Author Topic: Living off of other people's work  (Read 73771 times)

MrsPete

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Re: Living off of other people's work
« Reply #50 on: May 01, 2013, 02:28:24 PM »
When we're young and essentially "have nothing" to put into society, we have to put in our labor.  As we age and accumulate capital, we can begin to let that money work for us; this is what a retired person does.  That person still contributes his share to society via taxes, which we all know do not stop at retirement. 

The people who really "live off other people's work" are those who have never worked and who collect monies of various sorts from the government.  That is, those who have never really contributed to society in any way. 

AJ

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Re: Living off of other people's work
« Reply #51 on: May 01, 2013, 02:32:22 PM »
Occam's razor, man. What's more likely?

A. That the vast majority of our society here in North America, a people in general who are some of the most highly educated and enlightened humans who have ever lived, who often do incredibly difficult, demanding, and exacting jobs that require decades of training (and do them better than any collective group has done their work in the history of humanity) are all simply stupid and undisciplined and, through their own character faults and shortcomings condemn themselves to wage slavery.

Or:

B. That you have a system that has elegantly directed our focus away from the free and engaging activities that could make us happy in an effort to endlessly produce and consolidate that production in a way that civilizations have done since their very beginnings.

Let me re-frame that. What is more likely?

A. That human beings of all kinds, regardless of their education or "enlightenment" are, by their very nature, wired and evolved to seek the path of least resistance and to prioritize immediate rewards/pleasure over that of the future - and that giving into those natural inclinations rather than building up the mental muscles to resist them condemns them to wage slavery.

OR

B. That a consortium of immoral and powerful people have deliberately engineered a system with the intent of making people miserable for some nefarious purpose - and have done such a good job that the system merely *appears* to have a simple exit (spend less than you earn).

Yes, people (even the smart ones) are often lazy and undisciplined - especially in terms of things that will require mental effort. Effort feels bad. Do most people know they should save more yet fail to do it? Yes. Do most people know they should exercise but fail to do it? Yes. Intelligence and education != self-discipline.

tuyop

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Re: Living off of other people's work
« Reply #52 on: May 01, 2013, 04:51:18 PM »
B. That a consortium of immoral and powerful people have deliberately engineered a system with the intent of making people miserable for some nefarious purpose - and have done such a good job that the system merely *appears* to have a simple exit (spend less than you earn).

Mmm good strawman. "System" does not mean people. Read more, man.

velocistar237

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Re: Living off of other people's work
« Reply #53 on: May 01, 2013, 07:28:26 PM »
Mmm good strawman. "System" does not mean people. Read more, man.

She was pointing out that with this complex topic, it's a bit glib to just throw up a dichotomy and assume the answer is obvious. Why set these against each other? Both are true. The system does exist, and everyone still has personal responsibility. As Mustachians, we take responsibility for ourselves, hence don't blame the system. Rise above. As Mustachians, we have a powerful mirror to hold up to others so they can see and stop serving the system. We have a means to fight the system, a system comprised of people who can't stop at enough and who exploit each other for profit.

AlexK

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Re: Living off of other people's work
« Reply #54 on: May 01, 2013, 08:00:54 PM »
Much of the wealth in developed nations is acquired through exploitation of developing nations and the environment.

I would argue that the "exploited" are better off for it. See Hans Rosling's data in the youtube video I linked to above. Their standard of living (life expectancy) has increased. If it wasn't the best alternative available, nobody would take a job in a sweat shop. I'm not claiming it's fair, but the capitalistic system raises the standard of living for all (some much more than others). Look at China's incredible growth and prosperity over the past few decades. Who's exploiting who?

The concerning thing about capitalism and the fiat money system is it depends on exponential growth in order to pay all the interest. Seems like something will have to give eventually.

Jamesqf

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Re: Living off of other people's work
« Reply #55 on: May 01, 2013, 09:58:04 PM »
Without some kind of help, that Ethiopian subsistence farmer is never going to be able to move from the 'poor' to 'rich' categories, regardless of gumption, effort, or fortitude.  The opportunities just do not exist for him.

Just the way that, without some kind of help (plastic surgery, maybe?), I'm never going to be able to move from "unattractive guy" to "male sex symbol".  So what?  Life isn't fair*: get over it. 

I've never quite understood why people who profess such concern for their ideas of "fairness" always seem to have it working in only one direction: that I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?

* Indeed, you should be glad you're not a shark, where the strongest embryo eats its siblings before birth.

SomeYoungGuy

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Re: Living off of other people's work
« Reply #56 on: May 01, 2013, 11:21:48 PM »
Sorry I've missed out on several great posts, I'm an expat in a different time zone...

In general, Economists seem to agree that Globalization has benefitted third world countries to the disadvantage of first world (one example is Jeffrey Sachs, The Price of Civilization, and his podcast about the topic at:  http://www.econtalk.org/archives/2013/04/sachs_on_the_cr.html).

But posters have hit upon what I think is really at the heart of the issue for me, which is that Mustachianism is generally a 'rent' collection scheme (rent in the economic sense means a exacting a 'free payment' from another, whether that be through collecting dividends, collecting interest, being a landlord...).

People generally agree that 'rent seeking' is bad for Capitalism, once they understand how it is manifested.  For instance, when lobbyists get subsidies for their constituents, it 'tweaks the system' in an 'unnatural way', and suddenly you get ineffieciency such as corn prices spiking because a non-natural economic balance has been imposed by setting a mandatory production of ethanol in order to 'get the system going in the right direction'.

Similarly, Pete, the grand Mustache, advocates renting houses, collecting dividends, and collecting interest via peer-to-peer lending so that you no longer have to be a productive member of society during your most productive years.  In his example, I can think of several ways his example is 'bad for capitalism' - that he went from being a producer (maybe, in his career, he would contribute to software that saves humanity billions of hours in lost productivity, I for one am glad Microsoft didn't stop improving in '97).  And, although he is a highly educated software engineer, he is taking a job from handymen and carpenters who do not have the capacity to retrain and take his job.

I want to keep this separate from his message to consume efficiently and thoughtfully via simplifying life and buying quality durable goods, etc.  I'm just against that he is selling this good message with the tagline 'because then you can retire early'!  We can all do with being better consumers, but a generation can't all retire at 30! 

Zeb

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Re: Living off of other people's work
« Reply #57 on: May 01, 2013, 11:32:28 PM »
So many interesting and thoughtful replies have given me a lot to think about, and I really appreciate that. I haven't seen an answer that resolves the question for me though, so I'd like to process the themes I've understood from everyone and see if anyone can add to or clarify these lines of thought. I want to make it super clear that I am only asking about the personal decision one faces of whether it is ok to stop working and live off of investment income once you have amassed enough capital to do so. What makes this a difficult question for me is that investment income is the proceeds of others people's work, and normally I and most people condemn living off other people's work when you are perfectly capable of working yourself. I am not asking about the morality of the capitalist system, or of history, or of trade and econmic relations outside your direct control. Those are all really interesting and worthwhile things to talk about and I'm enjoying reading people's thoughts about them, but they're not the particular thing I'm asking about. Facts about those things may bear on the personal moral decision, but whether those facts are good or bad we each still have have that one personal decision to make.

So here's what I've heard. I've tried to organize the answers into a few general types with a few specific justification for each type of answer.


The Question: Is it ok to live off of other people's work via investment income, as in early retirement?

Answer type A: I'm not living off of other people's work.

   Justification A1: I'm not living off of other people's work, I'm living off my own prior work.

