How $30,000 Can be More Than $300,000

In interviews, speeches and in writing on this blog, I often point out that financial capital is just a marker for real capital, which is comprised of natural, built, social and human components. In the context of upcoming social upheaval given numerous converging crises, this post is a brief discussion piece on how those making little or no money may actually have a leg up on those who are employed/making alot of money.

The Monkey Trap - All the monkey has to do is let go, to get free

How Can $30,000 Be Greater than $300,000?

With the financial crises making headlines, and folks losing jobs and unable to pay for things they once viewed as 'necessities', I thought I would offer a different perspective. For at least 4 reasons, I think those lower on the income hierarchy may have advantages.

Let me begin with some personal history. I am not a wealthy man, at least by US standards, but in the past I've made a great deal of money. Two years out of MBA school in 1994, I was making over $400,000 per year. However, irrespective of how much I earned, I was living paycheck to paycheck - not only did I spend all my after tax income but was psychologically dependent on the next check being at least as big. (The details behind this are another story entirely). Today I live off of a graduate student stipend of $21,000 per annum and some income generated from savings. I now live in a 1200 square foot house, grow 40% of my own food and spend most of my spare cash on tools, books and gardening equipment. I am no saint, and due to travel still have a footprint many times that of the average person. I consume less not because I have to, but because it has made me much happier, and calmer. Perhaps I was lucky in my twenties to hang with billionaires who weren't happy. However, I still am connected to the financial markets, both due to interest and because more than half of my closest friends still work in the industry (though that number is declining, partially because some are losing their jobs and partially because I am losing some of them as friends.) I don't have all the answers to the upcoming social puzzle, but having breathed the air near the top, as well as studied the unrelated sciences of habituation, finance and anthropology, so I feel qualified to make a few speculations.

With that backdrop here are some reasons why those of you making a lot of money ought to reassess your path, and those making little or no money, should perhaps have a brighter outlook.

1)There is a 'monkey-trap' that exists among people with high incomes, which makes them both unable to see they have 'enough' and slow to change their markers into real capital. Based on recent and real conversations with those making north of $1 million per year, it is COMMON among this crowd to feel great pressure to continue at or near this level. They 'see' the upcoming depression and energy crunch and feel that making more money is their best defense. Also, over time, their 'nut' has gradually ratcheted up (country club memberships, private school for their kids, 2-3 expensive resort vacations per year, etc.) While every one of these 7-8 friends has far more money than I do, they are trapped by their expectations. Furthermore, they are surrounded all day by people with an internal success barometer measured by digits. The jump to a lower consumption lifestyle is a long one. I might also note that few of their wives would willingly sign up.

Research in sociology, biology and economics suggests that however much money we make in one year, we want 'more' the following year (these studies were undergone in the heart of an era when 'money' was a proxy for social standing -similar results may not hold in the future). In economics, the hedonic treadmill is a phenomenon (described by Richard Easterlin) where irrespective of ones success at obtaining material possessions over time, ones desires for more material possessions increases faster. Having been on this treadmill for much of a decade, I can assert (n=1) that it is true.

Source - "The Overspent American" - Professor Juliet Schor (Click to enlarge)

2)"Poor" people will be the first to wean themselves off the giant fossil fuel subsidy underpinning modern society. Out of necessity they will substitute time and labor for things money once bought them. As such they will have both skills and mindset that will serve them well in an energy (and money) constrained future. Before the repeal of the small farm subsidies and sharp shift towards industrial ag in the early 1970s, poor people were incredibly healthy (vs. their modern counterparts), as they would use what little land they had access to and grow their own fresh produce. This is not the case with the countries current poor people as the cheapest food available is often the least healthy. As necessity becomes the mother of invention, and in parallel with increasing research showing the ill health effects of too much refined carbohydrate and sugar, lack of money will force people to cooperate, barter, and immerse themselves in productive activities other than moving paper around and taking a fee. There is an opportunity to accompany the societal inversion of this pyramid. In many cases these people already are laborers, so already have an advantage. Oildrum readers - would you rather have Donald Trump or MacGyver as your neighbor given what you know?

The Addiction Timeline - Eventually we need the drug just to get back to normal (Click to enlarge)

3) As I wrote about in my essay on addiction, modern stimuli 'hijack' our brains. It is likely that our daily smorgasbords of stimuli will be reduced in the future, either via higher costs, fewer options, or less time. Those that have 'ratcheted' high up the consumption ladder will have a more difficult time adjusting, in very real physical/emotional ways. Local, social and labor intensive activities are slower than found in the current fast paced business jungle where our brains seek perpetually higher differentials between unexpected and expected reward. Can you imagine a day when stock market tickers are not on in most restaurants, airports, taverns, etc. or when >50% of ones social network is not online?

4)Given the near certainty of cultural shift away from conspicuous consumption due to unaffordability via asset deflation and eventual inflation, the disparity between the haves and have-nots will increase. The "American dream" may not seem to be available to everyone anymore, and many in the have-not category may harbor some resentment. Would you rather live in a gated community with a large bank account, paranoid of people out to get you, or have little of concentrated wealth that others could want? As such, sometimes being in the majority is not only camouflage but comforting.

These above are just some thoughts. I don't advocate 'becoming poor', only opening our minds as to how rich and poor are defined. In the end I think it is social acceptance among peers that is what we seek - money, after basic needs are met, is just a vector. Much more than any energy/technological constraints, it is the tight grip on our 'non-negotiable' lifestyle that will be our downfall - the global monkey-trap.

Is the banana really that tasty?

I guess for whatever reason I have never felt compelled to conform in the sense of buying lots of crap to prove I was a success. Yet I live in an area with SUVs and McMansions all over the place, and we know some of the people who go in for all of this stuff.

Some of it seems to be cultural - some ethnic groups seem to place much more importance upon appearing successful than do others. Ultimately it will place a great strain upon the people who attempt to maintain appearances - those who downsize and simplify as required will undoubtedly have a much easier time of it.

I keep thinking back to when I was a kid - we didn't have lots of expensive toys, but we could play chess, board games, card games, or go outside and ride a bike or throw a football around. We had houses that all had a single bathroom, and our families had only one car. When we kids wanted to go somewhere, we would ride our bikes or take the bus - rarely would we get a ride in the car. When we took a vacation, we tended to throw tents and sleeping bags in the car and go camping at State Parks that weren't too far away - we didn't fly off to exotic places very often (if at all). If you had asked us, we would have said we were quite happy - many people today would find living like that to be difficult.

A nice collection of salient thoughts.

Why do we keep sticking our hand in the jar, when data clearly shows we are on plateau (pun intended) when it comes to happiness-to-income ratio:

Letting go would serve us and the environment so much better.

Also, why do people high up on the ladder seem to have the hardest time in understanding that the earth is finite and oil resources are exhaustible?

Because people in the rat race are more prone to attention-deficiency-trait, resulting in high dopaminergic activity, which in turn correlates with high belief paranormal phenomena.

No, really, I didn't make that one up :)

If such a causation was true, it would explain a lot of the reality-denial by the people still waiting in the queue for their learjet....

My apologies if this was previously posted, but it seems very appropriate for this thread (another priceless thread from TOD).

Speaking of our Monkey Trap Culture:

Hanging On, or How to Get Through a Depression and Enjoy Life

... I’ve seen few interesting, in-depth accounts of how middle class, and upper middle class Americans in particular, experienced the 1930s depression...

...If you were in a business, you kept the business going any way you could until the upturn came and things got better. If you had a job, you hung onto it any way you could...

I found this article over at Bill Totten's weblog:

I think it captures the essence of our current financial predicament very clearly and concisely, and the only thing I found at all lacking was any discussion of what the viable alternatives might be, if any.

I had several "aha!" moments while reading it, and now I find myself wanting to look up William Catton's book "Overshoot" because, if memory serves, he had similar things to say about the root causes of the last great depression.


You are absolutly correct about Totten's piece. I believe it is worth copying and handing out to friend who are begining to squirm but can not get a grip as to what is happening. It might also be very useful for high school teachers to use as a discussion point----maybe a way of introducing them to the future. Thanks for the lead. D Wright

You bring up some interesting points.

Re: #4, I grew up in the Boston suburbs in the 1980's. It was not always easy to tell the rich from the poor. The rich drove beaters, the poor drove beaters with nice stereos. The rich dressed in LL Bean, the poor wore Nike. The main difference was in what schools their kids went to. When I came to the Midwest, it seemed like everyone was rich, with nice cars and such - I think it was just that people wanted to project that image, where in the East, people wanted to project thrift.

#2 I am not so sure about. It seems that many of today's poor, especially urban poor, have few skills and no land, and also many have drug and health problems. I don't think that people who are used to going to the 7-11 for food are going to fare well, other than by government handouts. There are still some rural poor who have lots of practical skills and will probably do fine.

Re: #1. I am very interested in the story of how you made the decision to make the "switch" from Wall St. hotshot to Ecological Economics (Master of the Universe to Master of a finite planet). Did you get a lot of ridicule from your BSD Wall St. buddies?

This I believe is sooo important.

People can get addicted to spending. This causes them to keep spending over their limit. They see money as the answer to their problems. I believe there is a point where money becomes the reason to live and not a means to help live.

However, I still believe money will increase survival rates, even in a post peak era. There is a simple social principle, money is power (the ability to buy someones time) and power increases survival rates in almost every society, unless something weird happens like the french revolution...

Present value

In calculating the present value B of a perpetual with face value A, paying interest at a percent per annum, we have to discount the annual interest payments at the prevailing rate of interest b. Since the annual interest payment is Aa, the discounted value of the nth interest payment is Aarn, where r = 1 - b is the discount factor. We have 0 < r < 1, hence rn approaches zero as n gets arbitrarily large. The discounted value of the string of interest payments is:

B =Aa(1+r+r2+r3=...+rn=...)= Aa/1-r=Aa/1-(1-b)=Aa/b

We conclude that Aa = Bb. For example, the 4% perpetual with face value $1000, yielding $40 per annum, can be traded in the secondary market for $1000 as long as the market rate of interest b is 4%. However, if it is halved to 2%, the same perpetual can be sold for $2000, because at the lower rate it would take two debentures to generate the same income stream.

