idea that socialism can be achieved through reform rather than revolution. In some respects, it has been less successful than revolutionary socialism: the UK Labour Party, until recently, reformed itself away from democratic socialism.
In the UK, welfare as we know it here originated from the Liberal Party, in fairness. Nationalisation (attempted socialism by reform) was the hallmark of the Labour Party, not heavy welfare spending.
Since Thatcher, the Tories have a knack for presenting themselves as the thrifty party - in effect, living within our means. Except household budgets are not so analogous to government budgets. It just so happens that this line resonates with the everyday voter in times of economic woe and it's all too easy to paint the social democrat as a boundless spender.
An example: in 2007 the Tory Party's shadow chancellor, George Osborne, said he would match Labour's spending plans. Recession hits, tax revenues drop and they harped a very different tune.
A semiconductor fab costs several billion dollars. Rollout of a national communications network still costs even more. The world is still full of big lumps of capital that aren't going away any time soon.
Agreed, and I'd be in favor of those being financed at least partly by the government and offered "at cost" because it lowers barriers to entry for new participants. I'd also include drug research, roads, housing in areas without a housing shortage (IE, not SF or Manhattan), and more. I even think the idea of a living wage makes sense and in fact will be necessary, I just haven't figured out how to pay for it (and frankly, the naive implementation of "just give everyone $X" would be so hugely expensive that it strikes me as infeasible. A working implementation is going to need to be significantly more... creative.)
And yet, the big stories of the last decade or two have noted a trend: more value being generated by fewer people with fewer capital expenditures (prime example being MSFT > Google > Facebook > Instagram/Whatsapp/Minecraft). The majority of "capital" in those cases (VC money, if applicable) is spent on engineering salaries.
Meanwhile, oil companies are dying, communication networks are barely profitable (cisco?), and "hard industry" is an industry no one optimizing for profitability wants to get into unless it's to break it up and sell it off. Of course you can point to the recently ended energy bonanza during which Exxon became the most valuable company in the world; explaining the drivers of that is beyond the scope of this comment but it's not about energy being a fundamentally awesome business to be in (but briefly, BRIC growth + monopolistic practices to really juice income).
So the interplay between brain capital, industrial equipment, and various other types of capital is more complex than "the public should own the means of production". Some of it yes, most of it no. And I'd argue the brain capital trend is going to continue while heavy industry jobs are going to keep disappearing, forcing us to resolve the "interplay between capital" question in a way that doesn't collapse our entire economy, doesn't cause a civil war (and/or avoids one), and doesn't end up with the public (or a small group calling themselves "the public") being able to shake down any success story simply because they figured out how to make more money than the next guy.
Apart from the fact that material production is still the real source of material goods, that sounds like an individualist fantasy. The idea of controlling one's own mind is a tautology, and as for the body, who can say where it starts or ends? We are interdependent. Combine those two assertions and I don't think you can draw any lines around individual persons any more.
There is some particularly crazy thinking in philosophy on self-ownership, which may interest you:
Cécile Fabre, Whose body is it anyway? Justice and the integrity of the person
Presumably by studying geology, then thinking a lot about the oil formation process, and working out where to find some before anyone else. Then, you can negotiate to obtain value for your knowledge of the location...
That's a bit of a stretch dude. In our world it's easy to think in terms of intellectual capital, but look around you - every object you see was manufactured somewhere.
The knowledge economy wouldn't exist without physical objects to express it through, and they all have to be produced.
Usually the first two socialist priorities are healthcare and housing. Together those things probably account for 35% of GDP.
Consider a trivial example -- the affect that the post ww2 public housing boom did to the US construction industry. Government procurement rules transformed and forced consolidation of the brick industry. On the east coast it went from hundreds of geographically diverse companies to 4-6, all in the south.
The world is full of people that think that they can do better than everyone else and they are temporarily disgraced because all the other people are just simpletons that cannot understand their mighty genius.
Mental institutions are full of people that think in a freakingly similar way.
