Author Topic: What if everyone lived the Mustachian lifestyle?  (Read 12550 times)

Chumley

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What if everyone lived the Mustachian lifestyle?
« on: December 03, 2013, 05:08:18 PM »
Hi all,

I'm new to the site and am really loving the tips and overall philosphy. It's already encouraged me to make some serious changes in my lifestyle (and I thought I was already pretty frugal). However, while pondering the implications of increased frugality, it became evident to me that the world economy is largely based on consumerism. What do you guys think the world would look like if everyone lived the type of lifestyle advocated here?

Just one idea off the top of my head:

- No more cars. Since individuals/families don't buy new cars anymore, there is no longer enough demand to support the auto industry and it would collapse (causing a loss of millions of jobs and billions (trillions?) of dollars). Granted, businesses and rental companies may still buy new vehicles, but this would only support a small fraction of the current industry. Eventually, all the old cars would stop running and we would be left with a car-less society. This in turn would have massive impilcations for innumerable other sectors of the economy. For instance, consider the extent to which American cities are designed around the assumption that most people will use cars as their primary mode of transportation. People would flood into the cities from the suburbs, causing overcrowding and perhaps food and housing shortages. From there the effects spiral outward (e.g., what happens to the oil industry, and the worldwide shipping and transportation industries?).

This same logic applies to almost every industry in the world. The inevitable outcome would seem to be massive economic collapse.

Anyway, I'm intersted in hearing everyone else's thoughts. Maybe I'm just being pessimistic ;).

Eric

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #1 on: December 03, 2013, 05:39:58 PM »
Human sacrifice, dogs and cats living together, mass hysteria!

http://www.youtube.com/watch?v=O3ZOKDmorj0

Chuck

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #2 on: December 03, 2013, 05:47:29 PM »
It's a dirty little not-so-secret that if everyone practiced the frugality espoused here, then the entire concept of ER would collapse.

ER is obtained through the purchase of investments that can only be afforded by spending excess income. Excess income would not exist if excess spending ceased. The end of consumerism would reduce everyone's wages a horrific amount, which would return us right back to "work til you drop."

 

the fixer

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #3 on: December 03, 2013, 05:49:08 PM »
http://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/

I'm pretty sure this has been covered on the forum too. It's still a fun topic...

My view is close to MMM's, with the following revisions:
  • Not everyone is going to become Mustachian overnight. If it's a gradual enough cultural shift, the economy will be able to adapt without significant disruption. If people did suddenly become super-frugal all at once, it would be a shock, a recession, then a readjustment over a decade or so.
  • Part of the problem may be that the way we measure how "good" our civilization is, through economic indicators like GDP, is fundamentally flawed. All the big economic indicators value a subsistence society worse than one with extensive specialization of labor. Another way to say that is: the economy wants you to do exactly one thing and be lazy regarding every other aspect of life, paying someone else to do it for you. That doesn't sound to me like a very fun way to live my life. I believe we're using the wrong metrics to describe how well off countries are, which means these "what would happen to the economy if..." discussions are missing a huge part of the sociological benefits of Mustachianism if these values were more widespread.
So what do I think the world would look like?
  • Greater sense of civic duty, helping others, willingness to pay taxes in exchange for public services, and participation in government (this comes from people worrying more about people than about their own money)
  • Greater sense of culture and community (from the FI having more free time)
  • Reduced inequality and poverty perhaps?
I don't really care as much about what the economy looks like in such a world.

the fixer

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #4 on: December 03, 2013, 05:57:23 PM »
It's a dirty little not-so-secret that if everyone practiced the frugality espoused here, then the entire concept of ER would collapse.

ER is obtained through the purchase of investments that can only be afforded by spending excess income. Excess income would not exist if excess spending ceased. The end of consumerism would reduce everyone's wages a horrific amount, which would return us right back to "work til you drop."
I don't believe that, at least not via that mechanism. A larger retired population would still produce a large amount of consumer spending compared to its income. At the same time, the labor supply is smaller because all these FI people don't want full-time jobs, and even those with just a little FU money will be less willing to put up with poor working conditions or poor compensation. That produces an upward pressure on wages.

I think a large contributor to high unemployment right now is coming from the opposite effect: all these old people can't afford to retire so they're taking jobs away from the 20-somethings. This also harms productivity: "you know, Bob, that will only make someone work just hard enough not to get fired."

smedleyb

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #5 on: December 03, 2013, 05:58:07 PM »
Mustachianism seems to me a modern recapitulation of what sociologist Max Weber referred to as the "Protestant Ethic," i.e., that fluid mixture of frugality and the virtuous belief in the the power of invested capital.  Thus, not only is Mustachianism compatible with our modern conception of capitalism, it may very well be it's purest, most forceful expression. 

As ar as the automobile analogy is concerned, the history of humanity is littered with the corpses of dead industries, yet the world keeps marching on.

Chuck

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #6 on: December 03, 2013, 06:15:06 PM »
Quote
I don't believe that, at least not via that mechanism. A larger retired population would still produce a large amount of consumer spending compared to its income. At the same time, the labor supply is smaller because all these FI people don't want full-time jobs, and even those with just a little FU money will be less willing to put up with poor working conditions or poor compensation. That produces an upward pressure on wages.
The large retired population you reference would not exist, as the mechanisms that exist to support retired people would not exist, at least not in the magnitude they currently do. Equities would be much less valuable in a Mustachian world, and their rate of growth would be far below the current average of 8%. Granted, inflation would also be reduced (perhaps even stuck at current levels indefinitely...)