February 12, 2009

Growth And Debt: Is There A Trade-Off?
by Antal E. Fekete

Hi Mac, - I can simplify your equation, unless you need a precise number to fantasize about. It was imparted to me by a guy with a few PHD's, who wrote propaganda for Reda Pump / Schlumberger:

"The present value of a dollar today is a dollar and tomorrow it is not."

An interesting PoV from Jay FitzGerald, at

So, what is my allowable consumption to be carbon neutral? Well, roughly 200 gallons of gasoline a year, or 4000 lbs of wood in the woodstove, or elsewise in consumption in the mix. Of course here it gets very complicated, and it gets tempting to cook the books. Personally, I think the easiest thing to do is to scale it all in gross dollar consumption because the spending of every dollar has a carbon impact at this point, and the price of a gallon of gasoline is probably the most accurate measure of the real impact of a purchase, as fuel is one ingredient in everything we buy. If I assume 200 gallons of gasoline at 3 dollars a gallon as an average(since I don't burn that much gasoline) we have 600 dollars of consumption: if we assume that fuel is at least 10% of the cost of any purchase, conservative indeed--this gives me a consumption level of +/- 6000 dollars a year at current valuations as what I'd see as the upper allowable limit of personal expenditures. Of course this is a little over twice of global GDP so I'm living pretty high on the hog. A good number for a lot of reasons: 3 acres per person, perpetual permaculture, living under one's federal standard deduction so tax money doesn't directly go to undermine one's effort(another topic). At the moment with world population where it is there is almost 5 acres per person on the planet so the effort is sensibly ethically dependable. . .3 acres per person in agriforestry permaculture with cash expenditures not to exceed 6000 dollars a person for annual expenses to me seems to be a very good estimate of what sustainable really means. It is indeed do able, and of course, central to the theme around here, is a strategy that makes the forthcoming economic collapse of pretty small consequence. . .

Hi subgenius,
The link you provide doesn't make any sense. It asks: "So, what is my allowable consumption to be carbon neutral? "

The largest production of CO2 is from burning coal for electricity generation, oil for transport and natural gas for electricity and heating. So for a country that generates most o fits electricity from renewable sources( hydro wind, solar) or from nuclear is mainly contributing CO2 from transportation and from embedded CO2 used to manufacture imported goods. The actual embedded carbon in non-FF energy sources is low( for example a Danish study of wind generated electricity estimated 1.4gCO2/kWh),but may be up to 50g CO2/kWh for nuclear. To have a high standard of living( equivalent to most EU countries, but much higher than $6,000) we probably need to consume >2,000 w(17,000 kWh/year)

If we take the figure of 10g CO2/kWh for low carbon non-FF energy, this is 170Kg CO2 but could be as high as 1,000 Kg(equivalent to 15-75 gallons of gasoline in carbon dioxide terms).

The embedded energy on say an imported car from a high CO2 producing country ( US) is approx 3Kg CO2/Kg ( a 2,000 Kg car has about embedded energy equivalent of 2,000 gallons of gasoline energy). This is close to your calculation of 10% of the value of goods is gasoline energy. So a country using low carbon renewable energy could import $4,000 -5,500 value of goods from high FF using countries to say within the 200 gallons gasoline equivalent. Clearly that country would have an average income much higher than $6,000.

So to answer the question "what is the allowable consumption to be carbon neutral", probably need to quality by adding; "If a country continues to use FF at present average carbon intensity ".

Since the cost of using low carbon renewable energy is only slightly higher(1-2cents/kWH) than using FF energy, for example annual US per capita electricity (11,500kWh) would be $115-230 more is all FF electricity was replaced by wind, solar, hydro and nuclear, it seems more likely that countries will replace FF with renewable energy rather than have a 6 fold drop in per capita income(from $36,000 to $6,000).

A better question is;
" how much would it cost me to reduce by carbon production by 85%?".
In Canada or Norway the biggest reduction would be to not drive an ICE vehicle, drive a lot less, or drive an electric vehicle. In US or EU, more than half of your carbon foot-print is from using FF generated electricity( 75% in Australia), and most of the rest from gasoline or diesel vehicle use and air transportation. Consuming products, or food or services directly have much lower embedded FF energy, but would vary greatly depending upon the type of food, or where the product was manufactured and the type of service.

If you look at the rest of his site, you will see that Jay is attempting to live off 3 acres of forested land in Hawaii in a self-sufficient manner. And without damaging the existing flora and fauna.

I think it's a pretty good way to think about it, in terms of dollars. and right now to me $6000/year looks very good, I've been living on a third of that for the last couple of years. The "poverty level" for a single person in the US is $9000 a year, as a point of reference.

This is all a bit muddled. The way to think of it is that things have a dollar price, but they also have a carbon price, as I've done here. They're not equivalent, since we don't have a carbon tax.

We're used to things having several different prices already. "I could get this table, and just whack it in my dining room, or get this cheaper Ikea table, but it'd take some time and hassle to assemble" - and so on.

A dollar price, and a carbon price. Different things.

"A dollar price, and a carbon price. Different things.":

The connection is that is costs $$ to replace present carbon use. If as you have proposed, the goal is to reduce CO2 production to <1tonne CO2/person /year, its sensible to at least examine the potential cost.
Subgenius is suggesting one method is to reduce average income from $36,000 to $6,000. That's a high cost( $30,000 /year).

You have suggested eliminating most,private vehicle and airline transport, using a lot less electricity and that from wind power, and a range of other measures that will save money. From your perspective their may be no cost, just a different lifestyle.

In the case of Australia by far the largest CO2 emissions come from stationary generation and industrial processes that use mainly coal and some NG. The second largest if from transport.
As an individual you cannot do a lot about the energy that was used for most products(home,vehicle, clothing, appliances), whether new or used, except not consuming. But this is not the big generator of CO2, its energy used at home, at work and transport.
As an individual you can use NG and electricity more efficiently and for a small additional cost(approx 2cents/kWh?) have 100% of electricity derived from solar or wind power. When electric vehicles become widely available, recharging with 100% green power, will have a very small CO2 impact. Under those conditions, it is not really relevant how much I drive or how much electricity I consume. You may feel better not driving or using a fan for cooling instead of A/C, I would feel better driving and using A/C, but the environment doesn't care if my CO2 foot-print is the same as your CO2 foot-print.

You may argue that just by consuming more, I am providing income to others and they are using >1Tonne CO2, so I am indirectly contributing. The counter argument is that society has to provide support to all and if I do not contribute to economy the government will take on additional measures( such as lower interest rates) to boost economic activity, perhaps creating more CO2( for example larger support for aluminium refining?).

The connection is that is costs $$ to replace present carbon use. If as you have proposed, the goal is to reduce CO2 production to <1tonne CO2/person /year, its sensible to at least examine the potential cost.

It's 1 tonne of CO2 for the things an individual can control directly by their lifestyle choices(food, heating, transport, etc) - there's another tonne in things individuals can't control like industry and so on.

The things an individual can control, most of them don't cost but save money.

1. buy electrical power from other sources preferring in order: wind, geothermal, solar, hydroelectric, landfill gas or natural gas, waste burning, bagasse. Don't even think about nuclear or coal.
2. use cool drinks and fans not airconditioning, jumpers and hot drinks not heating, hang washing out to dry, change to CFLs and pull plugs out on appliances not in use
3. Don't fly in aircraft at all.
4. bye-bye cars: for a journey under 5km, walk. Under 15km, bike. Over that, public transport.
5. consume mainly fresh fruit and vegies, grains and legumes, avoid processed containerised food
6. reduce meat consumption to under 12kg/year (0.25kg/week)
7. for consumer goods, borrow rather than buy, secondhand rather than new
8. if available, use coppiced wood for heating/cooking, otherwise use that wind powered electricity, or if that's not available, use natural gas

Of all those, only #1 costs more money in the West; but combined with #2 money will be saved. #2, and #3-#7 all save money, and #8 may cost more or less, it depends on the area.

Thus, sometimes reducing carbon costs money, sometimes it saves money. If the infrastructure (renewable energy and mass transit) are available, then reducing carbon saves money. Putting them in place costs carbon, but then coal-fired stations and roads have a much larger carbon cost.

You may feel better not driving or using a fan for cooling instead of A/C, I would feel better driving and using A/C, but the environment doesn't care if my CO2 foot-print is the same as your CO2 foot-print.

Going by your tone, I'd be extremely surprised if my carbon emissions were the same as yours. Our household emissions are at about the world average, which is 25% the Western average and about 300% of what they need to be to avoid catastrophic climate change.

Again, that's with distinguishing between the lifestyle things which an individual or household can affect directly, which things are responsible for about half of all emissions.

It all sounds very good. But being dutch i take my bike even for 100 meters :) I hope I do not have to stop using my bike....

Okay Nate

I can't this one up. Money by and large in this culture equals status. We are primates used to living in strict social hierarchies. We're quite vicious primates and really by and large thrive on deferred aggression towards those lower down in the social hierarchy. Poor = low status. Lower status in the mainstream culture = (1) the being of the target of much more intraspecific violence (2) poor access to health care (3) no access to education. People are on the treadmill of "keeping up with the Jones" because status means a great deal to us in terms of access to these basic issues. Although very few people think this thru consciously (except for social scientists and people who have made major changes in their hierarchical status), I suspect that most people are quite aware of this calculus on a subconscious level.
You've said that you've breathed the air on the top. I'm a ghetto kid who's breathed the air on the bottom. Job opportunities where I grew up were the military, drug-running and prostitution. I was the only scholarship kid. Through education, I've gone from the ghetto to an upper-middle class life. What that means: I can do work that I love (paleoclimatology). I can go to the doctor when I'm sick and be diagnosed. I'm not immediately written off as a drug-user or a psych case. I am much physically safer. I'm not usually a chosen target of the police now (I'm light-skinned, don't speak with a Native accent, and I make eye contact with whites, I dress professionally in button-down shirts).
There's often alot of cracks about wives caring about status too much on the Oil Drum. I suspect that women are as conscious about how dangerous it is to be perceived as poor as non-white males tend to be. They (correctly) perceive middle-class status as much physically safer and conductive to a healthier existence with more opportunities.
I'm trained as an ecologist, and I know that our dream North American middle class lifestyle is completely unsustainable. And yes, most of these desired status items are crap and don't make us happy at all. But if you want people to voluntarily become poorer you've got to address these human rights issues. From what you mention of your thesis research, you are viewing us as individuals. We're not, we're primates in a hierarchy where status matters deeply for serious matters. Check out the vast literature of social determinates of health, the research of Dennis Raphael and there's alot of good work by British statisticians on the subject.