A bit ironic then that the overall tax burden was rather higher than the previous Labour government for most of her time as PM:
"The tax burden (measured by the Institute for Fiscal Studies in the form of total government receipts as a share of national income) started at just above 40 per cent in 1979, peaked at 45.4 per cent in 1982, then fell below 40 per cent in 1990."
The fact that socialists feel entitled to free cash is hardly a surprise. In India which went though decades of socialist rule, its quite common among people to expect others to provide for them all their life.
I know a lot of people from my circles, especially older people in the late 50's and 60's who have spent their lives in the socialist era endlessly expect elder brothers/relatives to provide for them. Any refusal to do so is taken to amount to some extremely bad kind of selfishness and greed. Keep alone the fact that they've barely done any work all their lives, or are any way serious even now with their spending habits. The basic idea is that they are entitled to be provided no questions asked and someone is supposed to make up for them. Refusing to comply is evil.
From where I am standing it seems capitalists feel entitled to free cash. They take their capital, dump it in the stock market and hey presto free cash! This free cash mostly arises due to some accounting trick and is not productivity backed at all.
People who see the stock market that way are merely gamblers and will have their chips taken away in the next financial crisis.
During 2014-2015 I've participated in a lot of share issues to provide cash for gold mining companies requiring capital to move into or expand production.
These are companies with a few hundred shareholders or so.
The profits I've made in the past few months from gold mining companies, I think is perfectly justified. I've done my research and invested in these companies when everyone else has shunned gold and gold related investments. These were companies whose market capitalisation were less than their projected cash flows for the next year. I've invested in these companies when few other people would.
These gains I've made, are completely backed by productivity. Without these latest round of share issues, many of the companies would have gone under, and there would be no gold coming out of the ground.
(You could argue gold has no value beyond being a good material and I'd respond, neither do paint or flowers. With gold, people can use it as an asset without counter party, and provides zero interest, guaranteeing capital during times of negative interest.)
I don't resent anyone who chooses to play the game and wins. We just make the best of the system we exist in however I do believe in being honest about the system too.
Gold has a value purely due to it being vital in many technologies. That said I can't imagine the price we pay for mined material, gold or otherwise, even comes close to reflecting the cost of what it will take to repair the damage we are doing to our environment during the extraction of these materials.
Regarding productivity there are many instances of financial products which are not even remotely linked to any kind of productivity. If the stock market was strongly linked to productivity the down cycles it experiences would be minor in comparison to what they are.
Yes, I only invest in gold mines in my own country, where there are more strict protocols with regards to the environment, where a 'environment cleanup' bond must be lodged with the government before mining begins. The area is rehabilitated when mining completes.
The down cycles and bubbles are pumped up by central banks. When the stock market isn't doing well central banks lower interest rates, encouraging people to take out loans, to buy houses and stocks, and if they didn't, the central bank would lower the interest rate until they did.
It is market intervention that is exacerbating the phenomenon you're talking about. A small down cycle is a healthy event that cleans up all the almost productive companies and reallocates their capital through liquidation. It is zombie companies propped up by government subsidies and central bank intervention that is causing the rot in America's economy. It is akin to a forest fire burning all the weeds so the forest can rejuvenate.
There are many. To name a few: synthetic CDOs (the 2008 mortgage crisis), insider trading (Martha Stewart), rate rigging (LIBOR scandal), Ponzi schemes (Madoff) and straight up cooking the books (Enron).
I hope that's enough to refresh your memory? It's irrelevant to my original point though as capitalism is by definition hoping to get something from doing nothing (or making money work as the propagandists like to dress it up as).
Apart from Enron, the rest have little to do with capitalism but mostly to do with markets (or, more precisely, our fucked-up financial institutions and deficient financial regulations).
> It's irrelevant to my original point though as capitalism is by definition hoping to get something from doing nothing
You have to be really stupid to think that, and deny all the benefits to our society that capitalism enables. Or, could you please explain how you would e.g. start an airline, or build a hospital, or your house's sewage system, without utilizing capital?
>You have to be really stupid to think that, and deny all the benefits to our society that capitalism enables.