Quote
I think a large contributor to high unemployment right now is coming from the opposite effect: all these old people can't afford to retire so they're taking jobs away from the 20-somethings. This also harms productivity: "you know, Bob, that will only make someone work just hard enough not to get fired."
How does eliminating 60% of the economy allow these old people to retire? In a world where everyone consumes a fraction, and relies upon their own labor for many services as well, what will replace those lost jobs? Unemployment is not a form of retirement.

In a Mustachian World, productivity gains are pointless, because the need for products is reduced to a mere fraction.

Even if we assume that the transition is gradual, the end result is the same: Everyone gets paid much less, equities return a much lower rate, and far, far fewer can afford to ER.

the fixer

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #7 on: December 03, 2013, 06:33:06 PM »
My argument is only that a world with a sizable FI population should be a stable economic system. The dynamics of how the transition would work are much more complex than I'm qualified to debate (this sounds like an economics PhD thesis topic to me).

In a Mustachian World, productivity gains are pointless, because the need for products is reduced to a mere fraction.
Ah, this reminds me of another common viewpoint that I think is a serious misconception. Not all products are consumed, at least some are investments that produce a tangible return. Such products essentially have double the economic impact of those which are just consumed for irrational reasons.

For instance, if I buy a bike and then immediately throw it off the nearest cliff, the economic transaction results in the bike's seller making some profit off the sale, but I get no measurable value from it. If I instead ride that bike every day instead of driving a car, I as the buyer also get a bunch of value from the transaction and it turns out to be mutually beneficial. As a Mustachian that money I save gets invested, so even our flawed economic measurements capture the improved outcome. Most consumer purchases today are closer in outcome to the former example (especially with bikes: they are bought, ridden 2-3 times, and sit in a garage or locked in the rain until they're trash). What if everyone was actually getting value out of every purchase they made, and what if manufacturers/retailers switched to building more products that allowed purchasers to achieve more value?

Chumley

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #8 on: December 03, 2013, 06:39:03 PM »
http://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/

I'm pretty sure this has been covered on the forum too. It's still a fun topic...

My view is close to MMM's, with the following revisions:
  • Not everyone is going to become Mustachian overnight. If it's a gradual enough cultural shift, the economy will be able to adapt without significant disruption. If people did suddenly become super-frugal all at once, it would be a shock, a recession, then a readjustment over a decade or so.
  • Part of the problem may be that the way we measure how "good" our civilization is, through economic indicators like GDP, is fundamentally flawed. All the big economic indicators value a subsistence society worse than one with extensive specialization of labor. Another way to say that is: the economy wants you to do exactly one thing and be lazy regarding every other aspect of life, paying someone else to do it for you. That doesn't sound to me like a very fun way to live my life. I believe we're using the wrong metrics to describe how well off countries are, which means these "what would happen to the economy if..." discussions are missing a huge part of the sociological benefits of Mustachianism if these values were more widespread.
So what do I think the world would look like?
  • Greater sense of civic duty, helping others, willingness to pay taxes in exchange for public services, and participation in government (this comes from people worrying more about people than about their own money)
  • Greater sense of culture and community (from the FI having more free time)
  • Reduced inequality and poverty perhaps?
I don't really care as much about what the economy looks like in such a world.

Thanks for the link fixer, it was an interesting read. I realize that it's absurd to think that a majority of the population (let alone everyone) will ever live this type of lifestyle - I just find it an interesting thought experiment. I also think that if it were to happen, it would probably be beneficial to society in the long run. But we would almost certainly have to revert back to a much more primative lifestyle in many ways. Our society would eventually become more like that of Bhutan, where people live simply and do not value expensive consumer goods, but are probably happier overall.

I think the crux of Chuck's argument is also true. In modern, developed consumerist societies, there is an implicit trade-off: the society will pay you a high wage (relative to undeveloped countries, even the U.S. minumum wage is high), and in exchange you will spend that wage on expensive consumer goods and services. If you find ways to live cheaply and save most of your money, you are basically gaming the system. Therefore, if this behavior becomes widespread, that system will collapse.

2527

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #9 on: December 03, 2013, 07:00:49 PM »
There wouldn't be any dry cleaners.

okiedoke

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #10 on: December 03, 2013, 07:11:49 PM »
The truth, by my lights, is that real mustachianism is parasitic -- i.e., it depends upon on a healthy economy (read: consumer culture, to some degree,  driving equity returns as we know it).  Where do you think that 4% return comes from?  If everyone did radically scale back their purchases, even if they only "gradually" shifted that way (which is a total dodge), profits, and therefore dividends and equity prices, would tumble, and we'd likely enter a deflationary spiral.

I don't mean "parasitic" in a pejorative sense -- the dogs and cats in your home are parasites, and we love our pets no less because they rely on their hosts for their existence and wouldn't likely survive otherwise.  To put it another way, it's similar to the fact that if everyone relied on passive index investing, index investing would be far from optimal and lose most if not all of its utility -- indexing depends on a material percentage of traders/investors actively aggregating information and acting on that info, making the market a relatively efficient and providing relatively accurate prices. 