   My doubt for A1: If that were true you'd be drawing down your savings, which are the total remaining compensation for your prior work. Instead you're maintaining your savings by not touching them and letting them appreciate. All the compensation for your prior work remains unused, so you are living off of compensation for present day work other people do.

   Justification A2: Investment income is compensation for something the investor is doing now - taking risk, maintaining assets, managing investments, etc.

   My doubt for A2: It's tricky but you can separate out the costs of capital from the income derived simply from ownership. The cost of taking risk is just the odds of losing your investment. If the risk of total loss is 1/100 then a 1% premium covers that cost so that overall the investors come out even. Needless to say, the risk of loss of the type of investment MMM advises are less than 1/100, so the actual risk premium is a small portion of the return on those investments. The cost of maintaining the asset is just depreciation in the case of a tangible asset and inflation in the case of a financial asset. Again, that is a small portion of the return MMM investments give. The cost of management is whatever it would cost to hire a manager, which many investors do for both financial and tangible investments. There may be other costs as well, but the fact that investors can pay someone else to assume all those costs and still get investment income shows that they are not being paid for what they do but for what they own, and that their investment income is being produced by the work of others.
   
   Justification A3: Investment income is compensation for something of economic value the investor did in the past - living frugally, working hard at a high value job, choosing to put income into other's productivity via profitable investment.

   My doubt for A3: Living frugally and working hard are very good things, but you're not getting paid for them as a retiree. Lots of people live frugally and work hard but because they don't buy capital they don't get investment income. So THERE is the difference, and I agree it does justify some income - you created economic value in the past by choosing to invest rather than consume. The value of that choice is in addition to the value you created by working, so when you get paid money on top of the savings you put away you are being compensated for a value you added to the economy with that choice. Still, what is the real value of that choice? Surely it is not infinite. Yet you can derive increasing and unending income from the earned income you put away during your working years. At some point you are no longer being compensated for the economic value of a decision you made in the past and are just being compensated for the fact of ownership. At that point you are living purely off of other people's work.

Answer Type B: Living off other people's work is ok.

   Justification B1: Everyone lives off other people's work, so it must be ok.

   My doubt for B1: It's true we all benefit from other people's work, but a worker in a free market only consumes the produce of her own work. A money economy allows one to convert her production of one kind of service or good into all the other services and goods she consumes. She benefits from other people's work but she is a consumer of her own work as converted into theirs via money exchange. As to the benefit derived from our ancestors' work, that is a non sequitur. In the present there is a pool of economic value created by productive work which you may contribute to  and take from. Early retirees take from that pool what others have produced without contributing to that pool.

   Justification B2: Dropping out of economic production gives someone else a job so I'm helping the working population.

   My doubt about B2: Frankly this one is a bit over my head, but I'm skeptical and it seems like a non sequitur. While it is true that your previous position is now available to one worker, it seems unlikely that reducing the net pool of value produced and reducing the volume of economic transactions is profitable for workers on the whole. Anyway, I don't see the connection between the possible benefit of leaving an opening for one worker and being justified in living off the work of other people while not working yourself. Maybe it was a good thing to do, but I don't see why working people should pay you a yearly salary for it indefinitely.
 
   Justification B3: Investing is a benefit to producers who need it and to me who gets a portion of their production. Win/win.

   My doubt about B3: The fact that investment benefits producers may justify investment, but once you've received the investment income you still have the choice of whether to live off it or live off your own productivity. So the question still stands, at that point why is it ok to live off someone else's work?

Answer Type C. It's not a moral question.

   Justification C1: The way the system works is just a fact: you can live off other people's work through investment income if you choose to meet the requirements. There is no morality to it, it's just a personal option you can take or leave. IE "Don't hate the player, hate the game."

         My doubt about C1: The same is true of the disability abuser. I once worked as an assistant case manager at a homeless shelter and helped some people get a lifetime of free income even though they probably could have worked for a living. We didn't commit fraud but we did game the system. I didn't feel too bad about my role in it because we were following the rules and ultimately I didn't feel it was my place to make the determination of who should apply for benefits and who be granted them. I left that to the claimant and the Social Security office. But I know I could not in good conscience have made the choice those men made. I feel that if I can work I should work and not live off the work of other people. And that applies whether the trick is filling out a disability claim the right way or investing a certain amount of money I earned the right way. I don't hate the player OR the game, but I do recognize that I have to make a moral decision and so does everyone else. I am interested in how the question can be answered.

So if anybody has any corrections, additions, or defenses for the answers I've paraphrased here or any other justifications for living off of investment income I'd like to hear them. (I'll respond to some particular questions and accusations in a separate post.)

Zeb

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Re: Living off of other people's work
« Reply #58 on: May 02, 2013, 12:47:56 AM »
Here is some follow up to some possibly off topic things that were addressed to me. This is my first post on the forums. I've been reading the blog for about two months and this question had been bothering me more and more. Then MMM asked for frequently complained questions on his blog and I posted this and got into some extensive discussions. He emailed me and said the forums are more appropriate for long discussions, so here I am. I didn't even know the forums existed, and I considered myself too much a novice to even comment on the blog before, at least until I'd read a lot more of it. I'm sorry if this came off as me saying, "Hey guys, I just want to let you know you're all EVIL!", which was not my intent. Rather it was, "This sounds great but are you sure the founding motivation behind all of it is ok?" As far as I can find this particular critique has never been addressed by MMM, and I felt like before I invest too much of my time here I want to get some reassurance about the basis of it all. So I'm not trolling, but I can see why suspicions would be raised.


velocistar237 that was a facinating discussion. It linked to a post on ERE that pretty much stated my exact unease very succinctly, but it didn't seem like the discussion went very far. The ERE post: On Elevating Humanity

no name guy In your parable why should you get an unending portion of your neighbors' productivity in return for a limited amount of extra work and sacrifice you put in? In that specific example what you actually deserve is the market value of purchasing the tool. That value would probably be pretty high since it is so effective, but not unlimited. Any income you derive beyond what would be the purchase price is just exploitation of the fact that you hold power over them in the form (presumably) of government enforced ownership.

AJ I do think work has value unto itself, but I agree that seems like a subjective opinion and it's not central to my question. I didn't mean to imply that progress or production is inherently good. If you consume nothing then I wouldn't have much of a critique of producing nothing. It's the consuming of economic value that others produce while producing no economic value oneself that I question. Your question about writing a book at age 80 after doing nothing up to then is interesting. All I can say is that it works equally as a defense for a welfare abuser. If a welfare abuser invents one great thing late in life, does that justify his decades of living off the public? Personally I'd say maybe.

mustachecat Funny. I have not read either but my thinking here is probably equally informed by Marxism and the example of the Amish I work with (who are the most bad ass mustachians without mustaches and the weirdest mix of communitarian and libertarian ruthless businessmen). So you're not too far off.

Jamesqf I'm not making moral claims, I am asking about your morality. If you collect investment income you are living off others' work. Do you believe that to be a moral way to live? Why or why not?

DocCyane I lived for over ten years like a Mustachian, except I wasn't earning enough money to put any away. I put myself through college with no debt and I never held a job I didn't like and believe in for more than a couple months. I lived on less than $20K until after I got married at 30 and started my own business. I get the sacrifice. I'm using this blog to get back to that mindset, and even with a family of 4 on $40k we're finding places to save and smarter ways to attack the debt I married into. (Although we made a dumb novice mistake: setting my wife's credit card to automatic full balance payment then a month later taking a 15 month 0% balance transfer on that card to wipe out a $7k 11% student loan and not changing the auto pay. Hello bank fees, hopefully no automatic rate hike.) I have a lot to learn here, but the sacrifice is not unfamiliar.

marty998 Why is it different if you quit your job to go on welfare rather than quit it to go on stock dividends?

