Author Topic: is mustachiansim really special?  (Read 15499 times)

sol

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is mustachiansim really special?
« on: February 28, 2012, 04:50:55 PM »
I'm beginning to think that the mustachian early retirement system is less special than I thought.  It might just be the old fashioned American dream, for those who embrace the lifestyle and continue to work.

I think this forum has established that a typical family of four can comfortably pay their basic living expenses outside of housing for about 30k/year.  A married couple of typical white collar office workers who make 65k each can thus easily save about half of their income, putting them on the path to retirement in about 15 years.  Alternately, this couple could continue working for a full 40 year career while maintaining their frugal lifestyle and things quickly get out of hand. 

They could retire with a fortune in the millions, pay for college for kids and grandkids, and host extended families at their estate in the Hamptons every year.  A lifetime of frugality and hard work could be rewarded with a subsequent generation of lazy trust fund babies.  It's the American dream, and it appears to be available to the majority of upper middle class office worker drones.

If this is really the secret to joining the 1%, then I feel cheated.  I want to believe that the filthy rich are lucky, or corrupt, not average Americans who worked hard and lived beneath their means for 40 years.  Every time I hear a politician say "anybody can be rich like me if they just work hard enough" I want to vomit because it has always rung so hollow to me.  Running the numbers, though, makes me think that anybody who makes more than about 55k/yr has a very decent shot at it.

Am I missing something?

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Re: is mustachiansim really special?
« Reply #1 on: February 28, 2012, 05:37:48 PM »
Warren Buffett has lived in the same house since the 60s. Most people don't want it bad enough. They simply want everything now.

Physics

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Re: is mustachiansim really special?
« Reply #2 on: February 28, 2012, 06:11:04 PM »
You are correct in observing that it is generally possible.  But where it becomes special is in actually _doing_ it.  That is what is rare and special. 

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Re: is mustachiansim really special?
« Reply #3 on: February 28, 2012, 08:21:25 PM »
I don't like to consider it special, it is something that takes work but the work is worth the reward.
Perhaps it is special these days because for the past 50 or so years (I actually think it started soon after WWII) we have become a country that expects instant gratification. It takes work in this nation of consumerism to get past it.
And though I say it takes work, it isn't difficult. It's nothing we should be given medals for.

Our parents (and maybe grandparents by this point) turned away from their frugal ways, we are just getting back to it. And now we have the salaries that let us save enough to be FI a lot earlier in life.

shedinator

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Re: is mustachiansim really special?
« Reply #4 on: February 28, 2012, 08:53:41 PM »
I don't like to consider it special, it is something that takes work but the work is worth the reward.
Perhaps it is special these days because for the past 50 or so years (I actually think it started soon after WWII) we have become a country that expects instant gratification. It takes work in this nation of consumerism to get past it.
And though I say it takes work, it isn't difficult. It's nothing we should be given medals for.

Our parents (and maybe grandparents by this point) turned away from their frugal ways, we are just getting back to it. And now we have the salaries that let us save enough to be FI a lot earlier in life.

Our parents and/or grandparents were also statistically much more likely to have employer-sponsored pensions, and as a whole had more faith in the promise of Social Security. There was an understanding in many industries that if you were faithful to your employer for 25-30 years, it would payoff for the rest of your life, and the government would kick in a few bucks for your troubles as well. Now, the pension contribution has been replaced with the 401(k) match, but our generation as a whole is living like that's not the case.

I'd say frugality is special. It shouldn't be, but it is, because it's not normal, and it's benificial. Maybe some day it will be the norm.

MMM

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Re: is mustachiansim really special?
« Reply #5 on: February 28, 2012, 09:46:08 PM »
"If this is really the secret to joining the 1%, then I feel cheated."

Haha - brilliant satire, Shedinator!

The funny part is, those claims about hard work that the rich people make have never sounded hollow to me. It has always seemed like a "Duh" moment when they point out the obvious, and then a subsequent "I want to punch these complainers in the Face" moment when the various audience members claim that it is impossible to get ahead.

There is a big difference between Mustachianism and American Dream Riches, however, and that's just the consumption level and the pampering. The idea I'm promoting is that you NEVER need to lead more than a middle-class lifestyle, regardless of how much money you have. Because it's already plenty to make you happy - the only thing you increase by spending more is your environmental destruction.

Similarly, you absolutely do not want to raise your kids in a pampered lifestyle with chauffeured violin lessons and a trust fund. Any money you give them, short of maybe helping them avoid a deep debt on their education, is just stealing away the chance they would otherwise get to earn it for themselves. That activity is really good for you, and people who aren't happy making it on their own would not be happy having things handed to them either. I've met some truly morose and depressed trust-fund adults here in the Boulder area.

Matt K

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Re: is mustachiansim really special?
« Reply #6 on: February 29, 2012, 09:33:32 AM »
I'm currently reading "Once Upon A Car: The Fall and Resurrection of America’s Big Three Auto Makers – GM, Ford, and Chrysler” by Bill Vlasic. It's a fascinating and engaging read about the US auto industry from before the crash through to the recovery. If you like cars or are interested in how big businesses operate at the top level, I suggest borrowing a copy from the library.

I find certain executives in it to be really interesing characters. I keep noticing how there are two common traits in every one of the guys who really made a difference:

Hard work
When Alan Mulally moved from Boeing to Ford he left his wife and five kids in Seattle. Even before he was technically a Ford employee he was in the office in the early morning, and leaving late at night. He was working hard to learn everything he possibly could about the company. He visited engineering departments, factories, and dealerships. He read every financial report, plan, and forecast he could get. By the time he officially started at Ford he knew more about the company than almost anyone else there.

The same was happening at GM. Dedicated individuals were putting in massive time and brain power to work things out. The more successful the individual was at his task, the more important tasks were piled upon him. You know that saying about 10% of the people doing 90% of the work? Or “If you want something done, assign it to a busy person”? These were very much the cases. And they were putting in these hurculean efforts before everything went down hill (What's that MMM said about hard work preparing you for more hard work?)

Diverse experience
The “dead weight” at the top levels seems to have largely been guys who moved up vertically within the organization (that’s my reading of it; the book doesn’t really go into much detail on the dead weight guys). The guys who carried the burden were the guys who had lots of out-of-Detroit experience. These guys had been assigned from one foreign market to another foreign market, often moving to entirely different sections (marketing, engineering, finance). Even Bill Ford worked all over the company before becoming CEO of the family business.

It's definitely making me want to do a lateral transfer to some other position outside of my comfort zone...

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Re: is mustachiansim really special?
« Reply #7 on: February 29, 2012, 01:58:44 PM »
 Several things make Mustachianism special.

The big one is the emphasis on the savings/spending rate graph and the power of compound interest. This has the interesting effect of discounnecting the 'retirement age' question from the historic "65 years old, 80% pre-retirement income" mantra.

We are raised from the earliest age to go to school and learn what it takes to get on a 'hamster wheel' of employment, lured by the 'promise' that we can get off at age 65 or so! Meanwhile, borrow and spend!!

Thanks to the power of capitalism, ordinary middle-income people can realistically amass a 'stash sufficient to provide a family with everything they reasonably need for ever. But most people don't understand the math, or MMM frugality.

In addition, early Financial Independence presents the most interesting question: once you're off the hamster wheel, what do you really want to do with your time? A lot of people have no answer to that opportunity of freedom.

Melissa

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Re: is mustachiansim really special?
« Reply #8 on: February 29, 2012, 03:18:16 PM »
I believe mustachianism should be considered special.  I think it akin to fitness.  Most people know what it takes but very few have the discipline to follow through.  You are often ridiculed for not following the crowd and yet everyone tells you how lucky you are and how nice it must be to have that kind of life.

-Good luck is just a term used for those who think about all the things that could change or go wrong and plan for them.
-Yes it is nice to have a life that I decided was worth having on my terms, not someone else's

sol

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Re: is mustachiansim really special?
« Reply #9 on: February 29, 2012, 08:01:29 PM »
The big one is the emphasis on the savings/spending rate graph and the power of compound interest.

While I agree with your first point, I think early retirement is actually less dependent on compound interest than most people believe.  Jacob at ERE made this point quite well.  If you're saving 90% of your ATI so that you can retire in only five years, the interest you earn during those five years is basically inconsequential because the vast majority of the balance will come from your large contributions.  ROI is less and less important the higher your savings rate climbs.