I never did that. I'm well aware of the benefits capitalism has brought society, just as I am aware of the damage it has also caused. I can guarantee you the majority of capital pumped into businesses does not come from the people who will do the work.
> I can guarantee you the majority of capital pumped into businesses does not come from the people who will do the work.
Well, it comes from the people that invest money (investors), others invest work/time, and they all get the benefits.
Funny enough, a large chunk of invested capital these days (both in equities/index funds, as well as hedge funds and PE/VC) comes from... drumrol: workers (or, more precisely, their pension funds)! In this case, I actually totally agree that it's stupid and unrealistic to expect a risk-free, forever-growing, >4% compound return by doing what everyone else is doing, but unfortunately, the whole pension system is flawed this way, there's not much we can do about it (individually).
A lot of old-school financial advice seems to focus on the importance of saving and avoidance of debt. It seems reasonable but I always wonder how applicable that is in the modern times with our record-low interest rates. Short look at the tables in [1] suggests that, for example, you could gen 5% after-tax real returns on government bonds in the 19 century. Today, that would be unthinkable.
On the contrary, near-zero interest rates recommend more debt and more risky investments, because (a) debt is cheap, and (b) inflation (stagflation perhaps) will nibble away your savings if you try to ignore the equity markets.
This is all true, but it was not all obvious until I'd experienced four or five decades of life lessons. If you think this advice is at all dubious, ask and we'll see if we can explain...
I took a credit once, for buying a car, and will never do it again.
Although I never had problems with paying the money back, I was paying a lot more money back to the bank, so when I finished paying the credit off, the car was worth half of the price I bought it, almost having paid double the price because of the credit interests.
But the worst part was that it didn't feel right.
So now my policy is to never buy anything with money that I don't have (yet). It makes you feel so much better, you feel a truly free person. I don't own my apartment, true, and the money I spend each month on rent could bring me closer to owning one, but I just don't see the point of it. But buying stuff for money you actually have makes your decisions so much better and closer to what you can really afford.
Also, there is another component to buying stuff with money you actually have. Recently, I decided to buy a scooter. Not a big "deal", but I didn't want to just spend any savings on it that I have so far, so I put aside money from some freelancing outside my daily job, sold some unused furniture and electronics, and only had to pay around 25% of the price of the scooter from my account. It felt so good, it felt like I deserved it, because I planned for it in advance and didn't have to "compromise" my savings. On the other hand, when I took the loan for the car, I felt bad, I almost felt miserable, as if I was doing something wrong. I can't imagine buying a house for someone else's money. You must feel like a slave.
Have you considered that your personal feelings are preventing you from taking what can actually be a good economical decision?
For example, imagine you had taken a loan to buy the scooter, then used the money put aside to pay the installments instead. You might have paid somewhat more for the scooter, but on the other hand, you could actually own the scooter earlier, which might even save you money in the end (for example, if you drove a car instead and therefore spent more in gas and such).
Buying a house is similar; the "point" is that you end up saving money, since you stop paying for it, but never stop paying rent. Also, there are incentives (such as tax breaks) that make it cheaper still.
Does it mean that you have an extra obligation "tying" you? Sure. But that doesn't mean it's always a bad choice.
You can make some argument for paying for something over time if you are going to use it over time. A house, or a car, could fall into that category. However a big difference is that a house is an asset which normally appreciates in value, while a car is an expense which depreciates. Buying something on credit that will depreciate (or worse, is a consumable) is something to be very cautious about.
Here's the biggest reason why I don't mind taking out a loan on a car, one of the most aggressive and most expensive depreciating assets out there:
Comfort. Immense comfort.
I spend a lot of time in my car. I enjoy the car that I have now (a 2012 Honda Accord EX-L), but the only reason why I didn't take out a lease on something more expensive (like a 535i or an E-class) is because we're planning to move very soon and driving a luxury car in NYC makes no damn sense unless you are flush with money and can afford the inevitable body work.
When I went to Austin a few months ago, I decided to rent a BMW Z4. It was amazing. An absolute pleasure to drive. It wasn't the speed that did it in for me, though. It was the sheer comfort of everything.