I truly believe this -- but I don't care, frankly.   That's because (1) it's certainly not unethical (unless you think in some kantian way that you can only do something everyone else could, would, and should do) and (2) I know darn well that most people aren't going to become mustachians, and folks aren't going to try to stop beating the market.  I'm at peace with being a parasite, in other words. 
« Last Edit: December 03, 2013, 07:15:40 PM by okiedoke »

Luck better Skill

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #11 on: December 04, 2013, 09:49:03 AM »
  Couple of thoughts here.  The car industry can only collapse if cars stop being used, period.  If car sales fall the industry will shrink, adapt, perhaps become better.  I would expect to see less SCV and luxury vehicles.  More economy cars and work trucks in production.  But MMM still uses a car at times.  Not every person can make the move at the same time so some people need new cars.  That volume may drop which in turn could cause the price of new cars to fall.  In the end an equilibrium would be reached with some new cars entering the economy every year to become future old cars.
  The economy would not burn but change.  Hundreds and thousands of years ago no one could have imagined the feudal system could ever be replaced.  Most people today would not recognize the economy of a few hundred years ago before a consumer driven economy.  One of the key points under MMM is not so much retirement but working at what you enjoy.  MMM still works today.  He does different work, and may work less hours then before but he still works.  And anyone looking at MMM lifestyle better realize it is based on DIY.  That means several hours every week to maintain the lifestyle. 

odput

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #12 on: December 04, 2013, 10:45:59 AM »
The truth, by my lights, is that real mustachianism is parasitic -- i.e., it depends upon on a healthy economy (read: consumer culture, to some degree,  driving equity returns as we know it).  Where do you think that 4% return comes from?  If everyone did radically scale back their purchases, even if they only "gradually" shifted that way (which is a total dodge), profits, and therefore dividends and equity prices, would tumble, and we'd likely enter a deflationary spiral.

The 4% currently comes from consumer culture.  If everyone gradually shifted to a mustachian lifestyle, consumer stocks and staples would decline, and probably 80% of consumer companies would go out of business due to the smaller market.  This would allow the surviving companies to pick up the slack i.e. more market share of a smaller market.  Maybe the same dollar amount, maybe less, who knows?  There would probably be a small decline, but in the end, the free markets would find the balance point.  The rest of the stock market would be driven by new innovation.  This is where the 4% (or more) would then come from.  The economy would mostly produce the things it needs and things that improve humanity, and less of the ridiculous extras. 

We can argue for years about deflation and its true effects, but I will say that I don't suspect deflation would actually be an issue.  The economy as a whole would probably shrink as a total number of dollars, euros, rupees, whatever, but IMNSHO "a growing economy is a healthy economy" is a fundamentally flawed concept anyway.  If everyone was focused on spending their money efficiently on what actually matters to them, nobody would give a flying fuck about if the economy grew 3% this year or not.

Integrate

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #13 on: December 04, 2013, 10:58:16 AM »
There's a lot of interesting speculation in this thread. I think any doomsday scenario is a bit silly. It's hard to predict the future though since we have nothing like this to look at. The closest I can think would be the increase of women entering the workforce as the kind of opposite, but that has it's own differences too.

I think it's interesting that people will argue a large exodus from the workforce will drive down wages (early retirement) and we also have people argue that illegal immigration drives down wages from increase in labor supply. Just shows how easy it is to make a reasonable sounding argument with armchair economics.

The notion that productivity gains become worthless is quite odd. Even MMM himself consumes quite a bit and he would benefit from any productivity gain.

The economy is essentially a method of allocating a fixed amount of resources. The demand determines how those resources are allocated in a free market system. If we remove consumerism at a cultural level, some level of resource shifting will occur. Technology would be less focused on the next iPhone than how to produce crops ecologically, for example.

clutchy

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #14 on: December 04, 2013, 11:52:11 AM »
the economy would implode and then rebuild itself on a sound footing. 

mustachianism works because of the excess of those around us.  If the concentration becomes too high you'll run into problems... 

Lots of people moving to Denver/Longmont would be an interesting case study though.

clutchy

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #15 on: December 04, 2013, 11:59:51 AM »
Quote
I don't believe that, at least not via that mechanism. A larger retired population would still produce a large amount of consumer spending compared to its income. At the same time, the labor supply is smaller because all these FI people don't want full-time jobs, and even those with just a little FU money will be less willing to put up with poor working conditions or poor compensation. That produces an upward pressure on wages.
The large retired population you reference would not exist, as the mechanisms that exist to support retired people would not exist, at least not in the magnitude they currently do. Equities would be much less valuable in a Mustachian world, and their rate of growth would be far below the current average of 8%. Granted, inflation would also be reduced (perhaps even stuck at current levels indefinitely...)

Quote
I think a large contributor to high unemployment right now is coming from the opposite effect: all these old people can't afford to retire so they're taking jobs away from the 20-somethings. This also harms productivity: "you know, Bob, that will only make someone work just hard enough not to get fired."
How does eliminating 60% of the economy allow these old people to retire? In a world where everyone consumes a fraction, and relies upon their own labor for many services as well, what will replace those lost jobs? Unemployment is not a form of retirement.

