Three Levels of Wealth
awealthofcommonsense.com
awealthofcommonsense.com
I grew up in a divorced household. On one side I had a father and step mother who made large amounts of cash in a relatively inexpensive area. They vacationed regularly to Hawaii and Las Vegas, and prioritized spending money on themselves.
My mother and step father combined to earn around $30k, were hyper frugal, and stressed about every expense. Any expense whatsoever was agony, and they made sure my sister and I understood their inability to buy things on a whim.
So, as I bounced between houses each week, I yo-yo’d between borderline poverty (although they made it work) and quite high wealth.
When I hit my mid to late 20s, my wife and I hit a point where we had no debt. Could go out anytime. Could rent any reasonable home in our area (couldn’t buy because we didn’t have that kind of down payment money), and traveled a few times a year throughout the world. When I contrasted this against how I felt after undergrad, while in grad school, where I was heavy in debt, had no car, and felt constant financial stress, it’s remarkable.
As I’ve continued to grow older, I’ve now come to realize it wasn’t the travel, eating out, or the things I could buy that helped me to be less stressed, it was the lack of burden of worrying about how I would pay for X, Y, or Z. I make way less money now as I run my own startup, don’t go out that much as I do all the cooking, don’t travel that much because we can’t afford it, yet I carry the same lack of stress and worry as I did years back.
Part of why I’d like to see universal, free at the point of delivery, health care in the United States is for this very reason. I’ve first hand experienced and witnessed the choice of not going to get needed medical care because of the financial burden. UBI is still highly experimental, and many other wealth normalization techniques have severe downsides that potentially outweigh the benefits; however, universal health care has enough clear data points of success in the rest of the world, from my vantage point, that maybe that can be the “level 0” of wealth in the United States.
The problem is that there seem to be entirely too few people in the US willing to pay for some benefit that other people receive, even if it would help them too. There are just so many people hung up on how "unfair" it is to have to pay for someone else's food stamps or health insurance or whatever.
"Taxes are the price we pay for civilization"
> food stamps or health insurance or whatever.
The services you listed benefit all members of society:
> the 911 services they value, the fire department, roads, water, plowing in places with snow
My point is that it is unfair to the productive to take by force the product of their labor and give it to those who are unproductive.
If you doubt this and you have children, try an experiment. Children have a good sense of fairness (it's inborn). Take (without their consent) something they earned (and value) and donate it to Goodwill. Afterwards, when you tell them what you did, you can explain to them it's for the good of society if you want. See how they react.
Also, sounds like a slippery slope to me. I suppose everyone having a cellphone benefits all of society as well?
Excellent post, and I love this observation. Security is the main thing people need to have a chance at happiness.
For example I'm not happy unless I have at least 12 months of runway to survive in my current state without dipping into long term savings investments.
It just puts my mind at ease to know I don't have to think about rent, food, basic entertainment, etc. for a year at a time. Depending on what you do this could let you experiment without having financial motives. This is coming from someone who is a freelance developer for context.
What you describe as your requirement for happiness is possibly well above or below what is meant here (depending on your lifestyle).
Statements like yours downplay the actual needs of someone in need.
I'm in a safe bet now due to a couple contracts not going great. It's stressful enough that I'm spending money I shouldn't be on stress relief. But my emergency fund is full again, and I can't wait to get back to doing interesting, new, and/or important things.
But can a universal healthcare system resolve many of the emerging rent-seeking behavior costs peripheral to the actual hospital costs? Things like medical supplies that, in the U.S. are significantly more expensive than elsewhere. Would a universal healthcare system only further subsidize that kind of exploitative pricing?
If you have a universal healthcare system that would require mandatory prices.
No, it's not, at least that's not the reason it's uniquely high cost in the US compared to the rest of the developed world, because that's not a differentiating factor.
Is there anywhere where (1) prices aren't fixed (2) one party decides which healthcare services to receive (3) a different party pays the bills and (4) cost is significantly less than in the US?
Yes. Universal healthcare systems almost all (with some notable exceptions) can and will negotiate with providers and suppliers to control costs. They are typically the largest buyer, so of course they have a lot of negotiating power.
Notable exceptions include Medicare in the US being legally forbidden from negotiating drug prices.
That's not really accurate. Medicare doesn't negotiate, they just defacto tell drug companies what they'll pay. Plus on the outpatient side, it's the private insurers who negotiation on behalf of Medicare.
At any rate, drugs are ~10% of all Medical costs. Why hasn't Medicare negotiated down the other 90%?
- 1. Sell a whatever price they want. But then they don't get a patent and anybody is free to legally copy it.
- 2. Get a patent. But then they must enter the cost negotiation process with the government and prove why they require a particular cost. This is the option that is almost always chosen.
Sitting in the US, it's then sickening to see the same drug developped in France go for 5x the price, just because they can sell it here for whatever the market will bear.
Do you have a source for that? There are drug covered by patent in France that the gov't doesn't cover.
Yes, because a single buyer has enormous purchasing power. The insurance-based system is the reason these costs are so high in the US and lower elsewhere.
Would a universal healthcare system only further subsidize that kind of exploitative pricing?
It has not in any other country which offers universal healthcare. I have no idea why people in the US are so averse to this idea - you can still have great private healthcare if you wish and can afford it, but public healthcare provides far better healthcare to the poor, lifts people out of poverty, and it's cheaper for everyone too (public expenditure per capita is dramatically lower). Everybody wins.
No, that can't explain it, because it's also lower in other places that use a mixed public/private system with mandatory insurance purchase and public fallback for the medically indigent, instead of a single buyer.
Of course, such an idea here would be seen as straight-up Marxism.
I really think we might be close to the tipping point now. Plenty of people on both sides of the great political divide are starting to appreciate that no matter what we try, health costs continue to spiral out of control. That and the hard core folks are starting to die off.
There's something uniquely pathological about the US system to lead to costing about twice as much as any other industrialized nation per capita, while leaving millions uninsured, causing hundreds of thousands of bankruptcies per year (even if insured), and frankly having pretty crap outcomes. It's not just that we need a system that would be better... it's that it's hard to imagine a system actually being worse, if one is being realistic and not merely partisan.
Another thing toxifying the discourse is American Exceptionalism, that underlying believe that America is better than everyone else at everything. It's hard for a lot of people to even admit that our system isn't the best. There's a lot of "Yeah, it's expensive, but look at our technology!" I don't really know how to argue against the Exceptionalism argument.
Single-payer has had more public support (usually majority public support) than other routes to universal healthcare all the way back to and before when Bill Clinton campaigned heavily on health care reform in 1992; Democrats keep putting up complex, unpopular insurance industry kickback schemes instead, which end up easing Republicans effort to kill them either in advance of implementation (as with Clinton's effort) or afterwards (as with the ACA's progressive dismantlement since Obama left office.)
