oftwominds-Charles Hugh Smith

Trends for 2009: "Voluntary Poverty"

Voluntarily working less for a lower income--what I term "voluntary poverty"--will grow in popularity for a variety of reasons both cultural and financial.

An unspoken tenet of the American Dream (version 2.0, in beta) is that maximizing personal income is an essential ingredient of "success." Many are now re-thinking that notion for a wide variety of reasons. (This value was pithily summarized by rapper 50 Cent as "Get rich or die trying.")

I want to be very clear that by "poverty" I am not referring to the sort of poverty experienced by many on this planet, i.e. going hungry, shelterless, etc. I am explicitly referring to the concept of voluntarily opting out of the maximum income one might earn in this impaired economy.

Let's go through the reasons why some are choosing lower incomes than they might otherwise earn:

1. Noble service. This is not new, of course, but in times of need many idealistic citizens accept work which pays modestly in order to serve their faith or ideals. We recently met a very intelligent, hard-working young man who just completed his seminary training after having spent five years in church-related work in Vietnam. Let's just say he didn't get rich.

2. Exiting the high-cost small-business rat-race. I have frequently addressed the stupendously high taxes and junk fees paid by legitimate small businesses in the U.S., and many have concluded that's it's easier to just make $12,000 directly rather than working ridiculous hours and paying all the rent, junk fees, payroll taxes, cost of paperwork and compliance, etc. to gross $100,000 and then actually net . . . $12,000.(See Trends for 2009: The Rise of Informal Work (December 30, 2008) .

For example, here is correspondent Dave E., writing in response to Trends for 2009: The Death-Spiral of Local Government and Small Business (December 29, 2008) :

You're so right: government will simply tighten the screws, incognizant of the fact that they're destroying the livelihoods of their own taxpayers in the process.
I ran a small consulting business for decades, and from home. And despite my relatively low overhead, I still struggled to pay 1/3 of my gross income in income taxes, not to mention all the other sales taxes, property taxes and government fees. So for the time being, I'm basically unemployed while I figure out how to make money while reducing those burdens. What I've decided so far is that it doesn't make sense for me to earn more than the maximum that can avoid income taxes, which is around $10,000 per year. Fortunately, I can live on that.

The system has become so burdensome that it's literally suppressing participation. I remember talking to a small business owner from the Netherlands about fifteen years ago. And he said that the burdens and taxes were so high, and the social benefits so lavish, that for most people it made more sense to go on the dole. It seems we're headed down the same path. "

I would add that the "costs" of trying to keep a small business afloat aren't just financial--the toll on one's psyche, family, health and sense of self are stupendous.

3. Exiting soulless work. One of Karl Marx's key tenets about Capitalism as he experienced it was the alienation of workers from the fruits of their labor. I personally know many people who hold well-paying but super-demanding corporate cubicle-Hell jobs in which the actual product or service is a million miles away and all that's present is a demanding boss and piles (or digital files) of essentially meaningless paperwork. Many are planning their exit once their kids are done with college and they no longer need to maximize their income.

Though it's not popular to say this, these workers are extremely alienated from their work and the "fruits of their labor." Their work is fundamentally soulless and everyone knows it; people stay because the money is so much better than more meaningful work performed in service of actual customers or patrons.

At some point people are ready to let go of the extra income and do something better with their lives. Many will cling on to age 63 and then bail onto Social Security; others are simply hanging on to get vested in whatever pension plan they have.

Others will get laid off and find they like not working at their former jobs. Once their families adjust to the lower income, they seek lower-paying, less stressful work.

4. Job-sharing /family care. Several physicians I know have chosen to work three days a week, effectively halving their salary, in order to spend time with their children or have leisure time as they get older. Yes, I understand many physicians have to maximize their incomes to pay down their horrendous student loans, but at some point in middle age drastically cutting hours, responsibilities and income is a possibility for many frugal professionals such as doctors, nurses, attorneys, etc.

One side benefit of this halving of hours is that it essentially "shares" one job between two families, enabling more people to live off one position.

5. Anti-materialism can be fun. If low-cost shelter is available or shared, "dumpster-diving" and "freegan" lifestyles are remarkably low-cost for at least for the healthy among us. It's relatively carefree to work for low pay 10-20 hours a week and scrounge up some tossed-out food from dumpsters, leaving you time to form a band, do some craftwork, etc.

In other words, The American Dream Version 3.1 might reject maximizing income as a waste of one's life. Beyond a certain point of comfort, a sofa dumped on the street is (once de-fleaed and cleaned up) nearly as comfortable as some poorly made bourgeois sofa which cost thousands. Ditto thrown out food (mostly perfectly good), "beater" cars, etc.

In a "rich" irony, I find that the Forbes Ad Network is displaying a "win a $2 million dream home" advert today on the site. All I can say is: you gotta love it... the irony, I mean....

Here are some recent insightful reader comments; I am pleased several Gen-xers have checked in:

Kevin M.