TheEnigmaMachine I really appreciate how you and others have brought in the theoretical basis of my question which you clearly understand better than I do. But I don't think I am subscribing to the labor theory of value. I'm using the subjective value quantified by the free market. Economic value is generated by the work of people. Each bit of it has a value determined by the market. I talk about work creating value just in the literal physical sense. No value would be created if workers did not create it. (And by workers I mean everyone who spends time and effort including managers, not just the hands-on people.) Capital is used by workers to create value, but itself it does not create any value. More importantly ownership of capital adds nothing at all to the production of value. And yet that's all the capitalist is getting paid for: her ownership. And she is getting paid a dividend of the value created by workers producing things the market values. That's all I mean.

mustachecat

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Re: Living off of other people's work
« Reply #59 on: May 02, 2013, 05:21:44 AM »
The "Your mustache might be evil" thread was a bit overwhelming for me, but I have to say, I'm really, really enjoying this thread. Lots of engaged criticism, zero vitriol. Go forum!

And Zeb, just to say that my question was definitely not poking fun. I was genuinely interested to know if you ascribed to or were influenced to a specific ideology, since it might make narrowing others' responses to your particular field of inquiry easier. 

So, some more questions. Is it ethically okay for indisputably disabled people to receive disability payments? Is it ethically okay for a construction worker to sue a builder if unsafe working conditions at a building site led to an accident that deprives him of his livelihood? Is it ethically okay for an elderly person to apply for and receive and a subsidized apartment from his or her municipality? Is it ethically okay for parents to raise severely impaired children who will never contribute economically to society? Is it ethically okay to accept the winnings if you won the lotto? Is it ethically okay for you to leave your children an inheritance? For me, the answer to all of those is yes. Also for me, those situations are very, very far apart from people who abuse the welfare or disability system.

Right now, I'm at a point in my life where I'm both working productively and investing. If you think it's unethical that I'm reaping gains from investments where all I've down is put up capital, then does my productive work mitigate that? Would your opinion change depending on the type of work I do (artist, civil engineer, wildlife rescuer, farm laborer)?

GuitarStv

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Re: Living off of other people's work
« Reply #60 on: May 02, 2013, 06:15:07 AM »
When we're young and essentially "have nothing" to put into society, we have to put in our labor.  As we age and accumulate capital, we can begin to let that money work for us; this is what a retired person does.  That person still contributes his share to society via taxes, which we all know do not stop at retirement. 

The people who really "live off other people's work" are those who have never worked and who collect monies of various sorts from the government.  That is, those who have never really contributed to society in any way. 

So, what should be done with people who never really contribute to society in any way?  What do we do with severly autistic people for example . . . who might be grown adults in their 20s with the minds of three year olds?  They end up living off of other people's work their whole lives . . .



I've never quite understood why people who profess such concern for their ideas of "fairness" always seem to have it working in only one direction: that I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?

You need to re-read my posts.  I didn't say once that you should give up what you have.  I just don't agree with the claim that all anyone needs to succeed in life is to work hard.  I actually commended you twice on your work ethic and ability to save.  Just don't forget that your circumstances did play a big role in helping you - otherwise you're simply not acknowledging the many advantages you had.
« Last Edit: May 02, 2013, 08:10:37 AM by GuitarStv »

tuyop

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Re: Living off of other people's work
« Reply #61 on: May 02, 2013, 07:44:46 AM »
When we're young and essentially "have nothing" to put into society, we have to put in our labor.  As we age and accumulate capital, we can begin to let that money work for us; this is what a retired person does.  That person still contributes his share to society via taxes, which we all know do not stop at retirement. 

The people who really "live off other people's work" are those who have never worked and who collect monies of various sorts from the government.  That is, those who have never really contributed to society in any way. 

So, what should be done with people who never really contribute to society in any way?  What do we do with severly autistic people for example . . . who might be grown adults in their 20s with the minds of three year olds?  They end up living off of other people's work their whole lives . . .



I've never quite understood why people who profess such concern for their ideas of "fairness" always seem to have it working in only one direction: that I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?

You need to re-read my posts.  I didn't say once that you should give up what you have.  I just don't agree with the claim that all anyone needs to succeed in life is to work hard.  I actually commended you twice on your work ethic and ability to save.  Just don't forget that your circumstances didn't play a big role in helping you - otherwise you're simply not acknowledging the many advantages you had.

I think that you're hinting at a central problem with building morality out of an economic system that values "productivity" over all else.

I mean, the subsequent questions are great, but this is 2013 so if we want to talk we have to define "productive" and "productivity" first, and all disagreements with the answers to the followup questions are really about problems with the definitions.

No Name Guy

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Re: Living off of other people's work
« Reply #62 on: May 02, 2013, 09:55:30 AM »
Sorry there Zeb.

"Government enforced ownership"?  "Deserve"...

Uhhhh.....more like the natural rights of man in private property.  I made it with the sweat of my own brow, I'm free to do with it as I see fit.  I'll get what ever I see fit out of the tool in a free exchange.  My neighbors were free to decline to rent the tool, in my parable.  There was zero coercion involved.  They saw the benefit of the free exchange, I saw the benefit of the exchange, and the deal was done.  I could spun the yarn to just as easily have kept it for myself and let my neighbors stay right on the ragged edge.  I could also have spun it how my neighbors didn't like the bargain after a while and declined to use the tool any longer (which they were free to do, going back to their old way working 12 hour days.)   

I happened to have spun the yarn such that I kept building capital and as a result, several of my neighbors are better off (e.g. working only 10 hour days in lieu of 12) AND I was "FI" - win/win.  What do you know, perhaps my neighbors will go forth with their extra 2 hours a day and discover that a root cures some disease that was afflicting the entire area.  Perhaps I'd go back to work 4 hours a day to trade some additional production of wheat for the magic root so I could cure an ill family member.  Or perhaps in those 2 hours a day, my neighbors will discover how to make their own tool (e.g. build their own capital, instead of wasting their time at the carnival trying to win trinkets). 

I could have just stopped at the first tool and kept the improvements entirely for myself - 8 hour day in lieu of everyone else working 12 - that wouldn't have been so bad - not "FI", but permanently part time by choice.  Would that have been selfish, to deny the benefits of the tool to everyone else?

As to your point to Marty - the difference between going on welfare and stock dividends:  welfare money is collected at the point of a gun from those producing the wealth.  Don't think this is true?  Try not paying your taxes and see if armed IRS agents show up and violently apply some coercion to gain compliance.  It's a far cry, and the polar opposite of charity, which is freely given and can be freely withheld.  Dividends (or profit from business) are paid out as the result of free exchange.  People choose if they're going to buy yarn from hippie organic free range sheep / yak wool shop (or it could be air time from AT&T, to be American / First World in the hypothetical) .  The profits earned from the latter have no guns nor coercion involved in the transaction - individuals are free to enter, or decline, as they see fit.  Person wants yarn (or minutes for their piece of I-Crap), another person provides it and earns profit, of which some is paid to those that provided the capital to build the cell tower, or buy / raise the initial batch of sheep & yaks and build a spinning wheel.  Distilled to is basics:  Welfare = violence & coercion.  Dividends = peaceful free exchange.  No one forces me to hand money to AT&T (or hippie yarn shop), but someone is pointing a gun to my head for welfare.

brewer12345

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Re: Living off of other people's work
« Reply #63 on: May 02, 2013, 09:57:39 AM »
zeb, by all means, remain yoked to the cart for the rest of your life in the name of morality.  Hate capitalism, give away all of your extra income to Ethiopian subsistence farmers (or whoever), and be a upstanding moral goddamn paragon of presumed virtue.