In a Mustachian World, productivity gains are pointless, because the need for products is reduced to a mere fraction.

Even if we assume that the transition is gradual, the end result is the same: Everyone gets paid much less, equities return a much lower rate, and far, far fewer can afford to ER.
 

quoted for truth.  Regardless of how you feel about what you do and how others behave mustachianism does have a predatory ideology and works because of others' excess. 

if everyone practiced this it would cause a massive upheaval.  The economy would collapse and return stronger(maybe/maybe not).


The thread on ethics of ER https://forum.mrmoneymustache.com/welcome-to-the-forum/ethics-of-er/ really opened my eyes as to who was actually practicing this philosophy and while I appreciate many elements of mustachianism I now consider this community to be somewhat immoral as a whole.  Also discouraging in general are the high levels of education coupled with dodgy ethics.

Eric

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #16 on: December 04, 2013, 01:01:15 PM »
The thread on ethics of ER https://forum.mrmoneymustache.com/welcome-to-the-forum/ethics-of-er/ really opened my eyes as to who was actually practicing this philosophy and while I appreciate many elements of mustachianism I now consider this community to be somewhat immoral as a whole.  Also discouraging in general are the high levels of education coupled with dodgy ethics.

Hahhahaahahhaa.  Thank you for that!  A thought experiment turns a whole group of people immoral!


clutchy

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #17 on: December 04, 2013, 01:08:37 PM »
The thread on ethics of ER https://forum.mrmoneymustache.com/welcome-to-the-forum/ethics-of-er/ really opened my eyes as to who was actually practicing this philosophy and while I appreciate many elements of mustachianism I now consider this community to be somewhat immoral as a whole.  Also discouraging in general are the high levels of education coupled with dodgy ethics.

Hahhahaahahhaa.  Thank you for that!  A thought experiment turns a whole group of people immoral!

you're welcome :)

odput

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #18 on: December 04, 2013, 01:18:04 PM »
Regardless of how you feel about what you do and how others behave mustachianism does have a predatory ideology and works because of others' excess. 

if everyone practiced this it would cause a massive upheaval.  The economy would collapse and return stronger(maybe/maybe not).

Mustachianism works effectively now because of others excess, but this is hardly predatory, more opportunistic.  As the world shifted towards a mustachian lifestyle, the investment gains would come from other venues like advances in technology and medicine.

If everyone instantly converted then yes there would be a massive upheaval then rebuilding, but in a gradual shift the laws of supply and demand should take care of this.  Companies would no longer produce the things that are no longer in demand (think iPads, luxury cars, etc.) and companies that are 0 value added would go out of business (think cable companies and the like), and all the capital that was going to these companies would go toward more productive enterprises.

Albert

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #19 on: December 04, 2013, 01:34:25 PM »

Mustachianism works effectively now because of others excess, but this is hardly predatory, more opportunistic.  As the world shifted towards a mustachian lifestyle, the investment gains would come from other venues like advances in technology and medicine.

Would there be any advances if no one was willing to spend money on them?

clutchy

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #20 on: December 04, 2013, 01:42:00 PM »
Regardless of how you feel about what you do and how others behave mustachianism does have a predatory ideology and works because of others' excess. 

if everyone practiced this it would cause a massive upheaval.  The economy would collapse and return stronger(maybe/maybe not).

Mustachianism works effectively now because of others excess, but this is hardly predatory, more opportunistic.  As the world shifted towards a mustachian lifestyle, the investment gains would come from other venues like advances in technology and medicine.

If everyone instantly converted then yes there would be a massive upheaval then rebuilding, but in a gradual shift the laws of supply and demand should take care of this.  Companies would no longer produce the things that are no longer in demand (think iPads, luxury cars, etc.) and companies that are 0 value added would go out of business (think cable companies and the like), and all the capital that was going to these companies would go toward more productive enterprises.

predatory/opportunistic  choose your poison.  Regardless of how it is described the views espoused here in sufficient practice would rend the economy.  Now I'm not saying the economy isn't bloated or that people spend their money on dumb stuff... BUT 70% of our economy is consumption based.  Lets say that we reduce that 70% to 20% or even 30%.  What replaces that economic activity?  What replaces 50% or 40% of the US economy?

the thought experiment becomes pretty uncomfortable pretty quickly.  Most of us aren't in primary economic sectors and would quickly become redundant. 

which brings me back to my original point.  Mustachianism is predatory in nature.  It functions in a society of excess.


Hey Albert what part of Switzerland are you in?  I have cousins in Blonay.

Albert

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #21 on: December 04, 2013, 01:51:57 PM »
Hey Albert what part of Switzerland are you in?  I have cousins in Blonay.

I had to look up where that is… I live in the North, quite close to the German border.

Luck better Skill

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #22 on: December 04, 2013, 01:54:55 PM »
The thread on ethics of ER https://forum.mrmoneymustache.com/welcome-to-the-forum/ethics-of-er/ really opened my eyes as to who was actually practicing this philosophy and while I appreciate many elements of mustachianism I now consider this community to be somewhat immoral as a whole.  Also discouraging in general are the high levels of education coupled with dodgy ethics.