Also, definitely avoid conspiracy theory thinking that Democrats wound up with ACA rather than "single payer" out of corruption and malice, rather than realistic political consideration. That's another pathology. I don't believe there are any Democratic politicians who want health care to be more expensive and difficult! They want cheap, universal, quality, and fair. Duh.
Okay, but how? I have 'good' insurance and it still blows.
My most recent example -- I had a Holter monitor for a day and I paid 50% more for the 24 hour usage of that monitor than I can buy it for brand new. And then I paid $350 for a technician to tell my cardiologist how many events were recorded (being as optimistic as possible, that most likely involved verifying that the machine counted correctly).
Contrast that to a couple weeks prior in Hyderabad India, I went to the local CARE Hospital, which is actually a precent decent place -- the equipment was state of the art, and I did not interact with technicians, but actual doctors. Had an echocardiogram done by an actual doctor, consulted with another cardiologist, as well as an electrophysiologist. Total cost? 4400 INR. Do that math on that one.
I definitely expect the costs to be lower in India for obvious reasons, but the dichotomy is nuts.
See what I said about the Japanese model. It's basically the American model + strict price controls. That appears to work very well.
There is something else which makes American system not working. I suspect high barrier to entry, huge lawsuit risk and heavy regulation for entering the market. If there is no real competition to provide cheaper services it's no wonder existing players charge ridiculous amounts.
I investigated suing a doctor due to a medical error. Unless it cripples you for life or kills you no regular person would be able to win a malpractice lawsuit. It is insanely expensive. Another medical professional would need to speak against the other doctor or pharma company. Speaking against pharmaceutical companies is pretty risky for doctors.
I think the cost of healthcare is expensive due to high education debt, lack of price regulation, and very little consumer protection as far as pricing goes.
That can't be the reason as United Healthcare (largest US insurer with 40M lives) pays much more than Canada (total population 35M).
Back to the point, I think the purchasing power of a state entity combined with its control over the market is a powerful combination, but also the dysfunctional US market seems to reward healthcare insurers for paying more - they don't care after all if they get ever more money from the poor suckers who have to pay for insurance, they can take a larger cut of a larger pie.
I'm not saying insurance markets can't work (someone cited Switzerland above), just that the current US insurance market is out of control and needs solutions (like Obama's solution which has now been wrecked, or single payer which works well elsewhere). What the US has currently doesn't work, fails to serve much of the population, and even then is much more expensive than equivalent services elsewhere.
The real answer as to why Canada gets lower prices is gov't fiat - they just say "this is what we will pay you, take it or leave it".
This is not an objection to using single-payer in the US, quite the contrary.
the lack of burden of worrying about how I would pay for X, Y, or Z
I had the same experience of once worrying about that, and now not really having to. It's incredible. Imagine what it's like raising a family while having to worry every time you buy diapers or milk.
And 57% of American adults have less than $1,000 and are in that category of worry. Wealth inequality is the central problem of our time.
Later, I earned much more, but invested to start my business and had to carry a far heavier burden financially - the kind of burden that would wipe me out quickly if I stumbled. It ate away at me and was probably unhealthy.
I think economic policy should aim to maximize the number of people who can live in the stress-free bracket. Not super wealthy and able to go to Hawaii every winter; just able to make ends meet and have a bit of reserve for a rainy day.
Most western economies are not geared in this way at the moment, and I think that's a huge shame.
However, we want to have children and we don't want our debt to impact their lives. How sad is it that American workers can't afford to have children because of how expensive our education is? Imagine if one of us had medical debt...
College education and healthcare /should/ be free for all in this country(USA). They are fundamental to the social mobility and freedom that our founding principles were created for.
There's almost nothing I learned during my 4 year college education that prepared me for any of my (tech) jobs post-graduation. And, due to poor decisions that I made, essentially as a child, I dropped out of high school when I was 16. So, a GED and a college education seemed like the only way out of the hole I dug myself at the time.
I guess now that I am 30 and know myself a lot better, what I do regret is not being more creative. I probably could've figured out a way into a job similar to the one I have now if I had been more creative and avoided getting a 4 year degree.
Did you participate? I've always been an avid and successful self-teacher, but college gave me opportunities and goals that I would have as an individual "smart" person. Everyone I've met who "tried" in an educational setting has come out knowing more than when they went in.
More important is to ensure that a college education is not required and not useful for social mobility.
OTOH the traditional college may be not the best way to acquire certain kinds of knowledge. In many cases learning outside campus using recorded lectures, books, and computers may be as efficient, and visiting labs for necessary work could be vastly less expensive than doing full-time college.
I suspect the value of certain independent examinations / certifications, that is, the comparative advantage they give, will grow with time. The effort of passing them will be (or already is) university-level high, and the prices will also grow, but definitely not to the level of college prices.
This will democratize learning because of the lower prices, easier choice of time / pace, and easier choice of what you really want to learn. It's already happening, of course, but it's low-key by now. I posit that it will be a major force.
Certain things, like medicine, are not amenable to this approach, or course. But a lot of STEM, financial, media, even liberal arts curricula can benefit from such an approach.
In my country, vast majority of people go to post-high-school education. The result is that a lot of people have bachelor's or even master's yet end up working shitty dead-end jobs. Which they could do as well right after high school. In fact, many places prefer to hire people without degrees for such jobs for various reasons. Effectively higher education becomes net negative if you went there for the lulz and didn't make it.
Its being accessible is the issue, that is, we don't want to miss a bright child of not so well-off parents who can't afford to pay a lot. Hence education credits: if you're bright and determined, a good education will give you a lot, and land you in a financially more gainful place.
OTOH a diploma becomes a token of costly signaling, "all good kids get a degree", so a lot of people go to college just for lulz, or to appease parents, which is a pretty bad use of their time, and also a source of crippling debt.
Here's where differentiation actually occurs: it's between the determined kids who actively work on and benefit from education, and unmotivated kids who just fool around, because peer pressure, parents, or fashion pushed them to a college which they don't care much about, or which teaches only unmarketable skills. It's a pretty painful and costly way to differentiate; I hope the society will eventually find a different way to achieve a similar effect.
(To say nothing of the rising cost of education, fueled by the unending source of the educational credit money.)
For the record: I did not press my son to go to college, and he decided not to go. I'm fine with it. He's got an engineering job anyway.
Perhaps on a purely relative scale, not much would change comparatively between the citizens. But the country's wealth will have increased.
Good plumber can advance standards of living and overall wealth much more than another failed literature critic. Who feels too smart to go to vocational school to learn plumbing after spending 4 years for useless diploma.
College doesn't only improve your income via teaching you valuable skills that demand a higher wage on the job market. It also tells employers that you're the sort of person who can successfully get through college, and employers rightfully discriminate based off this signal.
