Sunday, July 14, 2024

I Fear for Our Nation

I hope we gain the wisdom that we need each other, not as enemies but as colleagues, not always in agreement but respectful nonetheless.

I fear for our nation, and I am not alone. The echoes of the past are becoming louder, and I recall the decades between 1961 and 1981 with trepidation, for that era was marked by crisis, tumult, discord, civil violence, war, a near miss of nuclear war, extreme polarization and assassinations.

Many Americans sense the country never really recovered from the assassination of President John F. Kennedy in 1963, or from the assassinations of presidential candidate Bobby Kennedy and civil rights leader Martin Luther King, Jr. five years later in 1968. An attempt on the life of President Gerald Ford was narrowly thwarted in 1975, and an attempted assassination of President Ronald Reagan very nearly succeeded in 1981.

A terrible madness swept the land, as dozens of bombings and the bizarre kidnaping of media heiress Patty Hearst by a domestic terror cell pockmarked the 1970s, a decade marked by a failed presidency, revelations of domestic spying by federal security agencies and runaway inflation.

It was a very long night before morning dawned in America again. From the longer view, the twenty years of tumult can be understood as the political and social reaction to what changed in America in the previous twenty years of 1941 to 1960: America had been roused from isolationism to fight a world war, forced to protect allies in Europe and Asia from the threat posed by an expansionist totalitarian Soviet Union, and a century-old reckoning with the racial divide that made a mockery of our nation's principle that "all men are created equal" and should be treated equally before the law. The promises made by the founding documents of the nation had yet to be fulfilled.

The very success of our protection of war-devastated allies created an economic crisis of our own, as the old, less efficient industrial plant of America was outpaced by the new industries that arose in Germany and Japan with modern technologies, industries aided by America's open door to exports and the strong dollar.

The 1970s was a decade of economic adjustment with high costs to both capital and labor as the Energy Crisis and the need to tackle industrial pollution drove a multi-trillion dollar (in today's dollars) rebuilding of American industry, a process punctuated by recessions that caused great misery for those laid off and struggling with high inflation.

These sacrifices and conflicts eventually paid dividends. Inequality eased, high interest rates crushed the inflationary spiral and the investments in higher efficiencies and new technologies started paying off.

My fear is that we've entered another 20 years of tumult, chaotic conflict, infectious madness and discord, but without the resilience we possessed in the 1960s and 1970s, the resilience generated by low debt, strong domestic industries and supply chains, low levels of regulation, low-cost healthcare and education and much higher levels of civic virtue, community, national purpose, moral legitimacy and self-reliance than are visible today.

Whether we admit it or not, we are riven by rising inequality in wealth and opportunity, high debt loads and little consensus on how to get through the night in one piece and emerge better from facing the challenges head on. I fear the siren-song appeal of denial and magical thinking, as if a rocket to Mars or a new phone app or another AI chatbot will fix what's broken in America.

I fear our buffers have been thinned, and our ability to make sacrifices for the future has been lost. Our moral foundations are in such tatters that getting rich by whatever means are within reach is now the "solution" to the coming storm, as if greed bled dry of ethics isn't a proximate cause of the coming storm.

My hope is that we gain the wisdom to see there are no easy solutions, no one-size-fits-all fixes, that solutions will be localized, partial, contingent on continual adaptation to changing conditions, and that this continual experimentation and evolution requires an acceptance of continual failures and a keen sense of humility about our limits.

I hope we gain the wisdom that we need each other, not as enemies but as colleagues, not always in agreement but respectful nonetheless.



Bastille Day July 14--vive la France, God Bless America



My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
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Friday, July 12, 2024

How Will We Distribute the Pain Ahead?

What is acceptable, and what is unacceptable? We'll soon have to decide.

I wish the transition ahead--the unwinding of all the distortions and sources of instability in our economy and society--could be painless. That would be ideal. But history suggests that hope is unrealistic. History suggests those in power will cling to whatever is working well for them even as the economy and society decay and decohere around them.