Hahhahaahahhaa.  Thank you for that!  A thought experiment turns a whole group of people immoral!

you're welcome :)

Having not read the ethic thread listed nor planning to read the 5 pages I would be interested in what you see as immoral?  Or explaining what see as moral/ethical in another thread.

clutchy

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #23 on: December 04, 2013, 02:00:14 PM »
Hey Albert what part of Switzerland are you in?  I have cousins in Blonay.

I had to look up where that is… I live in the North, quite close to the German border.

French meet German.

beautiful country you have.

Luck better Skill

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #24 on: December 04, 2013, 02:04:51 PM »

predatory/opportunistic  choose your poison.  Regardless of how it is described the views espoused here in sufficient practice would rend the economy.  Now I'm not saying the economy isn't bloated or that people spend their money on dumb stuff... BUT 70% of our economy is consumption based.  Lets say that we reduce that 70% to 20% or even 30%.  What replaces that economic activity?  What replaces 50% or 40% of the US economy?

the thought experiment becomes pretty uncomfortable pretty quickly.  Most of us aren't in primary economic sectors and would quickly become redundant. 

which brings me back to my original point.  Mustachianism is predatory in nature.  It functions in a society of excess.

  one possible outcome is people would work less to meet their needs.  Spending the remaining time raising families, reading, helping others, hobbies, research.

  If everyone practiced Mustachianism then I could see less people reaching ER but more reaching FI.  Possible we go to a 20 hour work week as we are not buying the consumer trinkets. 

  As you say many would have to retrain to primary economic sectors.  Would that be bad?  I think not.  Do we really need the number of accountants and lawyers we have?  Would it cause change or upheaval?  Yes.  Does not mean the outcome must be bad.
« Last Edit: December 04, 2013, 02:06:54 PM by Luck better Skill »

Albert

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #25 on: December 04, 2013, 02:08:49 PM »

  As you say many would have to retrain to primary economic sectors.  Would that be bad?  I think not. Do we really need the number of accountants and lawyers we have?  Would it cause change or upheaval?  Yes.  Does mean the outcome must be bad.

It would. Primary sectors are increasingly automated or outsourced to the cheapest possible locality. Long term probably just automated.

clutchy

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #26 on: December 04, 2013, 02:10:00 PM »
The thread on ethics of ER https://forum.mrmoneymustache.com/welcome-to-the-forum/ethics-of-er/ really opened my eyes as to who was actually practicing this philosophy and while I appreciate many elements of mustachianism I now consider this community to be somewhat immoral as a whole.  Also discouraging in general are the high levels of education coupled with dodgy ethics.

Hahhahaahahhaa.  Thank you for that!  A thought experiment turns a whole group of people immoral!

you're welcome :)

Having not read the ethic thread listed nor planning to read the 5 pages I would be interested in what you see as immoral?  Or explaining what see as moral/ethical in another thread.

On the surface; 42% of early retirees who voted in that thread would accept obvious welfare programs to sustain themselves even though they don't need them and are not intended for them.  42% of self selected people on this site would take from the poor.  Take programs that are not intended for people who have assets to sustain themselves.  This site on its face is generally concerned with social responsibility, with being a good steward and reducing consumption but when it comes down to it that appears to be a farce.  Some of those programs have waiting lists.  To accept them is despicable, and puts a boot in the face of the downtrodden.

I consider that to be immoral. 

clutchy

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #27 on: December 04, 2013, 02:17:44 PM »

predatory/opportunistic  choose your poison.  Regardless of how it is described the views espoused here in sufficient practice would rend the economy.  Now I'm not saying the economy isn't bloated or that people spend their money on dumb stuff... BUT 70% of our economy is consumption based.  Lets say that we reduce that 70% to 20% or even 30%.  What replaces that economic activity?  What replaces 50% or 40% of the US economy?

the thought experiment becomes pretty uncomfortable pretty quickly.  Most of us aren't in primary economic sectors and would quickly become redundant. 

which brings me back to my original point.  Mustachianism is predatory in nature.  It functions in a society of excess.

  one possible outcome is people would work less to meet their needs.  Spending the remaining time raising families, reading, helping others, hobbies, research.

  If everyone practiced Mustachianism then I could see less people reaching ER but more reaching FI.  Possible we go to a 20 hour work week as we are not buying the consumer trinkets. 

  As you say many would have to retrain to primary economic sectors.  Would that be bad?  I think not.  Do we really need the number of accountants and lawyers we have?  Would it cause change or upheaval?  Yes.  Does not mean the outcome must be bad.

go back and look at the optimism from 50-60 years ago.  They thought we'd be working 10 hour weeks.  Our needs would generally be met...  what has actually happened?  The wealth has climbed into the hands of a few and people work more hours with more people have 2 person incomes. 

the problem you are discussing is a political one. 


Just as an aside; I do a lot of work in agriculture(primary economic driver) on the finance and accounting side.  In the 6 years I've been active in this Industry I've seen more automation and more jobs being lost.  What used to be a heavily man hour intensive work is now almost fully automated.  I'm not saying this is necessarily a bad thing but it does drive wealth concentration.   

I don't really have any answers though. 

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #28 on: December 04, 2013, 02:29:17 PM »
Spending, GDP, stuff, jobs, whatever you want to include as what could be lost is irrelevant......because you it doesn't solve for the deficiency of human nature.  We are not and have never been an equitable or compassionate lot. There will always be some form of haves and have nots....so eliminating consumerism will just shift to some other form.   