Furthermore, there's a selection effect too. Colleges don't necessarily make their students better, but can often simply find better students. If you took Stanford and replaced 100% of the instruction with putting the admitted kids in a room together, the "graduates" would end up out-earning others simply because of the kind of person that they are.
There's some debate about the relative sizes of these three factors, but it's my opinion that the human capital theory is a relatively small portion of it. Under 20%, I think.
In a narrow IT industry sense, having an MSCE, or JCP, or Cisco certification used to be somehow valuable. But tech moves fast, so topic-bound certifications don't keep their value for very long.
This is not a problem that has any easy solutions. I've been kind of partial to making tuition free for four years (paid for by the state) as long as you can maintain a 3.0 GPA. Basically extended public school but more aggressive about weeding out people who are not cut out for school. The state would negotiate appropriate tuition each year to discourage ever inflating rates.
A 4-year degree should also not be as widely required as it currently is, which is something else that needs to correct, which would happen with a collapse of graduates.
But as mentioned upthread, if we simply keep things as they are and throw good money after bad, people are going to have to be in school until they're 30 in order to meet the minimum requirements for mediocre jobs. Better to have some tough times to weather, given that you can always enroll later in life after things have settled, assuming it's something around a 5-year correction.
Is this better or worse than the credential treadmill and a lifetime servicing debt? At least when college was cheap in the 70s, you could pay for it with a summer job and part time work during school.
> more aggressive about weeding out people who are not cut out for school
This would never happen.
1. Provides government with cheap, high-quality workers. 2. Teaches leadership, discipline and other necessary soft-skills.
So, stop federally guaranteeing (and issuing) student loans (which mostly don't go to the poor) and increase need-based, and public-service-based, grants. Widely available no-need loans drive up prices but also insulate people from the immediate effects at a time when they are cognitively least able to appropriately assess long-term costs.
We had this. It was called high school. But then standards were lowered so it was no longer a good filter for intelligence and conscientiousness. Standards were lowered to increase "social mobility." This did not work. Now college performs the same function. But the average IQ of college graduates will continue to decline as the percent of the population that graduates approaches 100, and so masters degrees are becoming increasingly common.
Will this, too, increase social mobility?
Social mobility in a meritocratic society is hard given the heritability of valuable mental traits. If we keep sacrificing our schools on the alter of social mobility, we will end up burning the first 30 years of or lives getting Phds in mopping floors.
Standards have never been higher. Students face pressure from college admissions and teachers face pressure from national standards bodies. Policies that have enriched standardized testing companies.
The real issue: Labor power has never been lower. Wages have been stagnant for the past two decades. You need a college degree now because safe middle class lifestyles that were previously available to graduates of high school are now limited to those with certain bachelors degrees.
Whether this is due to political collusion with capital, increased automation, globalized labor or a combination of the three is up for debate. The middle class you're imagining was fueled by an economic engine tooling up to rebuild Europe and a political climate that taxed the rich at 80-90%.
Secondly, you seem to imply that no improvement in the education level has happened because of the normalization of high-school education. I disagree with this also. I have no numbers to back this up, but by looking at the world around us, at all the inventions and the added complexity and our increasing ability to handle complex systems, I think we have become smarter.
Thirdly, maybe social mobility was hijacked by some rhetoric or became a symbol for this or that group. But at its core, social mobility means allowing people to rise to their potential and not stifling them. How can we be "sacrificing our schools on the alter of social mobility" when social mobility is supposed to be _more_ meritocratic, not less?
For instance the difference between 3.5 years without graduating and 4 years + graduation is immense, whereas in a non-signaling model, they should have very similar outcomes.
Education, in the resume / HR sense is absolutely a signal.
Education, in maintaining and excelling in your profession is knowledge.
It's lamentable that degrees are used as filters, but I wouldn't trust someone to do an electrical engineering job who didn't have a related degree. There's simply too much to learn. (Yes, exceptions do exist, but they're not common)
I'd argue the more pointed questions to colleges should be: if you're not equipping your graduates with the latter knowledge, then what are they buying? And why should they continue to pay you?
The exact same type of jobs often have different requirements year-to-year. Recruiters start adding or removing requiments based on how easy it is to find people for a role. It just acts as a filter but is often unrelated to the actual difficulty of the role.
Recruiters don't want to have to judge people entirely on merit as it is hard. They pre-filter the pool to focus their search and make it easier to manage and vary the constraints based on number of applicants.
This means people perfectly capable of doing a job get excluded for a superficial reason other than ability or competence and it overly effects people from a poorer background.
https://www.npr.org/templates/transcript/transcript.php?stor...
[0] https://smartech.gatech.edu/bitstream/handle/1853/5873/00STU...
And the GDP of Venezuela as measured in bolívar is the highest it's ever been!
"More comparisons on new SAT scores versus critical reading and math scores on the old SAT:
A new 1200 corresponds to an old 1130. A new 1300 corresponds to an old 1230. A new 1400 corresponds to an old 1340. A new 1500 corresponds to an old 1460. But a new 1600 is just as perfect as an old 1600."
https://www.washingtonpost.com/news/grade-point/wp/2016/05/1...
Underestimate the caliber of the rising population at your own peril. The failing generation can only cry ageism for so long before their jobs are eaten.
reply
The argument against the downfall of society stands pretty well on it's own without it though, mostly because there's no evidence the tests are getting easier (regardless of recent score changes a 1600 is still a 1600) and even less evidence the test takes are becoming less accomplished.
http://www.pnas.org/content/pnas/early/2017/01/10/1612113114.
I think it's a bold conclusion to leap from one genetic marker doesn't seem as strongly correlated to education levels among Icelanders to "cognitive genomics is on the decline".
Better to use hyperlinks; order of posts on HN is not immutable.
My older son needed a certain ACT score to get into the school he wanted. He wasn’t anywhere near the score. After 10 one on one tutorial sessions at $100 a pop with former college professors. He got in. He didn’t all the sudden get smarter. He had access to resources.
Another anecdote, I had the highest SAT score in my school and I believe at least the second highest in my city out of 5000 graduating students (not a large city). How much of that do you think was due to me being one of the smartest or hardest working students in my city (usually ranked near the bottom in income in the US) and how much was it due to my mom not only being a high school math teacher but she also had done SAT workshops for years?
I didn’t have to go to a “SAT Tutorial” class with 30 other students where an overworked teacher volunteered to come in the morning for an hour before school started. I had all the help at home I needed.
https://en.m.wikipedia.org/wiki/List_of_countries_by_tertiar...
Setup a corporation owned by a trust, all your assets go into the corporation. If you have a catastrophic life changing event, your base will be secure.
You can also rent your home back from yourself and write off things you can't do as a homeowner (depreciation, upgrades, interest, etc.).