Denial and magical thinking are the order of the day. Rome is eternal, so there's nothing to worry about. If the peasants have no bread, let them eat brioche. And so on.

If the painless option is off the table, then the issue boils down to the distribution of the pain. Ideally, those least able to sustain further sacrifices will be favored at the expense of those better able to sustain sacrifices. But those most able to sustain sacrifices are those with the power to distribute the pain to others. This dynamic leads to those least able to sustain sacrifices being distributed the majority of the pain, to the point that they have so little to lose that abandoning the status quo becomes the least worst option.

The data collected by Italian researcher Vilfredo Pareto revealed a pattern throughout Nature and civilization of 80/20 distributions, what we call the 80/20 Rule or the Pareto Distribution: 20% of the sales staff make 80% of the sales, 20% of the populace ends up owning 80% of the property, 20% of the plants produce 80% of the seeds that sprout, and so on.

The Pareto Distribution distills down to 80% of 80% and 20% of 20%, or 4/64: 4% of the populace ends up with 64% of the property. In the U.S., the top 10% own 93% of the stocks, and it's likely the top 5% own 65%--in line with the Pareto Distribution. The bottom 50% own 2.6% of all financial assets.(See Federal Reserve chart below.) This is in line with the Pareto Distribution: the bottom 64% own about 4% of the nation's financial assets.

The issue thus becomes how best to avoid the dire consequences of the 4% at the top of the wealth-power pyramid distributing 64% of the pain to those at the bottom. Unfortunately, the pain will be distributed unevenly regardless of our intentions: highly paid people in unsustainably costly industries will be laid off along with people in more precarious jobs.



Our most realistic hope is to do our best to ease the burdens of those who will suffer the most severe dislocations and shift some of the sacrifices to those with sufficient means to cushion them from any real suffering. We can rethink our winner take most financial system, our duct-taped social contract, our enfeebled civic virtue and our waste is growth Landfill Economy.

Or we can let the system run to failure and let the Devil Take the Hindmost. What is acceptable, and what is unacceptable? We'll soon have to decide.





My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


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Wednesday, July 10, 2024

Here's Our Big Problem: The Ratchet Only Moves Us Closer to the Cliff

Imagine an institution whose ratchet was set to relentlessly reduce budget, staffing and processes while focusing on increasing output / results.

It's tempting to personalize our problems, as those in power tend to possess all the traits that qualify one for immediate delivery to Devil's Island as a danger to humanity. Rather than focus on bad people in power, let's consider the good people working in institutions and agencies, of whom there are many, trying their best to keep the status quo glued together.

The problem they face is systemic and structural: there are no self-correcting mechanisms in American institutions other than running out of money, which rarely happens as money can be printed or borrowed in whatever quantities are needed to bail out the institutions that are the social technology / social infrastructure of our economy and society.

In systems / evolutionary terms, there has never been any need to develop corrective feedback, self-correcting mechanisms, triage protocols or any other institutionalized "muscle memory" responses to sclerosis and dysfunction or to the existential threats posed by multiple mutually-reinforcing crises (i.e. polycrisis) because no recession in the past 78 years has ever lasted more than a few quarters and so the money has always continued flowing in ever greater quantities once the spot of bother passes.

The sole institutional response to failure is to replace the big boss, on the theory that a new "supreme leader" will be able to fix the mess with managerial experience, financial acumen and inspirational leadership.

If the institution lacks the structures--feedback loops, self-correction, the means to radically transform the entire institution as needed--then this is akin to dropping someone in a desert and tasking them to create the Garden of Eden. It cannot be done because the needed tools and resources are not available.

The institutional tools don't exist because all that the employees have ever experienced is The Ratchet Effect: like a mechanical ratchet that only allows a cable to move in one direction, institutions only have the mechanisms to expand: higher budgets, more staff, more meetings, more regulations, more compliance reporting, all of which define the staff's conception of work and the purpose of the institution.