Volume knobs? They're RIGHT THERE. You don't even need to move your forearm.
The seats? Plushy and comfortable (unlike my Accord; everything is great, but those seats are terrible).
Cruise control that actually works on downhills and actually slows down? Not a problem.
Me paying a few hundred dollars per month to not drive something much cheaper (and, likely, not as nice/comfortable) doesn't bother me at all. It's a debt, and debt sucks, but driving a low-grade econobox for a few years while I save up for something that will be worth 30% less than what I bought it for the minute I drive it out is much worse (for me).
(Same goes for my future house or apartment.)
That being said, building up my emergency spend and clearing up some debt that I've amassed is next on my priority list after moving.
BMW fan here! (To an extent). BMWs have their flaws (buy a 15+ year old E46, I dare you), but damn, it feels much more like they thought things through. Nothing in the interior of my E46 annoyed me. I've driven the F30 as hire cars many times and love it. However, I drove a 2015 Mercedes E-class for 3 days last week...:
- The parking brake is a PEDAL and the release is a totally separate lever.
- The button to disable auto start-stop is labelled "Eco" rather than a more standard VW/BMW "A" icon in a circular arrow.
- The gear selector is a weird stalk (drive is down, reverse is up, and park is a separate button you push inwards?!).
- The cruise-control always stayed -1km below what is set.
- The gearbox mode selection cycle in the order: Eco->Sport->Manual, i.e. in eco, you need to cycle to get to manual rather than being able to select it directly. Also, flipping up a gear with the paddle DOESN'T put it in to manual mode.
- The cruise control stalk is complicated and had an LED, which is out of view.
- No button on steering wheel to directly change radio station.
- You need to dig the brake pedal to enable the auto-hold.
- To wash the windscreen, you need to push inwards a small button on a stalk to the second level! The first level activates the wipers without water. I dry-wiped the windscreen a few times before realising.
> The parking brake is a PEDAL and the release is a totally separate lever.
That has two functions in one go: first of all it stops your potentially deranged passengers from pulling on the handbrake and second it allows for much more force to be applied to the pedal than you could ever achieve while pulling on a lever. This means that if you need the parking brake for it's backup emergency brake function it will likely have a lot more effect.
> The gear selector is a weird stalk (drive is down, reverse is up, and park is a separate button you push inwards?!).
Gear selector is a matter of taste, it's actually the same as it would be in some other EU cars (and even some ancient ones, the (original) DS for instance). The reason why park is separate is so when you reverse and you still have a little bit of speed you don't accidentally lock the wheels.
> Cruise control setting being 1 km below what you set is
Similar to the speedometer erring on the side of caution. In case of doubt, check with a GPS and adjust accordingly if you really feel like riding that fine line between a fine and a freebie.
> No button on steering wheel to directly change radio station.
First world problems ;)
> To wash the windscreen, you need to push inwards a small button on a stalk to the second level! The first level activates the wipers without water. I dry-wiped the windscreen a few times before realising.
That's a half-automatic gear box, so gears but no clutch! (Not bad for the early 60's, as well as hydraulic suspension, power steering and headlights that point where you're driving).
I've even seen it on some American cars. Eventually the shifter for automatics moved to the transmission tunnel (if you had one) as well but it wasn't always so.
I suspect the re-occurrence of this has to do with the mid console in high end cars now more and more occupied with electronics and infotainment rather than the drive train and associated levers.
Hallo,
also kind of BMW fan here; driving 12 year old E39.
It's one of the main selling points of BMW that everything is designed and engineered towards the driver - from the controls to the essence of the driving experience. It's something which is inherited in every successive model.
I can afford buying any of the new models, but rationally can't see what I'll get additionally, besides the ego boost and the quickly fading dopamine kick.
Maybe more efficiency and reliability?
Part of what pleases me is that you get the same level of comfort and experience for so little.
“Let’s suppose you want the latest iPad. You want it because it is convenient to be able to look at pictures and websites and books and play music around the house. Sure, you already have other computers that do those things, but the iPad is special because it lets you do them while holding it in one hand, sitting on the couch.