Why do you feel that women are very conscious about how "dangerous" it is to be perceived as poor? Re physical safety, there are lots of safe, lower income areas in the USA.

There may be plenty of safe lower income ares in rural states/regions, but... in CA, the poor neighborhood = dangerous relationship holds true more often than not.

This will be my only response in this thread, as I promised someone I would work on a project and stay away from commenting here until finished.

Money by and large in this culture equals status

The past generation that has been largely, but not totally true (for example, consider some in academia or church service whose status is based on the respect of their peers. Money, in my lifetime has always been able to buy respect to a point, but the point of my post is I think that will change and is changing already.

There's often alot of cracks about wives caring about status too much on the Oil Drum. I suspect that women are as conscious about how dangerous it is to be perceived as poor as non-white males tend to be

This is probably true, but in my own sample size, the husbands are my friends who I've 'been through the ditches with', not their wives. As such the men have been incessantly hounded by emails and writings from me over past 5 years so are kind of 'up to speed' whereas their spouses are not. I fully think women are equally as competitive/cooperative as men - it just manifests in different ways.

But if you want people to voluntarily become poorer you've got to address these human rights issues. From what you mention of your thesis research, you are viewing us as individuals. We're not, we're primates in a hierarchy where status matters deeply for serious matters.

My actual 'thesis' addresses this precise issue - on how to change the cultural metric away from conspicuous consumption. And I didn't go so far as suggesting people voluntarily become poorer, only realize that 'rich or poor' can and will be defined differently in our lifetimes.

Pls feel free to contribute a guest essay to Campfire - I wrote the above this am because one such promised did not materialize. We're only as good as our content here. Nothing in the cupboard and you get Nate or Gail...;-)

This will be my only response in this thread, as I promised someone I would work on a project and stay away from commenting here until finished.

Have you ever considered the addictive nature of hanging out here on TOD? This is not meant as a personal criticsm of you but more of an observation. I know I have sometimes found myself neglecting important things to participate and sometimes wonder if this is just self indulgent consumption that is of little more value than if I went to the movies or read a good book.

One of the things on my list to give up on the way to austerity is home broadband connection - but it is really difficult to make that final cut, even though I know it is necessary. The television is on the list too but that will involve a small war with the family.

Addendum; Tried the whole "ditch the television" thing out on the family tonight at dinner (around the table with TV off). Got my war! Might be a long campaign. Stay tuned!

Ha - "Stay Tuned!"

good luck Termoil, I have gone for 1 and 1/2 years now with no TV...

the first month was *weird* but after that, I really started to enjoy the extra time.

the kids and I now play cards and board games for entertainment. If we really want to watch a movie we can do a DVD on the computer, but the absence of commercials is awesome.

"Nothing in the cupboard and you get Nate or Gail...;-)"

Ha, throw me in *that* briar patch.

I suspect that women are as conscious about how dangerous it is to be perceived as poor as non-white males tend to be. They (correctly) perceive middle-class status as much physically safer and conductive to a healthier existence with more opportunities.
I'm trained as an ecologist, and I know that our dream North American middle class lifestyle is completely unsustainable. And yes, most of these desired status items are crap and don't make us happy at all. But if you want people to voluntarily become poorer you've got to address these human rights issues.

"They correctly perceive"?! What pray is correct about this perception, especially since it not necessarily true. It most certainly is not true in many other cultures and parts of the world.

" But if you want people to voluntarily become poorer you've got to address these human rights issues."


Maybe what we need is to come up with new social status symbols other than the ones we currently have.

Obviously some people's current perception of what is or is not poverty is what has to change. Those people who think that they need McMansions, SUVs and upwards of a million dollars a year to meet their basic survival needs, will be hit hard upside their heads with the two by four of reality.

I have been up north this past week. I bought a horse, brought him home, tried him out, then took him back because he was barn sour.

The view where I live is limited. Everyone in my little community lives pretty much the same, although some have more money than others. Still, our outward circumstances are all similar. For an example, when you live where there isn't much extra water, landscaping statements of status are quite impossible and most opt to let the Sage and Rabbit Brush do it's thing. There are few lawns because they tend to dry up and blow away. We have a few big houses, but they're recent and have been built by the folks moving in from other areas of the country. They apparently have the income to heat their big houses with either propane, or electricity. A small house can easily be heated with wood from the mountain, or coal for not a lot of money. Many cut their own firewood and the Stokermatic Coal Furnace is alive and well in this part of the world. Most of us live in 800 to 1000 square feet and some of the older homes are considerably smaller. We all own a vehicle, usually, an older model pickup truck with 4 wheel drive. They're necessary to get around on our rough unpaved roads, especially in the wintertime if we happen to get snow. A new shinny vehicle doesn't make much sense because they get dirty so easily and after hauling a few loads of hay, they get scratched up too. So, we buy used trucks for the most part, and besides, $45,000 for a new Dodge is pretty steep for most of us, when you can get one that's got a few years on it for a whole lot less. We all dress pretty much the same; jeans, heavy footwear, and a hat of some kind. A well worn chore coat is standard for the winter months. You never see a big belt buckle unless, it was won by the feller wearing it at the rodeo. Ball caps are common, as are Cowboy hats. Because of our elevation (7000 feet plus) it's wise to keep the sun off of your neck and ears.

So, back to my trip up north. I found the horse in the classified ads. I've been looking for a big Quarter Horse gelding for a while and I thought I had found one. I talked with the feller who owned the horse on the phone and he described what I was looking for. A good, solid Quarter Horse Gelding. I asked him why he was selling the horse and he told me he was "downsizing". "Downsizing" can mean a number of different things so I made no assumptions.

The horse lived in a very nice neighborhood, actually, a very nice subdivision of million dollar homes, all set on an acre lot, all with a nice brick barn out back, and all with a couple of happy fat horses as lawn decorations. I parked my truck and stock trailer in the asphalted drive at the address I had been given on the telephone. A younger feller came out the back door. He was well fed just like his horses. He shook my hand, introduced himself, and we walked together back to his "pasture" to take a look at the horse I was interested in buying. The barn was full of "toys", 4 wheelers, a truck camper, a flatbed trailer (for hauling hay I would guess), and a jet ski. Two new pickup trucks were parked in the drive as well as a new SUV. I looked at the horse, a large fine fellow, buckskin, and obviously very well bred. I asked again why he was for sale and was told by his owner that the lumber business had been very slow lately and he was forced to cut his expenses and the horse had to go. He hoped to keep the other three in the barn; a mule for his wife and his teenage daughter's mare and a year old filly. I offered a thousand less for the horse than he was asking and I left with the horse.

On the way out of the neighborhood, I noticed a number of For Sale signs, in fact three of them in a block and a half. One had a sales brochure at the sign so I stopped and picked it up. The house was only $859,000 complete with mother-in-law apartment. Big house, nice place. As I left the area, I noticed a billboard advertising the lots in the subdivision I was leaving; "Lots Beginning at $349,000" had been crossed off. A new number did not replace the $349,000. So, I figured the $859,000 tag on the nice house with the mother-in-law apartment was probably a give away price. Likely, the owners were facing foreclosure or they'd be asking a higher price on their beautiful home. I suspect the feller I bought the horse from would soon be facing similar circumstances. I wish him well.

Here is the thing. The big houses, the mother-in-law apartments, the fancy brick barns, the nice horses, the ATV's, the SUV's, the truck campers, the long asphalted driveways, none of it means a thing to those of us who live for what we think are the important things in our lives and our community. The important things are being close to the land, having real and lifelong friendships, and watching our children and the children of our community grow up marry, and have their own children. We all belong to a real community of folks who truly know and enjoy each other. A big house, an asphalted driveway, a new truck, a big screen TV, none of it means a thing to us and in fact, it all seems silly and a waste of money to us. We know that all of that stuff isn't at all necessary to a happy and a full life.

I know that people who live large also have good friends, but, the part we don't understand is why do they bother with all of the rest, all of the stuff they accumulate that doesn't add a bit to the bottom line and the bottom line is living a full and happy life.

The nice horse didn't turn out. He's barn sour and so I took him back. Best from the Fremont

It is easy to over-generalize about women and what they want. Some will fight a downsizing, others (like my wife) recognize that change is coming.

There have been funny stories about "toxic wives" in the U.K. press recently. Essentially golddiggers who walk out when the man loses the high-paying job. Part of the problem for the men who are really high earners is that it is the social-climbing gold-digging type of women who aggressively seek them out. The men aren't completely innocent either - oftentimes when they pick one out, they are termed the "trophy wife". But if the marriage can essentially be summed up as him bringing home a paycheck so she can live a life of pampered luxury, then it wasn't much of a marriage in the first place, and the man would probably be better off without her.

Great post, and quite true.

One offshoot of the choices listed could be to adjust ones values and live on $30k while making $300k, and save the rest.

My wife and I have managed to live on under 15k per year (that's for both of us, $7500 each) - sometimes substantially under - for our entire adult lives, and that includes the costs of all possessions and building housing, food, medicine, etc. in what is one of the more expensive states to live in.

During a significant part of that time we were each making relatively decent salaries so our income was well into the 6 figures range, but we simply treated that as "spare" money to spend on global conservation work. Now that health limitations have knocked our income down, we still don't experience hardship since the only thing missing is the "spare" money.

And I'm not talking about self-deprivation. With a little creativity it has been possible to not only feel like we were living adequately, but to give the outward appearance of being slightly eccentric wealthy people. Many who know us probably think our income is more than 10x what it actually is, since we don't "act poor" with the usual social signals.

I'd recommend that sort of lifestyle to anyone; it has probably been more satisfying than the lives of the billionaires I've known; I certainly wouldn't have traded lives or priorities with any of them. Feeling like a success in one's own eyes and by one's own standards, feeling like you didn't waste your life on unimportant crap, is real wealth.

and to answer the question, I wouldn't want Trump as a next-door neighbor, since he's a bit of a dick and would probably complain about my landscaping. MacGyver would be welcome. Or maybe compromise on the guy who played him, he helped me save some Taiwanese monkeys once. (Unfortunately, some monkey traps actually still catch monkeys).

