Hypothetically - What happens as more people ER?

[Insanity]

I got to thinking, after seeing the latest post on MMM, what would happen if we changed people's minds from being consumer based to ER based.  What would the product world look like?  What about the service world?  How would the world change as the ramp up of ERs progressed?

I'm honestly not sure.  Would it change? Food for thought...

[matchewed]

Well I'd say tease it out for yourself but I'll take the same stab others have.

First of all consumerism itself would not die it would just evolve. It would be based less on pure consumption for consumption's sake than consumption for needs/"true" wants. Service industries would still survive as things that people do not value doing for themselves would be purchased as a service.

Basically it would just be much less wasteful, slower growth, and probably smaller work weeks to compensate for that. I'm more curious what would happen to pay in a world where people focused on generating financial stability.

Also as an aside - http://www.ted.com/talks/keith_chen_could_your_language_affect_your_ability_to_save_money.html

or

http://cowles.econ.yale.edu/P/cd/d18a/d1820.pdf

There are graphs noted in those which show countries that have average savings rates of 30%. Some of those countries are pretty darn successful while still maintaining high rates of savings. So to your question as to what would change? Probably not much.

[Insanity]

The reason I didn't "tease it out" was I'm honestly not sure.  I look at the progress that has been made since I was a kid (Atari 2600 / Commodore 64 tap drive days) to where we are today.  It's hard for me to fathom that kind of progress being made if the workforce wasn't as dedicated and large and demanding as it is today.    I look at the progress (at least on the technological side) that has been made and I think how close we are to the "replicators" of star trek (think 3D printers).  Those inventions have not necessarily made life any easier in some respects (instant communication leads to a higher expectation of quicker response times regardless of the time they were sent or how long the review in and of itself might take).

Then there's the health insurance side (at least here in the US).  A large portion of it is dependent upon group insurance provided by employers (yes, that "may" change now).  With a smaller (I'd have to figure it is smaller) workspace, more people would need to purchase them individually (or through some co-op type purchase program).  That would have to lead to a shift in plan configurations and purchase prices.

The service industry would be very interesting.  For instance, lawn care services.  They might actually see an influx of people willing to do the work as they may actually be able to get away with charging more and paying better.  Or are they going to be phased out because people would have more time to do the work themselves?  They would be more inclined to do the work themselves?

Thanks for the links.  I'll have to look at them!

[Iron Mike Sharpe]

I don't know what the world would look like.

However, I think it is really pointless to even speculate on it because the masses aren't going to give up their habit of high consumption.  It just won't happen.

[smalllife]

There will be more like minded people with which to spend your now-abundant time, sharing knowledge and cheap entertainment.

[.22guy]

I don't know what the world would look like.

However, I think it is really pointless to even speculate on it because the masses aren't going to give up their habit of high consumption.  It just won't happen.

Totally agree.  There are some people who will FIRE, but the percentage is so low it won't affect society or the economy in any meaningful way. 

That is an interesting, hypothetical question though.

[matchewed]

I don't know what the world would look like.

However, I think it is really pointless to even speculate on it because the masses aren't going to give up their habit of high consumption.  It just won't happen.

Because speculation and thinking never produced anything. Because humans don't constantly evolve their cultures and all things inherent in it such as economic structures, governments, technologies, arts...etc. The statement of something being impossible has been made several times in history. I'd say at worst this is improbable. Making such a definitive statement just closes the door for that possibility only for yourself. Please don't try to close it for others.

Yeah the links I posted are just the same study, one a 15 minute talk, the other the full story. But it is fascinating. Previously brought up in another thread but it's main focal point is the connection between the language concept for future events like English (it will rain tomorrow) vs some other languages which do not have that future concept to words (it rain tomorrow) and the related savings rates of those countries.

Back on topic, will people mow their lawns more. I think you'd see an uptick, but for people who do not enjoy that activity there will still be lawn care services in existence.

[2527]

There would be a lot fewer restaurants, dry cleaners, and jobs for teenagers.  Etc.

[Khan]

In America, I don't think it'll ever be an issue, especially with concerns about the current unemployment being a paradigm shift of systemic unemployment finally being brought about via the automation of lower skilled jobs, as well as the shift towards the wealthier(corporate/stockholder) receiving all of the gains of increased production.

But, imagining that that isn't the case, and that more of America starts to be financially literate and reduce consumption(bonus points for the environment), as well as possibly ER'ing, I'd imagine we'd at that point have a cultural conversation/shift away from the 40 hour work week. Why should we all have to work 40 hours as the baseline? What if everyone in America, with their decreased consumption, their eyes towards optimization and minimalism, looked at work through that lens and thought: Hey, work sucks, we could reduce our hours collectively, have less problems with employment, etc. etc.