Personally, I worked damned hard to accumulate what I have and I will relish the reward of not having to show up in a soul-killing job every day.  YMMV.

Jill the Pill

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Re: Living off of other people's work
« Reply #64 on: May 02, 2013, 10:24:27 AM »
Good discussion, and thanks to Zeb for starting it.

Quote
Without some kind of help, that Ethiopian subsistence farmer is never going to be able to move from the 'poor' to 'rich' categories, regardless of gumption, effort, or fortitude.  The opportunities just do not exist for him.

Worse than lack of opportunities -- Ethiopian subsistence farmers are now forced from their lands into camps so the land can be leased to foreign investors: Saudi rice growers, Indian flower farmers, Israeli biofuel producers.  You might want to examine your own investments for participation in this scheme (commodities, farmland).  Large commercial investors (e.g. pension funds) are buying into an African land grab that contributes to an investor's livelihood at the direct expense of a subsistence farmer's.  (http://www.grain.org/article/categories/13-against-the-grain)

Quote
Welfare = violence & coercion.  Dividends = peaceful free exchange.
There's violence underlying those dividends, too.  It's just further removed from the transaction.  Consider "guard labor" (http://econospeak.blogspot.com/2010/01/guard-labor.html) or the use of public police to put down labor protests at a private corporation (http://www.huffingtonpost.com/2012/10/03/walmart-protesters-ellwood_n_1935189.html). 

velocistar237

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Re: Living off of other people's work
« Reply #65 on: May 02, 2013, 10:48:19 AM »
I think that you're hinting at a central problem with building morality out of an economic system that values "productivity" over all else.

That's a really interesting topic. There was an article that showed up on one of the Google News lists yesterday about morality and markets.

http://www.marketwatch.com/story/capitalism-is-killing-our-morals-our-future-2013-04-27

The gist: we've gone from a market economy to a market society. Thinking objectively about morals makes people uncomfortable, so we take moral issues that we used to think long and hard about and hand them over to the "wisdom" of the markets. We can then take comfort that everything must be okay because everyone voted so in the market.

tuyop

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Re: Living off of other people's work
« Reply #66 on: May 02, 2013, 11:23:00 AM »
Sorry there Zeb.

"Government enforced ownership"?  "Deserve"...

Uhhhh.....more like the natural rights of man in private property.  I made it with the sweat of my own brow, I'm free to do with it as I see fit.  I'll get what ever I see fit out of the tool in a free exchange.  My neighbors were free to decline to rent the tool, in my parable.  There was zero coercion involved.  They saw the benefit of the free exchange, I saw the benefit of the exchange, and the deal was done.  I could spun the yarn to just as easily have kept it for myself and let my neighbors stay right on the ragged edge.  I could also have spun it how my neighbors didn't like the bargain after a while and declined to use the tool any longer (which they were free to do, going back to their old way working 12 hour days.)   

I happened to have spun the yarn such that I kept building capital and as a result, several of my neighbors are better off (e.g. working only 10 hour days in lieu of 12) AND I was "FI" - win/win.  What do you know, perhaps my neighbors will go forth with their extra 2 hours a day and discover that a root cures some disease that was afflicting the entire area.  Perhaps I'd go back to work 4 hours a day to trade some additional production of wheat for the magic root so I could cure an ill family member.  Or perhaps in those 2 hours a day, my neighbors will discover how to make their own tool (e.g. build their own capital, instead of wasting their time at the carnival trying to win trinkets). 

I could have just stopped at the first tool and kept the improvements entirely for myself - 8 hour day in lieu of everyone else working 12 - that wouldn't have been so bad - not "FI", but permanently part time by choice.  Would that have been selfish, to deny the benefits of the tool to everyone else?

As to your point to Marty - the difference between going on welfare and stock dividends:  welfare money is collected at the point of a gun from those producing the wealth.  Don't think this is true?  Try not paying your taxes and see if armed IRS agents show up and violently apply some coercion to gain compliance.  It's a far cry, and the polar opposite of charity, which is freely given and can be freely withheld.  Dividends (or profit from business) are paid out as the result of free exchange.  People choose if they're going to buy yarn from hippie organic free range sheep / yak wool shop (or it could be air time from AT&T, to be American / First World in the hypothetical) .  The profits earned from the latter have no guns nor coercion involved in the transaction - individuals are free to enter, or decline, as they see fit.  Person wants yarn (or minutes for their piece of I-Crap), another person provides it and earns profit, of which some is paid to those that provided the capital to build the cell tower, or buy / raise the initial batch of sheep & yaks and build a spinning wheel.  Distilled to is basics:  Welfare = violence & coercion.  Dividends = peaceful free exchange.  No one forces me to hand money to AT&T (or hippie yarn shop), but someone is pointing a gun to my head for welfare.

Oh man, your portrait of Ronald Reagan must be so sticky.

Jamesqf

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Re: Living off of other people's work
« Reply #67 on: May 02, 2013, 11:52:11 AM »
Jamesqf I'm not making moral claims, I am asking about your morality. If you collect investment income you are living off others' work. Do you believe that to be a moral way to live? Why or why not?

First, I'll join with others in saying that I simply don't see investment income as living off others' work.  (Assuming I made the initial money myself, rather than having inherited or stolen it.)  As a parallel, back in the early '90s I wrote a software library, initially for my own use but it was picked up by the vendor, made available to their customers, and I collected royalties for years, with little work other than on-going improvements. 

Hypotheticaly, I could have sold it for a one-time payment, and that would have been a straightforward economic transaction.  Instead, I essentially "lived off other people's work", not doing anything but collecting money for previous work.  Now is that moral or not?

Living off investments is exactly the same, morally, as me continuing to collect money for new sales of previous work.  I have accumulated a bunch of money that I don't presently need.  Other people need/want money that they don't have.  They can borrow it from me at a relatively modest charge (e.g. corportate bonds), or we can be partners in a enterprise, me putting up money, they the labor (stocks).  Again, nothing immoral in that.

So yes, I think living off investment income is perfectly moral.  Though as a matter of personal preference, if you have been reading the forum for some time, you may have noticed that I am not at all an advocate of retirement.  I like working, in moderation, and enjoy the work I do, and can't quite manage to understand why anyone would actively want not to work.

Jamesqf

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Re: Living off of other people's work
« Reply #68 on: May 02, 2013, 11:55:20 AM »
Worse than lack of opportunities -- Ethiopian subsistence farmers are now forced from their lands into camps so the land can be leased to foreign investors:

So how is this different from American farmers (and other landowners) having been taxed out of their lands in order to turn them into strip mines, subdivisions, and shopping malls?

TLV

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Re: Living off of other people's work
« Reply #69 on: May 02, 2013, 11:56:11 AM »
   Justification A2: Investment income is compensation for something the investor is doing now - taking risk, maintaining assets, managing investments, etc.

   My doubt for A2: It's tricky but you can separate out the costs of capital from the income derived simply from ownership. The cost of taking risk is just the odds of losing your investment. If the risk of total loss is 1/100 then a 1% premium covers that cost so that overall the investors come out even. Needless to say, the risk of loss of the type of investment MMM advises are less than 1/100, so the actual risk premium is a small portion of the return on those investments. The cost of maintaining the asset is just depreciation in the case of a tangible asset and inflation in the case of a financial asset. Again, that is a small portion of the return MMM investments give. The cost of management is whatever it would cost to hire a manager, which many investors do for both financial and tangible investments. There may be other costs as well, but the fact that investors can pay someone else to assume all those costs and still get investment income shows that they are not being paid for what they do but for what they own, and that their investment income is being produced by the work of others.