In the most draconian sense we you don't have to look to far back in history to see what this would look like.....landowners, serfs, and slaves.

Or, You could go farther back to caveman era when we were nothing more than slightly evolved animals - even then the strong ate and the weak did not. 

For me, I would rather have a spendy world that supports a 4% SWR but creates a bunch of wageslaves than the alternative of having to trade food for labor or worse take from those that are weaker and defend from those that are stronger.


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Re: What if everyone lived the Mustachian lifestyle?
« Reply #29 on: December 04, 2013, 02:30:43 PM »

predatory/opportunistic  choose your poison.  Regardless of how it is described the views espoused here in sufficient practice would rend the economy.  Now I'm not saying the economy isn't bloated or that people spend their money on dumb stuff... BUT 70% of our economy is consumption based.  Lets say that we reduce that 70% to 20% or even 30%.  What replaces that economic activity?  What replaces 50% or 40% of the US economy?

the thought experiment becomes pretty uncomfortable pretty quickly.  Most of us aren't in primary economic sectors and would quickly become redundant. 

which brings me back to my original point.  Mustachianism is predatory in nature.  It functions in a society of excess.

  one possible outcome is people would work less to meet their needs.  Spending the remaining time raising families, reading, helping others, hobbies, research.

  If everyone practiced Mustachianism then I could see less people reaching ER but more reaching FI.  Possible we go to a 20 hour work week as we are not buying the consumer trinkets. 

  As you say many would have to retrain to primary economic sectors.  Would that be bad?  I think not.  Do we really need the number of accountants and lawyers we have?  Would it cause change or upheaval?  Yes.  Does not mean the outcome must be bad.

go back and look at the optimism from 50-60 years ago.  They thought we'd be working 10 hour weeks.  Our needs would generally be met...  what has actually happened?  The wealth has climbed into the hands of a few and people work more hours with more people have 2 person incomes. 

the problem you are discussing is a political one. 


Just as an aside; I do a lot of work in agriculture(primary economic driver) on the finance and accounting side.  In the 6 years I've been active in this Industry I've seen more automation and more jobs being lost.  What used to be a heavily man hour intensive work is now almost fully automated.  I'm not saying this is necessarily a bad thing but it does drive wealth concentration.   

I don't really have any answers though.

  Yes but 50 to 60 years ago only the wealthy 5% lived in 2000+ square feet homes.  A brick blue collar worker home in 1950 or 60's was 800 to 1000 square feet.  So our standard of living increased our working hours went back up.  MMM only works 20 hours a week to have a standard of living blue collar workers would dream of 60 years ago.

  The agriculture industry is an interesting change.  I expect it will imploded.  It works on two assumption, one- petroleum will always be cheap, two- that overuse of antibiotics will not create resistance germs.  The Titanic was a better bet than both of those events being true.  In an MMM world agriculture farms would be smaller, more local, less of a environmental impact, less fuel consumption but more people needed. 

  Not to imply I have correct answers.  I look at the patterns in history.
« Last Edit: December 04, 2013, 02:32:58 PM by Luck better Skill »

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #30 on: December 04, 2013, 02:35:38 PM »
  Just for the record we are going through economic upheaval.  The real debate is are we at the end of the roller coaster ride or just the first big dip.  The credit age is now starting to pay the fiddler.  Detroit now in bankruptcy that payment is pennies on the dollar.  I think more will be pushed into a frugal lifestyle just out of changes in the economy.  Many young post how hard it is to get full time employment.  To me the consumer driven economy has killed its golden goose. 

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #31 on: December 04, 2013, 02:39:14 PM »

Mustachianism works effectively now because of others excess, but this is hardly predatory, more opportunistic.  As the world shifted towards a mustachian lifestyle, the investment gains would come from other venues like advances in technology and medicine.

Would there be any advances if no one was willing to spend money on them?

In a word: yes.

Mustachians still spend money on things that are important to them, and I haven't yet met someone who thought their own longevity wasn't important, so that takes care of medicine.

Technology is trickier because 90% (pulling this number out of my ass, but that's how it seems, someone feel free to put up the correct number if they know it or can find it) is consumer technology.  But again, people will spend money on useful things and free markets will do what they do: get rid of the useless products and develop newer, better, useful ones.

What replaces 50% or 40% of the US economy?

Who says we need to replace it?  As I mentioned earlier, I find economic growth being synonymous with economic health quite stupid.  If we are not concerned with economic growth, then investments will still return capital based on the new developments.

go back and look at the optimism from 50-60 years ago.  They thought we'd be working 10 hour weeks.  Our needs would generally be met...  what has actually happened?  The wealth has climbed into the hands of a few and people work more hours with more people have 2 person incomes. 

the problem you are discussing is a political one. 

There is a study from MIT (http://groups.csail.mit.edu/mac/users/rauch/worktime/) that concluded that due to productivity gains and technology, the average worker today needs only 11 hours to do the same amount of work as 40 hours of a 1950s worker, so in theory, we could be working 10 hour weeks if we so chose. 

The problem is actually one of marketing departments being smarter than most and convincing us to spend most of our money on their stuff rather than save it.

Wealth distribution (which has undoubtedly grown more one-sided leaning toward the rich) has nothing to do with this fact.