The output and results are secondary to the demands of process, which continually expand: the task of the staff is fulfilling the processes that define "work": attend meetings, fill out compliance reports, enter the data, pass it on to the next department, etc. Whether the mission of the institution is actually being fulfilled is lost in the tyranny of process, the assumption being that if everybody fulfills their job description then the organization's mission would automatically be fulfilled.

Ironically, the processes that are supposed to fulfill the organization's mission end up being the substitution for the mission: there's no meaningful feedback on the goal or purpose, there is only feedback on completing processes. All accountability is for completing processes, not for results.

Did the university's education actually prepare the graduate for a successful career and life, or was it little more than a rubber stamp? The answer is nobody knows because the feedback required to make that assessment--brutally honest, stripped of sugarcoating--doesn't exist.

Meanwhile, the threshold for organizational collapse keeps ratcheting closer to the breaking point. As budgets, staffing and processes bloat, actual results falter, causing the leadership to demand more staffing and budget to "fix the problem." The actual, unaddressed problem is the organization's faulty structure of Ratchet Effect expansion as the "solution" to every manifestation of failure.

lacking any institutionalized requirement to perform triage, to prioritize the mission over process, the organization stumbles off the cliff once budgets are cut. Since there has never been any pressing need for triage, ruthless prioritization, slashing make-work in favor of real-world, measurable results, and the imposition of accountability on every employee not for compliance but for results, the organization never evolved these capabilities. The only capability the organization evolved was to ceaselessly expand.

Imagine an institution whose ratchet was set to relentlessly reduce budget, staffing and processes while focusing on increasing output / results. Imagine an institutional structure that focused solely on feedback of results rather than processes. Imagine an institutional structure that demanded constant triage to weed out needless regulations and processes, who left processes open to those accountable for results, a structure that enabled managers to radically re-order the structure on the fly to better serve the mission.

Imagine an institution capable of instantiating the Pareto Principle, of slashing the budget by 20% while increasing output, or even more radically, cutting the staff by 80% while increasing results. This is of course "impossible" until the money runs out or loses its purchasing power. Then there is no other option but triage and a radical re-conception of organizational structures, missions and results.



Management guru Peter Drucker foresaw the obsolescence and replacement of institutions we consider permanent. He understood that ultimately, every organization, from a sole proprietorship to a sprawling agency employing thousands, is an enterprise that doesn't have profits / results, it only has costs.

Our social technology has ossified while our consumer technology overloads our daily lives with shadow work once performed by public and private organizations. Squeezed between corporate monopolies stripmining us with addictive technologies and crapified goods and services (planned obsolescence run amok) because there is no real competition left, and sclerotic institutions that respond to failure by expanding, we need a radical reversal of the Ratchet Effect. Nothing less will matter.

Digital Service Dumpster Fires and Shadow Work (February 14, 2024)

Is Anyone Else's Life as Stupidly Complicated by Digital "Shadow Work" as Mine Is? (May 22, 2024)

The Ghetto-ization of American Life (April 25, 2024)



My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


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Sunday, July 07, 2024

No Reform or Leader Is Going to Save the Status Quo--We're On Our Own

The key takeaway here is: don't count on a simplistic ideology or reform or a "supreme leader" to save the status quo from internal failure.

Humans prefer simplicity to complexity. This is why mythologies still resonate with us, despite our hubristic claims to rationality and "following the science." What we actually crave isn't the challenge of teasing apart highly complex systems of interconnected dynamics in which each subsystem influences every other subsystem.

What we crave is a simplistic explanation / answer and a leader who we can follow because they keep repeating the simplistic answer. So we boil complicated systems such as societies and economies down to "capitalism" or 'socialism," and cling to simplistic versions of these ideas as the explanation of human nature and the answer to all our problems.

When these simple ideas fail to map reality, we're forced to say things such as "ah, capitalism / socialism works wonderfully and perfectly, but we don't have true capitalism / socialism," with the unstated cause of this troublesome imperfection being, well, the pesky humans in the otherwise perfect system.