Moving your assets to their own entity is how you protect them. Should something go wrong, you have no assets for them to come after as they're owned by the trust. You can use your lifetime estate giving to help avoid taxes on the first few million. Plus if you're putting things in there before they've appreciated over decades, it will be at a lower cost basis as well.
Discuss this with an accountant and attorney that understands trusts and the tax implications of course.
The mental shift and peace of mind GP is talking happened for me when we could pay off all of our debts with our liquid assets. We chose not to do this however because of interest rates, and because the nest egg meant we never had to pay for anything, even a broken car or arm, on credit. I believe that you will discover you feel the same way.
Don't confuse 'no debt' with 'wealthy'. Wealthy people take loans too, when it's cheaper than the alternative.
I understand the financial reasoning behind not paying them off...but I think her time is worth more to us than whatever money we would save if she had to continue working.
If the interest rate on your student loan is lower than the investment returns you make, then you:
(1) End up with more money if you don't pay off your student loans, and
(2) Can still pay off your student loans whenever you need to, so your wife would not have to continue working any longer than she would otherwise.
It is strictly more money, and doesn't change your wife's timeline. You basically get free money at the spread in yields between your student loan debt and your investment returns.
One way to think about it is this: If you could borrow $50k at (say) 3% interest and could invest it in a way to make (say) 8% returns, why wouldn't you? You'd make 5% on that $50k!
The fact that you already have the debt, and the cash comes from saving monthly instead of in a lump sum doesn't change that basic math, and doesn't change how long you need to keep saving for -- in fact, it would lower it!
Of course, that assumes a low student loan interest rate and a high rate of return on investments, as well as risk tolerance, etc. etc. etc.
If you ever want to be comfortable (nevermind wealthy for the moment), you must overcome the urge to spend money that you have 'lying around'. The forced austerity of paying off your loans as fast as you can is a different kind of discipline that is useful, but it avoids temptation. When you pay off your loans you make that money disappear, in a much more concrete way than for instance setting up automatic transfers.
Eventually, you have to learn to resist that temptation, and I think it's healthier and more efficient to exercise those muscles long before you hit a net worth of $1. You have to get comfortable having liquid assets, and still live below your means. To spend it when it's wise to do so instead of when you want to. If you can do that your wife can quit her job, or you can take a chance on that new job that is in a new town, or might explode in a fiery cataclysm. You can remodel your kitchen to make your house worth more than you spent on the remodel.
Even simple stuff like putting aside money for a new TV or laptop and then not buying it until there's a sale can make a huge difference in your spending money. Or bigger, like a car. Don't get the one without air conditioning because it's the color you like. Just wait.
If you feel you do not have the discipline to avoid dipping into your investments, then by all means continue as you are.
Otherwise you'll still be stuck in the loop. You'll get a little breathing room but you'll never really be free of the worry.
This really adds to discussion as people get also to discuss if they really want to spend more of their own money. The word 'free' in this context seems to automatically dismiss any discussions about tax rise and public spending.
Disclaimer: I'm Brazilian, not some angry republican.
I'm Brazilian and living in Sweden, that is how society here thinks (mostly), social mobility here is absolutely real. Just as an anecdote, I have friends who are 1st generation born here from very poor immigrant families, they are architects, engineers and fashion designers with good careers ahead. That was only possible because they had access to free education for all of their lives.
I am proud to pay my taxes here and fund this, even though I never have used (and don't plan to have a family), as many issues as this society has it works and tries to improve itself, coming from Brazil it's another world.
So I don't appreciate the rhetorics around not funding public education and healthcare, these are basic tenants of the societies of the future.
What are those people doing now if they didn't go to college because it was too expensive to pursue an "impractical" degree?
Wouldn't providing people the option for further education be a net good for society in general?
I'll choose to ignore the entire notion of "impractical" degrees. The society I want to live in is not without music, literature, and art. But those are "impractical" studies.
I was accepted to a well known engineering school. I chose to go to a much cheaper state college and stay at home. Looking at the salaries reported by the engineering school for graduates three years out, I was making the same.
But, in-state tuition at universities can be very affordable. The average public four year tuition is $6,841. Knock out two years at junior college and it's even cheaper.
There are pretty generous subsidies based on income, where you can get junior college almost for free.
Yes private university tuition is very expensive, but public colleges are not.
(Lots of poor people applying for colleges don't know this, of course, and restrict themselves to “cheaper” public schools.)
Now I have a stable relationship and I'd love to have children... but I can't, because 70% of my income goes to debt payment. My country has no US-style bankruptcy (if I stop paying I'm a pariah for life).
Absolutely agree about universal healthcare, that's something my country does well, and would improve the life of Americans.
Education... well, I'm more on the fence. I think current college prices in the U.S. are too high, but there's so much amazing free education... but yes, some basic level should be free. Maybe UBI would enable self-taught or other alternatives (I know there are some YC startups focused on alternatives).
Edit: no idea why I was downvoted :(
Living life knowing you can at any time be bankrupted and homeless from an injury or disease in your household is not the kind of "freedom" we should value.
So whilst Canada has a far better "average" I would say that for proactively healthy people the US system appears to be superior. The main issue in the Canadian system is that even if you can pay cash for something you cannot have it done and must join the long universal wait list. This includes simple things like finding a GP, getting standard lab work...
This was the first hit on google that agrees with me: https://www.fraserinstitute.org/studies/waiting-your-turn-wa...
On the downside sometimes they try to deny treatments a little to eagerly, when I broke my clavicle, Kaiser suggested I could go without surgery, while a private practitioner said I needed immediate surgery, pronto, right now. Kaiser ultimately had me wait over the weekend 3 days before the surgeon got in on Monday. But the service itself was good.
I don't think "proactively healthy people" is the right dividing line. It's more like "wealthy people". The point of the universal system is to provide a reasonable baseline for everyone. In my experience the UK system does this. Of course it has issues. So does the US system. The real debate is about which tradeoffs are preferable at a society-wide level.
I think the UK system is a good compromise - if you want more you pay more.
Private insurance in Canada tends to cover things the govt system doesn’t.
Yes, I got an appointment within a few days, and I got the cardiologist's report shortly after. But when I had a simple question about the report, my doctor suggested I book a follow-up appointment (and get charged another few hundred dollars) to get my question answered. I said no thanks - I'll take my chances and ask my friend in med school. If I knew ahead of time how much the original diagnostic would have cost, I might have had second thoughts about that as well. And while there seems to be nothing wrong with me, for other people in a similar situation that decision could end up being the difference between life and death.
I've had standard lab work done in Canada and have no complaints about the wait. But I'd take waiting a few weeks if that means no one will choose to forego life-saving diagnostics because of extortionate health care costs.
Why would you have to move to the US for that, can't you just go to your favourite American city and walk into a hospital?