Do big stuff for the world, die broke.

The final scene in Monty Python's 'The life of Brian'. "You come into the world with nothing, you die with nothing. So what have you lost? Nothing".

We're much alike, Nate.

"Before the repeal of the small farm act in the early 1970s, poor people were incredibly healthy, as they would use what little land they had access to and grow their own fresh produce."

I'm getting old. This sounds like "in the 40's"
used to sound to me.

"I picked cotton by hand" sounds like "and then we
had electricity." ;}

I've always lived pretty close to the ground and never felt especially deprived, although I have often been resentful of rich people for all the resources they squander on nonsense stuff. But there remains a very big difference between me and the "poor." Attitude, upbringing, education, and other things I don't know about.

Most people, rich or poor, don't voluntarily give up stuff they already have. I don't think Nate is really any different. He may have given up money and a lot of nonsense stuff that went with it but got something better in trade, more satisfying. Well and good. Can anyone do that? Well, yes, hypothetically but in reality most people won't see it that way.

It's true that people trade one thing for another. A common tradeoff for high income is high stress and low security.

For example, I've a friend who works in IT, he comments that he could leave the large company he's in and double his salary with a startup company - but the startup company, about three-quarters of them won't be here in a year, and in that year he'd be working 60-80 hour weeks and stressing. So he trades money for security and lower stress.

This is pretty common, I think. "I could get that promotion/fancy job but then I'd have less time with the family."

The same friend, incidentally, says, "I could also get a promotion within the company, and get more money - but there's no point, my wife would just have us borrow more against our income and so we wouldn't really be better off."

The same friend, incidentally, says, "I could also get a promotion within the company, and get more money - but there's no point, my wife would just have us borrow more against our income and so we wouldn't really be better off."

I find this a curious matter of affairs.

I wonder if this is explicitly understood by the wife because the husband has stated his understanding to her outright or if this is all in 'stealth status'- he has never said a word to his wife and compensates via his choices.

Hard to say. But it's definitely his experience speaking. When their house was revalued, she said "great! we can borrow more!"

My friend and his wife are nothing unusual. Like many others before the economic crisis, they used their mortgage as a low-interest credit card. And it's not just her. Australia has a "baby bonus", a payment of a thousand or so you get when you have a baby, it's supposed to help with the expenses immediately around childbirth. It's not means-tested, so if you're on the dole you get it and if you're on $100,000 you get it. He used theirs for their second child to... buy an iPhone.

Does this contradict his worry about the mortgage? Absolutely. But that's the nature of people, of humans. They're contradictory. Today they worry, tomorrow they do the thing they know is foolish, tomorrow they worry again.

Conspicuous consumption, conspicuous waste - that's our culture.

Yes, paying people to have more children when the population is already unsustainable is pretty much insane. And I'm sorry to say the U.S. shares this form of insanity. We don't dole out "baby bonuses" per se, but heavily subsidize childbirth via tax incentives and welfare.

It seesm the babay bonus has just been changed and is now $5000, paid if your combined family income in the six months post birth is less than $75K. It is now paid in installments of $384 each fortnight. These changes seem sensibile and may prevent the perception that Baby Bonuses end up as new plasmas on the wall (or i-phones). It is still extremely generous by most international measures.

I do think that it is demographically preferable to have a higher indigenous birth rate and lower immigration of people in the 15-40 year old bracket who arrive here ready to join the consumption fiesta as fast as they possibly can.

This is pretty common, I think. "I could get that promotion/fancy job but then I'd have less time with the family."

The same friend, incidentally, says, "I could also get a promotion within the company, and get more money - but there's no point, my wife would just have us borrow more against our income and so we wouldn't really be better off."

I'm in a similar position. A few months back, I was 'offered' a Salaried position. The initial offer was a grand total of $500 more than I was already taking home (slightly below average wage here in Oz). I managed to avoid laughing in the Managers face and politely refused the 'offer'. A few weeks later, she came back to me with an improved 'offer', of $1500 more than current. Again I refused. A week later, she 'invited' me into her office, and told me that if I didn't take the 'offer' up, I would be demoted (illegal) and replaced with someone who would take it. I still refused.

So here I am, doing the same hours I was previously, for a few thousand less than I was getting previously. Why would I willingly do that?

Because, despite the extra in-the-hand money, and despite the promise of a potential end-of-year bonus (probably not going to be handed out this year, given economic conditions), there was the unspoken agreement that I would be working extra hours. For free. This is bourne out by all the other workers in the same position at other stores, who are working, on Salary, 60+hour weeks, for essentially the same money as I'm earning. And frankly, I value my spare time as more than $1500/year+potential bonus.

And it also feels good to just say 'no' to people who think they've got the goods on you, once in a while.

"Given the near certainty of cultural shift away from conspicuous consumption due to unaffordability via asset deflation and eventual inflation, the disparity between the haves and have-nots will increase. The "American dream" may not seem to be available to everyone anymore,..."

It may be harder to prise "the dream" from the grip of even the most hardened of poor given the proliferation of the active screen based media such as Television, internet and billboards, blaring messages at the masses all day. Then there are the lotteries, which promise huge instant wealth as a carrot to keep on toiling and "practicing" overconsumption to prepare you for the day when your numbers come up. Orwells 1984 is much more real and pervasive than we think.

Even the coming depression may not be enough to reset peoples expectations or ambitions. The chasm between desire and fulfilment of course will become wider. The mourning will be long and desperate, prolonged by mass media and their corporate big brother masters, just as desperate to survive.

Eventaully of course, reality will smack people in the face and some of them will wake up. The path to sustainable austerity will be difficult at that stage, as the dying carcass of the empire will throw up many nasty surprises and navigating them may be difficult even for the well prepared. It is the time of transition which will be the most dangerous and I suspect we are just in the opening scenes of the first act. Good luck.


I remember a poll done on TOD perhaps a couple years ago where it asked about the religious persuasion (if any) of the TOD community. I believe that the "believer" segments (of whichever persuasions) were in the minority. Nonetheless --wherever you are situated on the "belief" map-- what you describe as your embracing of a significantly lower (not impoverished) lifestyle reminds me a lot of "Brother Sun, Sister Moon," that maudlin-but-magnificent movie in the '70s of Francis of Assisi. I'll never forget the scene where he realized (as you appear to also) the hollowness of his father's wealth and stripped down naked in the town square, throwing off his rich garments to embrace poverty and the simple life.

Your story has a similar ring to it, and I find that inspiring.

"The jump to a lower consumption lifestyle is a long one. I might also note that few of their wives would willingly sign up."

This point is huge! the underlying reason most men strive for the outward trappings of success is to have access to attractive women.
In my own personal preparations for imminent PO, I thought it
wise(!)to sell my $16,000 Harley and use the proceeds to buy a woodstove and other improvements for our home. Even though I had carefully explained my reasoning to my wife, her reaction was immediate. "But it's a status symbol!" she wailed in dismay.... SHE DID NOT EVEN LIKE TO GO FOR RIDES ON IT! But she adores the Harley apparel that they sell at the dealerships. I fear that this primitive
yearning for baubles and status symbols will make the descent far harder than it needs to be, and will be the root cause of many failed marriages...


It reminds me of what Orwell said in The Road to Wigan Pier,

The fact that the working class know how to combine and the middle class don't is probably due to their different conceptions of family loyalty. You cannot have an effective trade union of middle-class workers, because in times of strikes almost every middle-class wife would be egging her husband on to blackleg and get the other fellow's job.

There's some truth to that, but I don't know that it's as true now as it was then. I think you guys might be looking at things from an old-fashioned point of view. Modern males are just as comfortable with conspicuous waste and consumption as women are. I mean, Nascar? "Oh but we only do that buy all those shoes for? to attact women!" Why do you think women spend $100 for a haircut?

I don't think conspicuous consumption and waste are a gender issue. We all do it.

This point is huge! the underlying reason most men strive for the outward trappings of success is to have access to attractive women.

Ding! Civilisation is the human equivalent of a peacock's feathers.

p.s. Harleys are terrible bikes anyway.

When I saw the title what I first thought of was debt. Those on $300,000 will often have a larger debt as a multiple of their income than those on $30,000.

That debt naturally drives them to want more income to pay it off. So there's something else to consider with the always-just-out-of-reach graph. Someone on $10,000 wants another couple of thousand for a few luxuries; someone on $100,000 wants another ten thousand or so to sort out the huge debts...

I once had a chance to interview an American musician who was, at the time, on tour with another musician from Canada. She related how the Canadian artists had a "leg up" on their American counterparts. First, every Canadian is covered by health insurance. This liberates people to follow their passions rather than seek & stick with a job they hate just for the benefits. Second, the Canadian government had a small competitive grant program to underwrite the cost of touring (van rental, gasoline). The Canadian bands were by no means financially rich, but as Nate suggests, they were wealthy in human capital (health) and social capital (there is a surprisingly vibrant music scene in Canada, more than one might expect from a nation its size).

When I think of doing more of what I want, following my own passions, I know that health insurance (and the potential to not have it) is a major impediment.

wisco finally got it right!! All these key strokes, and finally the first real useful point of the day!!

National healthcare, or truly portable healthcare, would so change the dynamic of employer to employeed and poor to "not poor" (as opposed to wealthy, and I will get back to that) that it would essentially remake the nation, and the employers know it. This is why some type of national or even portable healthcare is seen as such a threat to the employer class. Healthcare coverage is the lever that gives them full control over their employees. The employee can be fired at any time and lose the coverage, but the employee cannot afford to quit the job at any time, thus as the baby boom generation ages, they are each year more in the grip of the employer. It is a horrific situation to be not able to secure health care and have to stay at a job that is essentially damaging your health to keep it. Horrific.

But we are talking about poor vs. not so poor, and have not in this string or the post that started talked about the truly wealthy. Living in a 2 or 3 million dollar home is NOT, REPEAT NOT wealthy if your still paying a mortgage!! It's insanity, not wealth!