I disagree with your definitions. Risk premium and the cost of risk are different things. If you offer to flip a coin and my stash doubles on heads, and is wiped out on tails then there are three outcomes: One I take the bet and win, two I take the bet and lose, and three I don't take the bet. Risk premium is the amount in excess of the cost of risk that is required to convince someone to take the bet in the first place.

In some cases, such as casinos and bubbles, the risk premium is negative but people still take the bet. For others, such as stocks, bonds and real estate (in general), there aren't enough people with capital who are willing to take the bet when the expected value is zero, so those who need the capital (businesses, governments, renters, etc.) must offer a positive expected value (the risk premium) in order to convince the capital owners to take the risk.


Is it moral for one to demand a risk premium for the use of capital?
Or in other words, is it moral for a retiree to live solely off of savings stuffed in their mattress if their only investment options have an expected return of zero, when others would suffer for not having access to that capital?


I can see how some would answer no - that it's not moral to hoard capital, and the moral person should lend capital with 0% expected return (interest equivalent to the risk of loss) or even with the expectation of loss (and personal suffering) in order to help others.


If that's the case (and I'm not saying it is), is it moral to force someone else to "do the right thing," taking their capital for the greater good? Now we could get into the morality of taxation, etc.


Personally, I tend to see things in shades of grey rather than black and white. It's better to require a risk premium than to not lend capital at all, and it's better for someone to be happy, retired early, and holistically productive than to be unhappy and employed longer solely for economic productivity (or so they have enough savings to retire without a risk premium). Ideally they'd be happy to keep working in the first place (like Jamesqf), but we all know that's not always the case, so early retirement (even if it requires a risk premium) can be (but isn't necessarily) the best and most moral of possible options.
« Last Edit: May 02, 2013, 12:28:25 PM by TLV »

Jamesqf

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Re: Living off of other people's work
« Reply #70 on: May 02, 2013, 12:27:00 PM »
If that's the case (and I'm not saying it is), is it moral to force someone else to "do the right thing," taking their capital for the greater good?

We also need to remember that "the right thing" and "greater good" are almost always purely subjective.  I'm pretty sure the Boston bombers sincerely believed that they were doing the right thing.

JohnGalt

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Re: Living off of other people's work
« Reply #71 on: May 02, 2013, 05:11:30 PM »
Where do you draw the line of how much work makes you morally okay?

If I can command enough value for 1 hour of my labor to support myself for an entire year, is that moral?  If so, what about 10 minutes?  What about 1 second?  If not, how many hours should I work?  Why is that magic number moral but not twice that number? 

Should every hour of labor earn the same amount? If not, then some people will inevitably earn more than they need to survive.  If they continue to work, what are they to do with the remaining earnings?  Contribute to charity? Wouldn't that be someone else surviving off of those charitable contributions?  What happens when enough people follow this morality that all the needs of those unable to work are met? 

Would it be morally okay if I first hit FI and then intentionally damaged myself such that I could no longer work to support myself if I had to / wanted to?




Jack

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Re: Living off of other people's work
« Reply #72 on: May 02, 2013, 05:53:07 PM »
I've never quite understood why people who profess such concern for their ideas of "fairness" always seem to have it working in only one direction: that I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?

Because your problems are higher up on Maslow's Hierarchy of Needs than the Ethiopian farmer's are.

swiper

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Re: Living off of other people's work
« Reply #73 on: May 02, 2013, 06:14:19 PM »
So how is this different from American farmers (and other landowners) having been taxed out of their lands in order to turn them into strip mines, subdivisions, and shopping malls?

You are joking right?

tooqk4u22

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Re: Living off of other people's work
« Reply #74 on: May 02, 2013, 06:45:27 PM »
The bottom line is that it is moral if those who are doing the work are doing it by choice and of free will (i.e. they are not slaves or forced labor). 

Jamesqf

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Re: Living off of other people's work
« Reply #75 on: May 02, 2013, 06:58:04 PM »
I've never quite understood why people who profess such concern for their ideas of "fairness" always seem to have it working in only one direction: that I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?

Because your problems are higher up on Maslow's Hierarchy of Needs than the Ethiopian farmer's are.

So what's that to me?  You really have to start from the fact that my needs are quite a bit more important to me than yours are - and, I expect, vice versa, if you'll be honest with yourself.

davisgang90

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Re: Living off of other people's work
« Reply #76 on: May 02, 2013, 06:58:59 PM »
Wow! That is a whole lot of troll-bait for the obvious troll who started this post.  Well done!

tuyop

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Re: Living off of other people's work
« Reply #77 on: May 02, 2013, 07:00:03 PM »
The bottom line is that it is moral if those who are doing the work are doing it by choice and of free will (i.e. they are not slaves or forced labor).

Problem solved. Everyone go home!

wait, what does "choice" mean? Does free will exist? What is a "slave" what is it to be "forced" to do "labour"?

Jill the Pill

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Re: Living off of other people's work
« Reply #78 on: May 03, 2013, 12:40:29 PM »
Quote
I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?
From a global climate perspective, the Ethiopian farmer subsists on drier land with less clean water, so that you can have air conditioning, car transportation, and imported produce.  The global neoliberal economy which improves your livelihood is crushing his.  His political rights are curtailed so you can feel safe from (Somali) terrorism.  He's doing a lot to help you out, involuntarily and indirectly.   

But, jqf, how is your sex life?  We all care about your needs here, brother, and want to make sure you are doing ok. 

brewer12345

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Re: Living off of other people's work
« Reply #79 on: May 03, 2013, 01:00:16 PM »
Quote
I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?
From a global climate perspective, the Ethiopian farmer subsists on drier land with less clean water, so that you can have air conditioning, car transportation, and imported produce.  The global neoliberal economy which improves your livelihood is crushing his.  His political rights are curtailed so you can feel safe from (Somali) terrorism.  He's doing a lot to help you out, involuntarily and indirectly.   
 

What a pile of horseshit.

Jamesqf

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Re: Living off of other people's work
« Reply #80 on: May 03, 2013, 03:07:07 PM »
From a global climate perspective, the Ethiopian farmer subsists on drier land with less clean water, so that you can have air conditioning, car transportation, and imported produce.  The global neoliberal economy which improves your livelihood is crushing his.  His political rights are curtailed so you can feel safe from (Somali) terrorism.  He's doing a lot to help you out, involuntarily and indirectly.

Nope.  Not much connection at all between the two.  I'd be surprised if our hypothetical Ethopian farmer lives on drier land than I do.  Rainfall there (per this: http://reliefweb.int/map/ethiopia/ethiopia-annual-rainfall ) runs from 500-2000 mm/yr in most of the country. The nearest measuring station to where I live says we get 190 mm/yr, though I probably get more, being closer to the mountains.  But that's an aside: please explain how Ethiopian rainfall, or lack thereof, affects or is affected by the rainfall in northern Nevada, or how anyone can move Ethiopia's rainfall somewhere else.  Likewise, I do not in fact have air conditioning.

For that imported produce, some of it might (again, hypothetically) be Ethiopian coffee.  Those Ethiopian farmers do in fact export quite a bit (http://en.wikipedia.org/wiki/Agriculture_in_Ethiopia ) though realistically most probably goes to Europe or elsewhere in Africa.  And what exactly is wrong with that farmer being able to sell his produce in an expanded market?  It's hardly crushing his livelihood. 