As a baby boomer myself, I won't be one of the critics (of my views in Trends for 2009: Generational Optimism (January 5, 2009). Your article/analysis today is some of your best work. It offers hope in the fog ahead. But I'd like to offer that at least some of the pessimism of our generation is probably related in no small part to the fact that we see current circumstances as intractable.
The WW2 generation knew life before the "contract", the millennials can see clearly that the contracts future is unlikely; as boomers, we've grown up in and with the contract, and are somehow controlled by it emotionally and intellectually. We were even educated in it, giving it it equal weight in the scheme of life with basics such as food, water and air. Most of the analysis of the current state of affairs by boomers is status quo centered because that's what we know.

For most, it's all we know, and any assumption of it's demise is considered unduly pessimistic, unpatriotic or utterly unthinkable. Despite our generational (superficial) emphasis on free thinking and free living, we are at the core anything but. We may instead be the most programmed, propagandized generation in the country's history. Our views and behaviors in regard to consumption, lifestyles, education, healthcare and any number of facets, have become disturbingly regimented. We've seen less individualism--rugged or otherwise--in the past 10-20 years than we've witnessed in the previous 30-40. Our generation has become sanitized and robotized, if that's a word.

Perhaps more significantly is the fact that while the economic game is changing, the status quo still dominates, and therefore we're still within it's grip and unable to make extreme moves beyond it. This is especially true for anyone with children who are school age or younger (the current level of government control or influence over child rearing is unprecedented in our history). Yes, the current system is dysfunctional and in a state of deterioration, however evidence of a successor system in not yet clear so we desperately cling to the past in the search for salvation for the future.

So while it may be entirely logical and reasonable to project that the future will see a return to small family farms, the present remains dominated by corporate agribusiness. We continue to live within a construct of unsustainable high costs in housing, health care, taxes and various other mandated costs which constrain our options to move forward. That's the reality of the moment.

There may be hope for a rise in boomer optimism once the changes resulting from the current deterioration become more obvious and relevant. Keep plugging with your articles. The future will become clearer over time, but we need people like you to identify it to the skeptical masses who have been brainwashed to believe that the status quo is the only way.

Lone Cowboy

From your Jan 06th column:
" I was born in 1980 so I'm one of the people you're talking about. It is accurate to say my generation is full of optimism. .... Everyone I know that graduated from college last December wants to work for the government,"

And what exactly is entitlement but working (actually perhaps we should say "employed", working a government job is an oxymoron) for the government. Who do they think pays for all these government jobs?

And, they never seem to remember, those paychecks of theirs (taxes) are collected at the point of a gun. Just try not paying your taxes.

The LAST thing this country needs is yet still more government workers. Maybe, just maybe, they should get a real job and try getting along with all the government workers, rules and taxes. Then maybe, just maybe, they wouldn't be so "full of optimism".

They are full of something all right, but it isn't optimism.

I'd have more, but I have to go fill out government paperwork for the next hour or so to continue to do the same job I always have. The paperwork, will of course, never be looked at, for any reason, but by god if it's missing, the huge fines would put me out of business.

Brad G.

I have one response to your thought-provoking reader Noah C's comments: For goodness sakes, I'd be optimistic too if I was looking for a government job that provided great pay, benefits, and pension. Did you notice that NONE of his friends want to work in the private sector. Who the heck is going to pay for all these govt jobs,benefits, pensions? Boy, you talk about someone that doesn't have a clue... just like most of the "millennial optimists".
Lis M.

I read your and Maggie's comments with interest. I agree with much that was said in both. However, I do wonder why the vast military expenditures of our country are seemingly "off the table" when it is time to talk about fiscal responsibility. Nowhere is there more waste and corruption than in our military spending. No other national expenditure brings more misery and destruction to the rest of the world. It seems to me that we need to address the wider world of spending in order to build a more equitable society. The reason that SS has persisted and the genius of its formula is that it is an entitlement for all. When it assumes the character of a welfare program for a designated group, it will perish. The very entitlement that Americans feel for their SS is the only thing keeping the wolf from the door for the poor.
David S.

As an amateur historian, I believe that the Greatest Generation (WWII) is responsible for a lot of our current mess! Their parents were adults during the Great Depression, and seemed much more skeptical about FDR and his socialist solutions to Hard Times. However, the GG ate up FDR’s nonsense with a spoon. They were the ones who were first fully indoctrinated. It took until about 1965-1970 for the decline to fully set in, but I believe it began when the WWII generation embraced socialism.
Michael Goodfellow

The thing about Social Security and Medicare is that old people vote. To really means-test those programs requires not just cutting them from Bill Gates (there aren't enough rich people to matter to the overall numbers), but cutting them from upper-middle class, and then (if health care inflation isn't tamed) middle-middle class. And you wouldn't just be cutting future retirees -- once the budget gets bad enough, you are going to have to cut current retirees and people just about to retire.
Politically, those programs have always been a mix of welfare and forced retirement. It's the retirement part of it that maintains political support. If people really get into a situation where they are paying thousands a year into a program they know they will never get any benefit from, I would expect political support to disappear.