I personally know independent employers who live in 2 plus million dollar homes (sometimes greatly more) and have NEVER paid a mortgage on it. These are the wealthy. I know of men who right now do as they please, when they please or do nothing at all if they please as they sit on mountains of TVA bonds and annuity payments (you notice those are seldom recommended by the hucksters out there selling garbage stocks or by the business press which acts as pimps for these thieves). The market crash holds no fear for them. They will come in and buy stocks when stocks are discounted by 70%, they have the spare money sitting on the shelf. One old man I knew used to tell me "if you cannot get out of bed in the morning and say 'I will do exactly what I want today, this week, or this year, or if I choose, not get out of bed at all, your not wealthy.'"

Do you think Warren Buffet's wealth causes him stress?!! If it is causing you stress, it is NOT wealth!

My old friend referred to above (not Buffet, but one of the smartest men other than Buffet I can think of) years ago told me something else,something that I have since seen prove true at least two times in a major way and many times in a lesser way..."do you know how you can afford to be in the stock market?", He asked me with a conniving smile on his face... "when you can afford not to be in the market at all." That is real wealth, and no real wealthy person will give it up without willing to shed blood to defend it, and no real poor person (which is the rest of us) would willingly turn down a chance to get it if we thought we had a snowballs chance in hell pf achieving it. That's been true for 5000 years, and no petty liquid fuel crisis or threat of weather change is about to change it.


National healthcare, or truly portable healthcare, would so change the dynamic of employer to employeed and poor to "not poor" (as opposed to wealthy, and I will get back to that) that it would essentially remake the nation, and the employers know it. This is why some type of national or even portable healthcare is seen as such a threat to the employer class.

YES. I agree with you both and commented similarly below.


A lot of employers are getting fed up with the escalating costs and hassles of having an insurance plan, so not all of them are fighting it this time around. In addition, there is finally the recognition that the expensive piecemeal approach we have now is making us less competitive compared to other countries.

I suspect we will end up getting something in the next year or two, but it will probably be fairly bare-bones. People who want more can purchase something supplemental.

It seems to me that the business lobby (and thus the Republicans) would be in favor of National Healthcare. That would remove a large burden from employers and allow them to be competitive with their overseas rivals. That would lower costs for US businesses and make it easier for them to hire.

By which reasoning, the RACV here (car owner's lobby group) should be in favour of public transport, since it reduces congestion on the roads.

Funnily enough, not.

They're just not very good at that long-term thinking.

90% of drivers support 90% of other drivers using Public Transport. ;)

Classic. Reminds me of a survey I read about that concluded - a great majority of Americans love the idea of their neighbors driving an electric vehicle!

in favor of National Healthcare.

But national healthcare is not what is going to happen. National Insurance is what will happen. So you will layer an Insurance firm into the mix.

I used to think this too. However, there is another factor that a purely balance sheet analysis misses, and that is the additional control over their employees that businesses gain from having non-portable, non-universal health care.

Once this is factored in, it is little wonder that some percentage of business managers will argue against a bottom line benefit to their companies due to the loss of a controlling lever on their employees.

I was the up and comer in the company I worked for all those years ago. I was somewhat below a VP level but I was high enough to see and participate in the inner workings - which was, "People are expendable - the company comes first."

At the time the WSJ (which I subscribed to) had a series of articles about corporate dropouts. and I began to ask myself why I was doing what I was doing. What was more important, climbing and making lots of money or having time to live life. Time was an issue then since I had many 18+hour days (mostly starting up new facilities and devising productivity plans at other plants).

After a few years, I came to realize corporate life was wrong for me and my wife and I started to look for land. To make a very, very long story short, we ended up in Mendocino County in northern CA on 13 1/2 acres which was a huge change since we were lining in Dover, DE at the time we bought the land in 1972.

One very influential book for me was Robert Houriet's Getting Back Together (1971). It showed me that alternatives were possible. So, I've lived without status for 35 years. Oh, I served on a lot of boards, chaired a lot of committees and was the foreman of our county grand jury one year during this period because I thought my input might help. But, for the last 15+ plus years, I've walked away from even these minor status things.

One has to deliberately chose ones life and what is meaningful. For me, it was time to live.


Thanks for the positive thoughts, Todd.

I often ponder whether sailing around the world all these years has been the right thing to do. All those degrees wasted, massive promise unfulfilled. But I have always been able to leave all the detritus ashore and drop over the horizon when I want to. I've always considered that I am one to the few free men on earth. I'll do it my way just like you do.

I wouldn't have it any other way.

It's late in this thread's life but I thought I'd add this:

By moving to the boondocks when I did, I gave up several millions in income. I'm 70 and let's assume I retired at 65 with $10M. Ok, so far I would have lost around $5M so I'm left with $5M. What's the downside were I to take my bucks and move to the boondocks?

1. Psychological - No one gives crap that I have money. I could try to "buy" my way into a position of influence but people have heard this stuff before. Further, I am unaccepting of "making do - first class or forget it."

2. Skill sets - I'm more tied to the system then the lowest person since I am totally dependent upon other people to do what I do not know how to do to survive - which is essentially everything.

3. Community - I am not part of my immediate community because of my "wealth" - and attitude.

The list goes on. But, one point I'd like to make is that coming in as a chronologically old moneyed fart is that people will diss you as not being germane.


I find this topic to be quite a dilemma – why is it that most of our fellow US citizens persist in clinging to the deep and abiding faith that cars, houses, gadgets, trips, etc. are the basis for happiness when only the most delusional fool cannot see the collapse of this value system unfolding in the media on a daily basis?

I’m a bicycle advocate – I believe that the bicycle is the most brilliant machine conceived by mankind. Not only does it provide fantastic mobility (100 miles in a day is easy for a physically fit person) but, more importantly, it has the ability to reverse the brutish isolation of car travel and bring back a level of personal interaction with fellow travelers that most of us left behind in our childhood. A simple test – bicycle through a foreign land versus taking a bus tour – report back your level of interaction with people and your degree of happiness with the trip.

I live in a nice area: “Ozaukee County ….. population 86,697… second-lowest poverty rate of any county in the United States, at 2.6%. In terms of per capita income, Ozaukee County is the 20th richest county in the US…. Located on 25 miles of the western shores of Lake Michigan…. “

Ozaukee County has an exceptionally nice bike trail and cycling for recreation on the trail is accepted – however, county supervisors will not allow one penny of county taxes to be used for the trail or any type of utilitarian cycling. Utility cycling here is a matter of personal bravery. Only a tiny minority bikes to work or the supermarket, few kids bike to school. Many motorist view cyclists as nothing more than an inconvenience for their daily driving – some hate cyclists.

If something like utility cycling, that has such an obvious potential for energy conservation, health benefits and social interaction, is shunned and rejected by the majority of the citizens, how can we expect any type of downshifting from our contemporary consumption oriented culture?

My belief is that the great majority of our citizens simply do not believe there is a problem that cannot be resolved within the framework of conventional thinking. Until that changes, it is doubtful that any kind of rational change of culture will occur.

I'm with you on most of what you say Dave, but I've kind of liked having my own house in one place or another all my life. Tents are only fun for so long. Sure a better designed batch of cities and towns would make some sort of multi-family unit plenty desirable. But rent, well an old Montanan once told me paying that was like pouring water into the creek. Of course buying at the top of the market (and the top was a big extended part of the curve this last time) is worse than renting. Buyer must always beware.

It does take true dedication to try and get anywhere regularly on a bike in interior Alaska that is for sure. Through the years there have alway been a couple of hardy souls braving the 50 below to 80 above (weighted heavily to former) and climbing a 1000 foot or better one way on their daily 8-10 mile commutes in my neighborhood. But the bike trails are intermittant and round about. It is darned hard to get any real attention payed to real utility bike routes even when planning consultants are brought in and get million buck grants to redesign the old downtown core while making it more pedestrian friendly. Our system which totally caters to the car truly does suck, it is sucking the life right out of our entire civilization.

Luke - I didn't word the first part of my comment very well. I agree with you 100% about having your own house on a little plot of land. I was thinking of the luxury houses and high-priced SUVs I see all around here. Across the road, a single family is building an 8,000 sf house and the roads are full of single drivers (with cell phone in constant use) in huge vehicles.

Through the years there have alway been a couple of hardy souls braving the 50 below to 80 above (weighted heavily to former) and climbing a 1000 foot or better one way on their daily 8-10 mile commutes in my neighborhood

Now those guys are our national heros! I confess that I wasn't thinking about 50 below in Alaska. I will ride in the mid 20s but not much colder. Although, a velo mobile might extend that range. A few years ago, there was a study on bike commuting and it appeared that rides up to 12 miles (one way) were the most practical and sustainable - beyond 12 miles there was a significant decrease in the number of people who actually made a practice of bike commuting.

It is darned hard to get any real attention payed to real utility bike routes even when planning consultants are brought in and get million buck grants to redesign the old downtown core while making it more pedestrian friendly. Our system which totally caters to the car truly does suck, it is sucking the life right out of our entire civilization.

Amen. The next county up from us got $25 million in such a grant and it seems that they going to do very little with it - just can't bring themselves to accommodate anything other than cars.

The poor were "incredibly healthy" before the 1970s? Maybe they had less of certain diseases, but poverty has always been bad for one's health. This became even more important after medical science matured enough to actually help a lot of people -- basically, in the 1940s. The diets of the poor tend to be inadequate, despite the availability of land. For example, there was an epidemic of pellagra, a nutritional deficiency, in the rural South in the early 20th century. It primarily hit the poor. On top of all that, the low status and lack of control that come with poverty appear to negatively affect health. I'm all for mindfully curbing consumption, but let's not glamorize poverty.

I think there might be a little something missing in this discussion- touched on maybe. It is one thing for an individual who has seen wealth and education to realize that the striving, the relentless striving for material wealth is not really where it is at. In other words, we can say we have been there. We have seen and tasted it. We have been able to look to simpler times and options and we have been able to consider the intellectual aspects of wealth pursuit. We can make a decision based on our experiences, our up-brings with educated parents, and our fancy university educations. What we are doing is not sustainable, not workable and shallow and pointless from spiritual point of view. We are able perceive that—actually not all of us even, but some, as this posting session points out.

For the average Joe, they have not gone through the circle. They have not been given this opportunity and can only look at their lives as an accumulation of things that says in their world I am successful. This success image has been sold to them through the Madison Ave hype. The are absolutely convinced they must have it. The idea of being poor is repulsive. Many of them have been there and they were looked down on and felt apart. They lived it and they saw it. They hated it. Many of the readers of this blog have gone full circle. They have had the opportunity through education and material wealth.