Which leads us to the present. A great many people cling to a simple reform which they believe will either solve all our problems at the root, or at least go a long way to setting the course that will solve all our problems. These reforms include: hard money / return to the gold standard; adopting bitcoin as the universal currency; seeking "market-driven solutions" to every problem, more regulatory oversight to make sure bad things stop happening, and so on.

If simple reforms / "getting back to basics" actually worked, history would be composed of well-run, boring utopias interrupted every so often by spots of bother that were quickly vanquished by one of the tried-and-true simple reforms. But this doesn't map the historical record, which tends to exhibit long periods of stability characterized by complex city-states / empires establishing a system of governance and economic organization that is productive and adaptive to the predominate conditions of the era.

These stable system are eventually fatally disrupted by one or both of these forces:

1. The predominate conditions change dramatically, demanding adaptations that are beyond the capacity of the system that had worked so well for hundreds of years. These externalities include epidemics, long-term droughts, depletion of vital resources and invasion.

In some cases, these external forces overlap, generating a Polycrisis in whih each external challenge reinforces the others or depletes the system's reserves to the point there is nothing left to deal with the last set of crises.

(To borrow a phrase from correspondent T.D., we can say that these crises got inside their OODA Loop--observe, orient, decide, act--leading to a fatal inability to react fast enough and decisively enough to meet the challenges successfully.)

2. The system's internal limitations--invisible to the participants--fatally restrict the flexibility and adaptability needed to recognize and respond to gradually-developing weaknesses generated by the internal limitations. The weaknesses are papered over by underlings fearful of reporting the troubling truth--"everything's perfectly all right now. We're fine. We're all fine here now, thank you"--or narrative control--the empire is forever, no worries--or the system responds by doing more of what's failed spectacularly: the gods are angrier than we thought, sacrifice ten times more captives next time, that should do the trick.

Here is how Ray Huang, author of 1587, A Year of No Significance: The Ming Dynasty in Decline summarized the internal limits of the Ming Dynasty's system 57 years before its final collapse in 1644:

"The year 1587 may seem to be insignificant; nevertheless, it is evident by that time the limit for the Ming dynasty had already been reached. It no longer mattered whether the ruler was conscientious or irresponsible, whether his chief counselor was enterprising or conformist, whether the generals were resourceful or incompetent, whether the civil officials were honest or corrupt, or whether the leading thinkers were radicals or conservatives--in the end they all failed to reach fulfillment."

The status quo has already reached its limits and reform on any scale beyond the usual incremental "policy tweaks" is impossible, and it no longer matters who's nominally in charge, if rulers are competent, officials are honest or corrupt, or thinkers are radicals or conservatives--the system is beset by forces it fostered but no longer controls, and indeed is incapable of controlling due to the intrinsic limits of the system's core structures, limits which were invisible during the Boost Phase of rapid expansion.

The Ming Dynasty's highly centralized system of governance was unified and guided by a Confucianist moral code rather than a highly developed system of laws and regulations. The current global status quo is unified and guided by a code based on a specific definition of Progress: the eternal growth of production and consumption of goods and services, and the eternal growth of the credit needed to fuel this growth in a permanent economic expansion in which whatever is labeled "innovative" is reckoned better than whatever it replaced. Any evidence to the contrary is dismissed as "negativity," "Luddite," and other derogatory labels: new is by definition the epitome of Progress.

It is now clear that "Progress" defined as whatever is "new" and "innovative" is in many cases the opposite of actual Progress--what I term anti-Progress--and so this simplistic ideological underpinning of the status quo is crumbling.

The "innovation" may well be highly profitable--financialization, globalization, social media, etc.--but its impact may be disruptive to the point that the system is internally incapable of responding fast enough and decisively enough to correct the resulting run to failure.

We can visualize the system reaching internal limits and the resulting decay of adaptability / run to failure as an S-curve:



Given the internal, structural limits, the entire system has only one pathway: decline to the point that a seemingly modest crisis disrupts the last shreds of coherence in an increasingly nonlinear system and the resulting asymmetric effect collapses the system.