One thing I will say about the concern about more people ER'ing, is that over the near term, more people will leave the work force as the babyboomer generation retires. During this time, our quest for higher and higher GDP won't be necessary. We could have stagnant -real- GDP, or even slightly negative, and the economy would still be chugging along fine, and unemployment would probably be dropping as well.

But like I said at the beginning, I think automation, robotics, and computers will increasingly displace people(I know it's been theorized since the 1800's, but it will only continue to be proven wrong until one time we do find ourselves on the other side of that trend), and that is more, the conversation we want to have. Not one on what happens when people choose not to work, but what happens when most people -can't- work, -can't- compete with robotic labor.

[Bakari]

I have so much to say.... but...
most of it would be repeating much of what I said already here:
https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/living-off-of-other-people%27s-work/msg82928/#msg82928

In America, I don't think it'll ever be an issue,

Don't assume that just because one way is all that has existed in our own personal lifetimes that it therefore is the only way it has ever been or ever could be.

I think automation, robotics, and computers will increasingly displace people(I know it's been theorized since the 1800's, but it will only continue to be proven wrong until one time we do find ourselves on the other side of that trend), and that is more, the conversation we want to have. Not one on what happens when people choose not to work, but what happens when most people -can't- work, -can't- compete with robotic labor.

There is nothing wrong with automating the boring jobs; accept for this:

the shift towards the wealthier(corporate/stockholder) receiving all of the gains of increased production.

If we were to change the paradigm such that increases in productivity were distributed equitably, we would have 10 hour work weeks already.

[Nords]

I got to thinking, after seeing the latest post on MMM, what would happen if we changed people's minds from being consumer based to ER based.
I'm honestly not sure.  Would it change? Food for thought...

I think the surf breaks would get a lot more crowded...

[Khan]

 

There is nothing wrong with automating the boring jobs; accept for this:

Except that, should all those boring jobs get automated, whilst at the same time the country is actually having a "Makers vs. takers" argument about the economy(hint: that's complete bullshit), and while we continue to strip the government's powers for increasing the general welfare and reducing taxes on the upper 1% gaining all those increases of production, as well as extremely predatory practices on the people who normally staff those jobs well... Let's just say that that would be bad. I'm all for eliminating lame jobs, but I don't believe American capitalism is ready for such a shift, especially because our rhetoric on the issue is so extremely bad by comparison. Funnily enough, Milton Friedman and his negative income tax is I think one of the best solutions to that.

Have you ever read Manna by Marshall Brain?

[Lennart]

I used to wonder about the same thing as well, since it might look like we profit from the mass consumption from other people. Luckily, MMM already covered this topic in his blog: http://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/. I could give a summary, but it's best you read the whole thing. After reading it, I'm not fearful anymore of everyone on earth becoming frugal and/or retire early.

[Bakari]

Except that, should all those boring jobs get automated, whilst at the same time the country is actually having a "Makers vs. takers" argument about the economy(hint: that's complete bullshit), and while we continue to strip the government's powers for increasing the general welfare and reducing taxes on the upper 1% gaining all those increases of production, as well as extremely predatory practices on the people who normally staff those jobs well... Let's just say that that would be bad. I'm all for eliminating lame jobs, but I don't believe American capitalism is ready for such a shift, especially because our rhetoric on the issue is so extremely bad by comparison. Funnily enough, Milton Friedman and his negative income tax is I think one of the best solutions to that.

Have you ever read Manna by Marshall Brain?

It would be great were the country having a real "maker v taker" argument - i.e. if it were widely talked about that the working class are literally the ones making all the stuff, and that the "upper 1% gaining all those increases of production" are just taking the profit without contributing anything of their own.  That wouldn't be bullshit.  Its just that people are falling for the rhetoric that pretends that hiring people to do work is equivalent to actually doing work (http://biodieselhauling.blogspot.com/2012/06/poor-person-never-gave-me-job.html)
Anyway, there is no point in debating whether simple jobs should get automated, it has been happening for decades, and it will continue to.


The stock market is increasing far faster than GDP growth or inflation, oil is a limited resource, and China is rapidly chasing us on technology, military, investments, infrastructure.... A shift is coming, whether American capitalism is ready or not.  The only question is what will we shift to, and how painful will it be?   On a practical, individual level, an MMM style outlook and lifestyle is probably our best way to make the transition.  On a nationwide scale, if everyone did it the transition would be voluntary and gentle.

