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Musings Report 2020-49 12-5-20 The New Frugality
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The New Frugality
I recently came across a classic of the 1960s-70s Counterculture titled How to Live on Nothing. First published as a paperback in 1968, a revised edition was issued in 1971, and went through nine printings into 1975.
This was the heyday of the "back to the land" branch of the Counterculture, of which I was a participant in 1978. (I was also a participant in the nonviolent-political-action antiwar branch of the Counterculture from 1971-1977.)
As I paged through the book's many suggestions for extreme frugality, two things came to mind: the forced frugality of the Great Depression which made many of these practicalities necessary, and the current FIRE movement of voluntary frugality aimed at financial independence / retiring early (FIRE = Financial Independence, Retire Early)
These three stages of frugality might be seen as a cycle which is heading for a frugality that is once again forced by impending scarcities in employment and essentials and the decline in purchasing power of our currency via outright devaluation or inflation.
It isn't actually possible to live on nothing, of course, and so the title is more grab-your-attention than an accurate description. But the book certainly contains a wide range of techniques to eliminate many conventional expenses.
Back in 2010, I was approached by Jacob Lund Fisker, who had just self-published his book Early Retirement Extreme. He sent me a review copy and I recommended the book a number of times in blog posts.
This book is now considered by many to be the first (or one of the first) FIRE texts--though as Fisker notes, these goals and strategies have been employed by people for generations.
How do we define extreme frugality? Fisker's bio on Amazon reports he's lived on $7,000 a year for years and his residence (owned free and clear) is outside Chicago. Other people who live in Illinois report their property taxes on their home are roughly $14,000 per year, double $7,000 a year, so I'm not sure how this discrepancy is reconciled. Property taxes and home insurance are more than $1,000 a month in many states with high property taxes, so frugality can only reduce home ownership expenses so far.
Perhaps a better definition--also mentioned by Fisker--is to save a majority of your net (after-tax) income. How much you can save depends on your income, of course; it's certainly possible to live on 30% of $100,000 and save 70%, but if your after-tax income is $25,000, the percentage that can reasonably be saved is considerably less--especially if you have children.
The percentage also depends on how high the taxes are in your state, and which taxes you're fully exposed to.
But setting aside these constraints, extreme frugality is characterized by strategies which drastically reduce or eliminate the big expenses: housing, autos, healthcare, education, dining out and so on. Such strategies generally require sacrifices most people are unwilling to make.
I've personally lived extremely frugally because that was the "cost" of working my way through college and then pursuing a low-paying career in free-lance writing. But since I'd worked my way through university at 19, I was accustomed to the trade-offs and didn't view them as sacrifices, since they aligned with my Counterculture values: living in marginal housing, maintaining and repairing my car, shopping for food in ethnic markets and so on.
I mention this just so you know frugality--if not extreme, then certainly disciplined--isn't an abstraction for me, it's a lifestyle I've embraced.
Let's consider the economic context of each of the three types (or stages) of extreme frugality.
1. In a Depression, work is scarce and social benefits are modest. Capital may be wiped out by a crash in assets or hyper-inflation. Frugality for most people is not a choice, it's required.
2. In the Counterculture era, frugality went hand-in-hand with the empowerment of learning how to do things yourself so you were no longer passively dependent on expensive "experts."
Above and beyond saving money, learning a variety of hands-on competencies was part and parcel of rejecting the "Establishment" lifestyle of working for 30-40 years to pay off a mortgage on a suburban house--in effect, trading your freedom for the lifestyle afforded by working for the government or Corporate America.
This frugality was part of a larger choice to opt out of the "rat-race" economy, which was booming in the 1960s and early 1970s.
3. The FIRE frugality is also a choice, but it seems the motivation is generally different from those of the Counterculture. The appeal of retiring early is understandable, but it strongly suggests that modern work is so burdensome that a great many workers want to leave it behind as soon as possible.