I agree that the insurance aspect of the system is difficult and could use mild regulation. But I think that the single-provider nature of "universal healthcare" is probably what causes issues with the Canadian system, more than the single payer aspect...
This is all anecdotal, but here is my experience with the Canadian system:
1. Uncle died of cancer and waited 8 months for chemo and never got it.
2. Almost no family doctors are taking new patients in Vancouver. You can't see a specialist directly unless referred by a family doctor.
3. When mother in law needed a breast scan, we called like 10 different hospitals to ask if they had a breast MRI machine because the wait times were so long and we only found 1 machine.
4. She was also mis-diagnosed with asthma for 3 years because they didn't have the diagnostic tools. We sent her to an allergist in the US and it turned out it was allergies. We've taken to seeing doctors in the US to get referrals to specialists in Canada.
5. Wouldn't let a friend see an OB until 23 weeks and she was bleeding. Friend didn't think it was a thing and we were appalled.
6. Grandfather was mistreated for a low platelet count.
7. No private rooms - if you're deathly ill you're in a hospital bed next to others who are deathly ill.
One other thing that's not often mentioned is the best doctors tend to move. When my grandfather was super sick, he was next to a man who's 3 sons were there looking after him. They were all doctors and came to the US to practice because Canadian salaries were so low (they too were ranting about how bad the care there was).
Point being, if the US moves to a single payer system in an effort to lower healthcare costs, a lot of people in the US are going to have to readjust their expectations.
Careful. If you read the article, the threshold for middle income in the US in 2014 for a couple is under $35K/yr (household). I doubt most people with that salary get a pretty good insurance policy through work. To give you an idea of what that can cost, see my comment here:
If you can afford private care, and are lucky enough to have good insurance through your job, you'll get better care in the US. Not in terms of quality, but in terms of wait times, and how nicely people treat you. I think the actual medical interventions are just as good either way.
I don't know if it would be possible to have it both ways. Give universal health care that's decent to all, yet give even better care to those willing to shell out extra.
I know in Canada its always a big debate. Some people think a hybrid public/private system could do it. Others worry it will just marginalize the affordable health care and lower its quality and increase even more its wait times.
Isn't that basically saying "lucky to be full-time salaried"? I don't know anyone in such a position who has bad insurance.
I do. A friend of mine had a cushy tech job in Chicago. He recently quit to start his own business. I asked him about health care. His employer provided insurance was quite bad (high premiums). He's paying only about a $100/mo more than when he had the job.
And then there's the issue of what you mean by "bad insurance". I work in a top tech company which gives us multiple options for insurance. For most people, it works out alright, but for each option, you won't have much trouble finding some employee who thought he got shafted with a high bill (things like someone in the chain of care ended up being out of network even though he had done due diligence to ask all people involved).
By design the US system should work better for those with more money.
An anecdote with the Canadian system:
A family member was diagnosed with Stage 3 form of cancer, and was receiving Chemo within a week. They have received excellent treatment the past 4 years and have "beat the odds" so far. I'm pretty sure the bill for this would be somewhere in the range of 500K to 1M in the US. The main costs for this so far has been parking, and some travel expenses for an out of City surgery.
I also know of someone of similar age who was going to be waiting well over a year for a hip replacement. (They went out of country I believe)
Some questions:
1. Did you pay the full premium for KP, or was some of it employer funded?
2. How many people are you paying for?
I once had KP through an employer. Best provider ever. However, at some point I was pondering quitting my job and looked up how much I'd have to pay in premiums to get the same copay, coverage, etc. It came out to over $900/mo for me + my spouse. That's almost $11K per year. Imagine how much more it would be if I had 2 kids.
I thought I'd just check now to see what the cheaper plans look like. The cheapest plan is $527/mo. Deductible is $6550/person (over $13K for household). So I'd pay over $6K if I didn't seek any treatment. And I could pay as much as $19K out of pocket (premium + deductible) before insurance kicks in.
KP is an awesome provider when I'm not paying for it :-)
BTW, I do have KP currently, under a different employer. Current wait time to see my PCP is 3 weeks (I've seen as high as 4 weeks). It used to be 1-3 days - I always wonder if changing employer plays a role (same PCP).
Lots of Americans don't have anything like Kaiser, and under the old rules, you could simply die of cancer because you couldn't afford to buy treatment or insurance (as a high school classmate of mine did). 27 years old in 2009; she died of adrenal cancer that probably started in 2004 or earlier but wasn't diagnosed in 2005 because she had no care. She couldn't be covered under her parents' care after college, couldn't get into a state program (they lost the paperwork, then told her she was ineligible because she earned too much at her retail job the year before), then she finally got into another state insurance program once she was poor enough (unemployed & living with parents again after having a surgery to remove a 14-centimeter tumor), and then she finally qualified for General Assistance/Medical Assistance/Medicare. Just about everyone agrees that the progression would have been different if she'd been diagnosed and treated earlier. To not be diagnosed with cancer until your tumor is like 12 cm in diameter because you simply can't afford a visit with a primary care physician --
-- that doesn't happen in Canada.
Also missing is level 4: I don't have to work to be at level 3 levels of comfort.
There's a tiny fraction who own significant wealth that are in a special level 5 or higher. "I don't care what anything costs."
Beyond that there might be, "I don't care how much my second (third, etc.) house costs".
And of course, there's the level where someone asks, "how many houses do we own, again"?
Andy: "So what else does your family own?"
Edgar Covington: "Well... have you heard of Scotland?"
There are people who can just sit there collecting checks and their lifestyle is never in jeopardy, because of investment income. They’re the only ones I’d consider truly wealthy.
First of all, the real fuck you money is enormous if you really want to forget about money problem altogether. You don't want to wonder if you can afford that expensive car and if it will impact your ability to buy an expensive car 10 years down the road. Second, you do not want to worry about your wealth in general. If you would just have it in a bank, then you definitely should. Inflation being just one of many things to consider. You could spread your investments all around the world and be doomed only in case of some world war or other catastrophe, but to do it well you need a lot of funds and a lot of effort.
So what you would really want is a cashflow. Your assets providing you comfortable enough paycheck each month without your wealth diminishing too much. Real estate investments seem like a pretty good option for that, although you probably still want to diversify not to depend on a single government. But without any effort on your side, optimistically, your income will only stay the same. Which is likely not to make your brain very happy because it is really good at adaptation.
You may think I'm overcomplicating it, you still can choose to work if you want to, it's the comfort that you don't have to and can continue without worrying about basic needs (whatever they may be for you). In that case though, if you are living in SF, there are so many places in the world where you can move with little to no savings and be set for life.
Would you want that though? Or do you prefer to be coding/creating or whatever it is that you are doing? Skillset also can kind of work like FU money. Knowing that at any point you can find a decent job and have money problem solved.