[Nords]

The stock market is increasing far faster than GDP growth or inflation, oil is a limited resource, and China is rapidly chasing us on technology, military, investments, infrastructure...

Another possibility is that none of these trends are sustainable, and they won't have any long-term effects on the American economy. 

[Bakari]

The stock market is increasing far faster than GDP growth or inflation, oil is a limited resource, and China is rapidly chasing us on technology, military, investments, infrastructure...

Another possibility is that none of these trends are sustainable, and they won't have any long-term effects on the American economy.

?
These trends aren't sustainable!  Neither, for that matter, is GDP growth, nor is currency and military dominance.
If we our economy is relying on unsustainable trends in order to function, how could those trends end without having long-term effects?
Maybe I completely misunderstood your comment?

[StarswirlTheMustached]

If we were to change the paradigm such that increases in productivity were distributed equitably, we would have 10 hour work weeks already.

Which seems like it would have been the rational path for society to take-- and it really looked like it would, for a while. Many mid-century (and earlier, back to the late 19th century) thinkers thought this was inevitable, after watching working hours drop steady for a generation or more.
Of course it didn't work out that way-- we let ourselves be seduced to ever-greater consumerism instead. Well, we as a society, as opposed to we on this forum

The stock market is increasing far faster than GDP growth or inflation, oil is a limited resource, and China is rapidly chasing us on technology, military, investments, infrastructure...

Another possibility is that none of these trends are sustainable, and they won't have any long-term effects on the American economy. 

Yeah, I don't get what you're saying here, either. That these things will just go away and not matter?

The stock market will stop growing faster than GDP or inflation, and you think it won't have any effects on the economy? Maybe not, but some days it seems like jiggling stocks is the only thing really growing in your economy.

Oil isn't going to stop being a limited resource-- it will stop being a resource, eventually, though. And if you think that's not going to have an impact on the American (and world!) economy, man. I have ALL the bridges to sell you.

China catching up in technological parity isn't sustainable? Why? Do you think Americans are just naturally more innovative and intelligent than persons of other nationalities?

Or do you just think that none of these things will really rock the domestic boat-- that the Chinese can be a major competitor on the world stage, oil can run out, and the stock market can slow down, and the US economy won't feel the difference?

[Bakari]

If we were to change the paradigm such that increases in productivity were distributed equitably, we would have 10 hour work weeks already.

Which seems like it would have been the rational path for society to take-- and it really looked like it would, for a while. Many mid-century (and earlier, back to the late 19th century) thinkers thought this was inevitable, after watching working hours drop steady for a generation or more.
Of course it didn't work out that way-- we let ourselves be seduced to ever-greater consumerism instead. Well, we as a society, as opposed to we on this forum

Consumerism is a HUGE part of it, I agree.
My favorite example (James should like this) is the Teachers Union.
Public school teachers already make substantially more money than private school teachers.  At the same time they work more than 40 hours (but with no overtime pay), and have overcrowded classrooms.  Obviously they are pushing for cuts in teacher pay in order to afford more teachers, reducing the burden on existing teachers and improving the quality of education, right?  No, of course not.  They just keep demanding higher salary, higher salary, higher salary, and pretty much nothing else.  Pure stupidity.

But it isn't entirely the fault of the worker / consumer.  Its government's decision how much power capital has over the economy.  Government grants corporate charters, approves mergers, breaks strikes.  And a combination of business and government decide to prioritize profit over employment, average standard of living, and everything else.

If it were a question of worker/consumers all being like the teacher's union and choosing money over free time or quality of life, you would expect for average salary to go up at the same rate as productivity.  It hasn't.  The majority of gains of productivity go to the upper 0.1%, which is why their rate of income is accelerating.

When a new robot gets invented that can do the work of 40 workers with just one operator, a company could have all 40 employees come in one hour a week to operate the robot, for the same total pay they had before (4000% raise per hour, but no net change per week).  What happens instead is they lay everyone off, and keep everyone's salary for themselves.  When this happens enough, we would expect to see rising unemployment and lower real wages, at the same time as massive increases in wealth for the capital class, concentrated primarily at the very very top (not the 1%, but the 0.1% and the 0.01%) - which is exactly what we do see.

Just so happens this trend has been noticed recently by a (relatively) mainstream news blogger: www.motherjones.com/media/2013/05/robots-artificial-intelligence-jobs-automation