The Ming Dynasty took 57 years to decay and collapse from 1587. Given the nonlinear dynamics and the inherent fragility of the status quo's many dependency chains, this timeline could be reduced by an order of magnitude to 5.7 years. We won't know until a crisis that would have been controllable in decades past generates asymmetric effects the system can no longer control.

The key takeaway here is: don't count on a simplistic ideology or reform or a "supreme leader" to save the status quo from internal failure: we're on our own, and it's far better to face this daunting reality now rather than place our faith--and our passive inaction--on the altar of false gods.



My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


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Thursday, July 04, 2024

Living Well on Less Than $30,000 a Year--One American Family's Story

"It's all because of our low cost of living that I can feel relatively secure."

We see stories like this all the time: Survey: The average American feels they need to earn over $186,000 a year just to live comfortably.

This is over three times the $59,000 median annual earnings of full-time workers in the US (52 weeks X $1,139). Median weekly earnings of the nation's 119.2 million full-time wage and salary workers were $1,139 in the first quarter of 2024 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported. (Source: BLS).

This is more than double the median household income of $74,580.

According to this site, about 13% of US households earn $186,000 or more per year. Other sources say the top 10% of US households have an income threshold of $191,406, while the top 5% have an income threshold of $290,164. These numbers vary widely state by state, with high-cost / high-income states having much higher thresholds than lower-cost states.

Bottom line, the bottom 90% say they need a top 10% income to feel secure financially. According to the survey, to feel rich, the average American feels they need to earn $520,000 a year--a top 2% income.

All of the above represents the conventional view that financial security requires being wealthy. The alternative view is financial security results from a low-cost, low-consumption, no-debt lifestyle of the kind I outlined in Is It Possible to Live Well Earning $30,000 a Year in America? Yes--With These Conditions (July 3, 2024).

To state the obvious: it's easier to live on less than it is to earn big bucks.

Confirming that it is possible to live well on less than $30,000, correspondent M.C. shared how his family lives well on a modest income. Their lifestyle and financial choices are within reach of pretty much any couple / family willing to make the required trade-offs. Yes, it can be done in inflationary America 2024, but it requires redefining "financial security" and "wealth," and trading the insatiable desires of conspicuous consumption and the desire to live in places coveted by the wealthy for much different sources of both inner security and financial security.

Here is M.C.'s commentary:

"Yes, it's certainly possible for a couple to live on 30k annually.

My wife and I have been doing this the past 4 years on a single $13.65 an hour job (up from $12 a few years ago) in a retail hardware store a few blocks away. (No benefits except an employee deduction on purchases.) We live in a rural area near the center of the USA.

We bought the house we are living in for 14k cash in 2011. Further, we can replace it (in our rural community with a population of 3,000 and continuing to decline) without breaking the bank (not much housing demand here).

Taxes. We pay nothing to the IRS. For 2024, the standard deduction for a two person household is $29,200. If our taxable income went over that, we can contribute to an IRA. We paid less than $200 in state income taxes last year. Our sales tax is 9%, except that unprepared food from a grocery store has just a 2% tax.

Debts. We own our house and land. We buy our vehicles for cash. I just replaced my 1997 Grand Marquis that I've been driving since 2006. My wife drives a 2014 that we've had several years and that will hopefully last several more. No debts, no credit card balances.

Healthcare. Health insurance on the ACA marketplace is free if taxable income is between 100 and 150% of the poverty level. For a couple, that's $19,720 - $29,580 this year. If we were a bit over that upper number, then we could reduce taxable income by contributing to an IRA.

Food. We are growing tomatoes, strawberries, watermelon, cantaloupe, and green beans. The lettuce and spinach got eaten up by bugs last year, so I didn't plant more. The corn and sunflowers didn't work out well either. I try to stock up on groceries when they are on sale, especially the items we eat a lot.