But my short point, apart from suggestion to reconsider the attitude yourself, which you can do much more through-fully that I can in a comment, is that you either are doing what you like - in which case keep doing it, especially in IT it is likely that you have the money problem solved, as long as your passionate about it - or you don't, in which case you can start doing something else and switch to the first scenario or just quit and live a slow life in some place where your money is worth a lot.
Number of people with FU money attitude who will actually achieve it, without lying to themselves, is infinitesimally small. Question to how many of them it will bring peace/happiness/satisfaction I leave unanswered.
I think there is a point where the costs become non-monetary.
Which is to say, there is a level up where the things you wish to do with your money require regulatory or social approval which can be quite a bit more "expensive" and onerous.
Here is an example:
In recent years, George Lucas wanted to build a third rural campus in Marin county[1] on a piece of ranch property that he already owned. Despite providing his own, fully staffed, private fire department[2], bequeathing a vast majority of the land to open space, and generally absorbing all possible costs (and, in my opinion, developing with a very high level of taste and restraint) he was denied at every turn and eventually had to give up on the project.
This was not due to lack of funds.
[1] The first two being Skywalker Ranch, home of Skywalker Sound and Big Rock Ranch, home of the new winery/retreat.
[2] Which also responds to public emergencies off the ranch.
If you got 10% it would be 50 years
Warren Buffet is definitely impressive, but compounding capital is a huge benefit
(Ok ok I ignored taxes, inflation blah blah)
Edit: just because this is fun: at $365M a year, you get WB wealth in 50 years at 5% and 32 years at 10%
Edit2: if you take Berkshire Hathaway's historical annualized return (20.8%), compounded quarterly, starting with $52M and no additional capital after that, you get WB wealth in 36 years.
Also proves out the opposite though too. Buffett, and his kids could spend $1 million a day and never run out.
That being said, it's also very fragile in a way. Not having skills or a wage means your wellbeing is subject to the overall economy. A lot of multi-generational fortunes were wiped out in WW2 and the great depression and never recovered.
Another billion or even $100 billion isn't going to change Warren Buffet's life at all. In fact he'd probably trade it all just to be young again.
[1] https://www.investopedia.com/articles/financialcareers/10/bu...
1. Paycheck to paycheck. Includes constant worry and frustration about living expenses and basic necessities. Any unexpected cost will lead to not being able to pay the bills. Money is on your mind 24/7, life in this category is hell. Very difficulty to escape this category once you fall into it.
2. Able to afford living expenses with a little left over. I guess you'd call this middle class? Or maybe upper lower class. These people have an income that lets them pay their bills without worry, so they have a cushion of a few hundred/thousand dollars a month. These people don't experience stress over standard bills anymore, they are free to enjoy living life a bit fancy. Can go out to eat at good restaurants, can afford to do miscellaneous activities.
3. Anything above #2 really. This is the bracket and beyond that has plenty of income in that expenses don't matter anymore. Stress about affording living expenses is non-existent.
So surely there must be differentiation on whether any given job or emergency can affect your standard of living significantly.
#3 can afford to not work for a long period if the job goes down. This also might let you invest your work in a startup
#4 can afford to not work anymore
If we compared it with other people internationally, or even historically, we're filthy rich at almost any level of the ladder.
A saving habit _and_ reasonable living on one's income, no matter the level, will _often_ quickly result in the kind of savings that will pay for those big restaurant meals, if needed, or those vacations, if needed. My friends who are good savers tend to take vacations to really nice places without needing to spend a lot when they get there. So they have more money for the next vacation, etc.
There are people who are unfairly saddled with debt, to whom this doesn't really apply as readily, but it'd be nice if messages like "wow, sad, income levels make life so hard" could be accompanied by "but here's what many of you who are reading this can do at any level to feel on top of things." We are short-changing our children by not bundling that more realistic discussion with discussions of income.
The other aspect is (as you and parent posters note) the comparison with others. If you live in an expensive area where everyone drives a nice car, pays for a gardener, and sends the kid to a high-tuition school, you'll stand out if you drive a 2008 Civic, have an adequate but not nice yard, and send the kid to the public kindergarten. "Comparison is the thief of joy," said someone. I personally was much happier with my un-professionally-landscaped yard and small house and used car in my middle-class neighborhood when I realized that those were reasons we have a higher net worth than most of our peers, not signs that we don't.
This is not true. Wealth is choices: how many different things can you choose to do? The average person today has a multitude of choices that were not available to the richest person in the world a century ago, and for that reason is wealthier than the richest person in the world a century ago.
No, that's not correct. What distorts the market are artificial constraints on the market. You mention Bay area housing prices, but you fail to point out that those prices are skyrocketing because of enforced scarcity: the supply of housing in the Bay area is not being allowed to grow in response to growing demand, but instead is held fixed by local laws and regulations. That is what is distorting the market.
Relative wealth does give an advantage in this kind of situation, but that doesn't mean fixing the wealth disparity will fix the market. It won't; it will just mean that the scare Bay area housing gets rationed by some other method than who has the most money. It will still have to be rationed because demand far outstrips supply; and no matter how it is rationed, many people will be left out and will complain that the system is unfair. The only long term fixes for that are to either expand the supply of housing (by letting it respond normally to market forces), or for a lot of people to stop feeding the monster and abandon the Bay area for someplace that offers them better opportunities--which again is a normal response to market forces. And what empowers people to make those choices is absolute wealth, not relative wealth.
Harvard only produces a limited quantity of lawyers every year, and those lawyers are paid a premium in large part because of the limited supply. A Harvard education isn't a process that can be infinitely scaled.
Income inequality drives up the prices for limited quantity goods.
Some limited quantity goods are unavoidable, yes. The quantity of land in the Bay area is limited.
But the quantity of housing in the Bay area does not have to be limited by the quantity of land. If it is, that's a choice people have made to impose scarcity. And decreasing relative wealth inequality won't fix that problem; you have to fix it by taking away people's power to impose scarcity to further their own ends at the expense of other people's.
> Harvard only produces a limited quantity of lawyers every year
Yes, which is another example of a choice to impose scarcity. See below.
> Harvard only produces a limited quantity of lawyers every year
But you don't need a Harvard education to become a lawyer. A Harvard educated lawyer might be better able to handle certain legal matters, but most people who need lawyers don't need that level of expertise.
In fact, most people these days who need legal documents prepared don't even need lawyers; the free market has created plenty of services that provide such products at a much lower cost. The only reason why many people still need lawyers is artificial scarcity: lawyers write most of our laws, and of course have written laws saying that you have to have a licensed lawyer to prepare various legal documents, even though the lawyer doesn't actually add any value to the process. You can't fix that problem by reducing relative wealth inequality. You have to fix it by taking away people's power to write laws to benefit themselves at the expense of other people.