Quote
In addition, early Financial Independence presents the most interesting question: once you're off the hamster wheel, what do you really want to do with your time? A lot of people have no answer to that opportunity of freedom.

Right, I get that.  My point was that for some people, the thing they want to do with all of their new free time is continue working and amass an enormous fortune so they can hang out with the rest of the 1%.  Why quit with a modest lifestyle after ten years of hard work and frugality, when twenty years of hard work and frugalty means you can become a full time philanthropist with enough change to actually enact change?

The world's greatest citizens have not typically been the early retirement types.  If you aspire to a nice quiet life with ample free time, you can certainly have that.  But think how impoverished our lives would be if that had been the choice of Thomas Edison, or Ben Franklin, or Andrew Carnegie.  These men kept working beyond when they could have opted for normal, not because they had to in order to put food on the table but because they wanted to contribute.

In some way, my decision to seek early retirement feels like settling for a life of smallness.
« Last Edit: February 29, 2012, 09:18:17 PM by sol »

arebelspy

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Re: is mustachiansim really special?
« Reply #10 on: February 29, 2012, 08:54:04 PM »
The big one is the emphasis on the savings/spending rate graph and the power of compound interest.

While I agree with your first point, I think early retirement is actually less dependent on compound interest than most people believe.  Jacob at ERE made this point quite well.  If you're saving 90% of your ATI so that you can retire in only five years, the interest you earn during those five years is basically inconsequential because the vast majority of the balance will come from your large contributions.  ROI is less and less important the higher your savings rate climbs.

I agree that it's inconsequential while accumulating for ERE, but returns are crucial when retired, to combat inflation, provide for your living expenses, etc.

So while compound interest is mostly irrelevant at the beginning for ERE-types, it does matter quite a bit later.  Luckily you'll have more time in retirement for figuring out your preferred method of investing!  ;)
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Re: is mustachiansim really special?
« Reply #11 on: March 01, 2012, 03:35:16 PM »
I believe mustachianism should be considered special.  I think it akin to fitness.  Most people know what it takes but very few have the discipline to follow through.  You are often ridiculed for not following the crowd and yet everyone tells you how lucky you are and how nice it must be to have that kind of life.
Exactly. Great analogy. I think the thing  I admire about very fit people is not their bodies, but the hard work it took to create the body. It's discipline and pushing away the pizza and ice cream, even when everyone around you is going at it.

James

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Re: is mustachiansim really special?
« Reply #12 on: March 01, 2012, 05:46:02 PM »
I think to limit Mustachianism to early retirement or building wealth is to miss the point, it's about much more.  We don't just bike to save money, we bike to avoid pollution (chemical/noise/etc), build fitness, enjoy nature, etc.  The same goes for most of the ideas we read here, it's a way of life that combines the best of many good ideas, without sacrificing the good life.  There are a million ways to balance things in life, and Mustachianism is one point of balance in a goup of areas that worked for MMM, and is worthy of adaptation by others interested in that point of balance.

Bakari

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Re: is mustachiansim really special?
« Reply #13 on: March 01, 2012, 08:45:36 PM »
I want to believe that the filthy rich are lucky, or corrupt, not average Americans who worked hard and lived beneath their means for 40 years.  Every time I hear a politician say "anybody can be rich like me if they just work hard enough" I want to vomit because it has always rung so hollow to me.  Running the numbers, though, makes me think that anybody who makes more than about 55k/yr has a very decent shot at it.

Am I missing something?

Any middle class person who is frugal and invests can get to the top 1%, yes.
But....

The top 1% are not the "filthy" rich.  The filthy rich are more like the top 0.001%
The wealth inequality between the top 0.001% and the top 1% is just as large as between the top 1% and the rest of us.
The OWS movement picked an unfortunate name, because it made the focus all the merely millionaires, instead of the multi-billionaires.

I looked it up once, and of the top 20, fully half of them got literally ALL of their wealth through inheritance.
They did literally nothing to earn their fortune.
Of the rest, who at least partially earned it, half of them were born into families which were already in the top 1%, giving them enormous advantages in both cash, connections, and education.

I stopped researching after 20, but I'd expect those proportions to continue more or less.  There are a few "self-made" billionaires, but they are in the minority.  Even when you get down to regular millionaires, sure many people could achieve it by earning an upper middle class salary and living frugally, but that doesn't mean that this is how most of the lower upper 1% actually did it.  In other words, even if the politicians words are technically true, they should still ring hollow and make us want to vomit.  If you look at how most politicians got their fortunes, it was indeed usually some combination of inheritance, nepotism, corruption, and unethical business practices.

dahlink

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Re: is mustachiansim really special?
« Reply #14 on: March 03, 2012, 12:07:41 AM »
The mustachian movement isn't just special...it's GOOD.  As in good and evil.  The way I see things now is that by being frugal, I am helping the economy, the country, but more importantly my fellow man.  It may not be unique as there are many other websites with this similar theme of frugality.  However, this is all part of a digital grass roots movement to save our society from the debt, waste, and financial stupidity that almost all hands have been involved in.

  I think this is somewhat of a social movement that is only possible because of the internet.  We see other uprisings because of the freedom of the internet around and here we need to be financially free, so this is our movement.  I am personally excited to live in these times and to be able to contribute to this growing frugal movement.
« Last Edit: March 03, 2012, 11:59:44 AM by dahlink »

sol

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Re: is mustachiansim really special?
« Reply #15 on: March 03, 2012, 07:53:42 AM »
The way I see things now is that by being frugal, I am helping the economy, the country, but more importantly my man.

I'm still not convinced.

If every worker in America opted to live off of 15% of their income and retire in only a few years, national productivity would plummet.  GDP would drop significantly.  The consumer treadmill is part of what drives our national success, because it keeps people working hard for long careers.

This whole extreme early retirement gig feels like a hack, a way to beat the system, to live off of the rest of society while contributing nothing of value yourself.  It seems clear to me that only a minority of people can really do it, if the system is going to continue to work.


Physics

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Re: is mustachiansim really special?
« Reply #16 on: March 03, 2012, 08:48:46 AM »
Is sitting in traffic for 1-2 hours everyday spewing exhaust and sitting in a cubicle being a cog in a wheel for 9-10 hours on top of that and then sitting in front of a TV for an average of 4 hours a day of your remaining waking hours a big contribution to society?

See, one can frame anything to look worthless.

Living in the mustachian lifestyle has enormous contribution to society.  Though I do agree with you, if more than a minority did so, the "system" would not necessarily continue in it's present form, it would have to change and evolve, hopefully to something better and more sustainable for all of humanity.

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Re: is mustachiansim really special?
« Reply #17 on: March 03, 2012, 09:27:44 AM »
The consumer treadmill is part of what drives our national success, because it keeps people working hard for long careers.

This has only been true for a relatively short period of our country's history - primarily post WWI. Buying things only to throw them into a landfill is ultimately an unsustainable model, and we've seen the aches of that in the past four years.

People typically use the term retirement, but what most of us - I think - are intrested in is financial independence. Being decoupled from requiring to work to provide for ourselves and families.  This independence allows for additional leisure time, but I wouldn't consider what MMM does as unproductive - he's organized a community, helps people get out of debt, builds houses, and provides shelter for people. In "retirement" he's providing more for his community (physical and virtual) than most people do during traditional careers. It's exactly these people who buck conventional wisdom who are able to achieve things like Edison, Franklin, or Carnegie.

Upon reaching FI, I'll have paid off all debt (mortgage), relieving some of the pressure a crushing national debt is inflicting on our economy and costing everyone billions of dollars in subsidies paid with our taxes. Paying without the need for consumer credit increases the efficiency of markets, allowing lower prices (certainly you've seen signs which indicate a lower price for cash purchases).

