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Comment by tjr225 | Hacker News Reader

"They work in big cities and rural towns. They’ve tried to save — but rent, child care, student loans and medical bills get in the way."

Yikes. I'm not exactly living paycheck to paycheck, but I can relate to this.

It's really funny - my wife and I make quite a bit of money - whatever twisted form of capitalism we currently live in has been designed in such a way to extract most of it away from us. One begins to wonder what the point of going to work and earning money is other than to line the pockets of corporations that have effectively taken ownership of our government.

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It's human psychology. Below a certain level, your mind will simply talk itself into spending your available money to make you happy.

You don't need that car. A car half the price would have been plenty good enough. But you did it anyhow.

You don't need fancy breakfast cereal that costs twice what the generic stuff at Aldi costs.

You don't need all those electronics and toys. You don't need to eat out that much.

If you made less money, you'd do less of the above right until you simply couldn't afford any of it.

And you'd continue to be about as happy as with all that money, assuming you were still paying for the necessities.

I'm not trying to convince you to give up those fancy drinks. I'm just explaining that you could choose to live more frugally without almost no repercussions, but you won't.

I decided in college that a 40 hr workweek wasn't the optimal amount for me. I've since learned that for white-collar jobs, employers really really want full-time employees[1]. My way around this was: consume as if I made ~half as much and take extended sabbaticals. The final piece in the puzzle was ACA exchanges, as I can now get stable (though expensive and high-deductible) health insurance while unemployed.

This obviously isn't a binary, but I've been consistently fascinated with the inability of the people I know (generally middle- to upper-middle class) to shift their consumption downwards to meet a goal. Not everyone wants as much leisure time as I do, but I know tons of people with all sorts of reasons they'd like to save more, and every one of them consumes more while making less than me (when I'm working). I used to think the issue was that I grew up without a lot of disposable income, but now I know people with similar backgrounds whose floor on consumption rises in lockstep with their income.

That is to say, I don't disagree with your analysis here, but for God's sake _why_ do people do it?

[1] Contracting is obviously possible, but it often constrains the type of work you can do.

Because there is a lot of things I would like to buy now that I have no money for?

My ideal doesn’t change when my income rises, I’m just finally able to pay for the things I’ve wanted all along.

At least, that was true before. I guess I’m finally at a level where something remains for saving.

Well, obviously. If what you want to spend your marginal income on is more consumption, that's completely reasonable. There's no accounting for preferences. That's not what I, the article, or anyone else in this thread is talking about though.

Note that I'm also talking about a _floor_, not about discretionary income. What you consider "must-have basics" is different from what I would consider to be so, which is different from what a billionaire or a villager below the global poverty line would. To some degree this is normal, but the degree to which it gets in the way of the other goals of the people I'm talking about, I don't understand it.

I'm specifically talking about the many, _many_ friends of mine who have goals other than immediate consumption, and for whom immediate consumption is preventing those goals even when those other goals are higher-priority. Yes, I know revealed preferences are a thing, but in extremis the concept relies on a completely unrealistic Homo Economicus model of people. Hyperbolic discounting, innumeracy, an innate desire to keep up with the Joneses even when you disavow any such desire: these are all surely contributors, but I guess I'm surprised at the degree to which their sum skews consumption behavior.

The "funny" part I think would be how rent, child care, student loans and medical bills tend to scale in cost to your locale, so despite your well paid job, your cost of living has gone up to match. It might be expected & natural for that to happen, but it's still kind of... "funny" if you look at it from a certain angle.

Child care, education, and medical are labor intensive. It's not like making widgets in a factory that can double in per worker productivity every two years. Industries that don't mechanize like a string quartet playing Mozart still command higher wages over time because they need to afford their bills too.

Real estate is limited by the supply of desirable land. Location, location, location.

I'm fairly sure that student loans do not scale with locale. That payment is the same no matter where you move to after graduation but it's easier to earn it in a high cost of living (unless housing costs are so high that your free cash flow is less).

There are a lot of assumptions about my decisions and my lifestyle in response to my original post. I am not angry at my situation, rather, I worry about my younger brother, and all of the other people out there who have yet to get as lucky as I have.

I must not be human.

Aldi and Liddle's cheap food is I would say a false economy.

I would like to know more, can you elaborate?

They are a snob. There’s loads of good quality food in Aldi or Lidl. Plenty of crap too. Don’t buy the crap.

Not really you recall the adulterated meat scandal we had in the UK - and try tasting cheap orange juice vs the better quality stuff.

I did not deny there was plenty of crap. Do they have more than one brand of orange juice though? Is one of them good? Do they sell at least some quality products? It’s been a long time since I was last in an Aldi or Lidl but the answer to the second at least was yes. Their bread was great and they had tons of quite good Italian ham, cheese and preserved and condiments that were just not previously available at those price points.

You bring up a good point, that even people who make decent money still can't get ahead much more than those making close to minimum wage. Why is this?

My theory, is that life is full of stress, and throwing money at problems can make some causes of stress diminish. Whereas a minimum wage worker will shovel his own driveway, a higher paid office worker may typically have a snow plow contractor on retainer (for them it is worth the trade off, especially with long office hours). Same story with vehicle or home repairs. Which is why you don't really feel stress free until your income exceeds the threshold to handle most stress items with money instead of your own labor.

This depends on your definition of "decent money".