Likewise, how is there any causal connection between me and the Ethiopian government's (or past governments) policies that (again hypothetically) oppress certain segments of the agricultural population, any more than there is between the policies of Stalin, Mao, or Castro?

As for his political rights, I'm sure they'd be greatly expanded after the Islamist invasion.

swiper

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Re: Living off of other people's work
« Reply #81 on: May 03, 2013, 07:33:18 PM »
The original point of the Ethiopian subsistence farmer example was to illustrate the point of inequality of opportunity and not to argue about rainfall.

I make a very good salary as a software engineer. Did I sacrifice to get there? Sure. Am i entirely self made and owe the world nothing? not a chance...

Jill the Pill

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Re: Living off of other people's work
« Reply #82 on: May 03, 2013, 08:45:49 PM »
Yeah, but Swiper, I don't want to just let it go.  I am trying to expand the point: it's more than "the Ethiopian farmer was just born in a lousy place so he has less opportunity."  He's not starting from zero, but rather from some negative level.  The deck is stacked against him and in favor of many of us.  Our comfort is not just built on the work of others; sometimes it is gained at the expense of others.  Please forgive me if this is too much of a digression and if Ethiopia is not the best example. 

I didn't realize some of you guys don't understand how climate change works, sorry.  It's not about our rainfall, their rainfall.  It's that we (first-world industrial nations) release atmospheric pollutants (carbon, nitrogen, methane) mostly from transportation (including long-distance shipping).  The cumulative effect of these is global warming, aka climate change or "global weirding."  In the Sahel, this shows up as longer and more extreme droughts.  (James, you have an expensive public water infrastructure to compensate for your dry locale.)

I appreciate James's point about coffee.  I've been studying the Gambella region, so I was thinking of the subsistence farmers and pastoralists there.  Of course other regions of Ethiopia export coffee, and that international trade has been a boon.  But, in Gambella, the Ethiopian government is leasing the peasants' lands at extremely low rents to foreign investors, most of whom don't actually have workable plans for the land, but are trying to grab it before someone else does.  The military enforces the claims of the investors against the residents; Ethiopian citizens have been killed, imprisoned, tortured.  It's a lot worse than "choosing" to leave because of high taxes.  The locals are evicted to "villages" which have nothing -- no food, no ability to farm, no services, no future.  Yet, because the World Bank favors wage labor over subsistence farming, this is somehow called "development." 


totoro

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Re: Living off of other people's work
« Reply #83 on: May 03, 2013, 09:18:36 PM »
So what. 

There is always inequality of opportunity.

I find these types of discussions so impractical.   If you want to debate stuff for entertainment that is fine but don't do it under the guise of being a great altruistic sort or wallow in some sort of guilt complex.  If you see a real problem that moves you then do something about it. 

The bottom line is that you are one person and you have a specific sphere of influence.  The question is what you are motivated to do in the world.  If you are motivated to save the dolphins that is fine.  If you are motivated by climate change that is fine.  Find the match for your motives and work it in a positive way.  Ask "what can I do" and not "what should other people be doing".

That people shouldn't invest their savings and retire is so far from a priority issue imo that it is laughable.  Too much time in university can have the weird effect of obscuring reality and the requirement to work hard on something real to have a real impact.  That is the effect of privilege sometimes.

Armchair philosophy is pretty self-oriented don't you think?   Don't just talk the talk, walk it.   

Jamesqf

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Re: Living off of other people's work
« Reply #84 on: May 04, 2013, 12:24:53 AM »
I didn't realize some of you guys don't understand how climate change works, sorry.  It's not about our rainfall, their rainfall.  It's that we (first-world industrial nations) release atmospheric pollutants (carbon, nitrogen, methane) mostly from transportation (including long-distance shipping).  The cumulative effect of these is global warming, aka climate change or "global weirding."  In the Sahel, this shows up as longer and more extreme droughts.

Err..  Now who doesn't understand how climate change works?  It's not at the level of resolution at which anyone can say with confidence that rainfall in a given area is likely to decrease, or increase.  You apparently don't understand geography, either: Ethiopia isn't in the Sahel.  The  desertification of the Sahel/Sahara region is a process that has been going on since Roman times (at least), the primary driver of which arguably has been humans and their grazing animals.

Quote
James, you have an expensive public water infrastructure to compensate for your dry locale.)

No, I don't.  I have a well.

Quote
But, in Gambella, the Ethiopian government is leasing the peasants' lands at extremely low rents to foreign investors, most of whom don't actually have workable plans for the land, but are trying to grab it before someone else does.  The military enforces the claims of the investors against the residents; Ethiopian citizens have been killed, imprisoned, tortured.

How does this differ from the previous (Marxist) government's forced collectivization schemes?  And where is the connection between me (or any of us), and that?  Are you suggesting I should support a US invasion force to enforce property rights?


The original point of the Ethiopian subsistence farmer example was to illustrate the point of inequality of opportunity and not to argue about rainfall.

It also, perhaps unintentionally, makes a point about values.  That Ethiopian farmer (given past governments which respected property rights) might well own more land than I'll ever be able to afford.  I may be rich by most standards, but while the large income of a software engineer would allow me to buy all sorts of consumer junk (most of which I don't want), I can afford only a paltry few acres - and that encumbered by a mortgage with over a decade yet to run.
« Last Edit: May 04, 2013, 12:08:34 PM by Jamesqf »

AJ

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Re: Living off of other people's work
« Reply #85 on: May 04, 2013, 04:12:34 AM »
I've never quite understood why people who profess such concern for their ideas of "fairness" always seem to have it working in only one direction: that I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?

Because your problems are higher up on Maslow's Hierarchy of Needs than the Ethiopian farmer's are.

Really? How do you figure? According to your link, sex is in the bottom layer of the hierarchy.

Jamesqf

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Re: Living off of other people's work
« Reply #86 on: May 04, 2013, 07:56:08 PM »
Really? How do you figure? According to your link, sex is in the bottom layer of the hierarchy.

Taking a closer look, I notice several things that are duplicated at different levels of that pyramid.  I'd also question some of them, at least as that article explains them.  Sex, for instance, is hardly a need in the same way that food and water are, and should go quite a bit higher in the hierarchy. 

Just out of curiousity (and recognizing that we may be a biased sample), how many of us would sacrifice financial security for sex?

Zeb

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Re: Living off of other people's work
« Reply #87 on: May 05, 2013, 11:07:09 PM »
mustachecat For me the answer for all the questions you ask is yes except the last two I would say it depends - in some cases I am not sure. Anyway, for you what makes those cases so different from people who abuse the welfare or disability systems? I'm not saying I think it is unethical for you or anyone to reap gains from investment - I'm only asking very specifically about living off investments while not working, and I'm not confident in condemning anyone for anything. But here is the syllogism that leads me to feel initially uncomfortable with early retirement:

P1. Anyone who is capable of working for what he consumes should not decline to work and consume what another has worked to produce.
P2. Investment income is produced by the work of others.
C. Anyone who is capable of working should not retire and live off investment income.

Now even if you are working this would implicate you if you are consuming investment income on top of your earned income even though you haven't retired. But maybe you reject P1 or P2 or the validity of the conclusion.