Much of the work people do is simply to pay off debt - that's regressive for an economy. Imagine if people did just live off of 15% of their income - the national debt could be paid off (Australia is an example of where the debt was paid off), taxes could be lowered, meaning more money for individuals meaning more spending would be possible with that 15%. We'd turn into a net exporter, which means we'd be collecting other people's money instead of borrowing it. Fossil fuel consumption would plummet meaning cleaner air and less required maintenance on roads. Discretionary spending would plummet, resulting in no more infomercials and reduced onslaught of advertising. People would be healthier due to increased walking and eating at home, reducing medical costs. There would be more open spaces since less room would be required for landfills. Social welfare programs could mostly be eliminated since even people with modest incomes could afford what everyone requires and for those with more, charitable giving might increase, further reducing government pressure. This is all sounds very utopian, but I think that's because conventional wisdom has strayed so far from what's possible that it now seems impossible.

Politicians used to call their constituents citizens, then tax payers, now its consumers. The most productive society is the one where we are thought of and spoken to as citizens again.

Guitarist

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Re: is mustachiansim really special?
« Reply #18 on: March 03, 2012, 09:28:10 AM »


This whole extreme early retirement gig feels like a hack, a way to beat the system, to live off of the rest of society while contributing nothing of value yourself.  It seems clear to me that only a minority of people can really do it, if the system is going to continue to work.

I'm sorry, but most of this comment made me laugh. I would say it's a hack and a way to beat the system (but that is based on the rules of the system, not my own). A relatively new system in the grand scheme of things really. The thing is, if our current system wasn't around, it wouldn't be possible for as many people as it is today. Living off society while contributing nothing of value myself? Oh really. Do you understand how capitalism works? Do you understand that our investments are actually contributing more then me going out and buying the latest and greatest gadget? Each day that an early retiree sits on his/her butt all day contemplating the universe (which, oddly enough, is not what we do/plan to do), their investments are doing more for the system then any other middle class person could do shopping at Wal-Mart.
Yes, a minority of people are all that can do this to keep this ultra-consumerist society going. But perhaps if more people did it, we'd bring ourselves back in balance with the rest of the planet. How long do you think we'll be able to live off the teat of oil? Even if it  doesn't kill us environmentally, eventually the wells will run dry (for the record, I don't even consider myself green, a conservationist yes, but not green).

If the means are there, why wouldn't you take advantage?

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Re: is mustachiansim really special?
« Reply #19 on: March 03, 2012, 11:46:15 AM »
The way I see things now is that by being frugal, I am helping the economy, the country, but more importantly my man.

I'm still not convinced.

If every worker in America opted to live off of 15% of their income and retire in only a few years, national productivity would plummet.  GDP would drop significantly.  The consumer treadmill is part of what drives our national success, because it keeps people working hard for long careers.

This whole extreme early retirement gig feels like a hack, a way to beat the system, to live off of the rest of society while contributing nothing of value yourself.  It seems clear to me that only a minority of people can really do it, if the system is going to continue to work.

This same argument was made many times on the old ERE board, and Jacob had a extremely good way of explaining why it is a (super common) misconception.

Lets say you throw a rock through a window.
That means that a glass person has to come out and fix it, and they have to purchase the glass that they use from a glass manufacturer, which in turn purchases its raw material somewhere, which in turn has to mine those raw materials.
So by breaking the window you employed a bunch of people, and by paying for the good and services you just increased GDP.

However...

What really just happened is that you started with a certain amount of real wealth (the actual intact window) and you destroyed it (breaking it turned the existing goods and the services it took to create it into garbage).  The end result is that you are back where you started.  Nothing new of value has been created, only replaced.  In the big picture, waste can only decrease the total wealth of a society.

Think of it another way:  would you support the idea of deliberately blowing up bridges and skyscrapers (empty of people, of course) just so that you would have an excuse to rebuild them, thereby employing people and creating need for more materials?  Of course not, that would be stupid.

Or another way:  Imagine you are on an abandoned island with three other people.  Lets say you happen to come across a limited number of a certain type of seashell, and decide to use them as currency.  Lets say one person is a masseuse, one is a banker, one is a shopkeeper, and the last is an accountant.  All of these people can provide their services to each other, and seashells can trade hands, and according to economists, the island's GDP grows with every transaction.  But obviously nothing of any real value - food, clean water, shelter - is actually being created.  All services amount to economic masturbation.  They don't increase the wealth of a society.

The majority of American economy is either producing waste, or is economic masturbation. 
The reason for this is because we have an enormous surplus of labor, along with an abundance of cheap energy and natural resources, and unlimited personal, corporate, and government credit.
The reason we have such a huge excess in labor is that technology has increased the productivity per worker by approximately 20 fold over the past century, and yet we have still have the same 40 hour work week that we had back then. 
In order to have people employed as technology gets better, we have to constantly expand the economy.  But since we already have more than we could ever need, the only way to expand the economy is to produce more and more crap that no one needs.

The best solution would be to set up society differently - every increase in per/worker productivity should be tied to a proportionate decrease in worker hours (instead of it all going to corporate profit).
But since that isn't even on the radar of the most progressive activists or politicians, it isn't going to happen anytime soon.
On a personal level, opting out of a destructive system is nothing to feel guilty about.

Now that is just speaking to living off a fraction of your income, and saving the rest for later in life.

A part of what makes that easy is gaining passive income based on capital, and in that sense I agree that it is taking advantage of the system.  I was told once that there is a Russian saying "if you are going to get raped, and there is no way out of it, you may as well try your best to enjoy it."  That's how I think of capitalism.  It what we have, its not going away, why not take advantage of it?
Of course, if society were restructured the way I am suggesting in terms of labor, corporate profits would plummet, and there would be much less money to be made in the stock market.  In an ideal world I would also limit investment housing to a maximum of one single unit per person (sorry MMM), which would mean a huge increase in supply of homes, which in turn would make homes much more affordable (and it wouldn't be linear, because once you cross a certain threshold, you don't need a bank loan and it's interest, or an agent, or closing costs, etc and the real cost drops even further).  This would mean that more people could afford to live in a home they own free and clear, while also preventing others with lots of capital from leeching off tenants for their own income.  Going back to the Russian saying, if I could afford it, I would totally buy some investment properties...
« Last Edit: March 03, 2012, 02:09:34 PM by Bakari »

dahlink

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Re: is mustachiansim really special?
« Reply #20 on: March 03, 2012, 12:11:40 PM »
The way I see things now is that by being frugal, I am helping the economy, the country, but more importantly my man.

I'm still not convinced.

If every worker in America opted to live off of 15% of their income and retire in only a few years, national productivity would plummet.  GDP would drop significantly.  The consumer treadmill is part of what drives our national success, because it keeps people working hard for long careers.

This whole extreme early retirement gig feels like a hack, a way to beat the system, to live off of the rest of society while contributing nothing of value yourself.  It seems clear to me that only a minority of people can really do it, if the system is going to continue to work.


Whoops, I meant to say fellow man lol.  I understand your point of view.  However, the way I see it by not wasting money on frivolous  and ridiculous things, we send the right signal to the market not to make BS products.  Workers should be making things of value to bring to the market.  Of course that is subjective and is up to each individual.  It just seems like are a lot of areas of total waste in our society, and if its just to keep someone employed thats not enough for me.

sol

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Re: is mustachiansim really special?
« Reply #21 on: March 04, 2012, 08:11:14 AM »
I wouldn't consider what MMM does as unproductive - he's organized a community, helps people get out of debt, builds houses, and provides shelter for people.

These are all worthy activities, but they are a very different kind of contribution than being a construction worker who builds stuff all day long.  If every worker in the economy tried to organize capital, nothing would get built.  We need some people to actually do the work.

Quote
Much of the work people do is simply to pay off debt - that's regressive for an economy.

I think capitalism argues that quite the opposite is true.  The very nature of our economic system is that value creation is derived from debt creation.  Those consumers servicing their debt allow the bank to lend out 10x more money, so in theory 10x more work gets done by those investments.  Capitalism thrives based on the lending of capital, and a steady income stream from debt payments is a good source of capital.

 
« Last Edit: March 04, 2012, 08:24:29 AM by sol »

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Re: is mustachiansim really special?
« Reply #22 on: March 04, 2012, 08:23:41 AM »
Lets say you throw a rock through a window.

I'm not suggesting that replacing a broken window adds to GDP.  I'm saying that having consumer debt is what drives workers to stick with their jobs.  Slaving away for 40 years in a coal mine is not something anyone would do if they weren't somehow motivated, and paying for that new iphone every year is good motivation. 

Consumer debt keeps the workers working.  If no one had debt, they would all stop working.  If no one worked, the economy would collapse. 