Though what I really expect is that the government will be under pressure to cut anything else but SS and Medicare. Certainly defense, and R&D (NASA, etc.) and sell off national land, and cut support to the states, spending on highways, etc., all before they start denying operations to Mom. And of course, they will demonize the drug industry and overpaid doctors and inefficient hospitals, etc. I would also expect to see free care in Emergency rooms dropped before they really cut benefits (homeless people don't vote.)

That's if they don't tell themselves they are saving money by nationalizing the entire system, which would throw it all into chaos. Who knows what will result then.

P.S. What would you have said at 18 if told your parents would be remembered as "the greatest generation" and the boomers would eventually be seen as an annoying, self-indulgent swarm of locusts who left nothing behind for their kids?

Bill Murath

Your post the other day about the outlook of the younger generation was timely. At 48 soon to 52 weeks from 50 on Thursday I want to think at the fore front like the 80's-90's folks. A basic tenet of Zen / Tao is that the old grow hard and hold fast to their ideas and thus snap in the wind. I want to let loose of my own long held beliefs and become one of the new revolution in thinking to keep advancing society. The old thinking is dead and it will lead most for a long miserable ride til the end of existence this time around.
I read Zen and the Art Motorcycle Maintenance 15 years ago on the Northshore. It was deeply moving back then. I was on a walk this afternoon with J. and how I mentioned to her that I felt like the main character. Driving himself nuts at the apex of middle age. I think the whole issue is that at this point in human existence we are not supposed to move so fast or so far ahead. We can't handle all the input and sort it out to really function.

It blows my mind how many people are taking effexor and clonidine for depression and anxiety. I am not part of that crowd though I self med with beer and smokes. Sure my choices are old school by they are simple by-products of our existence and somewhat more social than the others. Even taken to the extremes the homeless drunks do share a common bond of alcohol. Even smokers chat with other smokers during smoke breaks. But do you here the lost folks saying " hey, it's time for me to pop a Clonidine wanna chat?" Hell, even heroin addicts have more of a social bond than do the lost.

Chuck L.

love your blog, read it every day and I think you are way ahead of most people in understanding the types of changes that are coming. In regards to today's post, one of your reader comments makes me think that this younger generation may not understand the depth of changes coming their way and I had to write you. It was this one:
"In Ohio where we are supposed to be a lost people. Everyone I know that graduated from college last December wants to work for the government, my friend wants to be a school teacher, one woman I know wants to work for intelligence, and another wants to work helping criminals reenter society."

It's simply not possible in any type of a modern economy for everyone to work for government or for charity organizations-these things are neccesary and good, but totally dependent upon wealth generation/private sector activities to pay for it. Please try to gently let your younger readers understand this, or they may enter the workforce with some really dangerous illusions and naivete.

Jude Z.

You recent installments about generations, optimism, realism, and sacrifice concentrate on Boomers and Millennials, and the reader responses are a truly sad affair. Boomer comments are primarily apologia or condemnation of whipper-snappers, and the representative Millennial explains that he and his friends are optimistic because they want government jobs and to "party hard". As a Gen Xer, I am stuck between the unrealistic entitlement Boomers and what they "deserve", and hard-partying government parasites? Oh, that's lovely.
Gene M.

Reading this thread, I noted that few mention the fact that SS might well be self-sustaining if Congress had in fact let it alone instead of using it for the general fund (and avoiding the need to halt spending and/or raise taxes. In fact there was a law passed a couple of decades ago that was meant to halt this practice, but of course Congress got around it by writing IOU's to SS. {Insert here a snide, well-deserved remark of your choice about Congress}
Ah but Bernanke, who has become something of an expert on bailouts, should easily be able to bail out SS. After all the FED's balance sheet is unlimited, they tell us.

Steve C.

Just read your responses to Maggies email. All of it was well reasoned.
I do, however, have one other thought to add. Means-testing, rationing, et al, will be useless simply because at some point within the next decade, we won't, as a nation, be able to afford any form of social welfare. Recession/depression, a decrease in tax revenues (with a congruent decrease in the number of workers paying into the system), and an increase in the numbers of people drawing (or wanting to draw) welfare benefits from the government, will necessarily mean that something's gotta give.

Either the "boomers" will have to fall on their swords, or the Gen-X'ers may very well decide to run the boomers through with their own.

Thank you, readers, for your thought-provoking comments.


New Operation SERF installment. Please note: " This "Strategic Action Thriller" is fiction, and contains graphic combat scenes.

Operation SERF, Part 6:

“Dad,” said Daniel after he walked into the log home from outside. “The French are uploading the video they shot by satellite link.”
“And?” asked Josiah as he sat on his couch looking at the fire in the woodstove.

“Do you want them doing that,” questioned Daniel, “after what happened? What they have us on video doing.”

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