Selling the idea of down-sizing to the average Joe is not really possible. Telling one guy the big machines have to go, or should go by choice, is not really feasible. Go down to the local bar and try it. Tell some poor struggling worker that his future does not include a 4 wheeler, a massive pick up and a big home. When that same individual (and they are the majority) learns by the economic squeeze he can not have the goods and he must be poor, he will be unhappy, very unhappy. He will have to blame someone. This will be a tough grind.


Great post, WrightTracks.

Actually a pretty comprehensive survey was done in the early half of the last century by a dentist who noticed that there seemed to be a link between poor tooth formation, decay, etc. and diet

He found that locally sourced, natural diets in rural communities were the route to health, and industrially-processed foods were responsible for a large proportion of ill health. He was around at a time when there were still communities that were just being "modernised". He traveled the world over about 50 years doing his research, and also found that the diets were widely varied and not necessarily containing the "balance" advised by the dietitians today.

It makes very interesting reading, unfortunately it is a while since I read it and the name of the researcher escapes me. I will try to find it and edit this post when I do.

His name is Weston A. Price

Thanks awashinoil, I didn't know about the website.

Yes, all things being equal, you'd expect less tooth decay, obesity-related diseases, gout, etc. among the poor. But look at life expectancy statistics. Poverty has a huge effect.

All corrosive is the best description I have heard for true poverty. Touched it for a little while, did not like it.

Like any good American I have never heard of this "small farm act" that was repealed, and the good God-fearing US media such as Google etc have nothing on it. Anyone got the secret inside scoop? I'm all ears.

Hello Nate,

Most excellent keypost [Kudos!] with great TODer comments. It would be fascinating to medically study and MRI brain scan Simmons, Pickens, and Rainwater when they are on their farms vs when they cooped up in their corporate offices--I bet the differences in blood pressure and other medical indicators would be quite striking.

Perhaps the US would be better off as we go postPeak if we invited the British to burn down the White House again as it is an absolute 'pressure cooker'. If 0bama was forced to relocate to the spacious greenery of Camp David--his mind might dramatically readjust more towards Socrates' desired 'philosopher-king'-->he might rule more wisely.

From memory, I seem to recall reading that previous Presidents were happiest when they left Washington to visit their homesteads: FDR at Hyde Park, JFK to Hyannis Port, Nixon at San Clemente, Carter at his Georgia peanut farm, Reagan at Rancho Del Cielo, LBJ and Bush in TX, etc.

Also, consider that Socrates, Plato, Aristotle, surely some of the clearest thinkers EVER, did much of their thinking and discussing outside or in atriums. Again, consider Lincoln thinking while resting between log-splitting in the wilderness, or Jefferson pondering and writing away at his beloved Monticello.

Modern day: Nate's clarity might have a lot to do with the time he spends in his garden patch and walking his dog, with the same effect of Nature juicing Jay's awesome intellect.

Maybe 0bama would be at his best if he spent a lot more time in the sea-breezes of Hawaii again. There is something undeniable from taking the time to smell a rose, see a sunset, chase a butterfly...

Obama is an urban guy, he might be more comfortable in D.C. than most. A nice quiet beach on the Aleutians might be a bit too remote, oh you said Hawaii:-) No Oahu beach ever feels far from Honolulu (cars must have changed those islands immmensely) so they probably would be quite a refreshing homecoming to the pres, but I wonder for how long?

Socrates was asked to take break to the countryside in one of Plato's dialogues. He declined saying after half a day there he yearned to be back in the city in the company of men as the trees and brooks had not deigned to teach him anything thus far. I don't imagine ancient Athens was much like D.C. though. But the White House does have a fair sized yard does it not? A real city guy might find that quite enough.

Mind you I say all that from where I merely have to go a mile or two to get to a spot where walking east, north or west wouldn't take me across more than a road or two every few hundred miles if that often... but here I type on the web.

1. I have seen and lived true poverty (not enough money for food - which is how I define true poverty) and you would be surprised how, besides he media hype, people (even spouses and kids) can adjust and stick together at any sort of income until it gets down to the breadline. Beyond the breadline, it becomes every family and ultimately man for himself. Famine is luckily relativly rare.

2. There is little discretionary oil consumption anywhere apart from oil spent on vacations. A common misconception is that those on lower incomes somehow choose to consume less oil than the rich and that the poor will be the first to consume less oil when prices rise. There is a correlation between earnings and oil consumption, but this tops out at relatively low level (under $20,000/year).

3. Why is consumption so bad? Consumption is not waste. Consumption is a good thing that provides gainful employment to others. I believe that your concern is that we will comsume oil wastefully. Oil is going to disappear and we should not waste it needlessly. However, no matter what we do, oil will soon all be gone. The real question shuold be: is consuming it all now rather than in 50 years time wrong, or simply forcing our children to face the exact same dilemma?

4. Although it is commonly cited, the American dream is not about consumption. It is about living in a country where freedom of expression is a right. Conspicuous consumption has been around since the first caveman ever brought home a nice fur coat from the hunt. We should not perpetuate the idea that the American dream is all about consumption as that has never been true.

the American dream is not about consumption.

Then what is it about? Bailouts for bad decisions?

Formatting mistakes with HTML surpressed my comments, which were:

Take any MSM source and count the # of times "consumer" is used vs. "
citizen". The ratio is staggering in my experience.

We have redefined ourselves, at least in mainstream American culture, as consumers.


We have redefined ourselves, at least in mainstream American culture, as consumers.

What is this we thing you speak of?

Many people lay the 'consumer' label at the feet of Edward Bernays.

"What is good for General Motors is good for America - Chairman and CEO, Charlie Wilson 1955
Mr. Bush in late Sept. 2001 urged the American public: “Fly and enjoy America’s great destination spots. Get down to Disney World in Florida. Take your families and enjoy life, the way we want it to be enjoyed.” He’s even asked consumers to spend during better times. “I encourage you all to go shopping more,” he said in December 2006.

Americans have been immersed in the 'consumer' culture for years, if not their whole life. Like E. Foetida - if you take 'em and place 'em in fecal matter they will crawl out. If you don't let 'em crawl out - they settle in and multiply like crazy.

So, it is easier for a rope to go through the eye of a needle than for a rich man to enter the kingdom?

Excellent post.

Your chart just out of reach reminds me of the definition of happiness...."happiness is the difference between what you have and what you want". I believe this saying has a lot of truth in it, no matter what your wealth if you are satisfied you will be happy and if you are rich and want more you will not be.

One thing I have tried to drill into my kids is that wealth is not earnings, it is the difference between what you make and what you spend. There are a lot of people with big earnings who spend it all, and more. Meanwhile a lower-middle class person who lives modestly likely has greater savings than the spender who makes more.

With respect to conformity I have an observation from my city. I often meet lawyers and auditors in my job and when I ask them where they live about 90% of them live in the same area of town. They all believe that to be "in the club" they need to live there. I never had a desire to live there, it strikes me as fake, and full of people trying to "keep up with the Jones's", and keep up appearances.

One of the great "fears" that keeps me (and I suspect others) from taking my hand off the banana and out of the jar is the need to maintain my connection to the good health care that comes with the banana. I don't have a problem with reduced life style because, even though I have a good income, I've never tried to live beyond it. House is paid for, cars are paid for, we have all the "things" we want and our one "expensive" vice - travel - can be done cheaply if you have the time. But health care - what happens if one of us gets sick? Without medical insurance, you won't get the best care, you may not even get good care. And you can't afford medical insurance without keeping that job and that income flowing. I would be very interested to hear how those making the change and dropping the money habit address that issue.

The interesting thing is that health insurance and health care costs are such a huge topic in the USA while the overall population is not really very interested in staying healthy. Health care is very important if one needs it, but it is not as important as staying healthy-health care caused deaths is one of the leading causes of death in the USA. IMO a lot of this health care thing is psychological-I think Michael Moore is great and I loved SICKO but realistically the guy is a ticking time bomb at what-maybe 370 and the power of the health/sickness industry to fix human health has been WAY oversold IMO.

Interesting and thoughtful post, Nate. I would like to point out, however, that it focuses primarily on psychological issues. There are also structural reasons for overconsumption, detailed beautifully in Juliet Schorr's prior book, the Overworked American. There she discusses how difficult it is to work, earn, and consume less, when what is produced is continually larger and more complex.

One example is homes - small starter homes like our parents purchased are no longer built. Even if you want a smaller house, they're often hard to find. We had that problem when we moved to our current city. All the smaller homes were 60 years old. And the neighborhoods that had these homes had got themselves designated "historic" so the cost was MORE than for larger homes built later. (We ended up with a 1976 2000sq ft home.)

Another structural problem Schorr discusses is health insurance. Even if people are willing to trade more time off for less pay (and many people would do this), they usually cannot b/c most employers require full-time work for health insurance coverage. I believe this is a major reason business has resisted a single-payer type health insurance system - to ensure attachment to the job.

My point is, I think (and there is some research to back it up - just can't recall just at the moment where to find it) that many people would prefer simpler lives. But the way our economy is (deliberately) structured prevents them doing so. At least to the extent they would prefer.


Exactly!! I alluded to this in point #1. It is the sunk cost that is killing us. This is the monkey trap. A friend of mine had just gotten married and his house burned down - no insurance - all their stuff was in it. They were devastated for a few weeks, lived with friends for a while, then downsized dramatically and have never been happier (so they say - but I believe them). Both on the demand side (above) and the supply side (built infrastructure requiring high EROI, high energy density fuels, etc.), it is the sunk costs holding us back. But they are by definition 'sunk'. If it were psychologically possible to ignore them and design 'what works' from this moment forward, looking at all this stuff as an asset as opposed to a liability, we might get somewhere.

Back when I was trading I took an (expensive) course on Neuro-Linguistic Programming which advised us that if we were afraid of something to 'lean into' the fear (as opposed to leaning away from it). Via this logic I was able to easier take losses, give money to charity and become less afraid of spiders.

It is the tight grip on our 'non-negotiable' lifestyle that will be our downfall, much more than any energy/technology constraints.