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #32 on: December 04, 2013, 02:44:00 PM »

On the surface; 42% of early retirees who voted in that thread would accept obvious welfare programs to sustain themselves even though they don't need them and are not intended for them.  42% of self selected people on this site would take from the poor.  Take programs that are not intended for people who have assets to sustain themselves.  This site on its face is generally concerned with social responsibility, with being a good steward and reducing consumption but when it comes down to it that appears to be a farce.  Some of those programs have waiting lists.  To accept them is despicable, and puts a boot in the face of the downtrodden.

I consider that to be immoral.

I reduced the reply.  I see your concern here.  Being this was a small sample group of the posters, and the question is broad/general compared to your well explained reasoning I am willing to give the doubt that many are not despicable. 

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #33 on: December 04, 2013, 02:49:10 PM »

On the surface; 42% of early retirees who voted in that thread would accept obvious welfare programs to sustain themselves even though they don't need them and are not intended for them.  42% of self selected people on this site would take from the poor.  Take programs that are not intended for people who have assets to sustain themselves.  This site on its face is generally concerned with social responsibility, with being a good steward and reducing consumption but when it comes down to it that appears to be a farce.  Some of those programs have waiting lists.  To accept them is despicable, and puts a boot in the face of the downtrodden.

I consider that to be immoral.

I reduced the reply.  I see your concern here.  Being this was a small sample group of the posters, and the question is broad/general compared to your well explained reasoning I am willing to give the doubt that many are not despicable.

I generally hope so; self selected groups do not a consensus make.  It is depressing though.

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #34 on: December 04, 2013, 02:50:41 PM »

Wealth distribution (which has undoubtedly grown more one-sided leaning toward the rich) has nothing to do with this fact.

I am not so sure of that.  Perhaps it was not researched but the history channel did a story on the wealthy families of England during the height of its power, 1800 to like 1890's as claimed over half the world wealth was controlled by those few families.  The king of the Persian empire controlled more wealth than all the rest of Europe and India combined.  Not that the wealth distribution is not lopsided, just history argues when it was the worst time.

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #35 on: December 04, 2013, 02:54:15 PM »
If there is no growth then the whole thing turns to zero sum game and for you to do better someone else has to do worse (or there should be a constantly diminishing number of humans). Do we really want to live in that kind of world?

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #36 on: December 04, 2013, 03:02:46 PM »
If there is no growth then the whole thing turns to zero sum game and for you to do better someone else has to do worse (or there should be a constantly diminishing number of humans).

Wealth is still created by taking natural resources and turning them into useful goods.  It only becomes a zero sum game once all the natural resources have been consumed (which at that point everyone is fucked anyways)

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #37 on: December 04, 2013, 03:07:14 PM »
If there is no growth then the whole thing turns to zero sum game and for you to do better someone else has to do worse (or there should be a constantly diminishing number of humans). Do we really want to live in that kind of world?

This isn't true when you account for personal preferences and gains from trade.

There's also no reason to think there would be no growth. There seems to be a weird assumption in this thread that Mustachian's don't buy anything at all ever. Go back and look at MMM's house and his detailed spending. There's still a lot of it.

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #38 on: December 04, 2013, 04:47:37 PM »
Interesting idea, something I've pondered occasionally.  For example, lots of us buy used clothing (and other items), especially for growing children.  If "everyone suddenly" became more frugal, those used items wouldn't be available.  People would buy smaller wardrobes for their children, and the items would be much more worn -- then probably passed around in families like my mom and my aunts did when we were kids.  The "used market" would shrink considerably. 

The restaurant industry would pretty much cease to exist.  People would have more time to cook at home, and they wouldn't want to spend the extra money on eating out.  Ditto for house cleaning services, lawn service, and many fix-it type places.  With a better diet and a little more exercise, the need for doctors and medicine might decrease.  With more parental involvement, schools would improve, though with reduced transportation we might see a return to neighborhood schools, with kids of all ages attending together. 

If everyone suddenly became frugal, it'd be kind of like a return to a previous age. 

- No more cars. Since individuals/families don't buy new cars anymore, there is no longer enough demand to support the auto industry and it would collapse
Disagree.  As you said, cars'd still be needed for work and so forth, and lots of us would still want a car occasionally for trips.  I suspect they'd still be available . . . but because the numbers would decrease, the cost would rise.  This might lead to an increase in rental options, or extended families might own cars together.  Or maybe we'd see a return to rail travel -- something more like Europe. 

  • Not everyone is going to become Mustachian overnight. If it's a gradual enough cultural shift, the economy will be able to adapt without significant disruption. If people did suddenly become super-frugal all at once, it would be a shock, a recession, then a readjustment over a decade or so.
Realistically, "everyone" would only become frugal if it were in reaction to some sort of crisis, so I think it'd probably happen fairly quickly -- my guess is over the course of a year rather than a decade.  The majority of Americans aren't interested in this concept.  And it could only happen if every advertiser in America were dead . . . and some media would disappear without advertising to keep it going. 