Entertainment. I rarely ever watch television. We don't have an XBox or any such gaming devices. Four of our seven grandkids live in town, so that's our entertainment. We go to their ballgames, music programs, take them to movies, recreational activities (I play tennis with a couple of them).

Insurance. No property insurance except the required liability insurance on our vehicles. So we are self-insured (other than the required auto liability insurance). That's scary to a lot of people, but we buy good used vehicles and keep them maintained. In addition, we have an added advantage of family members who are electricians, as well as the fact that we are allowed to do the work on a house that we both own and live in. So, I do my own roofing, repairs, painting, etc.

We are able to go without property insurance because we have a few years worth of living expenses saved up. We have been living on less than $30k per year, but I feel it important to be straight-forward that we have an advantage that many don't have. We have peace of mind with retirement funds in a Roth IRA that can be used if things break or the budget gets tight. This is the first year of the four where we will draw some from retirement accounts. I don't anticipate doing this again for another four years.

To be quite honest, we could get by on a lot less than we currently live on. We eat out more than we would if money were tighter.

I would like more people to be aware that it's possible to live on less money. Around age 25, I had it all mapped out to becoming a millionaire. But life happened. And at some point I figured out that I wouldn't really want to win the lottery, as it would change almost everything about my life.

We could seek more paid work but I felt we had enough money, even though we have a fraction of what most people consider to be 'enough' to retire. It's all because of our low cost of living that I can feel relatively secure. I don't have much that anyone would want to steal, so I don't have much to worry about.

I love the mention of your building a micro-house. I've been working on a plan, and want to build one on our daughter's 4 acres. And depending how that goes, I might build a couple more, starting with our son's property."


Thank you, M.C. for sharing your family's pathway to financial security. Paying no interest / having no debt is a big part of that security:



New Podcast: 10 Geopolitical / Financial Risks to the Global Economy



My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free





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Tuesday, July 02, 2024

Is It Possible to Live Well Earning $30,000 a Year in America? Yes--With These Conditions

Can a couple of hardworking people live well in America on $30,000 a year in earnings? Yes, if they're willing to do what's needed to make it happen.

Is It possible to live well on $30,000 a year in America? Let's start with the raw numbers. I am starting with a couple, not an individual, so we're talking about two people living well on $30,000 earnings a year.

Why $30,000 a year? Several reasons. One, it's a full-time wage at $15/hour, a rate that is (or will be) minimum wage in some states and two, it's about half of the median annual earnings of full-time workers in the US. In other words, it's within reach of most workers with a few years of experience.

$30K a year is $2,500 a month. Average Social Security/Medicare and income tax withholding is around 22%, or $550 a month, leaving the wage earner $1,950 net income. Self-employed people have to pay the employers' share of Social Security/Medicare on top of the employees' half--an additional 7.65%, a total of 15.3%. (Yes, that's a big chunk. You get used to it. Render unto Caesar that which is Caesar's.) That pushes their withholding closer to 30%, leaving around $1,750 to $1,800 a month income net of withholding.

So under what conditions can you live well on $1,950 a month in America?

First, own your land and house free and clear, or have the right to live in a house that's free and clear of debt. In the status quo, that requires a huge inheritance. But since few of us actually receive a huge inheritance, let's stipulate that we're discussing lifestyles that are outside the conventional status quo.

For example, building a micro-house on a friend's land in trade for helping them. This is what I did at the age of 24. My buddy was a retired US Marines vet (in-country 'Nam) with acreage he couldn't possibly use so we made a deal that worked for both of us. We built a sturdy micro-house without any electrical power, just hand tools, and after living in a tent my femme and I found it pretty luxurious. I went back 30+ years later and it was still in use.

Alternatively, find a way to live cheap and save half your earnings for enough years to buy a plot of land somewhere where people with lots of money don't care to live. The longer we scrimp and save, the more capital we save to invest. If we have to borrow, borrow as little as possible so it can be paid off with a few years of work.