There is another ironic twist to this obsession with material gain as the route to happiness-it eventually leaves you and what most are left with is a desire for youth to return. Almost all older persons I have met want their youth and vitality back more than anything else-the obsession with material gain is strongest when youth and vigor are taken as a given. My advice to any young person reading this is-if it looks likely that you won't be rich make sure you never get old (physically or mentally). You will be ahead of the game when you are old if you are young physically and mentally and poor rather than old physically and mentally and rich (from what I have observed). I am probably overstating the case somewhat, but IMO young people as a whole don't realize that youthful strength (physically and mentally) has a huge monetary value.

The house part of sunk costs is problematic though, if half or more of your working life is 'saved' in your house, you are not going to abandon it without one heck of a good reason...many, many adjustments can be made to lifestyle while still retaining the house, though a good part of these adjustments must be community wide to make a big dent.

I'm guessing your friend's house was paid for or he would have been forced to have insurance. As much as I hate paying for house insurance, not paying it seems false economy to me (in our current system), just too much of my self has gone into building the place and earning the income so I could build it. But as for the other possessions, the most important things in our house would have very little insurance value...things like photos, letters from a family member now long gone, a box full of our kid's old grade school stuff...

But you are right, the sunk house cost is possibly the biggest drag keeping us from moving toward a more sustainable less automobile dependent lifestyle. So much has been built with use of the car central to its being able to function. What is a mother to do? Higher transport fuel taxes, graduated so higher usage pays higher and higher tax rates might be a real good place to start. Nothing seems to change behavior like having to make very hard budget decisions.

Thanks for the thoughtful post Nate, it is good to learn a little more about someone who has made such changes... and, I nearly forgot to say, thank you Nate and Gail for keeping the doors open on TOD.

if half or more of your working life is 'saved' in your house, you are not going to abandon it without one heck of a good reason...many, many adjustments can be made to lifestyle while still retaining the house,

Good point, Luke. I passed up some pretty good employment opportunities simply because I was unwilling to leave my home to chase a few more bucks. I built my own house from scratch with no mortgage (just a few small loans here and there). My strategy has been to make sure that the loss of my house would never be a totally depressing event - it has taken me nearly 30 years and it is still not totally "finished" (as my wife likes to say about some bookcase projects). I never let working on the house dominate my life - it has (mostly) been a spare time hobby. If I had lost the house at any point in time, I could pretty much say that I had gotten sufficient use for the labor I put into it. Of course now, at this point in my life, a loss would be more serious because of the accumulated investment of labor and money.

However, this type of DIY project is not possible in the vast majority of communities. Building codes and occupancy permits simply do not allow for this kind of approach to housing. Even though you own the land and buildings, the local taxing authority views your "occupancy" as temporary. They feel their mission is to uphold "property values" for the benefit of the community. Your house is not your castle - it is a community asset that is waiting for the next "occupant".

In fact, you could be arrested and jailed in most US communities if you persisted in trying to build your own home and live in it before it is "finished" according to some building code standards. Of course, the defenders of these codes and standards can cite all sorts of horror stories about electrical fires, waste disposal problems, and, god forbid, someone building a chicken coop in their back yard. The fact is that housing is viewed as a "community asset" and not simply a family's personal, privately owned, shelter from the elements. Maybe this is a big part of the current financial crisis? Just imagine the change in lifestyle if most people built their own homes over a several year time span as their personal earnings permitted? Maybe living in a tent or trailer for the first year or so. And then, doing everything possible to live there for the next 50 years. However, I can't imagine local taxing authorities and construction companies allowing DIY home building to become popular. I was just darn lucky to have started in a time and place before it became established as a good "investment" area. And, now, I've satisfied all the standards - but newcomers would not be allowed this leisurely pace of building.

Just imagine the change in lifestyle if most people built their own homes over a several year time span as their personal earnings permitted? Maybe living in a tent or trailer for the first year or so. And then, doing everything possible to live there for the next 50 years

Welcome to the edge Dave, the only place I ever tried to afford a house, be it Langlade county WI, the UP, western MT or here where this building mode is more the rule than the exception.

You are right though, most people couldn't do it especially where decent steady income is available. I can't cry too hard, building codes have contributed significantly to my livelihood. Even up here the rules are more stringent within city limits than in the outlying borough--though that can be hard to discern sometimes. I can't remember if code variance approval is required for blue tarps or green ones ;=)

Call me Bob if you like, I've had that handle for nigh on 60 years.

Hi Bob,

Call me Bob if you like, I've had that handle for nigh on 60 years.

I always enjoy talking to you young folk ;-)

building codes have contributed significantly to my livelihood

I've spent a significant amount of time learning building codes and have a lot of respect for the wisdom that has been captured in them over the years. I'm a big fan of adhering to building codes for safety reasons. I think building inspectors can provide a very valuable service (I had various inspector licenses myself). My criticism is not with the technical aspects of the codes - it is with the "administrative" aspects - the parts that prohibit DIY folks from doing plumbing and electric work, or requirements to finish within certain time frames, or prohibit occupancy of any part of the building until the whole thing is done. And then there are the "Architectural Boards" that require x amount of brick facing and a minimum of 2,400 sq ft etc. Of course, any complaint about these aspects of building codes brings forth the electrical fire stories - like bringing up 9/11 if you complain about the cost and utility of some new high tech and expensive military gadget.

I pulled a permit and went through all the inspections for a replacement bath in our basement. My coworkers thought I was nuts, and none of my neighbors ever pull permits for work they have done.

I thought I did everything by the book, and my framing and electric work passed no problem. My plumbing had issues. While I don't quite understand why one lavatory can use a wet vent but two can't, I was appreciative of the advice I got from my plumbing inspector in other areas. I have no doubt that he ultimately saved me thousands of dollars in what would have ultimately been repair and rework down the road by having me redo a bit of piping while the walls were open and rerouts were relatively easy.

The modest cost and modest pain in the rear were well worth the peace of mind that came from passing my inspections and knowing that a professional checked my work agreed that I did everything safely and correctly.

No concers when it comes time to sell, either. Everything will be in the records as it should be.

Hi Smwalt,

The modest cost and modest pain in the rear were well worth the peace of mind that came from passing my inspections and knowing that a professional checked my work agreed that I did everything safely and correctly.

This is the way it is supposed to work and congradulations on your success and peace of mind.

Unfortunately, it frequently does not work this way. Again, it is the local "Administrative" rules that can deny others your experience - and probably why your co-workers would be reluctant to play by the rules. I had one plumbing inspector tell me that even though I had a legal right to do the plumbing work, he would make sure that I paid a price for not using a licensed plumber. He said he would find some technical flaw and then force me to tear out all the work. Fortunately, I knew the code very well and he could not find the slightest reason to follow through with his threat - it was a very unpleasant experience.

In many communities, only a licensed plumber can legally perform any work beyond putting new washers in a faucet. You simply cannot pull the permit even for your own home. In other cases, a home owner can legally do plumbing work on an existing property but not new construction. Generally speaking, the more established and affluent a community the more restrictive.

But, your experience is great and perhaps this will become less of an exception as people have to return to a more basic style of home ownership. Even licensed plumbers can benefit if home owners know they can count on them as partners in a project - perhaps more people will call on thier services without fearing an unmanageable bill.

You summed the code thing up pretty well Dave, and I can see you have experienced the enormous difference between individual inspectors. Well only a month or two of Xcountry skiing left this season, I better get at it.


I really like this post.
But more fundamentally (and I believe it's a concern for men in particular more so than women) is a basic tenet: that high complexity= high status = equals high income. Think of a lawyer, a person talented in finance, an author of a book, a professor, a surgeon, an editor, a scientist etc. These people all have high incomes and their jobs are complex. They would probably be bored sitting in the country milking goats.

Personally I myself would love a life in the country milking goats. I think there are very sweet rewards to be had from downsizing and managing with no debt and little consumption. Until peak oil it was a lifestyle that in some circles might be seen as a losing proposition but now with food and energy inflation it looks like the smart thing to do (ELP). It is no longer a losing proposition in other words.

But people who don't want to do ELP will compete with the others who don't want to do it also for the chance to be elites (i.e. non-producers, see Nicholas Roegen-Georgescu's discussion of elites for a good definition of what an elite is and how they're generated by energy surpluses). Trust me, these elites or whathaveyou (the people who manifestly hate to be producers) will rather live eating soggy toilet paper than give up their status and their access to energy and complexity and information that keeps their minds busy (and perhaps happy).....

Think of kings in the past. All that complexity! Their palaces, music, clothes, food, social networks, soldiers and horses, vineyards and hunting grounds and ships etc. The job of king goes along with plenty of access to energy. Some kings just loved being kings and keeping an eye on all of those myriad components and relationships that comprised that life.

Wiser men took hermits vows and went to live in a hut in the woods. My heart belongs with them.

But the world has both kinds of people. And the ones who want to be "kings" sometimes see themselves as serving their countries or societies.

My comment that I was struggling to articulate is this: while one might live very happily indeed on the physical goods that one can purchase on an income of $20,000 per year (even quite abit less), one would find it very unpleasant living with the level of social services (i.e. access to health care, pensions, legal protection, higher education, adequate disability and death insurance, personally meaningful work, etc.) that can be purchased on an income of $20,000 typically in the US and Canada. Some people in the thread got the point, particularly concerning health care.

I have to disagree with your lumping Canada in with the US on most of those services.

In Canada, access to core medical service is provided by government regardless of income and CPP (Canada Pension Plan) will apply at $20k. Welfare (guaranteed income provided by the government) in some ways makes up for disability and life insurance. Higher education is still costly and getting more so, but tuition is about $5500/year + texts + living expenses.

As for personally meaningful work, my experience is that the more meaningful the work, the less meaningful the compensation.

Certainly, earning $50k in Canada will make a positive difference compared to $20k, but not nearly as much as in the US.

Problem with this analysis is that most people do not experience gaps between their $30K and someone else's $300K.... or conciously forsake $300 K for $30K. That's so large that it's like the son of a wealthy lord going into the priesthood... he's still the son of lord, a member of his class.... just taking a vow of poverty... and perhaps only until he changes his mind. His options are vast. He knows people who can rescue him from his chosen poverty. He carries enormous social capital. He's poor, but he can snap his fingers and with some work reconnect with his origins.

Another shlub may be in the same priesthood because he never had another choice.... same income, but a much more oppressive reality.