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Or another way:  Imagine you are on an abandoned island with three other people.  Lets say you happen to come across a limited number of a certain type of seashell, and decide to use them as currency.  Lets say one person is a masseuse, one is a banker, one is a shopkeeper, and the last is an accountant.  All of these people can provide their services to each other, and seashells can trade hands, and according to economists, the island's GDP grows with every transaction.  But obviously nothing of any real value - food, clean water, shelter - is actually being created.  All services amount to economic masturbation.  They don't increase the wealth of a society.

Capitalism argues that such transactions ARE the basis of wealth in large part because we don't use a fixed money supply.  Instead, we create money out of thin air every time we write a check or make a loan.  That newly created money is spent on real work and real things that would not have been performed or made without that newly made up money. 

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But since we already have more than we could ever need, the only way to expand the economy is to produce more and more crap that no one needs.

I hear and recognize your argument, but my grandiose version of the future has loftier aspirations.  Instead of manufacturing more plastic crap that will go into a landfill in a week, what if society worked towards renewable energy sources, or grand public architecture, or human colonization of space?  Surely there are worthwhile goals for humanity's excess productivity.  I think we could continue to expand our economy for thousands of years without just making a bunch of useless crap.

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if society were restructured the way I am suggesting in terms of labor, corporate profits would plummet, and there would be much less money to be made in the stock market. 

That's exactly why it feels like a hack to me.  It's way to beat the system that only works if only a minority of people do it.  The financially independent citizens of the world are totally dependent on the rest of the slaves continuing to support their own subjugation.  I can't retire early if everyone else does too, for precisely the reason you have pointed out.

Gerard

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Re: is mustachiansim really special?
« Reply #23 on: March 04, 2012, 09:17:58 AM »
But there are huge parts of the world with much lower GDP per capita than we have, and not that much more misery... I would argue that misery often comes from the uncertainty of income, not the amount. If all (or almost all) of us halved our consumption and our work life, the economy wouldn't collapse. It would just look different. The debt-driven coal miner is a good example... so what if each miner ends up working fewer years, or fewer hours, if we decide to use a lot less coal?

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Re: is mustachiansim really special?
« Reply #24 on: March 04, 2012, 10:56:31 AM »
Lets say you throw a rock through a window.

I'm not suggesting that replacing a broken window adds to GDP.  I'm saying that having consumer debt is what drives workers to stick with their jobs.  Slaving away for 40 years in a coal mine is not something anyone would do if they weren't somehow motivated, and paying for that new iphone every year is good motivation. 

Consumer debt keeps the workers working.  If no one had debt, they would all stop working.  If no one worked, the economy would collapse. 

But economists DO say that replacing a window adds to GDP.  The entire way we have of looking at the economy is flawed.
Of course we don't need debt to keep people working!  Life has ongoing expenses.  Most notably food.  Also shelter - even if you own a home with no mortgage, you need to pay property taxes and maintenance and insurance.  I have no debt.  I still work!  As far as I understand it, outside of modern America large amounts of consumer debt was never the norm.

When I was in Mexico I noticed a lot of houses had rebar sticking up out of the concrete roofs.  Someone explained to me that the reason was that most people didn't get loans to build houses, they paid in cash, and they only built as much as they could afford.  The rebar was there because someday in the future, when they had saved up enough, they could add a second story to the building.


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Or another way:  Imagine you are on an abandoned island with three other people.  Lets say you happen to come across a limited number of a certain type of seashell, and decide to use them as currency.  Lets say one person is a masseuse, one is a banker, one is a shopkeeper, and the last is an accountant.  All of these people can provide their services to each other, and seashells can trade hands, and according to economists, the island's GDP grows with every transaction.  But obviously nothing of any real value - food, clean water, shelter - is actually being created.  All services amount to economic masturbation.  They don't increase the wealth of a society.

Capitalism argues that such transactions ARE the basis of wealth in large part because we don't use a fixed money supply.  Instead, we create money out of thin air every time we write a check or make a loan.  That newly created money is spent on real work and real things that would not have been performed or made without that newly made up money. 

I know that is the argument!  That's the whole point of the thought experiment:  it is obvious that in real terms the island residents are NOT getting any wealthier, no matter what the theory says.  If they had an unlimited supply of seashells, but only introduced more into circulation when a transaction occurred, they could keep track of transactions, but the point is that just because real work was preformed doesn't mean any actual wealth - as in some tangible benefit - has actually been created.

The result of us creating money out of thin air is inflation.  It is one of (if not THE) largest drivers of inflation.  It basically means that the government gets additional purchasing power at the expense of the value of everyone's existing money.  In other words, it is, in practical terms, a flat tax.

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But since we already have more than we could ever need, the only way to expand the economy is to produce more and more crap that no one needs.

I hear and recognize your argument, but my grandiose version of the future has loftier aspirations.  Instead of manufacturing more plastic crap that will go into a landfill in a week, what if society worked towards renewable energy sources, or grand public architecture, or human colonization of space?  Surely there are worthwhile goals for humanity's excess productivity.  I think we could continue to expand our economy for thousands of years without just making a bunch of useless crap.

I challenge that we have any need to create more energy or colonize space.  And though I grant it would be a better use of resources and labor than what we are doing now, I propose that we could do those things without all working 40 hours per week.
In any event, the original argument was that people shouldn't all stop working, because failing to do work - any paid work, not work which inherently benefits society - would reduce GDP.  That is what I was responding to.

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if society were restructured the way I am suggesting in terms of labor, corporate profits would plummet, and there would be much less money to be made in the stock market. 

That's exactly why it feels like a hack to me.  It's way to beat the system that only works if only a minority of people do it. 
Before I was suggesting that our productivity has increased so much that there is no reason 40 hours should still be the standard.  Because of technology, one person can accomplish in 2 hours what would have taken 40 hours at the turn of the last century. 
In our current system, one worker puts in 40 hours a week, 48 weeks per year, for about 40 years = 76,800 hours.

But our productivity per person has increased 20 fold since 1900, when the 40 hour work week was being created.  Accounting for increased productivity, we only need 3,840 hours per person of lifetime work.  And given our standardized work week, that only amounts to 2 years per person.  If instead of giving all of the benefits of technological advancement to corporate profits, society reduced labor hours proportionately to productivity, we could either work 2 hours per week (like I suggested before) or we could work full-time for 2 years.

This is perhaps an extreme example - we might be more comfortable with the standard of living of the 1950s than the 1900s.  But given that the standard of living hasn't actually improved for most American's since the 1950s, there is no advantage to having a total productivity any higher than that.  Even so, we are grossly over-producing, which means that actually, yes, everyone could retire early, and no one would suffer for it. 

What you are getting at is that it wouldn't work if no one did any work at all, and that is obviously true, but in order to "retire early" you have to actually have been working, in order to have something to retire from.

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The financially independent citizens of the world are totally dependent on the rest of the slaves continuing to support their own subjugation.  I can't retire early if everyone else does too, for precisely the reason you have pointed out.

You seem to be assuming that the only possible way to be financially independent is to invest capital.  Lets say a person can live off of $10k per year.  They spend 10 years working at a high-paying but not-uncommon 100k per year job.  They could then retire at around age 30, and be FI for the rest of their life with absolutely no investments of any kind - even if they live to be 130!  Obviously the stock market, rental homes, or owning a business makes it a lot faster and easier, but it is not a necessity.

If not for our low wages, creating-money-out-of-thin air driven inflation, and investor owned housing, it would actually be a lot easier to do this, because people would make more per hour of labor and stuff would cost less.  In other words, it is our system of prioritizing economic growth over individuals itself which actually creates the conditions that make it relatively difficult to retire early.  The system isn't set up this way because it is actually ideal, it is set up this way because it benefits the people with the most capital (not the MMM/ERE/FI levels of capital, but the billionaires who get to make the rules, the upper 0.001%).  They could not exist without skimming off the labor of everyone else (early retirement people included).

Consider:  GDP has increased 1400% since 1970.  Since that time, inflation adjusted median wages has increased 0%.  What, then, is the point?

velocistar237

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Re: is mustachiansim really special?
« Reply #25 on: March 04, 2012, 11:57:08 AM »
What would happen if everyone lived the MMM/ERE life: efficient, practical, wasting nothing, and taking no more than what they need? If the answer is that the economy would collapse, then the economy must be broken.