Or find someone who's needing to sell, or willing to sell a piece of their land, and try to work out private financing. Of course you still need an experienced attorney to draw up the contract so both parties' rights and obligations are stipulated and protected, but the basic idea is seek older folks who may be happy with the monthly income at an interest rate lower than a bank mortgage.

Nothing is easy outside conventional debt-serfdom. Sacrifices and trade-offs abound. That's why so few people venture off the beaten path. The point is there is no substitute for owning whatever you own free and clear, zero debt, zero mortgage. Whatever it takes to get there, fair and square, win-win, that's the path we choose.

2. Choose a state with low property taxes. Every state and local government collects tax revenues. The ideal arrangement for those of us living on less is low property taxes and high sales and/or income taxes, because if we consume/buy very little, the sales tax is no big deal, and if we earn a modest income, the income taxes are not that big a deal, either.

The states to avoid are those where property taxes of $1,000 a month or more are normal. That's a lose-lose situation for those of us living on less income. The target is $100 a month in property taxes, $300 at most.

3. Figure out whatever healthcare arrangement works for you. For some people, that's a job that offers healthcare insurance for oneself and one's mate / significant other. For others, it's qualifying for whatever government insurance is available to low-income workers. For some young healthy people, staying healthy is their plan. For vets, it might be a nearby VA clinic / hospital.

4. Get a reliable high-mileage vehicle and learn to maintain it. A buddy of mine just bought a clean 11-year old Toyota sedan with 100,000 miles for $5,000. His existing Toyota has over 300,000 miles because he's maintained it well. 100K miles is no big deal if the vehicle has been properly maintained. A well-maintained Corolla or Civic routinely gets over 40 miles per gallon on the highway. If a vehicle needs $100 to fill it up, it better be making serious money as an essential work vehicle.

5. Grow some of your own food, buy only real food, waste nothing. Ideally, grow some of your own food, growing whatever grows well and without too much care in your locale. Like what you can grow. Trade your surplus for what others raise/grow, or give it away to people who appreciate it (and you). Only buy and eat real food, meaning there is only one ingredient. No salty, fatty addictive snacks, no sugary beverages, no processed foods, no packaged food, no frozen glop. Whole grain crackers, OK, sure. Chocolate chips for home-baked cookies, of course. But homemade is what counts here: we control the ingredients and provide the labor, which is the highest value input in meal preparation.

Once we taste real food, all the processed stuff no longer even qualifies as "food." As for the cost of real food, ethnic markets are cheaper and more fun than supermarkets. Some markets have discount bins. Much of traditional ethnic cuisines are basically peasant cuisines: cheap, locally grown ingredients with very little meat, which has long been dear. Living well means eating well, and nothing beats home-prepared meals with fresh ingredients.

6. Waste nothing. It's estimated that Americans throw out a significant percentage of the food they buy because they didn't plan the purchases and stick to the meal prep plan.

7. Get lean. We need less food when we're lean, and if we're eating home-grown and/or fresh, real foods, we're getting nutrient rich foods so we're not starved of essential nutrients, a hidden form of starvation that drives us to eat more in a vain attempt to get the nutrients we need.

8. Minimize the amount of time wasted on media, social media, screens and TV. There are better things to do with our time.

9. If there's extra living space, take in a boarder for the extra income. This is a time-honored way to earn extra income with little investment or outlay required. Choose roomies / boarders wisely and they'll add something to life.

10. Insurance is a rip-off until you need it. Needless to say, avoid locales where property insurance is unavailable or unaffordable. Shopping around is worth the effort. Consider buying a little extra insurance, as even a few extra dollars a month can buy more coverage. Even minimal collision coverage on an old car can prove useful.

Having a goal and a plan helps. So does having a Plan B in case Plan A doesn't work as hoped. Being disciplined helps. Having someone to share the work helps. Being able and willing to work hard helps. Having a mentor or three helps. Being able to ask for advice helps. Learning from others helps. Continuing to learn helps. Changing course when things aren't working helps. Having faith helps.

