Why does the rat race exist? Why does it seem that so many people work 40 hours or more a week, only to live paycheck to paycheck? There are many reasons for this, and many are largely out of our individual control. However, I think one reason has to do with our mindsets. Much of which is taught culturally. If an individual learns to change the way they think about money, then one can learn to manage it differently. Doing so could have a cascading effect to change our world for the better.
In the study of economics, there is a thought experiment that is helpful in demonstrating how economic action works. It involves thinking about Robinson Carouse on his island. For example, it can help explain how through economic development, one should be able to acquire more and more luxury time. Imagine, when Mr. Carouse is first on the island, he would have to spend most of his day fishing in the waters with his bare hands to get his food for the day. Let us say that every evening, he spends the little time he has left in the day to gather sticks and plants to make tools with. Eventually, after many days of this, he is finally able to create a net or a spear. This drastically makes his fishing more efficient. This way, he can spend less time in the day fishing for food, and more time in the day building even better tools, a home, etc. As this process goes on, he generates more and more tools that makes his daily tasks easier, granting more free time in the later parts of the day. Surely, we can see the parallels in our own life. Society has created cars, computers, and the like that has surely made us far more productive than our ancient ancestors.
So where is our free time? Well, one reason has to do with our desire for more and more material items. Going back to the Carouse analogy, we don’t spend the later parts of our days in luxury because we aren’t simply satisfied with meeting our basic needs of food, water and shelter. We want to spend the rest of free time working so that we can have lavish things such as jewelry, fancy cars, etc.
What drives this kind of decision making? Many blame these ideas of consumerism and materialism on the evils of western culture. However, there are deeper causes to this trend, one worthy of note is modern monetary policy. For the bulk of the United States’ history, governments have used fractional reserved banking and fiat money printing to expand the money supply. This causes inflation, which leads to the US dollar devaluing over time, and prices to slowly rise. This incentivizes people on a macroeconomic level to save less and spend more. If your dollar is going to be worth less tomorrow, it makes more sense to spend it than save it. So, one could see how this would leave people to buy “useless” things once all of their primary needs are met. I know we do not consciously think about our spending habits this way, but it is surely one of many factors that drives us to be consumeristic.
We may not have a choice in how our governments handle money (except perhaps by supporting infrastructures such as blockchain and cryptocurrencies). Regardless, understanding this truth about our society and infrastructure can help prove beneficial if we learn to overcome our urges. For many of us, our goal is to live luxuriously, and lessen the need to work tirelessly for the rest of our lives. To do so we have to give serious thought to what are the person basic necessities that would make us happy and how do we properly invest and save our money so it is not devalued over time. Perhaps insight from monks and minimalists would help in the former, but obviously this answer is going to be different for each person. Knowledge in the latter is certainly complicated and a subject of a great many books, with few having the best answer. Answers that will have to be explored in later blog posts.
Imagine though, if more people acted this way. If more people spent less, saved move, and lived more luxurious and free lives. This would have many positive benefits on not only individual satisfaction but would be beneficial to our world and planet. Surely, it would have positive benefits towards the environment, as much pollution is driven by our overconsumption and commuting. It would help the poor because less immediate economic activity would drive down macroeconomic demand and lower prices, making life more affordable. If this would occur more often in developed nations, perhaps more labor would be exported to foreign countries to help them grow and prosper as well. Often people think: “spend money to stimulate the economy!”. However, I see this as an antiquated notion.
The purpose of this blog is not to tell anyone how to live their life. I deeply respect the individuality of everyone, and the way different people wish to live their life’s. I am not judging anyone, or saying one way of living is “right” or “wrong”. This is simply food for thought. What I am trying to say is: be the change you wish to see in this world.