No Name Guy Natural rights? If property rights are natural then I would expect them to be detectable by scientific method. However the only place I see private property existing outside of subjective belief is in governmental practice. Private property is a legal construct. Private property rights, which require establishment, discernment, maintenance, and enforcement, is probably the single biggest tax payer funded government program there is. I will take back the word "deserve" though and say that in your parable what you've earned is the free market purchase price of your tool. Beyond that you are taking advantage of your power over your neighbor via the government (in it's provision and enforcement of your property rights). If it weren't for the government's enabling you to lord that power over your neighbors they might say with perfectly clear consciences, "NNG has all those tools that he is not using, let's go get them and use them and we'll pay him fairly for the time and sacrifice he put into them wear and tear that result from our using them and for the lost opportunity to use them himself for as long as we have them." If that did that you would lose nothing so they would bear no guilt for harming you. So I ask you again, In your parable why should you get an unending portion of your neighbors' productivity in return for a limited amount of extra work and sacrifice you put in?

Now this is funny:
  welfare money is collected at the point of a gun from those producing the wealth.  Don't think this is true?  Try not paying your taxes and see if armed IRS agents show up and violently apply some coercion to gain compliance. 
Distilled to is basics:  Welfare = violence & coercion.  Dividends = peaceful free exchange.
What do you think would happen if I quit paying the interest on my business loan? Investment income is collected at the point of a gun, your wheat harvesting tools are kept from your neighbors at the point of a gun, it's all at the point of a gun.

brewer12345
zeb, by all means, remain yoked to the cart for the rest of your life in the name of morality. 
I probably will, and I suppose I will be pulling all you lot who've found a way to hop up in the cart instead of pulling your own weight.

Jamesqf I'm confused whether you think investment income is living off other people's work but still moral, of if you think it is living off your own work?

TLV You're right I did incorrectly mix the terms risk premium and cost of risk. I think my point still stands though that any investment income beyond the costs of the investment (risk, inflation, management, etc.) is income due purely to the fact of ownership and not to any cost the owner is incurring or any value the owner is producing. That income is value created by someone else that the owner extracts by leveraging government power through property law. Nevertheless I agree with you that it is a pretty good system - the best that has been tried on a large scale at least since the advent of civilization, and if investment income beyond costs is an evil it is a necessary one that provides the good of making capital accessible to productive work. But I don't see that fact about the system having much bearing on the personal moral question of what to do once you are in the position of having a lot of capital and the opportunity to live off investment income rather than earned income. No more than the necessity of welfare and disability systems bear on one's decision about whether or not to go on welfare or disability.

JohnGalt If my syllogism given to mustachecat above holds, the line is you should produce as much as you consume (economically). I don't think the question of labor valuation bears on the question of whether to retire early - I'm pretty much happy to leave it up to the market myself and if you can earn enough in an hour to support your consumption for a year then you're in the clear for this question. Personally I think a minimum wage equal to a living wage is in order so that all full time work provides for a decent quality of life, and then let the market allocate luxury income beyond that, but that's a side issue. As to your question about charity, I do see a risk there of enabling laziness and one should be careful about giving to charities that do a good job of helping those who really need it.

tooqk4u22Mortality is coercive. Whether someone is holding a gun to your head telling you to work, or nature is threatening to starve you to death if you don't work, everyone is coerced to work except those who have found a way to live off the work of others.

totoro Walking the walk is exactly what I am interested in. What should I do if I want to be a good person who lives by right principals? I'm not trying to change the world because I don't think I can. I am trying to live well, and my question is should I follow MMM's lead in order to acheive that goal?

Jamesqf

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Re: Living off of other people's work
« Reply #88 on: May 06, 2013, 11:19:40 AM »
Jamesqf I'm confused...

Yeah, I've noticed :-)

Quote
...whether you think investment income is living off other people's work but still moral, of if you think it is living off your own work?

A bit of both.  I think it is living off my own work, no different in principle than if I wrote a book that turned out to be popular, and collected royalties for the next half century.  (See e.g. Harper Lee and "To Kill a Mockingbird", in the news recently.  I mean, she got a few cents of my money when I had to read that book back in high school...)

I also think would be perfectly moral by my standards (which are not yours), even if it was living off other people's work, since all the transactions involved are voluntary (excepting the taxes I pay on dividends & capital gains).

Quote
I'm only asking very specifically about living off investments while not working...

So is it ok if I do both?  That is, I work.  I make more income than I need for my fairly modest living expenses, so I invest the remainder.  Eventually I come to a point where the income from my investments would be enough to live on, but I keep working because I enjoy what I do.  So then, to be "moral" in your eyes, what should I do with that surplus?  Spend it on things I don't want or need?  Hide it under the mattress, or throw it away?  Work less, even though the work is something I enjoy?

Seems to me that if we follow your argument to its logical conclusion, then anyone who saves any of their income, even in something as simple as an interest-bearing savings account, is immoral.

TLV

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Re: Living off of other people's work
« Reply #89 on: May 06, 2013, 11:51:04 AM »
I think my point still stands though that any investment income beyond the costs of the investment (risk, inflation, management, etc.) is income due purely to the fact of ownership and not to any cost the owner is incurring or any value the owner is producing. That income is value created by someone else that the owner extracts by leveraging government power through property law.

I think I get what you're saying now - the right to demand a risk premium is one of the rights of ownership that the government enforces. Without that, I couldn't prevent someone from using my capital and paying only the cost of risk (heck, I personally couldn't stop someone from taking all my stuff and leaving me in a ditch to die; that's why I need government.)

I've been immersed in a culture with property rights my whole life to the point where this doesn't make sense to me:
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If it weren't for the government's enabling you to lord that power over your neighbors they might say with perfectly clear consciences, "NNG has all those tools that he is not using, let's go get them and use them and we'll pay him fairly for the time and sacrifice he put into them wear and tear that result from our using them and for the lost opportunity to use them himself for as long as we have them." If that did that you would lose nothing so they would bear no guilt for harming you.
If there is an owner, then what's missing is that the neighbors aren't asking for (or receiving) consent of the owner. But if there are no property rights, then there is no owner - so why do they say "so&so has all those tools, let's pay him a fair price" rather than "here are all these tools that no one is using, let's just use them (and perhaps replace/fix them if they break, to replenish the communal supply)"?

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I don't see that fact about the system having much bearing on the personal moral question of what to do once you are in the position of having a lot of capital and the opportunity to live off investment income rather than earned income.

Yes, I started to realize that as I was typing up my previous response. Thanks for this discussion.

P1. Anyone who is capable of working for what he consumes should not decline to work and consume what another has worked to produce.
P2. Investment income is produced by the work of others.
C. Anyone who is capable of working should not retire and live off investment income.

I still have disagreements with some of the assumptions here regarding property rights and investment income (risk premium), but we've been over those.

As for the points I think you're trying to make: I agree that it is immoral for someone to consume more than they produce when they are capable of producing more or consuming less. However, I take "producing" to include things like charity work, raising children, advocating for improvement, etc. that don't necessarily have a personal economic return. I disagree with your conclusion, because being retired and living off investment income do not preclude producing more than one consumes.

ncornilsen

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Re: Living off of other people's work
« Reply #90 on: May 06, 2013, 12:09:06 PM »
Workers need me to supply the capital for the machinery, floorspace, tools, etc they use to do the work I pay them for.
I need the workers to leverage the capital I own to produce some some good/service that will earn me a return on the money I have invested in the capital equipment.  I need the worker. The worker needs me. We both win. My compensation is earned due to the effort I put in to earn the initial capital, the research I did to locate a need and develop a way to fill that need, and the risk I take that the "next best thing" will render my current capital useless, at any time (among other risks)

I'm not there yet, but when I am, I will sleep with a completely clean conscience when my investments I writing me a checkof such size that I don't need to leverage someone else's capital to pay my way through this life.

-Nick

Jack

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Re: Living off of other people's work
« Reply #91 on: May 06, 2013, 12:15:25 PM »
I've never quite understood why people who profess such concern for their ideas of "fairness" always seem to have it working in only one direction: that I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?