A thought experiment turns a whole group of people immoral!
No, a whole group of people admitted they're willing to behave immorally. 

go back and look at the optimism from 50-60 years ago.  They thought we'd be working 10 hour weeks.  Our needs would generally be met...  what has actually happened?  The wealth has climbed into the hands of a few and people work more hours with more people have 2 person incomes. 
To some extent, we could live on 10 hours of work/week . . . if we lived like people do 50-60 years ago.  That is, if we raised and canned our own food, owned very small wardrobes, oh, the list could go on, but you get the idea.  My parents and my husband's parents were raised in tiny houses without air conditioning, etc., etc., etc., and they were middle class.  Today we have so much more, and that takes more money.


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Re: What if everyone lived the Mustachian lifestyle?
« Reply #39 on: December 05, 2013, 12:44:09 AM »

The economy is always near equilibrium, and if everyone became Mustachian, the economy would find a new equilibrium. Consider a nation that has universal conscription for military service for 18 year olds, and the service lasts two years, then that segment of the labor force is taken out of the economy, and will have to be replaced by workers over the age of 20. If there is no war, the conscripts are only in the army as a form of national insurance, and their pay, and the costs of maintaining them, is borne by higher taxation.

Now abolish conscription in that nation, and require all people 60 and over to retire, on a pension paid for by higher taxation, and the economic effects are similar. A universal age pension would work like a Basic Income, but only available to those 60 and over. The retirees would, generally, leave the labor force, and their place would be taken by younger workers.

As time goes by, and automation spreads, the retirement age could fall to 55, then to 50. The proposed Basic Income for older people would apply to all, and voters would have to accept that they have to close ranks and vote for a political party which will force the wealthy to pay higher income tax. Living standard will be largely static, though improvements in technology will continue as usual.

This suggests two points: there is no virtue in working long hours if machines will do the same work for less money; and you should be happy with what you have. Living standards today in rich countries are far higher than they have ever been in history. The message to non Mustachians is: accept it.


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Re: What if everyone lived the Mustachian lifestyle?
« Reply #40 on: December 05, 2013, 04:33:17 AM »
If there is no growth then the whole thing turns to zero sum game and for you to do better someone else has to do worse (or there should be a constantly diminishing number of humans).

Wealth is still created by taking natural resources and turning them into useful goods.  It only becomes a zero sum game once all the natural resources have been consumed (which at that point everyone is fucked anyways)

Natural resources don't have to run out.  They just have to become more expensive to obtain than their eventual economic gain.

Also, if taking natural resources still turns a decent profit, that is still a growth economy.  In a steady state economy, the average investment is neutral.  Not to say you can't make money, but you actually have to work at it.

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #41 on: December 05, 2013, 05:53:50 AM »
Germany had a mandatory military service for most of the time since WW2. There is also a government pension that's paid for via income tax (well it's technicalle not called tax but whatever). Economy still works.

What would happen if everyone was mustachian?
I got an oversimplified example:
Currently I work 40 hours/week to build a big house for some farmer. He works 40 hours to provide me with food in exchange.
I only eat 10 hours worth of food, I only spend 10 hours building the house. So the farmer has to live in a smaller home.
I still eat, the farmer still lifes someplace, nothing changed except working hours and lifestyle.
The economy is still stable, just slower.

I can also work 20 hours in one week and take every other week off.
I can also work 20 hours/week for one year and take one year off.
I can also work 20 hours/week for 30 years and take 30 years off.
I can also work 40hours/week for 20 years and take 40 years off.
That last one is called FIRE.

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Re: What if everyone lived the Mustachian lifestyle?
« Reply #42 on: December 05, 2013, 11:45:45 PM »

Mechanization and automation is a form of slave labor, but the slaves are mechanical. Sugar planters cut sugar cane with slave labor in 1770, with paid labor in 1870, and now cut cane with machines. Slave labor, paid labor and machines are interchangeable. Slaves and machines exist at a subsistence level, but paid labor, usually, lives above subsistence. In the modern world, paid labor competes with machines, and machine slaves often win.  Consider the number of diesel shovels, forklifts, and backhoes in the economy, and it is obvious that if these machines did not exist there would be an enormous demand for labourers.

Consider a white man in the ante bellum South. I expect it would have been customary for whites to do skilled work, and the worst jobs would be reserved for blacks, as happened in apartheid South Africa. Some whites may have been forced to migrate to the North to find work. Replace black slaves with machines, and the economic effects are similar. Today, humans compete with machine slaves for work.

I remember the steep decline in work for laborers in the fifties and sixties as machines took those jobs. We knew at the time that the tide was coming in, and workers had to move to higher ground. Some displaced laborers moved into clerical work, but these jobs are now being taken by computers and the internet. Computers add up bank balances and send out renewal reminders for insurance.

In the sixties, any laborer who could not move up to a better job, and lived on what welfare was available at the time was regarded with disdain, but we see today that computers take back office jobs in law, conveyancing, financial planning and engineering. The novelist Nevil Shute was an aeronautical engineer before he wrote novels, and worked on the R101 airship in the thirties. He described in his autobiography spending three months with a slide rule calculating stresses at numerous points on the airship frame. Today, a computer would calculate those stresses in minutes. Even engineers feel the effects of automation.

John Keynes, and others, mainly science thinkers, foresaw a world of the future where people would live an idyllic, comfortable life supported by machine labor, with a short work week and an economy which was not growing. Today, that is called work sharing, and is the way for any advanced society of the future, together with early retirement.

 

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