Wow, that couch is pretty convenient too, isn’t it? It is comfortable, enjoyable, convenient, and joyful to sit and lie on your couch. In fact, wouldn’t it be best to just lie on that couch all day? Forever? Yeah! Maybe you could even hook it up with a catheter and a bedpan, and a friend or robot could bring you all your food on the couch too. With each release, the latest iPad could be delivered to you, and you’d have the most convenient and comfortable and effort-free life ever.”
I too have read Mustache. His articles are good, but his ideology has always been achieving financial independence from complete (or mostly complete) detachment from materialistic wants. Money (or FI) isn't liberating when all I can do is ride my bike from place to place while always worrying about the time I'll be home since I'll almost never eat out according to his paradigm...
I disagree. If you haven’t been cured of spending all your money (or, as you say, “detachment from materialistic wants”), you won’t be able to save any of it.
Also, having money by saving it is not simply sitting at home doing nothing; it’s about feeling secure:
Most cars are within the same price range for a lease: honda accord $200, infinity Q50 $300, bmw 3 series $350, mercedes C Class $350, porsche boxter $600, audi A4 $300, hyundai sonata $200, etc...
Yeah...I wish I knew that when I financed my Accord. It just so happens that my Dad is paying only ~$150/mo more on his loan for his 2011 535i than I am for my 2012 Accord EX-L (insurance included in both cases). Sure, his 535i had 35k miles on it (mine only had 6.5k), but his car is SUCH a nice drive and has COMPLETE coverage for 4 years, so any work that he needs to have done on it will more than likely be covered.
If I had known that, I probably would've considered getting a slightly older 335i instead. That said, I don't regret my decision. I love our car (except for the driver's seat...boy is it bad), and owning a nice car here in NYC is a fool's errand unless you don't mind paying tons on body/wheel work.
Borrowing money for a depreciating asset doesn't make much sense in any case. It's not just the extra cost, but additional exposure to risk. Life sometimes throws curve balls, and being leveraged can make the consequences much steeper.
Twenty chapters of true wisdom, from that great American showman P. T. Barnum. Especially the penultimate chapter, "Don't Blab":
> Some men have a foolish habit of telling their business secrets. If they make money they like to tell their neighbors how it was done. Nothing is gained by this, and ofttimes much is lost.
Nicely done, Mr. Barnum. I am honored to share a birthday with you.
I was recently reading in a London paper an account of a like philosophic pauper who was kicked out of a cheap boarding-house because he could not pay his bill, but he had a roll of papers sticking out of his coat pocket, which, upon examination, proved to be his plan for paying off the national debt of England without the aid of a penny.
I've read only the first chapter yet, but will read the rest because it got me.
However there's a hidden idea which equals wealth to happiness which I dislike heavily. That said we can rest assured that while wealth is not connected to happiness (too many things into play to achieve that state), debt sure as hell leads to miserable.
Some of these advices are in harmony with thousands old maxim "fortune favours the prepared", which not only hints that so-called success is much more a result of chance, like almost everything else in the universe, but also correlate with the notions of avoiding a debt, concentration and persistence. But the chance is still the major factor.
BTW, the parts of the Patanjali Yoga Sutra, which gives practical advice about the practice - about necessity of an appropriate isolated place, diet, habits with emphasis on sleep cycle, proper state of mind, concentration and persistence - is the best universal advice to achieve anything in life that I am aware of. The word Yoga could be translated as "discipline", and has little to do with asanas, mats, and yoga pants.
You are given the TL;DR then the fleshed out story after, which is of a manageable size. The English style is very readable for something so old. There was presumably no word-count pressure.
I loathe books like How to Win Friends and Influence People that have some meandering and boring story before it gets to the point.
This is the 'how to start a startup' for business of the regular type, i.e. no ambition to get loads of capital and become the next Google. Read this once the tech bubble has burst!
[1] http://www.nbc.com/saturday-night-live/video/dont-buy-stuff/...
[2] http://www.youtube.com/watch?v=R3ZJKN_5M44