I agree that this is true as a practical description of how most conversations about wealth go. But to me, that is a bug, not a feature: it means most conversations about wealth are ignoring the huge increase in absolute wealth that has occurred as a result of advancing technology. In other words, people are being encouraged to ignore this huge positive impact on their lives, which, if they only realized it, empowers them to do all kinds of things, and are being told to focus instead on relative wealth disparities that, in a sane world, would have negligible impact on their lives.
Nobody in this discussion is using "relative wealth" to mean comparisons over long periods of time. Everyone is using it to mean comparisons between different people's wealth at the same time. If what you're concerned about is the advantages that relative wealth gives you in competing for scarce resources, that makes sense; but nobody today is competing with people a century ago for scarce resources, so using the term "relative wealth" for that kind of comparison makes no sense.
Wealth isn't choices, it's the accumulation of value. Don't believe me? Check a dictionary. Maybe you are thinking about liberty or freedom.
The value of anything is the choices it enables you to make. Don't be misled by the dictionary definition.
does absolute wealth buy you influence?
no, not even for a moment. if you have a million dollars, you have "a lot" of money. great. but what about your ability to turn your mass of money into societal influence? you can't buy congress if someone out there has a billion dollars. your chump change doesn't move the needle even if you are "rich" because they have so much more money that the sums they can offer are much greater. as the level of wealth rises, the costs of bribing politicians rises too. absolute wealth doesn't help you gain influence.
it's all about relative wealth. if you are more wealthy, you have relatively more say in the way society goes, at least in the way that things are configured currently.
This is a problem with the way things are configured currently. It doesn't mean absolute wealth doesn't matter.
In our ability to procure food and entertainment and travel, even a very poor person is pretty rich compared to the historical average. But if you consider our ability to have leisure time, walk away from an employer, or get other people to do stuff for us, the moderately wealthy of the distant past were still much richer than today’s middle class, let alone today’s poor.
If prolonged inactivity will force a radical restriction in what you consume, you are not wealthy.
Many people with high incomes think they are wealthy because of their income. You are wealthy only if you have stored wealth.
See Picketty's "Capital in the 21st Century" for more about income distribution and wealth distribution.
It seems like you're falling to the "Mental Accounting" [1] fallacy, wherein you create buckets of money but forget that they're fungible. You splurge in one area and cut back in another. [0]https://en.wikipedia.org/wiki/Mental_accounting
Hotels run up the scale to 67,000+$ a night. That's the tipping point for not caring about travel costs not simply bounding your costs by a hidden 'within my price range' scale. Interest on 1 billion will cover a 70k / night hotel room for the rest of your life it's simply not important.
On the flip side, going out to dinner with friends, and discovering that you may be on the hook for $100, and not stressing about how you are going to pay for it, is withing reach of a lot more people. I have several friends who have reached that level.
I think the levels are pretty good. Though I would also add two levels of wealth that materially change people's happiness - L0 (Can I pay my bus fare, rent, groceries without stressing. L0 is very, very real). And also, L4 - which is no longer flying commercial. Being able to go where you want on your schedule, without ever having to walk through an Airport/TSA is, I have heard, a material change to personal happiness.
I find this laughable. I thought it was common understanding that business class prices were significantly disconnected from the prices that the average person pays for a flight
My spouse and I could spend whatever we wanted (your 20k or whatever) on flights to Europe from the US in business class; we could pay in cash tomorrow and not really have to worry. But we don't, because that would be stupid.
Flying business class to Europe for 10k each is not something we value.
Similarly, we don't buy steak when we go out to eat. My spouse can cook a steak from our local farmer better than any steak I've paid $45+ for. We don't feel restaurant steak is a good value. Seafood? Yeah, we'll pay for that -- don't know how to cook it well, so it's a good value for us.
There is a significant difference between price and value. Coach is a fine value for me. I'm short, and I want to give my money to restaurateurs in Portugal, not American Airlines. The pleasure per dollar is a much better ratio. (BTW, Portugal is a great value :) )
But note - I'm not suggesting that you are making the wrong decision - just that you are making it because you have to think about the cost of flying coach, you aren't at "L3" wealth and so need to think about the marginal value associated with the money you are spending. 99% of people at L3 don't hesitate for a second to book a business class ticket. (In fact, when you are truly at L3 you probably consider flying first class (emirates has awesome First Class Cabins) - or, if we want to stretch the definition a little, opting out of flying commercial altogether)
After many years of traveling north of 100K miles/year, trust me, traveling in coach sucks, and anytime I'm forced to do so I'm miserable. If I had the money, I would never, ever, take any flight > 6-10 hours in coach.
You can just as easily spend $1500 a person for a two week vacation in Europe and enjoy essentially all the same things as if you're paying 10x as much.
$5K daily incidental, are you kidding me?
Don't fly business class unless your business is paying or you're on a honeymoon or something.
There were a few reasons - there are health issues associated with flying packed into a coach seat. Employees who have to fly a lot for work, if it was requested they fly in coach, might decide to leave their jobs pretty quickly if they couldn't fly business. And, somewhat related, it's considered a "soft benefit" (and 100% non-taxable benefit by employees in the USA) being able to fly business, stay in five star hotels, and have a reasonable ($100 or so) per-diem when engaging in business travel.
When Apple started flying engineers in business class to China, suddenly they got dramatically more likely to go to work out production issues rather than trying to convince management that the issues would work themselves out. A few million dollars in employee travel was immaterial to the increase in production reliability.
Wealth is the ability to generate such income levels passively (having control over your time).
> I live a privileged life yet I have only accumulated $80,000 in assets
Maybe you should save more? Even just spending 90% would make a huge difference and then you can continue to live a privileged life forever.
https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_i...
Because beyond those 3 levels is the world of "I can spend money to improve the lives of people around me, or to improve the world in general" e.g. starting foundations, making donations, seeing things created like hospitals or homes or new companies....all of these are things some people would like to do, and which require a level of wealth far beyond "I don't care what my vacation costs."
The distinctions laid out across these three tiers are both practical and relatable. Each step is another dimension of stress which subsumes the ones below it, which implies that eliminating one level also eliminates the level below it.
Level 1 means you have no debt. That already puts you well ahead of e.g. most Americans. It means you don't have to worry about your purchases in the past. Level 2 is a step beyond that, because it means you need not care about the cost of small luxuries in the present. And at level 3, you need not care about the size of large luxuries in the present.
The floor and utility of money increases categorically at each stage. Without debt, you can focus on "things" unencumbered. If you don't need to worry about the cost of restaurant bills, you can focus on "luxurious things". Vacations realistically cost thousands of dollars. If you don't need to worry about the cost of those, you can happily spend four or five figures on an "experience" that lasts perhaps a week to a month. And if you're not truly not caring for the cost of these things, at each step you can partake of the benefit many times in one year.