I don't care if it means that I could no longer retire within five or ten years. Absolutely everything would be better. If I would have to go to work for 20 hours a week until I'm 70, that seems like a fair trade.

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Re: is mustachiansim really special?
« Reply #26 on: March 04, 2012, 02:46:31 PM »
I wouldn't consider what MMM does as unproductive - he's organized a community, helps people get out of debt, builds houses, and provides shelter for people.
These are all worthy activities, but they are a very different kind of contribution than being a construction worker who builds stuff all day long.  If every worker in the economy tried to organize capital, nothing would get built.  We need some people to actually do the work.

This is such a perfect example, I almost wonder if you aren't actually playing devil's advocate for the sheer purpose of supporting the counter-argument!
Because, as you yourself just mentioned: MMM actually builds houses!  Literally.

How can you contrast a construction worker how actually builds stuff with someone actually building stuff?

And having retired from the corporate rat race is exactly what gave him the time to actually start his own small home building / remodeling business!  If you actually follow the blog, MMM never advocates for people to just sit around watching TV all day, nor did Jacob of ERE, nor anyone else (that I know of) in the FI through frugality movement.

Sure, if every worker just organized capital, nothing would get done, but that is, at best, an argument against capitalism.  Then again, if everyone was an ad executive, or a cab driver, or a shop owner, or a personal trainer, nothing would get built either.

sol

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Re: is mustachiansim really special?
« Reply #27 on: March 04, 2012, 04:05:08 PM »
But economists DO say that replacing a window adds to GDP. 

Sure, in the same way that they talk about the deficit rather than the debt.  It's a snapshot in time of the short term balance. 

You've convinced me to change my mind; replacing a window DOES add to GDP, because it is new production.  GDP is a measure of how much work the economy can do, not how much wealth exists in the economy.  It's certainly possible to have a very high income and very low net worth.  Replacing broken windows adds to the former but subtracts from the latter.

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The entire way we have of looking at the economy is flawed.

I like you, Bakari, you're even more of a pinko than I am.  The world needs more rational idealists.

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Of course we don't need debt to keep people working!  Life has ongoing expenses.

I think our nations is capable of achieving and producing things much greater than basic food and shelter for all of our citizens.  Which is not to say we actually do that, because I think we agree the current economic system is a giant clusterfuck with whipped cream on top.

But these vast increases in productivity you mention do allow people to have leisure time, or alternately to work hard on something else.  I think most people generally work less hard after FI, don't you?  Doesn't that decrease national productivity?

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it is obvious that in real terms the island residents are NOT getting any wealthier, no matter what the theory says. 

On this point we will have to disagree.  By working hard for many years, those four islanders CAN produce wealth.  They can build themselves homes, secure a reliable water supply, cultivate fields,  stockpile emergency supplies in case of future disaster, create art and music, and erect monuments to their civilization.  All of that is wealth.  The number of seashells they have is totally irrelevant. 

Now if they are all parasite jobs, then I'm with you.  If the four of them are like four lawyers, then they are not actually creating anything of value.  Those kinds of jobs are only viable in a complex society that benefits from specialized labor.

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The result of us creating money out of thin air is inflation. 

It certainly can be, if money is created too rapidly.  Econ101 teaches that money is created out of thin air to reflect the rising wealth of a society.  If the money supply were kept constant and the population doubled, everybody would only have half as much.  Clearly, though, all those new people can also build homes and cultivate fields and stockpile real goods, and are thus contributing to new real value.  Theoretically, money is created by the Fed to reflect this increase.

Yes I know the whole things is a giant sham and money is created at variable rates for political purposes, with the net result being that your inflationary theory is correct.  I'm just saying that on paper Capitalism works because lending capital creates new money to reflect rising production.  The real world is a different story.

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we could either work 2 hours per week (like I suggested before) or we could work full-time for 2 years.

Your Bakarian Utopia sounds lovely, what with the short working careers and long retirements, but wouldn't some people choose to work for 4 years instead of 2 just so they could have twice as much as their neighbors?

Or maybe some crackpot altruist wants to work ten years, keeping two years of income to support himself and devoting eight to an ideal he believes in, say educating oppressed minorities or protecting against future natural disasters?


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You seem to be assuming that the only possible way to be financially independent is to invest capital.

Your argument here is compelling, I think.  I could hide my stash under the mattress and still retire early, just not as early as otherwise planned.  As Jacob at ERE pointed out, investment returns actually become less and less important with increasingly higher savings rates, due to large contributions and short time periods over which compound interest can accrue.

Perhaps I should get out of the market and start a Scrooge McDuck style vault/pool.

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In other words, it is our system of prioritizing economic growth over individuals itself which actually creates the conditions that make it relatively difficult to retire early.  The system isn't set up this way because it is actually ideal, it is set up this way because it benefits the people with the most capital

Wait, what happened to the rational idealist?

I agree that the system is skewed against the working masses, and that it is perpetuated and amplified by the minority that it best serves.  Ye and I have chosen different paths, though; you seem to have chosen to fight the system and agitate for change, while I have chosen to work the system to become part of the favored minority.  I just don't see enough potential for the kinds of changes you're talking about, at least not in the short term, so I've subscribed to "If you can't beat 'em, join 'em."

Great, now I feel like a sell-out.  Thanks a ton, man.
« Last Edit: March 04, 2012, 04:07:51 PM by sol »

Matt K

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Re: is mustachiansim really special?
« Reply #28 on: March 05, 2012, 08:00:48 AM »
When I was in Mexico I noticed a lot of houses had rebar sticking up out of the concrete roofs.  Someone explained to me that the reason was that most people didn't get loans to build houses, they paid in cash, and they only built as much as they could afford.  The rebar was there because someday in the future, when they had saved up enough, they could add a second story to the building.

Useless trivia: As it was explained to me by a local in Peurto Angel, it's actually more of a tax avoidance thing. You don't pay tax on a uncompleted residence. So all those houses you see with rebar or unfinished windows in an unsused room are being left in a perpetual state of "under construction" so they can avoid having to pay the tax that will be due when the building is completed. I'm not certain if the tax being avoided is city land tax (annual), or simply the sales-tax-equivilant (one-time). Each state has different rules on what qualifies as under construction, so some just have one un-finished rooms without windows, others have an entire floor not yet there. In Peurto Angel there is an mansion overlooking the ocean that has been "under construction" since the 70s.

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Re: is mustachiansim really special?
« Reply #29 on: March 05, 2012, 05:44:24 PM »
You've convinced me to change my mind; replacing a window DOES add to GDP, because it is new production.  GDP is a measure of how much work the economy can do, not how much wealth exists in the economy.  It's certainly possible to have a very high income and very low net worth.  Replacing broken windows adds to the former but subtracts from the latter.
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I could accept that distinction.  My point is that in real terms breaking a window detracts from the overall wealth of a society.  Most people take it as a given that all economic activity and all increases in GDP are inherently good.  That is the part I'm challenging.

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But these vast increases in productivity you mention do allow people to have leisure time, or alternately to work hard on something else.  I think most people generally work less hard after FI, don't you?  Doesn't that decrease national productivity?

Yes.  But I think that is ok.  National productivity would not decrease to zero.  And since increases in national productivity over the past 40 years has literally resulted in no increase in the median standard of living, I see no reason to assume that a decrease in productivity would necessarily decrease it. 


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On this point we will have to disagree.  By working hard for many years, those four islanders CAN produce wealth.  They can build themselves homes, secure a reliable water supply, cultivate fields,  stockpile emergency supplies in case of future disaster, create art and music, and erect monuments to their civilization.  All of that is wealth.  The number of seashells they have is totally irrelevant. 

Now if they are all parasite jobs, then I'm with you.  If the four of them are like four lawyers, then they are not actually creating anything of value.  Those kinds of jobs are only viable in a complex society that benefits from specialized labor.