If we look at what's demanded of today's highly-paid workers, it's considerably more than what was demanded of workers 40 years ago. The stresses and workloads have increased for many people to the point where setting a goal to leave their career as soon as possible makes sense.
Put another way: if one's work is enjoyable and satisfying, retirement isn't a treasured goal, it's something to dread.
No doubt many people working toward early retirement reckon that their hobbies and interests will be more fulfilling than their (dreadful) job, and this is certainly possible. But we have to note here that many people who retire early find that boredom soon stalks their waking hours: their hobbies and interests aren't enough.
I never ran across anyone in the Counterculture era who thought about retirement; we assumed we'd be so happy working as homesteaders that we'd just keep doing that until we dropped dead. The whole idea was to have time for our hobbies and interests, not in some future but right now. Naively idealistic, to be sure, but there's something charming about that era's lack of concern for a nestegg large enough to fund a (frugal) middle-class retirement.
If the cycles I've written about for 15 years are indeed intersecting, we can anticipate a new Global Depression, one arising from the scarcity of paid work, essential resources and secure income that isn't rapidly losing purchasing power to currency devaluations, expropriations of assets or hyper-inflation.
I suspect that as roughly $200 trillion in bubble-generated phantom wealth evaporates in the decade ahead, it will be very difficult to preserve one's nestegg, as governments historically expropriate, tax or inflate away whatever still has value--or outlaw it.
The goal of financial independence is certainly desirable and laudable, but the nestegg might not be the most valuable part of the FIRE strategy.
Those who have chosen extreme frugality will not find an era of forced frugality as emotionally devastating as those who reckoned their lifestyle would never be touched, much less overthrown.
Self-reliance is less a matter of building a nestegg and more a matter of being able to live well due to possessing a wide range of competencies, and practical do-more-with-less strategies and techniques. These skills can never be expropriated or devalued. They are yours to keep and use as you see fit.
Highlights of the Blog
Podcasts:
The Parallels of the Great Fire of Rome 64 AD to Today (with host Richard Bonugli) (31:40)
AxisOfEasy Salon #33: Ethereum 2.0 could be the scaffolding for the Network States (1:03) with Jesse H. and Mark J.
Posts:
Covid Is Revealing the Cancerous Underbelly of U.S. Healthcare 12/4/20
About Those Vaccine ID Cards... 12/3/20
Do You Really Think the Empire Will Sacrifice the Dollar to Further Enrich Billionaires? 12/2/20
2021 is Already Optimized for Failure 11/30/20
Best Thing That Happened To Me This Week
Planted a Tahitian lime tree. Live long and prosper!
From Left Field
Why This Reflexive Ponzi Scheme Will Continue (Bitcoin) -- GBTC existed during past downtrends, so I'm not sure about this....
The Invisible oiliness of everything: what it takes to manufacture a pencil--try making one from scratch....
A Loss of Direction and the Rise of Populisms (via BrandonRox)
The Feynman Learning Technique-- worth careful study--
CDC Report: Officials Knew Coronavirus Test Was Flawed But Released It Anyway -- is there any wonder trust in institutions is in freefall?
How the Coronavirus Attacks the Brain: It’s not just the lungs — the pathogen may enter brain cells, causing symptoms like delirium and confusion, scientists reported.
Reinventing Workers for the Post-Covid Economy -- with one-third of all small businesses gone for good?
The Gig Economy Is White People Discovering Servants (via Maoxian) -- the view from Sri Lanka...
The Next Decade Could Be Even Worse: A historian believes he has discovered iron laws that predict the rise and fall of societies. He has bad news. -- MSM shifts Peter Turchin from marginalized doom-and-gloomer to interviewee....
Pfizer chairman: We're not sure if someone can transmit virus after vaccination -- you don't even know yet your vaccine is being approved?
Pollution from car tires is killing off salmon on US west coast, study finds
"Where talent is a dwarf, self-esteem is a giant." (Jean Antoine Petit-Senn, via GFB)
Thanks for reading--
charles |
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