If we wanted a legitimate middle class, the textbook definition of one, the per-capita incomes in such a class would need to average around 100k for the whole US. Then you would make enough to invest enough to be making an appreciable amount of your money from investments and thus be "middle" class.

The average income is still a bit more than a third that, so the average is still decidedly a member of the working poor.

Money doesn't stop buying happiness until... coincidentally... you start making about enough money to be middle class. I'm not surprised at all that those below that threshold are buying happiness at the expense of future stability or prosperity.

Do tell, what is the textbook definition of middle class?

I always assumed it was th middle of the income distribution.

The preamble of the wikipedia article on middle class espouses why its such a loaded term:

https://en.wikipedia.org/wiki/Middle_class

I'm using the academic definition, where if the upper class earns their wealth through investments and the lower class through labor, the middle is a mix of the two.

Humorously even the wikipedia article mentions how the middle class in the US is framed as a political tool of manipulation...

I think a lot of my stress comes from the fact that, while I wouldn't have done anything differently, I had to put myself in the hole 60k or so to come out of the economic tar sands of being from nowhere, and doing some really dumb shit as a kid.

I think that people should both be free to make childish mistakes and still succeed(without putting themselves in the hole) and i also fear for a medical emergency that tosses me back in the hole outside of my own fault.

My only point is that I think healthcare and higher education are necessary to exist in the modern world, therefor they are a right, and our government - and tax payers - should provide these things to everyone.

There's nothing inherently better about any specific trade-off between time and money.

Not buying a car and riding the bus saves hundreds of dollars per month but costs hours a day. Eating out saves the effort of cooking and washing dishes. Hiring a maid might be used out of laziness or to eek out more family time.

I have to remind myself to try to focus on what really makes my life better. Usually that involves estimating time+money+intangible factors. And if it will still be useful in a year.

The problem is not a "twisted form of capitalism". The problem is us. In the 1950s, a family could live on one blue-collar salary. You could probably live on a single blue-collar salary today, too - but you'd live like people did in the 1950s. You would eat out very rarely. You wouldn't have college debt because you wouldn't have a college degree. You'd only have one car. You'd have only one TV for the whole house. The kids would not have huge numbers of toys, and nobody would have huge amounts of clothes.

The problem is, nobody wants to live like that today. As soon as we have more income, we "need" more - more clothes, more toys, a better car, a nicer house in a better neighborhood. As we get more income, our "needs" change, driving our expenses to almost exactly match out income.

This is especially true when you have kids. If you can afford it, you're tempted to give your kids those ski lessons... that summer camp... that vacation to Disneyland... a car when they turn 16. It feels heartless to say no when you could say yes. But if you say yes to all of it, you'll spend as much as you can afford (and maybe a bit more besides), because there's always something more you could give your kids.

Note well: This is not a criticism of those with low incomes who are struggling to make it. It's a criticism of those of us with fairly high incomes who still struggle to make it.

That is a significant factor. Houses are bigger than ever for less kids. The kids not sharing a bedroom each has a cellphone faster than a 1950 supercomputer. People take flights yearly.

For a few things a 1950 standard of living is literally illegal. Medical care - no NICUs. Seat belts, leaded gasoline, crumple zones.

I actually think capitalism is the problem. It's the best form we know to organize a society, but it has the serious problem when money tend to stick or gravitate towards bigger chunks of money. I'm making well over 300k and can afford a decent house that I'd have to pay off my entire life. What if I had 30M and was too lazy to start a business? I would just buy 30-40 nice houses in my area and would rent them. 10 years later I would have 60M in assets plus whatever rent I've been paid. Where did those 30M come from? Did I do anything useful to the society? No. I have done nothing useful. It's just the dynamics of capitalism where another 30M sticked to my original 30M by the mere fact of their existence. If I was seriously rich, I could lobby zoning laws to benefit from monopoly and drive my wealth even higher, while giving nothing back to the society.

If you spent 30M and bought 30-40 houses to rent out, you would be contributing to society by risking your capital to provide housing for renters.

There is no certainty that you’d double your money in 10 years.

You aren't contributing to society if you charge more for rent than mortgage and maintenance, you are a parasite.

Why? If Apple charges more than the cost to manufacture a iPhone, are they a parasite?

If not, what’s the difference? The are both offering a good.

If you make 300k you need to either be fairly old, or buy a ridiculously expensive place to pay it off for the rest of your life.

Or be buying in a ridiculously expensive place - NYC or the Bay Area.

Given what I can buy myself, that would mean buying a 3M house. Even in the bay or NYC that’s a fairly expensive place.

the 1950s in the US were a unique blip in all of modern history.

at no other time before or since did a working class population have it so good.

Having most of the Western world destroyed except for your own country certainly helped.

It was a time when the U.S. kept the worlds manufacturing jobs warm before they were outsourced to these rebuilt places.

It's pretty understandable, imo. My income would not scale upwards very much if I moved from Chicago to somewhere higher cost like NYC, DC, or SF, and if I were to go to those places a lot of my current extra income would be wiped out.

This rhetoric has been known for longer than either of us has been alive, yet the more things change, the more they stay the same.

> It's really funny - my wife and I make quite a bit of money - whatever twisted form of capitalism we currently live in has been designed in such a way to extract most of it away from us.

I think it's evolved, not designed. A (arguably the) key element of capitalism is that a dollar extracted from an individual transaction is a dollar that can buy capital to scale up the extraction. That means exponential (actually logistic, I suppose) growth scaling with how much an entity can extract.

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