I guess I wasn't clear.  That is exactly the situation I was describing.  I should have said that the four of them are engaging in their given professions.  They are a masseuse, a banker, a shopkeeper, and an accountant.  I wouldn't call them parasites, but they aren't strictly necessary either. 
What I'm getting at is that not all jobs / economic activity results in a society being better off. 
The fact that a person is employed does not mean they are providing a meaningful contribution to society.  A good example is advertisers.  Back before Edward Bernays, an advertiser's job was to inform the public about products they might be interested in but didn't know about.  Ever since him, the role of advertising is to use human psychology to manipulate people into wanting things they actually have no use for.  This benefits the shareholders of the corporation that hired the advertiser, but society as a whole is no better off because consumers see a TV commercial and eat at Burger King instead of McDonalds.
If a job that doesn't benefit society ceases to be done, society is no worse off.  In that way, economic activity could be reduced without reducing real productivity.


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Yes I know the whole things is a giant sham and money is created at variable rates for political purposes, with the net result being that your inflationary theory is correct.  I'm just saying that on paper Capitalism works because lending capital creates new money to reflect rising production.  The real world is a different story.
Granted.

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Your Bakarian Utopia sounds lovely, what with the short working careers and long retirements, but wouldn't some people choose to work for 4 years instead of 2 just so they could have twice as much as their neighbors?

Or maybe some crackpot altruist wants to work ten years, keeping two years of income to support himself and devoting eight to an ideal he believes in, say educating oppressed minorities or protecting against future natural disasters?
Absolutely!  And I see no reason what-so-ever to discourage that.  I have no doubt that a majority of people would do just that.  I wouldn't even advocate a 2-hour work week or 2 year career, I was just pointing out that mathematically, it could go that extreme. 
Everything I've written in this thread is in response to this:
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"If every worker in America opted to live off of 15% of their income and retire in only a few years, national productivity would plummet.  GDP would drop significantly.  The consumer treadmill is part of what drives our national success, because it keeps people working hard for long careers."
 
Basically, what I am getting at is that the consumer treadmill and our economic system is what drives the extreme inequality of wealth that this country has developed, as well as the growth of wealth and power of corporations.  The propaganda that it actually benefits the middle class has become so universal that almost no one, in the media, in politics, or among professional economists, questions it. 
I actually do believe that the MMM way is applicable on a large scale, and that America would be better off for it.

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Perhaps I should get out of the market and start a Scrooge McDuck style vault/pool.

Well, like you said "If you can't beat 'em, join 'em."
I'm invested in the market, and making money on interest at Lending Club, and my mother owns rental property.  My communist great-grandmother probably wouldn't approve.

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Wait, what happened to the rational idealist?

I agree that the system is skewed against the working masses, and that it is perpetuated and amplified by the minority that it best serves.  Ye and I have chosen different paths, though; you seem to have chosen to fight the system and agitate for change, while I have chosen to work the system to become part of the favored minority.  I just don't see enough potential for the kinds of changes you're talking about, at least not in the short term, so I've subscribed to "If you can't beat 'em, join 'em."

Great, now I feel like a sell-out.  Thanks a ton, man.

Ha! I'm just living life.  I try to live my own values:  I have solar panels on my roof, run my truck on biodiesel, and I have sliding scale prices for my business.  Today my client was a 73 year old widow who lives alone, and who never keeps track of my hours or charges - I asked for 50% of what my real rates are (without telling her of course).  That is my anti-capitalism; I ask for what I think is fair, not the most I think I can get away with.  But, other than volunteering some labor and donating a sizable chunk of cash to the Occupy Movement, I am not doing anything at all to actually fight the system.

And, hey, my entire point in first responding to this thread was to refute the claim that, "This whole extreme early retirement gig feels like a hack, a way to beat the system, to live off of the rest of society while contributing nothing of value yourself.  It seems clear to me that only a minority of people can really do it, if the system is going to continue to work."
If the system isn't helping people anyway, than we aren't doing anyone any harm by opting out.  If everyone actually tried it, the result would be the sort of changes I'm talking about!  So, in a way, by working toward FI through frugality (as opposed to by trying to become mega-wealthy) you actually ARE working toward a more utopian future! 
I believe it was Ghandi who said"be the change you want to see"

sol

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Re: is mustachiansim really special?
« Reply #30 on: March 05, 2012, 10:09:54 PM »
Yes.  But I think that is ok.  National productivity would not decrease to zero.  And since increases in national productivity over the past 40 years has literally resulted in no increase in the median standard of living, I see no reason to assume that a decrease in productivity would necessarily decrease it. 

Standard of living?  Since when is that correlated with national productivity?  The whole point of capitalism is that wealth accrues to the people who have the most money and do the least work.  Are you suggesting we bin the whole Invisible Hand ideal?  Are you a raging Bolshevik in pink pajamas?

Your insinuation that a rising tide floats all boats is dangerously subversive.

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The fact that a person is employed does not mean they are providing a meaningful contribution to society.

I would even go so far as to suggest that the vast majority of our country's employees contribute nothing meaningful to society.  Look around, forum lurkers, you know who you are.

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Everything I've written in this thread is in response to this:
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"If every worker in America opted to live off of 15% of their income and retire in only a few years, national productivity would plummet.  GDP would drop significantly.  The consumer treadmill is part of what drives our national success, because it keeps people working hard for long careers."
 

I see I should have been more clear up front.  I didn't mean consumerist culture drives GDP, I meant consumerist culture motivates people to continue working far longer than necessary to service their debt.

And those of us with capital to lend benefit from that tragedy.  Yes, I'm exploiting my fellow man for personal profit.

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I actually do believe that the MMM way is applicable on a large scale, and that America would be better off for it.

A quick historical review of the method by which every great human society has ultimately collapsed makes your path pretty clear.  The rich and powerful amass more and more wealth and power in an ever shrinking minority while refusing to share either the wealth or the power with the majority.  The majority revolts and starts chopping off heads.  They build a new society and return to step one.

What you're suggesting just slows down the process by allowing the rich and powerful a longer run before the great proletariat uprising.  Maybe you're secretly working for the Man and don't even know it.

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If the system isn't helping people anyway, than we aren't doing anyone any harm by opting out.  If everyone actually tried it, the result would be the sort of changes I'm talking about!


I'll have to think about this for a bit. 

I think the system is certainly helping some people; the rich minority who benefit from the toil of the debt slaves.  Would I mind harming this minority?  Fuck no, I'd burn their empires down in a fit of rage and not lose a wink of sleep over it.

I'm not sure that spreading Mustachianism to a majority of the working population is going to accomplish much in the way of change, though.  We'd all just learn to get by with less, and the rich would still be richer but the system would just be more stable.  Is that really the change I want to see in the world?

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So, in a way, by working toward FI through frugality (as opposed to by trying to become mega-wealthy) you actually ARE working toward a more utopian future!

At this point I should probably confess that although my lifestyle is frugal, my end goals do include being mega-wealthy, like dynasty-building disgustingly filthy rich kind of wealthy.  I think it's a necessary prerequisite to enacting real change.
 

MountainMan

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Re: is mustachiansim really special?
« Reply #31 on: March 06, 2012, 10:37:26 AM »
I think Mustachianism is just old-fashioned frugality, combined with the awesome power of compounding.  Obviously, the more money you are able to put into it, the sooner you reach the point of financial independence.  In the past, many poor people were frugal, yet didn't have much at the end of their lives.  It seems this was a result of their low income.  Many of them still had something to pass on to their descendants, however little.

The magic of Mustachianism is the idea that we can actually achieve financial independence sooner and to ditch the idea that we "must" work at a career for our entire lives.  It's kind of a "duh" conclusion when you hear it, or at least when I hear it, but it is truly an earth shattering idea for many people.

For the hypothetical (hypothetical, because we have no example of this ever happening in history, nor does it appear at this time that it will happen anytime soon) idea of what would happen if a majority of people pursued and achieved FIRE, of course it would change society and the economy.  But I don't consider this something to be afraid of.  Socially, people would have more free time and with more free time comes a flowering of creativity.  People are going to do *something* with their time. 

What would I do?  Probably return to many of my interests as a child and return to an exploration mode.  There would be no limit to what I would delve into.  If I wanted to try to see how well an Earthship home design would work in my climate, I'd have at it.  If I wanted to try pottery, I'd do it.  If I wanted to set up a green house and try to replicate how plants would grow on a space station, I'd do it and pass on my findings.  Or if I wanted to grow all my own food for my family like Markham does, I'd do it. 

http://www.markhamfarm.com/index.php?option=com_content&view=article&id=46&Itemid=27

Can you imagine a large population of people released from the strictures and regimentation of society?  It would be a creativity boom.  How many would-be philosophers would get into it?  How many artists?  How many inventors? 

The economy will adjust.  All the economy is, at its core, are people trading their services or production.  That's it.  The rest are details of what's "fair", who get's what, who can and cannot produce what, etc.  It can go to either extreme of no control, to very strict control.  But people and their production and services, who ARE the economy, will adjust. 

I think it'll be good.  Of course, there will be growing pains.

But will this ever happen?

Let sites like these go forth and multiply and inform people all over.  Let the movement grow.

I don't think it will happen in a flash.  It'll just happen.

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Re: is mustachiansim really special?
« Reply #32 on: March 06, 2012, 03:32:19 PM »
If you look at how most politicians got their fortunes, it was indeed usually some combination of inheritance, nepotism, corruption, and unethical business practices.

You forgot the majority of politicians with ethical business practices. Take off the tin foil hat.

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Re: is mustachiansim really special?
« Reply #33 on: March 06, 2012, 04:01:11 PM »
Standard of living?  Since when is that correlated with national productivity?  The whole point of capitalism is that wealth accrues to the people who have the most money and do the least work.  Are you suggesting we bin the whole Invisible Hand ideal?  Are you a raging Bolshevik in pink pajamas?

Your insinuation that a rising tide floats all boats is dangerously subversive.

LMFAO!  I honestly have no idea to what extent you are being sarcastic and to what extent you are serious (if any).

If national productivity didn't raise standard of living, seriously, what the hell is the point?  Can you even imagine politicians and economists saying to the American middle class: "work hard and buy stuff - it won't benefit you in anyway, but it will generate even more wealth for people who have literally no use for it!"
I was saying that further increases in productivity don't necessarily translate to higher standard of living for most people.  I don't think there is any question that capitalism accelerates the improvement of living conditions of a developing nation.  The free market system partially built the infrastructure which fosters the wealth we do have.  Government contributed heavily to that as well, but the market made it happen faster and more efficiently.

But let me make one vital distinction: the "Invisible Hand" was a concept of Adam Smith regarding free markets.  Free markets do not imply capitalism, nor vice versa.  Adam Smith used the term "market" more like an actual market: a bunch of small independent businesses competing with each other.  He explained that in order to have efficient markets you need to have things like perfect competition and perfect consumer information.  Capitalism, and its propensity for buying out rivals, undermines the free market.  Corporations in particular, which could not even exist without government sanctioned charter, represent the opposite of a truly free market.  Without government intervention to enforce ethical and honest advertising, there is no perfect information.

And just to be clear, communism proposes that the government control all economic transactions and all of the means of production.  I am not suggesting that at all.  I believe in the free market.  I just recognize that laissez-faire capitalism, in the absence of government regulation, will inherently corrupt the market so that it is no longer free.

A rising tide is supposed to float all boats, at least in theory.  That is the idea behind Reaganomics and the trickle down theory.  Obviously that is not what has been happening, which means we are doing something wrong.

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I would even go so far as to suggest that the vast majority of our country's employees contribute nothing meaningful to society.  Look around, forum lurkers, you know who you are.

lol, ok, again... um...
well, all I was saying to begin with is that any employee who doesn't contribute anything meaningful can cut back on work hours and no one suffers for it.

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I see I should have been more clear up front.  I didn't mean consumerist culture drives GDP, I meant consumerist culture motivates people to continue working far longer than necessary to service their debt.

And those of us with capital to lend benefit from that tragedy.  Yes, I'm exploiting my fellow man for personal profit.

Well, yeah, I guess that is true.  But like you said earlier, in some cases a loan of capital (like to a start-up business) can result in real wealth generation.  In that case it is possible to skim some off the top (interest) without any consumer debt.  According to the Bible (and to true communists) that is still exploitation.  I don't have a definitive conclusion on that myself...

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A quick historical review of the method by which every great human society has ultimately collapsed makes your path pretty clear.  The rich and powerful amass more and more wealth and power in an ever shrinking minority while refusing to share either the wealth or the power with the majority.  The majority revolts and starts chopping off heads.  They build a new society and return to step one.
Wouldn't that be a good reason to build safe guards against massive inequality of wealth into the system?
That doesn't have to mean communist style direct forcible confiscation and redistribution of property, it could simply be a slightly progressive tax rate on earned income, a steeply progressive tax rate on unearned income, and substantial limits on the size of corporations. 

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What you're suggesting just slows down the process by allowing the rich and powerful a longer run before the great proletariat uprising.  Maybe you're secretly working for the Man and don't even know it.
Maybe.  My anarchist friends would probably agree with that.  I hope society will eventually opt out of the historical cycle you described.  I think some of the socialist democracies around the world are setting a decent example of what is possible.


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I'll have to think about this for a bit. 

I think the system is certainly helping some people; the rich minority who benefit from the toil of the debt slaves. 

I don't really think that a person who has a billion dollars actually benefits in any way what-so-ever by collecting a second billion.  So it isn't actually helping anyone.

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Would I mind harming this minority?  Fuck no, I'd burn their empires down in a fit of rage and not lose a wink of sleep over it.

I'm not sure that spreading Mustachianism to a majority of the working population is going to accomplish much in the way of change, though.  We'd all just learn to get by with less, and the rich would still be richer but the system would just be more stable.  Is that really the change I want to see in the world?
If we learn to get by with less - while not reducing our standard of living or our happiness levels, then (as you have been saying) people are doing less of the consumer spending that drives the economy.  If we have established that this consumer economy primarily serves the rich, then the rich have less transactions floating around to skim off of.   I think this is just the flip side of when we are told to go shopping to help the economy (where "the economy" really means "major corporations").  The children of the creator of Walmart, collectively, are the richest people in the world.  If people stop buying all the cheap crap Walmart has to offer, their fortune stops growing.  Since none of them have ever had to do an honest day of work in their lives, and since they are accustom to fancy lifestyles, they will begin spending down their fortunes.  Just an example...

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At this point I should probably confess that although my lifestyle is frugal, my end goals do include being mega-wealthy, like dynasty-building disgustingly filthy rich kind of wealthy.  I think it's a necessary prerequisite to enacting real change.

Sure, you feel that way now.  I have seen quite a few people on these boards who have already reached FI write something along the lines of "I calculated that if I had only worked 4 more years, I would have been a millionaire" - yet they never end up doing those last 4 years.  The reason is that, once you reach FI, there is no benefit to any additional money! 

The sort of money it would take to decide the outcome of elections or run your own nationwide TV ads or whatever "enacting real change" might mean, you aren't going to make it by being frugal.  Like I pointed out earlier (I think it was in this topic thread?), there is being "rich": the upper 1%, having a million or two in assets.  One can realistically achieve that through frugality plus a high-paying-but-still-middle-class job.
And then there is disgustingly-filthy rich: the top 0.001%, with billions in assets.  Nobody gets there via frugality.  The majority of people in that category got it all through inheritance.  The rest had some combination of nepotism, corruption or at least unethical business practices, blind luck, and occasionally some type of innovation.

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Re: is mustachiansim really special?
« Reply #34 on: March 06, 2012, 04:13:59 PM »
If you look at how most politicians got their fortunes, it was indeed usually some combination of inheritance, nepotism, corruption, and unethical business practices.

You forgot the majority of politicians with ethical business practices. Take off the tin foil hat.

Ha!  Are you acknowledging that politicians are often corrupt, yet insisting that they never engage in unethical business?
Just off the top of my head, without even doing any rudimentary internet based research, the Kennedy family with ties to the mafia and bootlegging, the Bush family with personal ties to the King of Saudi Arabia, and Cheney and Halliburton come to mind. 
It takes a lot of money, a lot of determination, and often a willingness to bend the rules or be a jerk to actually make it to the top, so even without examples, it stands to reason that the people who make it may have done things to get there that many would find... questionable.  I didn't even say "illegal".  I just said "unethical".
Many of the wealthiest people, politician or not, used unethical means to build their fortune.
Take Microsoft for example:  its history of success is a story of marketing, not of innovation.  Gates actually based some of his first operating systems (MS-BASIC) on existing free software, made minor changes, and then copyrighted it.  [edited due to errors pointed out below]
« Last Edit: March 07, 2012, 04:48:47 PM by Bakari »

Matt K

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Re: is mustachiansim really special?
« Reply #35 on: March 07, 2012, 06:58:08 AM »
Take Microsoft for example:  its history of success is a story of marketing, not of innovation.  Gates actually based his first operating systems on existing free, open-source software, made minor changes, and then patented it.