Because your problems are higher up on Maslow's Hierarchy of Needs than the Ethiopian farmer's are.

So what's that to me?  You really have to start from the fact that my needs are quite a bit more important to me than yours are - and, I expect, vice versa, if you'll be honest with yourself.

You wanted a reason, you got a reason: it works in "one direction" because that direction is from lower to higher on the pyramid. You can no longer claim to "not understand." The fact that you don't care is a separate issue.

I've never quite understood why people who profess such concern for their ideas of "fairness" always seem to have it working in only one direction: that I should give up what I have for the benefit of others, but no one else should have to do a damn thing to improve my life.  Or in other words, why should I be more concerned about the hypothetical Ethiopian farmer's economic circumstances than he is about my sex life?

Because your problems are higher up on Maslow's Hierarchy of Needs than the Ethiopian farmer's are.

Really? How do you figure? According to your link, sex is in the bottom layer of the hierarchy.

Sex for reproduction is on the bottom, but an emotional "sex life" -- which is what Jamesqf was talking about -- is the third level up, labeled "love/belonging."

totoro

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Re: Living off of other people's work
« Reply #92 on: May 06, 2013, 12:58:53 PM »
"Walking the walk is exactly what I am interested in. What should I do if I want to be a good person who lives by right principals? I'm not trying to change the world because I don't think I can. I am trying to live well, and my question is should I follow MMM's lead in order to acheive that goal?"

Figure out who you are are what motivates you first.  Do a vision board or some other sort of self-development.  If your motivation is not in line with who you really are then you are going to experience dissonance and you won't be as effective at "right living". 

If you really want to make some sort of difference stop worrying about investment income:  I would suggest there are more pressing social issues that you could become engaged in, like what you could do with your time to create positive change now.

Who is asking you to follow MMM?  Why would you think that this is the way to achieve your goals when, as far as I can tell, you haven't put the time into yourself to develop a clear set of goals and are instead just living in your head and twisting around in the wind. 

Connect your head to your heart and do the work for yourself.  The answer is in you and not in someone else's ideology.

AJ

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Re: Living off of other people's work
« Reply #93 on: May 06, 2013, 01:49:18 PM »
Sex for reproduction is on the bottom, but an emotional "sex life" -- which is what Jamesqf was talking about -- is the third level up, labeled "love/belonging."

And what if Jamesqf is trying to reproduce, but is unable to attract a willing mate. THEN we should all be concerned about his sex life?

Jamesqf

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Re: Living off of other people's work
« Reply #94 on: May 06, 2013, 01:50:25 PM »
You wanted a reason, you got a reason: it works in "one direction" because that direction is from lower to higher on the pyramid. You can no longer claim to "not understand." The fact that you don't care is a separate issue.

Hardly a rational argument.  You've taken an arbitrary (and IMHO wrong: see below) scale of "needs", and would dictate that I should sacrifice my own needs because they are high on your scale.  Rather presumptuous, I think.

Sex for reproduction is on the bottom, but an emotional "sex life" -- which is what Jamesqf was talking about -- is the third level up, labeled "love/belonging."

Wrong, in a lot of ways.  First, I have absolutely no interest in sex for reproduction: it isn't anywhere on my pyramid of needs*, let alone at the same level as eating & breathing.  Nor did I mean an emotional "love/belonging" sex life, while that would be nice to have (and one can have the love/belonging without sex).  I meant just pure, unadorned recreational sex.

* And frankly, I think the world would be a better place it was less of a priority for the rest of the human race.

tuyop

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Re: Living off of other people's work
« Reply #95 on: May 07, 2013, 05:25:10 AM »
I think the point of the placement of reproduction on the scale is the fact that we do, actually, need some people to reproduce. Without some people reproducing, our whole economy will fall apart and the whole species will go extinct shortly after. We need to build an environment that allows people to produce new young people much more than we need an environment where everyone can join a squash club because they love squash and want to hone their skills.

Now, how do we balance that need and ensure that Jamesqf never reproduces?

nktokyo

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Re: Living off of other people's work
« Reply #96 on: May 07, 2013, 06:53:41 AM »
+1 for working hard, creating value in the world and then selling or leasing it out to others.

Beaker

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Re: Living off of other people's work
« Reply #97 on: May 07, 2013, 10:00:34 AM »
   Justification A3: Investment income is compensation for something of economic value the investor did in the past - living frugally, working hard at a high value job, choosing to put income into other's productivity via profitable investment.

   My doubt for A3: ... So THERE is the difference, and I agree it does justify some income - you created economic value in the past by choosing to invest rather than consume. ... Still, what is the real value of that choice? Surely it is not infinite.

So we can agree that investing has some value. We can also agree that the value of that one decision to save & invest is not infinite. The value ends at the end of the investment term - which might be 30 years for a loan, one year for a lease, or 5 seconds for an electronic stock trader. Then I get to make the decision again: do I save or invest?

Yet you can derive increasing and unending income from the earned income you put away during your working years. At some point you are no longer being compensated for the economic value of a decision you made in the past and are just being compensated for the fact of ownership.

No, you are not being compensated for that one, initial decision. You are being compensated for repeatedly making the decision to save. At any point I could decide that all this saving and investing is for the birds, I should just spend it all on strippers and booze. I'm getting paid because I keep on deciding to let someone else use that economic value rather than consuming it myself. It's the same as the original decision to save, just repeated over and over through time. And if I keep making that same decision, should I not keep getting compensated for it?

If it's OK to make that decision and get compensated once, then why is it wrong the second time?

Posthumane

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Re: Living off of other people's work
« Reply #98 on: May 07, 2013, 11:04:59 AM »
There have been a number of arguments that state why living off of your investments which were earned by previous work is considered okay, and I agree with most of them so I'm not going to restate them. One thing which I will argue about is Zeb's assumption that a person working in a career is working up to their potential, whereas someone who is retires is not. I think in many cases this is actually the reverse - someone working a 9-5 job is contributing some amount to society but once they no longer have to work in that job because they have accumulated some wealth they have the resources available to contribute much more.

One of the ways in which they contribute is by making the result of their work (their capital) available to others (by investing), and for that they ask some compensation. After all, they could have spent that capital to make their lives more comfortable instead. This is a freely agreed upon transaction - the borrower agrees to pay a certain amount of interest or the company states that they are paying a certain percentage dividend, and the lender agrees to take on a certain amount of risk or pay certain price for a stock.

An independently wealthy person's ability to contribute goes beyond their capital though. If they are young and have some ambition and vitality they have a greater opportunity to really change society for the better. That's not to say that all of them do, but many early retirees contribute to society by doing important tasks for which nobody is willing to pay directly. This could include raising smart, ambitious children by spending more time with them and cultivating their intellect/personality, or it could include charity work, independent scientific study, literature/art, etc. Think about some of the people who you think really influenced society: Einstein, Newton, Copernicus, Currie, Guttenberg, whoever. Now, of the people on your list, how many became great and influential by working 40 hours per week at a company for most of their lives until they were not healthy enough to do so? I'd wager that the percentage is small.

matchewed

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Re: Living off of other people's work
« Reply #99 on: May 07, 2013, 11:12:56 AM »
Think about some of the people who you think really influenced society: Einstein, Newton, Copernicus, Currie, Guttenberg, whoever. Now, of the people on your list, how many became great and influential by working 40 hours per week at a company for most of their lives until they were not healthy enough to do so? I'd wager that the percentage is small.

That is true. Police Academy 1, 2, 3, and 4 would never have been made. And we would all be poorer because of that.

:)