I concur with another commenter that you can formulate a step 4, which is "I don't need to work to enjoy step 3", but beyond that I think you're really splitting hairs when it comes to lifestyle changes.
"Is the vast majority of the money you spend on a daily basis from capital, or wages?"
If capital, you're wealthy. If wages, you're not.
(Of course, if you work at a salary of $500,000 for a few years you start to accumulate capital pretty quickly, but it would take a lot of saving for investment income to get bigger than your salary.)
And how they are failing to do so between 1980-2010, as modern conditions globally approach those of the French Revolution.
Somehow that is something that does not seem to be valued enough when it comes to this type of discussions.
Financial independence does not mean necessarily being rich, as much as it means not needing to work for someone else and still be able to make a comfortable living.
Class 1: you can afford your current lifestyle without concern for daily expenses, and could withstand 1 or more major emergencies (job loss, car destroyed, $30,000 bill) without reducing your lifestyle.
Class 2: your assets are sufficient that with a reduction in lifestyle you never have to work again.
Class 3: your assets are sufficient that with no reduction in lifestyle you never have to work again.
Class 4: no amount of incremental wealth will increase the amount you’d spend on a primary home, and you never have to work.
Class 5: no amount of incremental wealth will affect your spending on vacation homes, yachts, or planes and you never have to work.
There are obviously levels of subsistence below these. But these are, to my mind, the levels of wealth/freedom. Below these I wouldn’t call someone financially secure or say have “financial freedom.”
I think when creating these tiers it’s important to acknowledge that lifestyle is a variable and some people’s preferences make it easier to achieve different levels. If you have caviar tastes, you need more money to make it into class 1. If you are extremely frugal and well paid, it doesn’t take much actual money to make it into class 5. Lifestyle vs freedom is a choice and there’s a trade off - do you use extra money to buy lifestyle or to buy freedom?
I'd make it (and like the ones in TFA, those all start above normal middle class status and end below < 5 million dollars -- beyond that it's mostly extravagance and political power and influence rather than actual quality of life changes).
1) Level 1. I’m not stressed out about debt: People who no longer have to worry about their credit card debt or student loans.
2) Level 2. I can buy for anything I fancy within reason (e.g. I could get buy a new high-end laptop every year, lots of clothes, eat out regularly at fancy restaurants, have a $5K watch and so on), but not extravagant stuff (e.g. no Ferrari collection or yacht).
3) Level 3. I might work, but I don't have to work. I can take a vacation anytime I want for as long as I want, and stay in a 5-star hotel for as long I like.
Don't define wealth by saying "you don't care what a meal or vacation costs." You always care, it's more that most meals and vacations are easily affordable.
Level one is living on the fruits of ones labors. Your wealth is based on what you do.
Level two is living on your assets, or capital. Your wealth is based on what you have.
Level three (rare in 20th/21st century) is living on your conquest and subjugation of others. Your wealth is based on who you are.[1]
[1] I speak not so much of colonial conquest, or subjugation of native peoples by outsiders, but rather of local conquest - you may not have killed all the other claimants to the local throne, but your grandfather did and nobody is challenging you.
What? Crimea? Iraq?
https://en.wikipedia.org/wiki/Annexation_of_Crimea_by_the_Ru...
https://en.wikipedia.org/wiki/Iraq_conflict_(2003%E2%80%93pr...
This number is probably the truest measure of a person’s real wealth: What is the largest unexpected financial shock you could sustain without the cost of that to you suddenly becoming ten times the original cost or more?
https://shift.newco.co/your-financial-shock-wealth-4845e6dc1...
level 1: Optimize for most calories per $$$. My budget on food is money.
level 2: calories have become cheap, so I have to worry about getting fat. The budget for food is calories.
level 3: I only ever optimize for time. The budget for food is how much time meals take.
I think there are better, more tightly specified definitions in this thread.
Level 5: Legal limits are the limiting factor in my political contributions.
Level 6: I don't care how risky an investment is because I won't even notice if I lose the money.
Level 7: If I told you about this level, my life would be in danger.
level 0: primitive accumulation of non-liquid assets. the image here is a homeless person trucking around all of their possessions in a shopping cart or perhaps someone living in a shantytown. there is no ability to pay for any kind of costs, except by the generosity of others. severe mental illness is guaranteed.
level 1: destructive equilibrium. wealth remains constant (and low) despite consistent or inconsistent income. this is where many of the working poor are -- no getting ahead, but a large potential for falling behind. a small number of fixed costs may be sustainable, but stability is very low and anxiety is very high. there is no purchase which can be made without budgeting. mental illness is highly probable.
level 2: unstable accumulation. wealth is low, but there is a slow rate of accumulation of wealth. the wealth is often dipped into during times of crisis, so on the long run, there isn't much compounding going on even if the wealth does accumulate. many purchases require budgeting, but the smallest of purchases (like a pack of gum) can escape deliberation. the rest of the working poor and most of the "middle" class fall into this category. mental illness is probable, because there is never true stability -- the amount of wealth in the bank is never enough to protect against more than one problem at a time.
level 3: stable accumulation. wealth accumulates reliably, and compounding interest makes the long-term view rather rosy. less-trivial purchases like TVs or nice dinners don't require deliberation. the real defining feature of this level is that for the first time, the means for having nice things increases over time. someone might be only able to afford one vacation a year at the start of their career, but if they stay within this level they could afford four by the end. mental illness is less likely because there are enough resources to protect against more than one shock at a time. note that major purchases like houses or cars are never beyond at least some deliberation for this level, even if other things are. this is the "upper" middle class.
level 4: accelerating accumulation. these are the upper classes. shocks are irrelevant to this level because a shock of sufficient size to threaten their well-being would probably be the end of the world or at least major chaos. at this level, budgeting does not really exist. the economic deliberations of the lower levels are replaced by a consumption deliberation. the question is no longer "can we afford this" but rather a purely hedonic "would i like to have/do this". the wealth base at this level is so large that even excessive consumption will not slow its accumulation by an amount which would require cutting down on future excessive consumption. the people at this level hold most of the world's financial resources.
is this view of things reductive? yep. the takeaway lesson is that the vast majority of the people with a positive net worth do not have genuine stability.
I would like to reinforce your point about the super rich. They have so much money now that it's basically impossible to spend it faster than its growing. They will continue to accelerate away from the general populace for the foreseeable future. This represents a tremendous failure of policy on the part of our government. It's locking up more and more of the wealth of the country at the top where it does nothing useful while the majority of the people who drive the economy get squeezed harder and harder. It is the government's responsibility in a capitalist system to prevent the capital feedback loop from destroying the system--nobody else has the power or will to do it.