Um, "open source" as we understand it didn't exist in the 80s. Nor did software patents. Software was copyrighted, not patented - huge difference. I'm not being pedantic, they really are night and day different things.

Gates purchased QDOS, an operating system written by Tim Paterson. Bill Gates then sold licenses of MS-DOS to IBM for a huge profit. Not entirely squeaky clean from a "fair" perspective, but not theft in any way shape or form either. He had a requirement from IBM (who contacted him via his mother), bought something that fit that requirement, then sold it to IBM at a profit. Was he ethically required to tell Tim "Oh, by the way, I'm totally going to sell this for a huge profit, and if you had the connections I do (through my Mom), you could have skipped the middle man an done it yourself"?

On the other hand, if Bill had never purchased QDOS from Tim, Tim wouldn't have had the $50 000 Bill paid him. Nor would he have ended up as an early employee of Microsoft (let's hope he had the good sense to buy a few company stocks at the time).

http://inventors.about.com/od/computersoftware/a/Putting-Microsoft-On-The-Map.htm

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Re: is mustachiansim really special?
« Reply #36 on: March 07, 2012, 07:42:24 AM »
Wow, you guys really have hijacked this thread.

judgemebymyusername

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Re: is mustachiansim really special?
« Reply #37 on: March 07, 2012, 08:32:31 AM »

Many of the wealthiest people, politician or not, used unethical means to build their fortune.


This is such a broad statement with no factual basis and does nothing to motivate anyone. You should really read The Millionaire Next Door.

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Re: is mustachiansim really special?
« Reply #38 on: March 07, 2012, 09:16:14 AM »
Wow, you guys really have hijacked this thread.

Yeah, and I think we've lost sight of the big picture. The original question was, is Mustachianism any different from the American Dream? Thrown in was the idea that continuing to work and amass wealth would purchase influence over society and thereby effect greater positive change, opening up the possibility that Mustachianism was somehow inferior.

Mustachianism is but one way to the American Dream, if by the American Dream you mean the opportunity for success. However, the powers that be tirelessly work to co-opt the Dream, redefining success as excessive material prosperity. It is difficult to fight discontentment by doing what discontentment does. Part of Mustachianism is saying, "Enough!" and contenting ourselves with the vast wealth we already have. It is a re-taking of the Dream for ourselves, enabling us to define our own success and have financial freedom while we still have life and a planet left. It releases us from work-for-pay and work-for-stuff to pursue other Dreams. If your Dream is to change society, I suggest you work toward giving the sensible minority a powerful voice, rather than trying to become a powerful individual.

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Re: is mustachiansim really special?
« Reply #39 on: March 07, 2012, 09:29:20 AM »

Um, "open source" as we understand it didn't exist in the 80s. Nor did software patents. Software was copyrighted, not patented - huge difference. I'm not being pedantic, they really are night and day different things.

Gates purchased QDOS, an operating system written by Tim Paterson. Bill Gates then sold licenses of MS-DOS to IBM for a huge profit. Not entirely squeaky clean from a "fair" perspective, but not theft in any way shape or form either. He had a requirement from IBM (who contacted him via his mother), bought something that fit that requirement, then sold it to IBM at a profit. Was he ethically required to tell Tim "Oh, by the way, I'm totally going to sell this for a huge profit, and if you had the connections I do (through my Mom), you could have skipped the middle man an done it yourself"?

On the other hand, if Bill had never purchased QDOS from Tim, Tim wouldn't have had the $50 000 Bill paid him. Nor would he have ended up as an early employee of Microsoft (let's hope he had the good sense to buy a few company stocks at the time).

http://inventors.about.com/od/computersoftware/a/Putting-Microsoft-On-The-Map.htm

I got a few details wrong - I was thinking of Microsoft's version of BASIC (which they didn't pay anyone for), not DOS, and then also mixing in the story of Microsoft's version of UNIX, (which was licensed).
But I never said it was anything illegal, I said that his success had more to do with savvy business than with actual innovation, and that this often involved questionable ethics.  Although, the numerous law-suits in multiple countries would suggest these business practices were in fact often illegal as well...

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Re: is mustachiansim really special?
« Reply #40 on: March 07, 2012, 09:31:27 AM »
Wow, you guys really have hijacked this thread.

Does you guys mean Sol and I?  It was Sol's original question, how can he hijack his own thread? 
That term usually implies going off topic, but our long back and forth posts were all pertinent to the original question.

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Re: is mustachiansim really special?
« Reply #41 on: March 07, 2012, 09:44:55 AM »

Many of the wealthiest people, politician or not, used unethical means to build their fortune.


This is such a broad statement with no factual basis and does nothing to motivate anyone. You should really read The Millionaire Next Door.
Millionaires are not the wealthiest people.  There is as much difference between a multi-billionaire and a regular old millionaire as there is between a millionaire and me.

It would take a lot of words to fully qualify my claim, but one could skim through these:
http://www.neatorama.com/2008/07/09/10-richest-people-of-all-time-and-how-they-made-their-fortunes/
http://www.askmen.com/top_10/entertainment/11_top_10_list.html
and then look up the history of, say, Walmart or Standard Oil, or the practices of the turn of the century mining towns, and the so-called "robber barron" railroad tycoons that make up the majority of the list.

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Re: is mustachiansim really special?
« Reply #42 on: March 07, 2012, 11:54:28 AM »
If we compared to the wealth of every member of this forum to the rest of the worlds population I think you'd find yourself in the top 1% of the world's earners, did you guys use evil to get there? Or where you lucky enough to not be born in some 3rd world country where there is no opportunity.

Some people are so busy looking at billionaires that they forget how wealthy they are compared to everyone else.

Just saying, wiping your ass with paper and drinking clean water is pretty freaking rare when you do the math on the 8 billion people on the planet.

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Re: is mustachiansim really special?
« Reply #43 on: March 07, 2012, 04:55:48 PM »
If we compared to the wealth of every member of this forum to the rest of the worlds population I think you'd find yourself in the top 1% of the world's earners, did you guys use evil to get there? Or where you lucky enough to not be born in some 3rd world country where there is no opportunity.

Some people are so busy looking at billionaires that they forget how wealthy they are compared to everyone else.

Just saying, wiping your ass with paper and drinking clean water is pretty freaking rare when you do the math on the 8 billion people on the planet.

I totally agree with everything you just said!

I think what I wrote before is being taken rather out of context. 
Sol said "If this is really the secret to joining the 1%, then I feel cheated.  I want to believe that the filthy rich are lucky, or corrupt, not average Americans who worked hard and lived beneath their means for 40 years." as well as, later on,
 "my end goals do include being mega-wealthy, like dynasty-building disgustingly filthy rich kind of wealthy" which is why I was contrasting the merely well-off and FI with multi-billionaires. 
Any middle class American who takes the MMM principals to heart could reach a nice comfortable FI/ER, and if they chose not to retire, could probably make it to the top 1% (although if everyone did it, it wouldn't be the top 1% anymore) but that isn't the same as the "disgustingly filthy rich knid of wealthy"

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Re: is mustachiansim really special?
« Reply #44 on: March 07, 2012, 05:09:16 PM »
I won't pretend to understand billionaires or how they got there.

But I do know we need billionaires.

Why do we need them?  Because they are the ones who spearhead stuff like this:

Space Ship One / Space Ship Two (space tourism and supply vehicles)

Paul Allen - Microsoft Billionaire
Richard Branson - Virgin Companies Billionaire


SpaceX / Tesla Motors (Rockets that can reach the Moon, Mars, and asteroids, will be supplying ISS for NASA soon; electric cars)

Elon Musk - Paypal Billionaire


Even some millionaires:

Bigelow Aerospace (building space stations in orbit)

Robert Bigelow - Budget Suites of America


These guys simply could not be players in these fields without a lot of money.  Elon Musk is a billionaire, but it's all sunk into his companies to finance their move forward.  Same with the others.

We might not understand them, we might not even like them.  But we do need them.