Is any of this easy? Heck no, a thousand times no. I wrote a little book about this entire journey to Self-Reliance based on what I've learned from experience and from others in 54 years of working. There is literally nothing easy about the journey. Risks abound. Every decision is imperfect because it's made with imperfect knowledge.

OK, all of this is "impossible." If that's what somebody decides, then it's true for them. But that doesn't mean it's true for the rest of us.

Can a couple of hardworking people live well in America on $30,000 a year in earnings? Yes, if they're willing to do what's needed to make it happen, which is step off the conveyor belt of conventional status quo resignation and debt-serfdom.



New Podcast: 10 Geopolitical / Financial Risks to the Global Economy



My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free





NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

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Monday, July 01, 2024

Move Over, Disaster Capitalism--Make Room for Addiction Capitalism

That monkey on your back comes in many forms.

We've all heard of Disaster Capitalism: the Powers That Be either initiate or amplify a crisis as a means of granting themselves "emergency powers" which just so happen to further concentrate the nation's wealth and power in the hands of the few at the expense of the many.

Naomi Klein described the concept and cited examples in her 2008 book The Shock Doctrine: The Rise of Disaster Capitalism, and summarized the core dynamic: "Disaster capitalism perpetuates cycles of poverty and exploitation."

Move over, Disaster Capitalism--make room for Addiction Capitalism.

Addiction Capitalism is my term for the last-ditch / desperation method of guaranteeing sales and profits when everybody already has everything: reduce the quality so everything fails and must be replaced, and addict your customers to your product or service which--what a surprise--only you or your cartel provide.

And since you've bought up all the competition and moated your monopoly via regulatory thickets / regulatory capture, consumers must continue paying--or suffer the consequences. Addiction Capitalism is capital's last best hope when the essentials of life and novelties are both over-supplied. So the only ways to juice demand and maintain profits are 1) lower the quality of goods so they must be constantly replaced (Cory Doctorow's "ensh**tification") and 2) addict consumers to services such as social media and products such as smartphones, or create dependencies which are equivalent to addiction, such as dependency on weight-loss medications.

Just as the addict is dependent on a drug, patients are dependent on medications that must be taken until the end of their lives.

Jonathan Haidt's new book offers a scathing indictment of the intentionally addictive--and destructive--nature of social media and smartphones The Anxious Generation: How the Great Rewiring of Childhood Is Causing an Epidemic of Mental Illness.

For another example of how Addiction Capitalism works, consider how tech companies sell a basic accounting software system for a small sum until it becomes a standard for households and small businesses. Then they eliminate outright purchase of the software and switch to a high-cost subscription model. Nice little history of all your financial records you got there; it would be a shame to lose all that by refusing to pay our monthly fee.

Put another way: going cold turkey and refusing to pay the subscription / prescription is going to be painful. That monkey on your back comes in many forms: checking your phone 300 times a day, obsessively counting "likes," binging on streaming TV and snacks, junk food, fast food, and other addictive glop--the list is long indeed.

Addiction Capitalism is neatly summarized in this scene from Bruce Lee's 1973 martial arts film Enter the Dragon, where the villain Han reveals his opium empire to martial artist Roper, played by John Saxon:

Han: "We are investing in corruption, Mr Roper. The business of corruption is like any other."

Roper: "Oh yeah! Provide your customers with products they need and, uh, charge a little bit to stimulate your market and before you know it customers come to depend on you, I mean really need you. It's the law of economics."


That's Addiction Capitalism in a nutshell: "customers come to depend on you, I mean really need you." That presents us with a choice: "and you want me to join this?"



New Podcast: 10 Geopolitical / Financial Risks to the Global Economy



My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free





NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, John C. ($70), for your splendidly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Federico T. ($70), for your magnificently generous subscription to this site -- I am greatly honored by your steadfast support and readership.


Thank you, Jay ($7/month), for your monumentally generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Aaron W. ($70), for your superbly generous subscription to this site -- I am greatly honored by your support and readership.

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