A rational argument to retire a little later - Comparative Advantage

[acroy]

A great, thought-provoking article.

http://thefinancebuff.com/early-retirement-and-comparative-advantage.html

Central, built in to Mustachianim is the willingness (or better, the desire) to DIY. But it ignores the fact that (in general) we suck at all trades besides our own. In reality, civilization relies upon the efficiency of an economy facilitated by specialization.

[Mr. Green]

The problem with that argument is that it mixes macro and micro economic scales to substantiate the claim and I think that's erroneous. In whole world, are there more efficient painters than me? Absolutely. Saying I should keep working to pay someone who is more efficient at it to paint my house while I'm more efficient at my job is the macro view. The problem with the macro view is it takes into consideration a whole bunch of variables that mean nothing to me because they are outside the scope of my life. The micro economic view says differently, depending on a bunch of other variables. Are you good at your job? Do you even like you job? Do you want to retire? There's a whole bunch of questions that have to be asked before you even get to the starting point of the argument in that article. If I hate my job it might be a moot point. If I can hate life at my job or hate life painting my own house I'm going to choose painting my own house if that means retiring earlier. Of course there are limits to my skills as an amateur. I'm not tearing down engine blocks any time soon. The article's argument does nothing to help me answer the question as to whether I, Mr. Green, should retire early. It applies generically to we, the aspiring early retirees.

[shotgunwilly]

The article makes me think of a question I've often had:

Who has an advantage in life? A person that is good at everything but not GREAT at one thing, or a person that is truly great at one thing and not good at anything else?

[EricL]

 A rational argument, yes. But based on the assumption retiring early is mostly to do BS chores around a stereo typical suburban house.  If that's the case then he's right. Don't retire early.  Don't retire ever.

 But everybody else wants to do stuff like:
– Pursue artistic interests
– Start their own business
– Go surfing/hunting/fishing/bicycle riding every day
– Raise their children proper
– Free themselves of the rat race and/or their cubicle and/or boss
– Read the library
– Travel the world
– Raise a zombie army to bend the mortal world to their beneficent will

 I don't think the author quite gets it.

[forummm]

I also value doing different things instead of the same thing all the time (like my job). So that shifts the equation a bit. It's not purely a dollars and time tradeoff question.

[ooeei]

It's rational if you assume that your goal in life is to do the least amount of work as efficiently as possible.

Then again, it doesn't take into account that most people can't just go do their job for 2 hours and get paid so they can pay the painter to do their bedroom.  For many jobs the minimum requirement is 40 hours a week.  If you've saved up enough to ER, 40 hours a week is overkill for what you need and is restricting your time rather than freeing it up.  The "efficiency" is realized in the excess money you receive, which you already have enough of. 

[CanuckExpat]

Also being discussed here: http://forum.mrmoneymustache.com/mustachianism-around-the-web/early-retirement-and-opportunity-cost

[fattest_foot]

The article also points to lots of one off jobs.

Most people aren't retiring early just so they can paint their house...every single day. You paint it and you're good for a few years.

Car maintenance? Comes up pretty infrequently.

Lawn care? We're talking at best an hour a week unless you're really into gardening, in which case you'd prefer to make the tradeoff (even if you're not good at it).

Really, the article only applies if you're planning on retiring to start your own small business, and it's one in which you're terrible at. Everything else is so infrequent that it's inconsequential. And I definitely agree that it's trying to equate macro-economic principals to individuals; because more than likely, your career isn't in the thing that you're best at. It's just in the thing you decided to specialize in. If you really wanted to maximize comparative advantage, we'd need a completely communistic economy with governmental control over employment.