The problem with $30K / annum isn't that it doesn't measure up to $300K... but that it doesn't measure up to $50K.

A huge part of the additional value of $300K really comes in the first $20k... after that its marginal contribution to happiness declines rapidly.

Most inequality is experienced not in comparisons of my paltry $30K to my old pals and their $300 K incomes... but at the level of a remodeled bathroom like the neighbors did... or not... a vacation this year... or not... two pairs of shoes for each kid... or just one... a few thousands, hundreds or tens of dollars difference between what I and those around me are able to afford.

Nate is learning lessons about inequality from a truly unusual circumstance... but inequality is experienced quite differently for most members of the middle class. He's gone from a financial elite to an academic elite... but he's still a member of an elite, who, if he'll forgive me for saying so, is slumming it and telling folks it's not so bad.

I would like to believe that... I really would... but like the Communists of old, those who have consciousness often did not come from the working class, and so there emerged a "vanguard" of theoreticians and men of action who acted on behalf of the working class... thinking the thoughts they ought to be thinking if they had the ability to do so, and acting in the ways that were necessary to support their interests, if they only understood it.

I'm not saying there is an easy way out of this problem. I've got a useless PhD myself, and does that mean anything I say really doesn't count because I'm essentially a member of the elite? Maybe.

Yes, happiness is being situated in one's social context... but somehow lots of people think that money and power are happiness too. How to harness that energy without allowing tyranny and exploitation to grow is a long standing human societal and political challenge. Sometimes you can't convince certain people that $50 K is just as good as $300K... you have to tax them, stop them or control them... and you may tell yourself it's because you know riches won't make them any happier, but the real reason you do it is because their vision of happiness makes it more difficult to realize the community version of happiness.

I think you bring up an important point. Would Nate be as sanguine about his $21K income if he didn't know he could trade it in for $210K if he wanted to?

An extreme example of this was a tearful interview that Mitt & Mrs. Romney gave when he was running for Gov. of Mass. about how they endured "poverty" living in a one-room basement apartment while attending BYU. His dad was the Governor of Michigan; nobody was going to starve to death. Most of us had no money in college, but it's not the same as being truly poor.

Well said. I wouldn't discount your observations just because you had a bit of schooling, though that does tint them and set you somewhat apart in your income class. Oddly enough, the most hopeful part of your post is the phrase 'long standing human societal and politcal challenge.' 'The End' isn't necessarily near.

As a society, we are becoming more poor by the moment. Over the years, we have been unable to sustain our wealth flow from the oil in our ground, so we turned to other countries, to supply our wealth. Massive amounts of oil were rerouted into countries like China who then converted the oil into goods, which were then sent to us, in return for borrowed money. They then sent this money back to the U.S. in through CDOs and various Wall street financing schemes, which increased the values of our housing and provided more collateral for more borrowed money to buy foreign goods. If you look at our trade deficit figures, you will see that this indirect flow of oil (in the form of goods imported), has drastically declined and the financial crisis has accelerated. We are all destined to a lowered standard of living regardless of our present day situation. Peak oil is hitting like a sledge hammer.

thanks a lot for this excellent posting and for your "coming out" about your personal change of lifestyle.

With your past, among others as a former Vice President at Lehman Brothers, you certainly know quite well the people you are talking about.>

However I think that your conclusion that it will be easier for all "poor people" to cope with the coming crisis is too simplistic: There is not only a homogeneous mass of "the poor". Instead, as far as I know, modern sociology now discerns a more complex pattern, which is called milieus. At least in Germany, these are well known and used as SINUS-Milieus or Sigma-Milieus.

For example the milieus in GB look like this:

As you see these milieus are determined by two parameters:
Social Status and Basic Values.
As far as I understand the social status mainly determined by the person's education and professional career (which may change with time), whereas the basic values are determined by the personal mindset, which may be influenced for example by one's moral education, family environment or - perhaps to a large extent - be an innate personal character.

This scheme is being widely used for example in marketing or in politics. (It can be worthwile to keep this in mind sometimes, for example this explains quite well why political parties grow or shrink as the social milieu they are focusing on is growing or shrinking.)

Now in comparision to your categorization between "rich" and "poor" there is this second "mindset" dimenson, which makes the overall prediction more complex:

For example the change of lifestyle you described might roughly fit in the milieu of post-materialists (roughly: people who are well off but know that there are more important things than money). People like you are (or were) rich and can cope quite well with a lower material lifestyle. However there are other milieus of rich people (which you described in your text) who still strive for more money.
On the other hand there are also poor people who can cope well with little money (e. g. hippie-like lifestyle, not displayed in this graph) but there are also poor people very eager to climb up the ladder (not discerned in this graph).

Apart from this sociologists have determined quite distinct milieu maps for several countries, so one cannot simply transfer the milieus of the US to the UK, Germany or China.

So the personal economical history may be one thing that determines the ability to cope with the coming crisis, but the personal mindset, which probably is even harder to change, is another one.

One important thing about addiction is how it can be maintained. Can you keep the addiction going can you feed it at a minimal level ?

Obviously one of the biggest things Americans are addicted to is cheap credit and buying large houses with cheap credit.

CR has a fantastic post on something I've been almost preaching that cheap loans will not prevent foreclosures.
Cheap credit can't cure our addiction to cheap credit. All the actions of the US government is doing is ensuring a steady stream of foreclosures coming on the market for years to come. Given that these FHA loans with 3% down many with fraudulent down payments make up a significant fraction of the new home loans. In some areas I've seen over 50% of the loans are these government backed subprime loans.

Its important to understand that as housing prices fall the only way to lower default rates is to ensure that asset backed loans are fully secured with home prices falling this means you have no choice but to reduce the loan amount to a fraction of the asset value and that this fraction is derived to include falling values for several years.

All of the risk has to be offloaded onto the borrower so that banks can repair their balance sheets and put this credit bubble behind them. Or we nationalize our banking system completely and give up on our farce of a free market.
That route leads to massive inefficiencies and eventually to a soviet style collapse. And it still does nothing to stop sliding home values. I'm pretty sure Britain will take the second path and eventually the US.

Now this is home specific but you can see that its really the game that Nate is speaking of everyone seems to not be happy with what they have thus they use leverage in the form of ever more unsecured debt to buy more than they should.
This imprudent purchasing by unqualified buyers drives up prices resulting in people getting less for their money.

So you have this sort of relentless train going. People leverage their incomes grasping for more as more people leverage more prices increase because "demand" is higher resulting in a spiral of rising prices and rising debt for many assets.

The second problem is the pool of prudent borrowers i.e the Nate Hagens of the world steadily shrinks fewer and fewer people resist the debt spiral as everyone is doing it. It goes past just keeping up with the Joneses and becomes an acceptable and in fact standard way to live.

This is the real problem we face as our debt bubble crumbles the pool of people willing and able to buy a wide range of assets at "cheap" prices has been so depleted that you simply don't have enough qualified buyers for our assets at any price. Sure you can keep using cheap credit to lure in unqualified buyers but this is simply eliminating future qualified buyers by getting these people to jump in using the old lax standards. These people are removed from the pool of future potentially qualified buyers and they do nothing really but delay the number of defaults in any given year.

Finally the backlog of loan defaults and unsold foreclosed homes is huge. Slowing the rate they enter the market does nothing its like putting a small dam upstream of a large dam with a hole in it. Its effects if any only show when the larger lake is finally drained.

So you should be able to see our real problem going forward is simply that so few people have decided to step back form the edge that we don't have a bastion of wealth available to stabilize our economy its gone we collectively are broke the prudent borrowers are simply to few in number to create a safety net to prevent our economy from crumbling.

And finally of course this is happening with numerous resources reaching peaks or declining and populations in many parts of the world at the limit of the capacity of the region. This will prevent us from using labor to transform raw materials into wealth at a rate required to dig out of this hole. We can't use money to rev our economy by borrowing short to expand our raw material usage to generate wealth.

So we are facing a double bankruptcy problem lack of financially prudent savers and lack of real resource wealth.
On top of course we face and unknown global warming problem.

The way to win of course is to pull back and retreat as fast as possible its time to turn and run for our lives.
Not only do you give up on growth you aggressively collapse the system well past its stable point then allow it to
grow slowly back to where its stable. Its a game of triage your goal is to provide the minimum standard of living for the most so that the worst ravages of poverty are averted then rebuild slowly a stable society based on renewables.

I'd suggest that the chances of us recognizing that retreat is the only solution much less implementing it our slim.
We are not going to take Nates graphs and reverse them giving future generations the wealth to slowly pay off the excess of today. The real reason we need this massive retreat is simply to give back to the future generations what we have taken. Enough is left that if we cut our resource usage by 50-75% future generations will have the resources to make the right decisions.

We of course will not do this.

"its time to turn and run for our lives."


I have been saying that the 21st century is going to be one long exercise in giving up things.

Income level and material lifestyle are important factors in determining how successfully a given individual may be able to adjust to the realities of a far less energy intensive and money constrained future. However there is an even more important determiner; membership in a community of friends and neighbors who are willing to work together to meet the challenges that an era of scarcity will bring. I spent roughly two decades living in small, remote Eskimo and Indian villages of northern Alaska. This included studying their traditional subsistence based lifestyles. They lived in frequently difficult environmental settings and overcame hardships that many in the modern world would consider overwhelming. They were unquestionably a hearty and innovative people conditioned to make the most of their surroundings. However, their real survival strength was to be found in their ability to work together in small groups, sharing both the demands and rewards of life. The image of the self-reliant and independent mountain man was the opposite of the aboriginal model. They thrived, because they worked together. In one small Eskimo village there was a saying, "Nobody goes hungry - unless everyone goes hungry." These were a people who went out in frail, skin covered canoes to take on whales and walrus. Cooperation and sharing were the foundations of their cultures. I suggest adjusting to the challenges of the fast approaching future of less energy and material wealth will require a level of cooperation and sharing like that of the traditional Eskimos and Indians of the far north.

I was thinking of that Zebra picture and the quote by Eric Hoffer and this came to mind: Thou shalt not covet thy neighbor's..--> covetous, syn. envious, emulous is a similar term = <<1. eager to surpass others, 2. characterized by or arising from emulation or imitation>>

See the TED Talk by Martin Seligman on happiness: