The real use of money is to buy freedom | Hacker News Reader

The real use of money is to buy freedom

paraschopra.com

357 pointsparaschopra295 comments

Tim O'Reilly on money:

It’s easy to get caught up in the heady buzz of making money. You should regard money as fuel for what you really want to do, not as a goal in and of itself. Money is like gas in the car — you need to pay attention or you’ll end up on the side of the road — but a well-lived life is not a tour of gas stations!

Source: http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-...

> The real use of money is to buy freedom

The real problem is: This additional freedom you can buy with money means less freedom for somebody else.

Inequality (wealth-based) means nothing else than domination. If you are richer, then you dominate the poorer people. And richer countries dominate poorer countries.

This is the most basic and fundamental injustice [0] we seem to accept in our Western culture. Because we are those who dominate.

[0] If you remember that we keep telling ourselves the nice little story how every life has the exact same value.

The real problem is: This additional freedom you can buy with money means less freedom for somebody else.

This assumes that wealth is a zero-sum game, so it can be traded around but not created.

It's hard to reconcile that view with the fact that standards-of-living have been growing, more or less worldwide , for the two centuries.

Is the standard of living really growing for everyone? Or are there more people now (%wise) in poverty ?

This is an honest question as several people have mentioned the standard of living argument before on HN. I've read however that the rich-poor divide is growing and thus am just wondering about this..

Not only have both absolute and percentage numbers of people living in poverty dropped in the last two decades[0], but global inequality (unlike some intra-country inequality) is falling as well[1].

[0]http://www.economist.com/node/21548963 [1]http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/13/a...

It's growing for most people in the world. The exceptions would probably be those who live in areas that are experiencing war or failed governments.

I don't have time to dig up sources but it's not hard to research. Wikipedia is a good place to start.

http://en.wikipedia.org/wiki/Poverty_reduction

Both can be true at once. The richest are farther ahead than the richest were, in monetary terms, but the poor have made huge strides in absolute wealth as well: it's possible to live a 1950s upper middle class lifestyle on almost the same dollar amount in 2013. Our idea of what a middle-class lifestyle entails, though, is now far above that.

Well, there are also intangibles that nobody cares to measure, that matter a lot.

A 2013 "middle class lifestyle" might be far ahead a 1950 "middle class lifestyle" in pocessions, access to products, etc, but there are important differences too.

For example, in all likely the 1950 "middle class" family could get all they needed by only one person working. And that person work an 8 hour day, with benefits and security. He was also quite sure that'd he keep his job if he was half decent at it permanently. He rarely was in debt.

Today's middle class starts of with a large debt (college loans), both in the couple have to work their asses of, and are not very far from falling off middle class, should anything bad happen (from a market crash to a medical emergency).

As for the increased luxuries and such (compared to 1950), those don't mean nothing to them, as they are the assumed zero-level for all middle class in their time.

I believe your assertions about the 1950s need substantiation. I'd like to see some empirical data about things like poverty levels, life expectancy, job security, bankruptcy, and so on.

Keep in mind that this is only a couple of decades (at most) from the Great Depression. Even if the 1950s were clearly better, it's a rather cherry-picked data point considering how much worse the 1930s clearly were.

That being said, I'm not too excited about the intangibles of the 1950s. The Korean War was in the 1950s and Jim Crow was in full swing. Life expectancy was much lower. Just about any consumer good from today is clearly superior to the 1950s equivalent.

Just for starters, he is almost certainly warping his perception of the 1950s by only considering what movies and television showed the 1950s being like for white men in suburbia America.

Which doesn't matter much, because I can also do the exact same comparison to the same group in today's suburbia America.

And no, it's not "movies and television". There are numerous books studying the decline of the middle class since the seventies.

Heck, there's even an accepted term "Great Prosperity" (as opposed to the "Great Depression" that describes the era after World War II for the USA and the West in general.

http://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_econo...

Here are some factoids:

Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.

According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 declined by 27 percent after you account for inflation.

Back in the year 2000, more than 64 percent of all working age Americans had a job. Today, only 58.7 percent of all working age Americans have a job.

The home ownership rate in the United States is the lowest that it has been in 18 years.

In 1989, the debt to income ratio of the average American family was about 58 percent. Today it is up to 154 percent.

Consumer debt in the United States has risen by a whopping 1700% since 1971, and 46% of all Americans carry a credit card balance from month to month.

Back in the 1970s, about one out of every 50 Americans was on food stamps. Today, about one out of every 6.5 Americans is on food stamps.

> Which doesn't matter much, because I can also do the exact same comparison to the same group in today's suburbia America.

Compare the lives of minorities and women in America 60 years ago to their lives now. Quality of life for the majority of Americans has undeniably improved. You have massive tunnel vision if you cannot recognize this.

Remember that white American men are a plurality, not a majority.

I'm not too excited about the intangibles of the 1950s.

It actually was a pretty good time, if you were American and white. The post-war boom was in full swing, American economic growth was at its highest in the 20th century (stats for earlier periods are harder to estimate, though long-term data series such as those collected by Angus Maddison might show this -- and the railroad and industrialization booms of the 1840s and 1880s were likely close). The US was the world's largest producer of oil (though it had just begun importing from Saudi Arabia), and it had essentially no rivals for industrial production (Europe and Japan had been seriously damaged by the war and were rebuilding, Korea and China wouldn't emerge for decades).

The Korean War was in the 1950s

For three years, 1950-1953. The US's troop commitment was 300,000. That compares with 16 million US troops in WWII. Fatalities alone were nearly as much as the Korean War deployment at 292,000. Korea was significant, but much less significant.

and Jim Crow was in full swing.

And starting to crack. Though it peaked in the 1960s, the Civil Rights movement had its roots in the 1950s, particularly the 1955 Montgomery Bus Boycott. No, it wasn't great, and there's still a huge amount of inequity, but things were finally starting to change.

And yes, there's a reason Nina Simone (and many others) left for France. https://www.youtube.com/watch?v=hBiAtwQZnHs

Life expectancy was much lower.

Not all that much especially when compared with improvements over the prior 50-100 years. Life expectancy at birth was about 66 years in 1951 for white males, 72 for women, vs. 75 and 80 years in 2004. That compares with 38 and 40 in 1850. The biggest single-decade jump for men was between 1911 and 1919 (six years), about the same for women. Much of that came from improved safety (particularly industrial conditions and automobiles), some in behavior and environment (decreased smoking, drinking, and air pollution). It was earlier advances in antiseptics, anesthesia, sanitation, waste disposal, food preservation, nutrition, and pharmaceuticals which accounted for the big jumps. For men, 1900 - 1950 saw an 18.08 year increase, 1950 - 2000 an 8.49 year increase.

http://www.infoplease.com/ipa/A0005140.html

Just about any consumer good from today is clearly superior to the 1950s equivalent.

I'll grant increased capabilities, complexity, and decreased costs, though overengineering (or lack of corner-cutting) meant that many electrical and mechanical products were more durable then. There's also the question of just how much such advances impact on quality of life.

A 1950's upper middle class lifestyle involved owning a relatively large house, and sane working hours with in many cases only one wage earner.

It's simply false that you can live this way today on the same dollar amount.

Actually houses have gotten significantly larger since the 1950s.

Houses affordable by single wage earning families? I think not.

Bingo! People talk about single wage earnings supporting a family and owning a house. Keep in mind that house was likely small by today's standards.

I don't think it's reasonable to complain that you can't sustain a family and a house that is 1.5x what they were in the 1950s, on a single income.

In the UK and much of Europe houses are not any bigger.

Even in among the lower middle class lifestyles, you'd have exactly the same minus the "relatively large house".

However, if you go back 50 years earlier, the lower class lifestyle was not that different from the favella living in slums around the world, where entire families lived in one or two rooms and everyone in the family who was able was responsible for contributing to making ends meet.

The lower middle classes can't afford a house/apartment in places with laws that make it difficult to build new houses or apartments, including many places with lots of tech jobs. But in rural areas, or many Midwestern cities, or much of the Sunbelt, a house is still very much within reach. But many of the most productive regions of the country are zoned such that very little new housing is built, and rising incomes for some just mean more competition for existing housing.

Of course houses are cheap in places with no jobs.

A basic income would help jobs follow people.

I've never seen this argument for a basic income, but it's a super interesting one to think about.

The lower middle classes can't own any house at all with just one wage earner.

Your second point (which I agree with) seems to imply that the US standard of living peaked in the 50's

> The lower middle classes can't own any house at all with just one wage earner.

The lower bound on lower middle class is, according to Wikipedia, $32,500. There are plenty of houses available for purchase in the $60,000 range, which is well inside of affordability ranges.

There are a plethora of rural homes available within those ranges, but that level of income isn't necessarily exclusionary to city dwelling either. Dallas, San Antonio, Cleveland, Cincinnati, St. Louis, Tampa, etc., are all very affordable, and at least according to MSN[1], has homes available for less than the lower bound on lower middle class.

[1] - http://realestate.msn.com/what-you-must-earn-to-buy-a-home-i...

Are there plenty of jobs near those cheap houses?

In Cincinnati, Tampa, etc., one would have to assume so. Regardless, that wasn't the point -- the point was that

> The lower middle classes can't own any house at all with just one wage earner

is not a true statement. If you'd like to qualify it further, feel free. I suspect I'd have to research more to answer, and I don't necessarily disagree with the sentiment you're suggesting, but presenting falsities as facts doesn't do any argument any particular good.

Well, definitions have changed, completely. The average home size in 1950 was ~1000 square feet, while the average home size in 2004 is ~2400 square feet.

Similarly, the 'sane working hours' you mention, generally speaking, were 48 hours a week or more. In the 'upper' middle class, more hours were spent at the office as well. Today, the average worker works ~37 hours.

Assuming job accessibility (which I have no idea if there's a guarantee of or not), and more reasonable home purchasing, I think it's not "simply false" that one can live the same way as they did in the 50s on the equivalent working wage, one simply has to make more apt comparisons to see that the goal posts have shifted.

The average 1950s family only owned one car, while the average family of today owns more than one (likely, to support the second job). If each of us bought houses half the size of what we're currently buying, and half the cars, we'd likely be in greater parity with our 1950s brethren. Also, they had to pay less than half of what we did for college, and they also likely didn't borrow in order to afford it, which factors in even further in measuring debt load.

Anyway, I think your comparison is somewhat rose-colored.

> The average 1950s family only owned one car, while the average family of today owns more than one (likely, to support the second job)

Actually, it's an even greater difference than that. The median household income in 1955 was about $4k, while today it's about $50k. In 1955 the cheapest Ford cost about $2k, or half the median household income, whereas today the cheapest Honda costs about $16k, or a little less than a third of median household income.

If we just leave it at that, it sounds like things are about the same. However, the cheapest Honda today comes with airbags, air conditioning, power windows and locks, an FM radio, and a whole host of other features that were luxuries reserved for the most expensive cars (if they were even available at all). On top of that, my (and others') experience with modern Hondas is that they can easily go for 200k miles without major repairs or tune-ups, whereas 100k miles was considered a major achievement for a Ford of that era. Realistically, this difference in longevity alone means that a car from the 1950's cost about three times as many working hours as a car of today.

The average worker works 37 hours these days, because of a big shift to part-time no-benefits jobs. So, you've got people working 30 hours to make ends meet, and you've got people working 50 because 'that's what's expected if you want to go anywhere.'

To be fair, I probably misstated. The average of working hours is ~37, which doesn't necessarily mean that the average worker works that at all. It could be the averages are between 40 hour weeks and 20 hour weeks, and that's where it falls. Honestly, I don't know, nor was I attempting to ascribe motivation to the numbers, except to point out that stated premise was factually incorrect -- workers in the 50s did not work fewer hours, nor did they have larger houses.

I think you're actually proving my point - a second car isn't an indicator of marvelous bounty. It's a liability required to support a necessary second job and higher debt load.

It probably says more about the courting culture and independence in America than anything else. I suspect (but have zero proof or support for) that fewer marriages are formed from high school sweethearts than was the case in the 50s, which means that many relationships start with 2 cars vs 1.

Beyond that, cars were still a relative novelty in the 50s, and ownership was more sparse. I'd have to research to see, percentage-wise, what the cost equated to. It's possible that their rarity meant that purchasing one car was equivalent to purchasing two, in today's age, but again, I don't have figures on that.

And, of course, I think you're dramatically underestimating the role of gender equality on the work force. Women work, many times because they choose to, not necessarily because they have to.

Regardless, the point you made simply isn't supportable by the raw facts that you presented, nor were necessarily the facts that you presented even factual. I don't disagree necessarily that the upper middle class of today is disadvantaged relative to the upper middle class of the 50s, but if that's the case, it's not because they worked less hours or owned larger homes.

That may be true. I think the more general point (which you seem to agree with) is that touting simplistic indicators and claiming that people are better off today, is inconclusive and by no means the 'given truth' that many here assert.

Yeah, I really don't know, to be honest. It depends, I'm sure, on which indicators one measures against.

I think in some ways, even the poor are better off. In some ways, even the wealthy are probably worse off. I agree that any notion of "We're all {better|worse} off than 1950" is naive without a greater degree of specificity. It's equivalent to saying that football was "better" in the 50s. How? Certainly not in player safety. Certainly not economically. In pure terms of game play, what metrics? Certainly not in passing. Etc.

This Hans Rosling talk from a few years ago shows how most indicators are improving worldwide (e.g. reductions in child mortality, GDP per capita).

http://www.youtube.com/watch?v=hVimVzgtD6w

Depression is also rising to epidemic proportions, suggesting that improving economic indicators may simply not have anything to do with quality of life.

GDP in particular has some huge problems as a measure of economic good.

There are numerous alternative measures which have been proposed, though none have been widely adopted: FISH, GPI, UNHDI, GSDP, GESDI, etc.

"Nobel Laureate: Examine Alternatives to GDP"

http://www.scientificamerican.com/podcast/episode.cfm?id=nob...

More like, mental health is not directly correlated with quality of life. Freed from the preoccupation of having to fight or work hard for basic needs, many people fail to find meaning in their life.

Are you seriously suggesting that there are more incidences of mental health issues because people have easier lives?

Why does that seem implausible?

Because a life of mental illness is not easy.

But an easy life can make one neurotic.

Poor mental health = a low quality of life

Measuring averages from the extreme is not-accurate(via Taleb)

What has that got to do with anything that has been said?

I would probably be inclined to agree with that. From a report I read recently (which I can't find again, sorry) pertaining to my home town of Memphis, TN, apparently the general conclusion was that Memphians were happier than Nashvillians, despite the latter having better access to health care, better access to higher paying jobs, better community features (arts, entertainment, etc.)

The report didn't postulate on what the actual cause might have been, or how happiness was measured (or, if it was, I've forgotten), but I found it interesting, and it does support your point here. It seems that, at least since I've been paying attention, America has been trying to optimize for wealth or income, though statistically, it seems that there is validity to the notion that money doesn't buy happiness. If we could better isolate the causes of happiness, we could start optimizing for those factors instead.

Nashvillians don't want to be happy or else many wouldn't be able to effectively do their jobs of writing and performing country music.

Eh. That argument cuts both ways. Memphis blues aren't quite as big a deal as Nashville country, but it exists, and, on paper at least, should make musicians wont to sadness.

>This assumes that wealth is a zero-sum game, so it can be traded around but not created.

And it very much is.

>It's hard to reconcile that view with the fact that standards-of-living have been growing, more or less worldwide, for the two centuries.

Those are not personal wealth.

Increased standards of living are a kind of background element, as they are more or less shared by the population. Statistically they even out, and only differences from them matter.

A guy living in a trailer park today, with a tv, microwave, electricity, some medical access etc, would be considered living like a king, compared to a 1600's peasant working in some feudal farm. That doesn't mean he feels (or is viewed) as such in our society.

Increased standards of living are a kind of background element, as they are more or less shared by the population.

You seem to have gone backwards, and defined wealth as "only the things other people don't have", in which case of course it becomes a zero-sum. But that isn't what wealth is.

The modern understanding of Wealth is the abundance of valuable resources or material possessions. [...] In this larger understanding of wealth, an individual, community, region or country that possesses an abundance of such possessions or resources to the benefit of the common good is known as wealthy. -- Wikipedia

>This assumes that wealth is a zero-sum game, so it can be traded around but not created.

>And it very much is.

You may be confusing wealth with money, which is in fact a zero-sum game. Wealth, on the other hand, can be created and it's been constantly created all the time throughout history. The section on the Pie Fallacy in this article may help clarify it: http://paulgraham.com/wealth.html

> You may be confusing wealth with money, which is in fact a zero-sum game. Wealth, on the other hand, can be created

So can money.

Neither wealth nor money is zero-sum.

Unfortunately money can be created for some by restricting access to wealth.

Restrictions on housebuilding is a perfect example in the UK with its dysfunctional housing market. The older generations are happy to have their house prices artificially inflated by not allowing enough homes to be built for the younger generations and immigrants. Keeps rents and prices high while not creating any wealth.

Money as a form of credit is zero sum. For example on the other side of every US dollar is debt security (government or mortgage) that the Fed has bought. Money only has meaning if someone (maybe indirectly) owes you that money. But it is correct that absolute wealth (or what economists call utility) is not zero sum. To focus on relative wealth is to invite unhappiness that no one or system can help. We don't live in Lake Woebegone.

Yes, wealth can be created. But creation of wealth isn't uniformly distributed, And beyond all it is a zero sum game at constant points in time.

This trope is so tired. Yes, I live better than a medieval peasant, and I have access to more computing power than ever. Yet, the standard of living across my entire family and most people I know is blatantly lower, in terms of human basics like housing and togetherness, than in my grandparents time, despite the fact that my grandparents were factory workers without even high school educations, and I am an experienced software engineer.

I think you have a rose-tinted view of the past. To take one example: I have much more togetherness with people in my family who would not be currently alive had they died of diseases with dramatically higher mortality rates 40 years ago.

Can we ask where you live? I wonder how local real-estate prices effect things. For example, I live in fly-over county in a $115,000, 1400 sq. ft. house on a large lot, while my brother-in-law lives in an 800 sq, ft. house on a tiny lot in Seattle that is apparently worth more than $400,000. I support my wife and 4 kids on one income, while he and his wife both work to support their two kids. So even though I make considerably less money, we have a lifestyle that is on par with the 1950's ideal.

So... how many women do you know that have died in childbirth?

So, how does that matter in this discussion? And the 1500s people didn't knew many who died from car accidents or obesity either.

> So, how does that matter in this discussion?

...how does it not?

Are you seriously attempting to make the case that automobile accidents and overabundance of food have made all of our other advancements a complete wash? That is delusional.

I think we are in agreement!

I only gave the example to say that what's basic is relative (compared to current standards), so saying that a trailer-park person has more access to more things than a peasant doesn't mean anything.

If living better than a medieval peasant doesn't mean anything, then why do so few people want to live like medieval peasants?

For one, because most people can not even point Canada on the map, much less know anything about the living conditions in the medieval age.

In fact, most things people associate with the middle ages are either BS or happened at other times. Witch-huns and the Inquisition for example, are phenomena of the Renaissance, not of the middle ages. Even the Plague happened on the tail end of the middle ages entering into the Renaissance.

Heck, even fewer know that the ratio of holidays (what we'd call bank holidays today) to work was extremely higher in the middle ages compared to today.

Most homeless/coupon-living/trailer individuals would be much better off in the middle ages compared to today.

> This assumes that wealth is a zero-sum game, so it can be traded around but not created.

And you assume that because it's not always zero-sum, that it never is, a position just as fallacious.

To swat down an argument one need only show that it's flawed, not that its converse is proven.

True, but you can do so without fallacious reasoning that make you both wrong. Wealth is sometimes a zero-sum game and sometimes not a zero-sum game; not everyone who makes money is creating value for the world, but they usually are.

Value for the world != things I happen to think are worth a lot.

Your view is hampered by your ignorance of the definition of the word value.

If people are making money (i.e. selling a product or service for a profit) they are by definition creating value by default.

The fact that you may not find what they are doing valuable is as irrelevant to the equation as the fact that I don't like broccoli.

> Your view is hampered by your ignorance of the definition of the word value.

Given your reply, I'd say it's your ignorance on display here.

> If people are making money (i.e. selling a product or service for a profit) they are by definition creating value by default.

False. This naive notion assumes everyone is honest and consumers are informed, both of which aren't true. Plenty of people make money by duping customers into thinking they're providing value when they aren't and relying on customers laziness to take the loss when they figure out it was a scam.

That someone voluntarily gave you money does not mean you provided them value. There is no value in Homeopathy, there is no value in fake magic aura balancing bracelets; these are simply people scamming stupid people for money by pretending to add value.

When I am healthy, or plant a fruit tree (on previously unused land), or come up with a better or healthier way of doing something, nobody else looses anything. (That has been going on since the dawn of time if you will, and certainly not just since the last 200 years.)

But on the other hand, a million dollars is in no small part worth a lot because most people don't have it; if everybody did, that wouldn't make everybody rich, it would just mean a loaf of bread now costs a million dollars. You can't just ignore that "because rising standards of living". Wealth is first and foremost a word, not an actual thing, and the associated concepts can be complex... but wealth purely in the sense of market shares, of bank accounts, even of being an expert in comparison to non-experts.. there is so much of what we tend to consider as wealth that is obviously a zero-sum game.

Wealth is not zero-sum nor need it be, the only thing required for wealth inequality is that the current pool of wealth be heavily consumed and dominated by a small segment of people, leaving very little of the remaining pool for others.

This small segment of people actually created this wealth. Why shouldn't they be the one consuming it? And you cannot call the sum of all wealth owned by people "a pool" because it is not concentrated in one place nor should be.

It's hard to reconcile that view with the fact that standards-of-living have been growing, more or less worldwide , for the two centuries.

Much of that standard-of-living increase has been dug or pumped out of the ground in the form of coal, oil, or gas:

http://ourfiniteworld.com/2012/08/29/the-long-term-tie-betwe...

>It's hard to reconcile that view with the fact that standards-of-living have been growing, more or less worldwide , for the two centuries.

Inequality has been growing a lot the last three decades

http://www.theguardian.com/society/2013/dec/17/living-standa...

As I see it there are two options available:

1) People freely exchange goods and services.

2) Wealth is distributed without free exchange.

It's a spectrum not an absolute.

In free exchange (me trading with my boss or with Google or with a grocery store) I will never enter into a trade that has a lower expected value than the dollar value I'm giving up. In other words in every exchange I will either gain value or match value.

On the second side of the spectrum I (me with the government, me with a slaver) will enter into a trade regardless of its outcome - meaning that I could lose value on any trade (for instance by paying into a poorly run social program, supporting a war that I disagree with or paying to be spied on). Also closer to the second range there becomes a coercive aspect where I am forced into something at the threat of violence (pay taxes or go to prison).

Evidence shows the more freely exchanged goods and services there are (with some exceptions) the more productive the country. See: http://www.freetheworld.com/release.html

If strong property laws are in place alongside an impartial justice system and limited government (one not influenced by wealth) human choice, good or bad, is respected and freedom reigns. When government is large and powerful or the justice system doesn't function properly (can be bought) coercion reigns.

Those who would rather not provide value (or believe that their value is worth more than others will give them for it) may prefer the coercive side.

The Capitalist order was created with the closure of the commons, creating large masses of people with nothing to sell but their labor. The resulting 'Enclosure Riots' where put down with great force.

As a consequence, 'Free exchange' then consists of people with massively unequal bargaining powers coming to an agreement. To see this arrangement as fair, one has to twist their sight up quite a bit.

A defense of the free market without redistribution to counter the effects of this and other historical crimes is a defense of oligarchical privilege.

My argument is practicality as well as theory. First - who had "the commons" before it was closed? From what I understand there has always been someone who had more control over property than another.

Who will redistribute in a practical way? Who watches that person to make sure they are both efficient and fair?

Also - look at a list of the richest people in America. You'll notice that most came from middle or low class backgrounds. It seems like redistribution occurs fairly rapidly (within one or two generations) compared with other times.

Also - please explain who in America has massively unequal bargaining powers?

In another comment you said you needed to use "counter propoganda". The internet and forums are largely dominated by your way of thinking. Maybe it's because people who hold your view would rather type about issues than do solid work.

And I've also been thinking about this practically. It is right that claims on property, the foundation of many forms of capitalist forms of economies, are not inherent. However couldn't powerful property taxes be useful as this? If we defined property well and taxed ownership then redistribution would be built in and taxes would fall on the richest (those who use the most resources)? I'm just playing with that idea.

Also - there is one prominent example of someone living on $7,000 a year comfortably (early retirement extreme) which is far below the minimum wage. This person lives a lifestyle far better than almost anyone two generations ago and most a generation ago.

I'm pretty sure that if the commons had been divided up equally among the people who previously had the right to use them, we would be exactly where we are now.

Capitalism results in inequality regardless of initial conditions, because people differ in their abilities, and in their luck.

A much more powerful argument for redistribution than capitalism original sin, is that (1) we all live in a society, where we rely on the state to provide the security and infrastructure in which the free market is even possible, and (2) redistribution is the least intrusive, least restrictive method of improving societal wellbeing. It is (potentially) completely indifferent and blind to everything a person is and does, except for their total income.

I know this argument seems weaker because it involves utilitarian aspects, but it is really a more powerful argument because it doesn't rely on an accident of history.

I agree with you (excepting that the violence evidenced in primitive capital accumulation is a historical accident), but the thrust of my argument was to demonstrate that Libertarian philosophy is wrong on it's own terms.

There are a variety of other arguments you could advance against it - for example that the self is social fiction with no scientific basis, the increasing communality of all labor, the inherent instability of Capitalism evidenced by the Long Wave cycle, the sociological fact that people's consciousness is shaped by their relationship to the means of production (evidenced, on their part, by their almost uniformly advantaged upbringings)...

Speaking for myself, I have lost my taste for extended intellectual debate on the internet, and all of these vectors of criticism would (if I were being intellectually honest) lead to extended debate. It may not be fair of me, but as a Marxist I do believe that the material world will change much more workers minds than some logic arguments arrayed in an online discussion.

I don't have the stamina to debate with libertarians, but I also have found that "beating them at their own game" is not a useful strategy.

Suppose, for example, you manage to prove to a libertarian that the current distribution of wealth is the result of unfair actions in the past. Then for them, the next best option would probably be to redistribute wealth, and then press "play". Which isn't what you wanted to argue for in the first place, so why make that argument?

You say you have lost your taste for intellectual debate online, but I think you would regain it if you were to engage in real debate rather than point-scoring.

Your starting point is that you know the truth, and it is "material" factors that prevent others from knowing this truth. But to have this point of view underestimates the power of debate and reason. But of course I can't really convince you that I haven't been subconsciously made blind to the intellectual power of Marxism by my comfortable middle class lifestyle.

>I don't have the stamina to debate with libertarians...

Probably true; I guess my comment can thought of more as counter-propaganda.

>Suppose, for example...

I imagine if I could get someone to question the premises of their hateful, retrograde philosophy I could get them to engage in further inquiry, which might open their eyes.

>You say you have lost your taste for intellectual debate online...

True, but I could also cultivate other interests. I'm sure eventually it will entice me again,

>Your starting point is that you know the truth

Marxists don't believe in absolute truth.

Do 'debate and reason' derive their power from the material world? It seems to me that they only exercise power in shaping one's consciousness to the degree that they reflect facts about the material world.

Following on the heels of that, what facts about a humans physical presence in the world carry more import for every other facet of their life than their economic position (position meaning, in particular, class)?

For what it's worth, people can and do argue against economic determinism. The degree of success that they have in that regard is a matter of continuing debate.

I think that's a simplistic view. Most rich people became rich because they provided a particular value to society. This value is exchanged for money, which allows the rich to draw back this value as they see fit.

Lets imagine that Steve Jobs, instead of getting paid for his iPhones, sold them in exchange for a person's time. The average hourly wage in USA is approximately $24, meaning an iPhone would retail for about 25 hours. You can choose not to buy an iPhone, in which case you are free, or you choose to draw this value offered by Steve Jobs, but then you'd owe him 25 hours of work. The exchange is still completely voluntary, and therefore can't constitute domination.

And those involved in creating the iPhone (in countries with strong property laws) all entered into a trade agreement where they provided their time or skills in exchange for a certain amount of money.

Bill Gates had to give 30 cents of every dollar he earned to the US government to avoid going to prison. That's domination - the threat of force if penance is not paid. Wal-mart never made anyone work for them. They simply have said we will pay $7.25 for someone's time with basic skills - if no one was willing to work at that wage they would up it. The value of unskilled labor is low.

Just what we need, some more Objectivism.

If the free market ensured that all people were given a wage that adequately reflected their value, the bottom 40% of earners would be getting more than 10% of the income.

Bill Gates paid 30 cents of every dollar in exchange for access to an educated and healthy workforce, use of the interstates for shipping, use of the police and military for protection, and use of a contract law system. Microsoft then abused its wealth to "embrace, extend, extinguish;" which is sort of a perfect illustration of how consolidating lots of money gives totally unbalanced market advantages to a few entities.

> Bill Gates paid 30 cents of every dollar in exchange for access to an educated and healthy workforce, use of the interstates for shipping, use of the police and military for protection, and use of a contract law system.

You make it sound as though it's a willful transaction between two parties. Yes, taxes go to those things, but it's compulsory. If I don't like Microsoft I can choose not to buy their products. If I don't like the NSA or CIA torture tactics, I can't opt out of their services. BIG difference.

Right? But the GP was asserting minimum wage is a willful transaction also. Actually if the laborers don't like their minimum wage, they cannot opt out of it either, they need to eat, pay for housing, and get medical insurance from somewhere.

It's absurd to me that someone would assert that Bill Gates is being dominated by paying taxes whereas these other people are somehow not being dominated by accepting a low wage in the same system.

Also Bill Gates has the resources to change citizenship if he thinks there's a better deal elsewhere. Many of these other people would not be financially able to move to another country and work there legally. So it's definitely more willful for him than for the minimum wage workforce.

They can't opt out of minimum wage because there are laws, not because it's otherwise coerced.

There are compelling arguments in favor of abolishing the minimum wage, just as there are compelling arguments in favor of increasing it. Neither position is necessarily wrong, and each requires making trade-offs for the other, but either way, the imposition of a minimum wage is not voluntary to those upon which it is imposed.

> They can't opt out of minimum wage because there are laws, not because it's otherwise coerced.

You missed the point. Let's get rid of the minimum wage. Suppose Alex is looking for a job, but all the jobs they can find that will hire them pay less than what they think is fair. Does Alex have a choice? No; if they doesn't get a job they will starve and die.

The point I made was that workers can't opt out of it because that would be illegal. There are, I'm certainly, many who are starving that would otherwise be thrilled to earn $4 an hour, but they can't. There are also a myriad of scenarios wherein paying someone less than the minimum wage doesn't mean that they starve and die. The minimum wage prevents those earners from finding a place in the market. Even further, there are a myriad of people who are thriving while currently sell their work for less than minimum wage, but they simply disguise the tasks as 'firm fixed bids' or 'flat rate bids' against a projected contract.

I acknowledge that there are bad actors in the system, namely Wal-Mart, who I'm guessing would be happy to pay workers as little as they possibly could, regardless of the burdens it imposed on them (I say because I believe their union-busting activities were unethical, not because I in any way despise their pay practices as they currently exist), but for the most part, a free exchange helps small business compete against bigger business.

In summation, hamstringing employers and employees is unnecessary. It's a shame, because in the tech community, we've already seen the value of a less-regulated workforce with things like oDesk and such. Companies who just need a Wordpress site are free to hire from oDesk, and will likely receive bids in the sub-$50 range which, in a more traditional arrangement, would violate labor laws. Similarly, we've seen it illustrated that those bottom-end producers aren't necessarily cannibalizing sales from up-market producers, as they're able to better distinguish themselves through marketability, experience and references. The artificial pay barrier we've imposed prevents many of the existing low-skill earners from getting experience and/or transitioning into higher-skill earners.

I think you and the GP (or whatever) are talking past each other. Their original point was that it's essentially impossible for a person to opt out of the labor market, because without money they can't buy food and will starve to death. This is true regardless of any kind of minimum wage laws.

Completely agree. To be fair, every government of major superpower also pursues the same policies of "embrace, extend, extinguish;", including ours, the US Government.

Unions have another take on that subject. Wage slavery is a real thing. Its only 'free will' if there's another option available. In many early WalMart locations they placed the store optimally to starve out local small-town businesses. After a year or two they were literally the only game in town.

And everybody that wanted to distribute copies of Windows in the United States was forced to pay for a licence to avoid going to prison, by that same government that collected 30 cents of every dollar Bill Gates earned. Let's not pretend that private property isn't backed by force - necessary or otherwise - here. The average person has a lot less choice over whether to work for a living than Bill Gates has over whether to do business in the United States on its terms or not.

And the government invested in the Transitor, Computers and DarpaNet; all things that were enablers for Bill Gates to make his fortune.

The same applies to every company that has to get their physical goods to market on the Eisenhower Interstate Highway System.

Not true; there's a reason why we have police, military and (in the US) the world's biggest imprisonment rate.

Let's reframe. Our economic system is capitalism. That means I can exclusively control (via state force) a region's natural resources (a "property" relation between me and everyone else in the universe). It also means that most people try to rent themselves out, giving themselves up to someone's command for half their waking lives, in what is called wage slavery.

The more bargaining power the wealthy elites have, the less they have to pay their subordinates, and can impose worse working conditions. Another phenomenon is you can have a city with as many empty houses as homeless people... when property relations are extended to the virtual, unauthorized sharing/using ideas and computer bits are criminalized.

Among Forbes top 20 billionaires, you'd be hard pressed to find someone who's made his fortune from natural resources.

A person who seeks value from society - value originating at the work of others - has to provide such value back. If all you can do is simple manual labor, you will need to provide quite a lot of it to purchase scarce items that have a high degree of inherent value (such as an iPhone).

The Kochs' money is mostly from natural resource extraction. Most software businesses are pretty heavily premised on intellectual property rights.

> Most rich people became rich because they provided a particular value to society.

Evidence? I think quite a lot of rich people are rich not because of an ability to create value, but an ability to extract cash. E.g., 95% of Wall Street's activity. And even those in the value-creating category often attribute much of their wealth to right-place, right-time luck rather than an unusually high ability to create value.

> 95% of Wall Street's activity.

I think most people consider growth of their investments and savings "valuable".

>And even those in the value-creating category often attribute much of their wealth to right-place, right-time luck rather than an unusually high ability to create value

Irrelevant. Point is that the value has been created and thus so has their wealth.

> I think most people consider growth of their investments and savings "valuable".

The growth of investments mainly comes through the work of the people at the company invested in. There is little evidence that the people managing retail investments do more than add overhead. And managing retail investment is a pretty small part of what Wall Street does.

> Irrelevant. Point is that the value has been created and thus so has their wealth.

Entirely relevant. Those people didn't become rich because of their ability alone; it was ability plus luck. That means using wealth alone to imply virtue isn't very persuasive.

There were more people than Steve Jobs involved in manufacturing the iPhone.

The same logic applies to each of them. It is assumed they chose to work for Apple, and that their salary reflects whatever value they bring the company.

That assumption is an oversimplification, concealing myriad dependencies, power/negotiating imbalances, information asymmetry, imperfect markets, lack of choice, restricted individual freedom, etc.

Yeah, down with feudalism! Employment is bad! /s

I cannot choose that Apple not pay campaign contributions to senators. It is not the only thing money does, but it does buy zero-sum power.

I highly suggest you read Paul Graham's essay about the "Daddy Model of Wealth".

http://paulgraham.com/gap.html

Wealth is not a zero sum game.

I disagree. If have a $100,000, and somebody else has zero, neither of us have any value until I spend the money.

If I spent the $10,000 to have someone do my laundry for the year (increasing my free time), then they have $10,000 with which to buy things that they might value more than the time doing my laundry. It may be groceries, it might be books, it might be a vacation.

If I invest the remaining $90,000 (let's say by buying a bank CD) then the bank will lend the money out to people, who have an opportunity to buy houses, start businesses, or otherwise put it to use.

Unless I stick the money under my mattress, putting money to use helps others. Nobody forces them to accept it.

>Nobody forces them to accept it.

In fairy tales maybe. In real life, need to feed the family, debt, hunger, mortages, need for shelter, medical treatment needs, etc etc are forcing them to accept it.

>Unless I stick the money under my mattress, putting money to use helps others.

The same thing happens with giving slaves food. It helps them. That doesn't mean it's the best kind of help they can get.

>Why other people should provide food, housing, medical treatment, etc if the person provides almost nothing in return?

They do provide stuff in return. Actually they do all the important stuff: cooking, cleaning the streets, driving the cabs, delivering packages, extracting oil, mining coal, replacing the hospital bedsheets, growing and picking our food, taking care of the dead, and tons more besides, while the rest of the population gets to play "highly specialized professional" for doing high level BS from marketing to accounting.

>Another question: Would you replace your doctor, who earns 50x minimum wage, with 50 random minimum wage earners to do a medical procedure on you?

No, I'd replace him with a doctor that earns 1x mininum wage -- so everybody can afford him. If he doesn't like the job enough to do it for what it is and for the service he offers, then he's not a passionate doctor anyway. (In the same way real hackers would even program for free, just because they enjoy it so much)

> In real life, need to feed the family, debt, hunger, mortages, need for shelter, medical treatment needs, etc etc are forcing them to accept it.

Why other people should provide food, housing, medical treatment, etc if the person provides almost nothing in return?

Another question: Would you replace your doctor, who earns 50x minimum wage, with 50 random minimum wage earners to do a medical procedure on you?

So the alternative is not buying things or services from people who need the money?

No, the alternative is to have some guilt when taking advantage of people that work for minimum wage, and not feel like Mother Teresa about doing it.

You're putting Mother Teresa into other people's mouths.

If there is large unemployment, and lots of people need work, is it morally better to spend $1,000 hiring one person or $500 each for 2 people, or $100 each for 10 people?

And that's exactly why money is freedom, when you have it, at least.

Having money or, more specifically, not needing money means that you are free to engage in whatever business engagements you see fit. For the illegal immigrants, oftentimes, their options are "work for less than what is fair" or "not work at all". For them, the decision is easy.

For many Americans, overextended, and with no way to feed themselves without work, we see a similarly exploitative environment as well. The minimum wage is designed to prevent against that, and it does, though now people are suggesting it doesn't, but either way, economic freedom is freedom from having to enter into an agreement that you wouldn't do if you didn't have to.

Unfortunately, only having money buys you that economic freedom.

> The real problem is: This additional freedom you can buy with money means less freedom for somebody else.

There are three wrong assumptions here: 1) that wealth is zero-sum 2) that wealth is the only possible way to obtain freedom 3) that for each individual the same quantum of wealth buys the exact same quantum of freedom.

Prime-facie, neither of these three are true.

There are all kinds of problems with associated with inequality (and the literature is far too rich for me to go into detail here), but this isn't one of them.

there's also the flawed assumption that freedom is a zero-sum game!

That one is very obviously and patently flawed: me to raise my arm in the air right now does not decrease your freedom. The only it could have been true about particular kind of freedom is if the assumptions the parent poster were true.

This essay is one of the easiest and simplest ways to show in clear terms that your opinion on money and wealth is simply incorrect:

http://paulgraham.com/wealth.html

Wealth-based inequality is not domination. In order to wield your wealth, you have to give it away, or at least offer to.

political inequality, however, often results in domination.

Moreover, wealth is not a zero-sum game. In any free transaction, both parties are made better off (otherwise the transaction would not have occurred). With politics however, there can only be a limited number of any given political position. Therefore, it is a zero-sum game.

There are legions of wealthy people who conspire to trade in their wealth for political power, but do not confuse the nature of one form of power for the other.

I agree with you. Not only we accept this, but many are not even conscious about this injustice. I think it's not an exaggeration to say this is still slavery, in a less direct form than what it used to be.

Sounds like someone should read Paul Graham's essay on Wealth again.

I cannot upvote you enough. The way I usually put it is that if you're putting those blinders on, focusing just on you and your family, and living large, you're like a person a dinner who gets up, fetches the ice cream and cake, and starts eating out of the carton in front of everyone who's still on the salad. Yeah, in a sense you aren't hurting anybody, there's just something globally rude about it.

That's just a flat out lie.

With regards to the car narrative: "Money will take you where you want to go, but it will not replace you as the driver". (A. Rand of course).

>You should regard money as fuel for what you really want to do, not as a goal in and of itself.

A little ironic coming from Tim, who cheapened the whole publishing house he had built, and then added those horrible techno-babble conferences for quick bucks.

Maybe making a first-class publishing house wasn't really what he wanted to do.

Does he still have control of the company or has his interest in it diluted to the point where he can no longer commit to the highest quality?

Beside the accidental car reference, this seems applicable to Elon Musk.

perhaps, its this way, that earning money is so hard compared to other things we do in our life (except love), is we have to push our self so much, to earn it, but once we have enough.. we can't stop. Thats because its also incredibly hard to stop earning money once you know how to do it.

How hard is earning money? At least in America I know plenty of people who make money by sitting at a cash register ringing up items all day or sitting at a desk in air conditioning. Hard work is the farming and toiling that true advancements in technology, through trade, have made unnecessary and inefficient in today's world.

In America everyone has access to more information than ever before, more comfort than ever before and many have to work less than ever before. Everything's amazing and no one is happy.

You've been in a reddit AMA with a 103 year old BAMF, haven't you?

Everybody just loves the word "freedom," like it's some magical super-juice which is the be-all and end-all of the American experience.

We will all be free of obligation, pain, responsibility, and any other positive or negative thing soon enough. Instead of the pursuit of freedom, we should dedicate ourselves to obligations that honor ourselves and others.

You don't really want "freedom," you want an obligation that you're excited about, you want a responsibility you're eager to take on, you want a job you love doing, you want a relationship that resonates with your values.

Everyone shorthands this to "freedom," and sooner or later that becomes the goal instead of the individual obligations you're now able to pursue.

Instead of the pursuit of freedom, we should dedicate ourselves to obligations that honor ourselves and others

Says you. I appreciate the freedom to sit at home and play a video game on a Saturday without feeling compelled to meet the needs of others.

Sounds like you're honoring yourself. Carry on.

Sounds like you have issues where you feel the need to control others.

Sounds like you have issues where you project a lot.

Once you have had your freedom forcefully removed, maintaining it becomes a major source of happiness.

> You don't really want "freedom," you want an obligation that you're excited about, you want a responsibility you're eager to take on, you want a job you love doing, you want a relationship that resonates with your values.

Absolutely this. "Freedom" encapsulates the state where you are able to pursue those smaller goals without other people or circumstances preventing you. That is something worth seeking. But it's always worth keeping in mind what you want the freedom for.

And if those things are freely chosen by you, isn't that a good thing? Living your life as a doctor because that was where you were directed by your parents, rather than as the teacher you dream of being, is not where most people want to be.

Freedom to choose valuable ways to make a contribution, is good. Freedom as ability to flit randomly from A to B to C, with no obligation or responsibility, is useless.

I define freedom as choice.

You can choose what you want to do rather than being bound to someone else's agenda.

The more successful people can do things they want to do, and the most successful people can avoid doing things they don't want to do, I guess that in itself is freedom.

Money purchases a lot of options, and on the surface, they are either freedom or provide the illusion of freedom.

I came to similar conclusions as the OP a few years ago but called it "flexibility" instead of "freedom".

Or you might call it "the freedom to choose", which I think is quite different from vanilla overarching "freedom"

In theory you would be right. In practice, not so much. Can you go about those obligations you love without having obligations imposed upon you by society, by governments, by life in general, whether you want them or not? I doubt it. Freedom the way the author describes it is still a significant proxy to happiness, the ability to exert options with your life. Money in turn is the nearest proxy to such freedom, as it extends those options and your ability to apply them.

Freedom to me in the context of earning great amounts of money is more related to an inner freedom. It's the freedom that allows your inner voice to say "ok we did this". And it's the one that allows you to feel like you're parents, friends, family, etc will know that all of the hours you've spent were actually worth something.

There is a really great article in The Atlantic (from 2011) called "Secret Fears of the Super-Rich" on this topic:

Excerpt: The respondents turn out to be a generally dissatisfied lot, whose money has contributed to deep anxieties involving love, work, and family. Indeed, they are frequently dissatisfied even with their sizable fortunes. Most of them still do not consider themselves financially secure; for that, they say, they would require on average one-quarter more wealth than they currently possess. (Remember: this is a population with assets in the tens of millions of dollars and above.)

Link: http://www.theatlantic.com/magazine/archive/2011/04/secret-f...

I recall a colleague once (~10 years ago) telling me that some people he knew felt that 5k GBP would be enough to solve all of their (money) worries.

I thought it absurd, i.e. too low given things like planning for old age. I guess there are people who would think my estimate too low if I said I needed 5m for the same purpose. (not saying 5m is the right number for me or anyone else.)

It's difficult to see beyond your immediate problems when you're broke and living month-to-month. My guess is that anyone who says $5k will solve 'all of their money worries' is probably not including retirement in that figure.

Those people are thinking they will never be able to retire, so why include that?

For what it's worth, I think most people think their financial situation will eventually improve (even if they're wrong).

One of the projects I want to do is to map living expenses, inflation and life expectancy to know exactly how much money is "enough". My problem is that we forget that we tomorrow should be more valuable to us than today and by the time we get this realization, we might have lost many years (of adulthood).

> One of the projects I want to do is to map living expenses, inflation and life expectancy to know exactly how much money is "enough".

There you go: http://www.nileshtrivedi.com/2012/07/10/how-much-is-enough.h...

Or, just create a blank web page with black font saying "it's never going to be enough, give this thought up".

Reminds me of another saying that software development time is never enough, except when you have hard borders and deadlines with the right priorities and vision - it will take exactly that time.

Getting more money loosens the borders - you buy better houses, better cars, have bigger family, make bigger investments..and you need more to support that.

That's true to a point for everyone: that having more money from a low starting point primarily increases lifestyle. But as you add more and more money, I think that most people reach a turning point where "enough really is enough" and their worries about money truly diminish, but that lifestyle stops increasing.

As I've grown in my own career, for sure my lifestyle increased. I literally subsisted on Ramen and $2 frozen pizzas in my first startup. Then as I achieved more income, I added a convertible, then a 401-k, then a new SUV (worst decision to that point), then a first house, then maxing out 401-k, then an airplane, then a classic Mustang, then a city apartment because my house was too far away and I got tired of the constant commute, then moved to a house in the city, then had 2 wonderful kids, then added 529s (college savings plans), then a bigger airplane, then...

All of those things, except the 401k and 529s, also came with additional expenses in time and money. (Technically, those 2 did as well, but in an immaterial way compared to orchestrating the maintenance on a house, classic car or airplane.)

However, I can also see that increases in income from here won't go towards (current) lifestyle inflation, as we have "enough" now. That could be because I'm older and wiser now, rather than a natural knee in the lifestyle vs income curve, but I'm inclined to think it's a natural knee.

For very few people does that knee hit before $100K/yr in a major US city. I'd guess that for a great many people, it doesn't hit until after $250K/yr, which is why people for shorthand say that it doesn't exist.

If you'd like to challenge yourself to bring that knee closer to the left side of the graph for yourself, I recommend Mr Money Moustache, Len Penzo and JLCollinsNH as bloggers who write extensively (and well) about this topic. Quick Googling will find them all.

I believe that getting to the right side of that knee, where you can stop worrying about money, is worth so much more mentally and emotionally than any amount of lifestyle inflation (beyond the basics of food and shelter). So, whether you can manage to increase your income to pass to the right of the knee, or move the knee to the left of your income, either way you'll be happier than a new car, new house, splendid vacations or 100 great dinners out.

I actively worry about this and I'm skeptical of your thesis that people will naturally reach a point of "enough really is enough". Even in your own story you are saying that you have enough now, but up until this point your expenses have grown to meet your income. The same is true for me, and I worry that it will always be so. I tend to believe that the majority of people will continue to grow with their income to very high numbers. I don't see the majority of people making $1M/year living a comfortable $250k/year lifestyle and investing/donating the rest. Some yes, but certainly nowhere near 50%.

The two major studies I've seen on this topic have both said that the magic number is actually 60-75000 a year. After that happiness plateaus. I would source you but I'm on mobile.

Airplanes must be cheaper than I thought, if a classic car and a city apartment comes after an airplane.

Well, I was in my 20s working for a hedge fund, and caught the aviation bug BAD, so don't read much into that prioritization other than, "I had money burning a hole in my pocket and all the sense of a 20-something..." :)

You can buy a functional single-engine airplane for $30-50K. $50K even gets you into something that I'd consider pretty nice for an entry level airplane. They go way, way up from there, of course...

Based on the following research, I guess $75K?

http://www.npr.org/blogs/money/2010/09/07/129703291/new-stud...

For me personally I know it's way more than $75k but less than $200k. I have expensive hobbies and like to to travel without blowing my savings.

Of course expensive hobbies require more money. However the point of that article is (vaguely and generally across the people they studied) your expensive hobbies and traveling do not increase your happiness as much as the pursuit of the extra money decreases it. In other words, you get some combination of diminishing returns on happiness per dollar, and increasing cost of happiness per dollar. $75k is the proposed sweet-spot, where happiness gained per dollar spent is still high and happiness lost per dollar earned is still low to moderate.

The study says no such thing. It only makes claims about averages, not about individuals, just like every other study.

Right, the study does not say exactly those things about individuals; I'm loosely extending those conclusions to the individual poster, to help my parent understand what the study means and why it suggests $75k is more happy than $200k. After all, it is not immediately obvious why $200k wouldn't be more happy than $75k- isn't $200k more money? Doesn't more money always make you happier?

To put it another way, for me, I am way less happy making $75K than I am now. That's even considering I have to do more to get the extra income.

The way I read the original article is that most people pursue things like luxury goods, houses, and cars which don't increase your happiness. If you keep your standard of living low, but income high, you can do more traveling, use the money to spend time on your hobbies or with your family.

I disagree a bit on houses not increasing happiness. I enjoy owning my house much better than renting.

That's per year and doesn't keep up with inflation. To have financial independence, you need enough money so that $75k or whatever annual number you want is derived from the earnings of whatever your your sizable chunk of money is invested in.

What does financial independence have to do with that number? The article is about "happiness" and "enough". Fuck-you money is not required for either of those things.

The theme of this discussion is about freedom. That includes not having to rely on an external source of spending money, yearly income, "fuck-you" money, or whatever you want to call it. This is also known as financial independence.

The $75k per year has to come from somewhere. If it's not interest from an investment or some other automatic payout, then you are not free because you have to work at making sure you always get that $75k a year to be happy.

In paraschopra's comment about calculating how much is enough, he mentioned life expectancy. That tells me is isn't just considering an annual amount of money to be happy, but a greater amount from which the annual money comes from.

Ah, you are right, I missed the part about life expectancy.

Of course, the $75k number is based on working individuals- I expect the number will be completely different for non-working individuals. People who are not working both do not enjoy the same life-satisfaction that can be had from rewarding employment, and do not suffer the stresses of that employment, so who knows where the balance of happiness lies. Perhaps if we are talking about someone who is not working for their money, there is no such thing as "enough", as they have no happiness "cost" to simply having more money (as they do not need to work for it)?

Find an actuary. This is what they do for a living.

5k seems absurd, though there is a big differential in the UK between those who own a house and those who do not. If I lived in London, 1e6 GBP would be necessary for housing alone, a ridiculous sum compared to the average wage.

Do you have a large family or a need for an enormous space?

London's expensive, but it's not that expensive. You can get a nice, but not huge, apartment in a central area for £400 / week which would work out to £20K per year.

Source: this was true as of 2011 when I stayed with friends in a 2BR apartment paying exactly that.

I was going to make the same comment, but:

- I then realise he's probably talking about buying rather than renting

- I read this report which claims that the median value of residential property in fancy parts of London (what the report calls 'Prime London') is 1m GBP, and the mean is about 1.4m GBP: http://www.marshandparsons.co.uk/news/research/item/1519-lon...

I do live in London, and while it's expensive, I can't see how you could need £100k annually simply for accommodation. Unless you have a very large family to support too?

1e6 is a million. I assume he's talking about buying a place rather than renting.

Only an unwashed pleb would live in anything less than 20,000sq-ft, eh?

No surprise there; would the folks who are satisfied with what they have, bother to become super-rich?

>>A life spent mostly hoarding money and possessions is a wasted life

Having seen the kind of advantage some of my friends born in rich families enjoy, I would love to hoard and posses tons of wealth even if its purely to give away in inheritance.

Rich kids enjoy privileges and advantage poor kids can't even dream of. The biggest of which is attitude of course. Rich kids are born with an assumption they are supposed to remain rich forever, become leaders and are free to act as unfair as they want given the their 'natural selection' in becoming rich.

No matter how hard you work, you will never be able to truly compete with a rich kid. He will get all the resources, tutions, fee and expenses taken care of to establish a more deeply entrenched position of advantage.

The only real way is for you to exactly do what their parents did, and hope your kids will be better off.

>>Then why do we run after money?

Which brings me to the point, why did you start a company?

Speaking purely from a philosophical point. There have been people in India, especially wandering monks who shown you can find all the bliss in life even on bare minimal survival gear. And there is no way you can match their freedom.

No matter how hard you work, you will never be able to truly compete with a rich kid

Not sure where you live, but the beauty of a class-free, highly mobile society is that the two dramatically wealthiest people I know started out from the very low end of the economic ladder. If anything, it gave them the freedom to take risks since they were never scared of going back to having nothing.

If you've already decided that you can't compete with "rich kids" then you won't be able to.

I think you've missed the point. The point is there is some amount of money that affords you the ability to do what you want.

Possessions have the effect of tying you down. Buying a house, assuming you get a mortgage, is a huge expense requiring you to work to pay for it. It ties you to one geographical area and puts stress from having to make the payments. You could spend the downpayment on a house as a down payment of yourself. Find somewhere or something you'd rather do.

| Possessions have the effect of tying you down.

This is getting to be a little off topic, but I see comments like this often from people who imagine a mortgage as a massive amount of debt hanging over your head. While I agree that home ownership is not the right move for everyone, and it's definitely true that you can't just up and leave, you can sell your house. It will probably take longer than the 30 or 60 days notice you would have to give to a landlord, but it's not as if you are signing a contract to live there for the next 30 years.

| Buying a house, assuming you get a mortgage, is a huge expense requiring you to work to pay for it.

Doesn't rent fit that description too? Unless you are crashing on someone's couch or living with your parents, housing is going to cost something. In my experience, first+last+deposit was the standard amount due upon moving in. At the end of the day you at least get to keep some of the money paid on a mortgage. Plus, if you do make it to the end of the loan, you could be paying the same monthly payment that you locked in 30 years ago, whereas rent will probably rise over time.

If you're moving, it's likely because the house you live in has become less desirable for some reason, like "all the jobs are gone". So in most cases, if you want to move you're also likely to have trouble selling your house.

As far as investment value goes, it goes against every rule of investment to hold a highly leveraged position in a single, undiversified asset. If you can own several houses you might be okay.

A few years ago, after spending most of my adult life in voluntary-ish poverty I decided to spend a few years earning proper money. By which I mean, significantly more than my first world country's average salary but still peanuts in HN terms. The main differences it's made to me are:

1) I can afford to buy a home, which I expect to remove a large amount of bullshit from my life and makes me feel more secure about my future.

2) When my computer / bicycle / phone / printer / washing machine etc fails I can get the problem fixed without significant disruption to my life. This is probably a much bigger deal than anybody who's always been able to find money for these things realises.

4) It feels good to know I have earning ability if I put the effort in.

5) It's nice to be able to buy stuff, occasionally.

I went a similar road (from $50 a month in an underground windowless garage with no utilities whatsoever, to a 200m2 penthouse).

I'd put an accent on your point #2 - it really makes a huge difference to just shoot up some money into trivialities and mundane annoyances in your life just to make them magically go away. Because there's so many of them, most cannot afford that.

I'd like to add a point though, maybe the most important in my list.

6) increased appeal to other sex.

And as far as buying stuff goes, all my wordly posessions fit in one box less than in this picture https://www.dropbox.com/s/us8bavsdjldd029/2013-08-16%2005.42...

Was #6 because of how you dressed, or because you could host events at your new place, or some other factors?

I'm curious since I have some acquaintances who are morbidly afraid of having members of the opposite sex approach them for their substantial wealth. They go out of their way to mask their material status.

I think most of the other points made are just a resultant from desire to appeal to other sex. Security, stuff, housing, all that. It is relatively trivial to sustain oneself, without family and other people dependant on you. Family is hard. And, spoken like a true life form, furthering our gene makeup is what it's all about, for the most part for the most of us. We can do Maslow's hierarchy here or some other model of motivation, but for me, this is the core of it in today's times.

Disclaimer here being that I'm speaking from male perspective (and there's an obvious significant difference in motivations accross genders).

As for your acquaintances, I'd doubt that it could be generalized to whole "rich" population. What your acquaintances have problem with is, well, their problem. Not a trend.

There's a difference between having money, which appeals only to the most shallow, and making money, which is a proxy for a range of universally desirable attributes (motivation, confidence, tenacity, intelligence, etc).

In my case making money correlated only with my willingness to be a capitalist drone for a few years. The attributes you mention surely correlate with success at most things. Admittedly money is quite popular, so assuming that its pursuit is a primary goal for everybody is probably not a terrible approximation of reality.

Sure, it's just a proxy signal. But don't discount "willingness to be a capitalist drone for a few years". For many people, taking on a multi-year commitment and seeing it through is beyond them. Such a signal would be attractive to someone who wanted kids, for example.

Why gender neutral language ? I think it makes big difference for men and women. Women are way more attracted to status/wealth than men are and I think it's important for yours (or parent's) point to specify their sex.

Ummmmm No... Really? Men are not attracted to status/wealth? Come on, dude. Odd, I personally know more men sponging off their female counterparts then the other way around.

It will never cease to amaze me people who will go out of their way to display their total ignorance.

How the hell is my comment being down voted and not the parent?

>> morbidly afraid of having members of the opposite sex approach them for their substantial wealth

That sounds a lot like counter-signalling. Do these people avoid buying Ferrari's or are they all wearing second-hand clothes?

Just get the 200m2 penthouse and you can stop worrying about #6 ;)

Freedom has been my main goal for money. As my business has grown I'm happier, but I can see the monetary goalposts shifting as I go.

I started two years ago. My initial goal was to build recurring income. I wanted enough to cover expenses, as an initial goal.

Achieved that. But I saw I was vulnerable to sudden expenses, or a temporary decline in business. So I wanted an emergency fund.

Achieved that. But then I realized I had student loan debt that I would soon have to pay interest on, as I was earning more money and wouldn't qualify for debt relief in the near future.

Had a really good autumn and achieved that. Then I noticed that I might have to pay more taxes, because my previous tuition tax credits may run out in 2013.

Achieved that, which brings me to the present. I only achieved much of that savings through tutoring. I charge a high rate, but it's not scaleable. So now my current goal is increasingly recurring revenue so that I don't have to sell my time directly.

Why am I writing this? At each one of these stages, I had the feeling "If I just achieve this goal, I'll have enough". It was a silly belief in retrospect – it would have been obvious to an outsider that I still had challenges to overcome.

Yet presently, I have the feeling "if I double my recurring income, I'll have enough". But I'm certain that once I achieve this goal, I'll see another reason I ought to earn more. Probably the next goal will be "if I just achieve X, I can make work optional by age 33" or "if I just earn X, I won't have to worry about the cost of airfare for trips".

I can attest that life IS better now that I've met the goals I listed above. I remember having lots of worries about money that have mostly dissipated. I haven't increased my lifestyle, and have been trying to keep "freedom" as the main goal for earning more money.

But the whole process feels shockingly short-sighted. It's as though I'm incapable of imagining how I will feel if I am earning $X or have saved $X.

http://en.wikipedia.org/wiki/Hedonic_treadmill

The importance of money is a matter of perspective. Anyone that has the author's attitude toward money has never been poor. Ask a homeless person, or any of the 50% of the US population that has a net worth of zero or less what their opinion on money is, and it will be markedly different than the author's. The opinion that money doesn't matter is a luxury that only the wealthy can afford.

Therein precisely is a HUGE problem. I was nearly homeless, then made more money than I could have ever imagined. I turned into a monster. 9 cars (yes, all for me) and other stupid crap that I'm ashamed even to recall now.

Come to think of it, some of my buddies who made it out of the ghetto did the same thing, at first. It does take a while of being "secure" that the money isn't going to be taken away, before you start to think the way the author does. It's when you're surrounded by stuff and your life still feels empty. When you realize most the rappers were sellout pieces of garbage who, during the daytime socialize with the dentists they live next to if they can and rarely rap about how crappy a life surrounded with material wealth can also be.

Fortunately, knowing a couple of billionaires helps. I sat down with one and expressed my frustration in how I felt and how I had slowly but surely become someone I never really aspired be. It was at this point in my life it suddenly hit me. I'd known this guy for a while and had never seen him flaunt his money like I did (and he had a lot more of it than me). Then he told me that money for him is a tool. If you start using it to become a "consumer", you become consumed by it. He is not just free to do whatever, because in some way that is selfish too. Rather he uses his money to help others and makes the most positive changes in the world that he can. I know that's true because it's not just his money but he actually devoted, the much more precious commodity, of time, to his philanthropic efforts. Efforts he started when he had money like me, except he decided early on to give his away rather than spend it on himself.

It doesn't take a lot of money to be free. I live off less than a 1/3 of what I was before and have a few more in my family now (I was single before). I work with some amazing people and am trying to work on making things better for others on a daily basis. One non-profit I help out from time to time has been tackling the issue of homeless families (not substance abuse or psychiatric issue related, primarily economic issues), and not surprisingly, it's often about the parents' attitude towards money. It would be nice if they felt "secure" enough to understand that money won't buy happiness and were frugal by choice. It would really help if more people had the luxury to have the author's opinions, but thanks to culture/advertising or whatever, there's a large contingent of people who need to think about money differently but don't.

I desperately want you to be Ghostface Killah. Fantastic story by the way.

How did you acquire your wealth if you don't mind me asking?

Sorry to disappoint but I am another yet another programmer/techie who picked his handle based on early hip hop influences.

Most of the money was thanks to entrepreneurial endeavors and code. I love building things. I still build, focus is just a bit different now.

Well hopefully your experience will be reflective of mine one day. My entrepreneurial ambitions and coding skills combined with multiple failed projects have taken me on the opposite journey - from relative wealth to relative poverty. I got screwed out of the one success I created - a company I was the technical co-founder of that was acquired for $64 million - by an unscrupulous partner who basically stole my $12.8 million stake and now fancies himself a televangelist. I am starting to lose hope that anything I create will be valuable ever again. Money definitely matters to me right now.

Well, I'd love to say it was my sheer wit and coding genius. But truth of the matter is, there's a good bit of luck involved as well. The secret to success: get lucky. I got unlucky too. Found myself scrubbing toilets for $4/hr back in NYC at one point. It's nice to not have to do that anymore.

If you can code, sure you might not be overrun with money, but at least you can still earn a decent living. At the end of the day, the most "successful" people I know do not measure their life in money stashed.

The billionaire I mentioned, showed me that I didn't necessarily need to become a billionaire to be successful. He happened to be a billionaire and is successful because he's satisfied with who he is and what he is doing. Still wakes up at 4am to change the world for the better as he sees things, with what's in his capacity to do.

When I was in NYC scrubbing toilets for a living, I shared my sandwich with someone else who needed it. That was positive impact I could make given my resources. When I got money, I just bought into the "good life" BS and became a consumer. I lived for nothing else but me. Turned into a certifiable asshole. It's hard to see it when you're in the midst of it.

Once I began to see that I was lying to myself saying, "I'll start being me once I've made $x". I could be someone I'm happy to be, now. Six months of planning, get rid of crap, and learning to live with less and asking myself a many times a day, "am I living up to someone I can be happy with" seemed to remedy the problem.

I've lost a good bit of $ to startups. Friends say maybe I'm afraid of making money, maybe they're right. But I sure as heck am happy being able to help. I hope I can get myself disciplined enough to the point when I get my next hit, I'll know whom beside me the money is going to.

Wish you the best. Screw the losses, you know what you've built and nobody can take that away from you. Do the best with what you have, to me that's success. And if luck should shine upon you, hope you're still successful afterwards because that's where it's easy to slip up and take it easy. (Sorry if I'm too preachy, obviously I feel strongly about the subject)

Thank you for the well wishes. Hopefully I will get there. If not I may be scrubbing toilets shortly myself. All I have right now is my name on a patent that formed the basis of a company acquired for $64 million. Unfortunately, that doesn't pay the rent. But, I will keep taking shots until I drop dead. Hopefully I will get lucky.

The author is from India. Based on that fact, there is a 95% chance that he lived most of his life in poverty comparable to the bottom 5% of Americans.

See figure 7: http://www-wds.worldbank.org/external/default/WDSContentServ...

It's also worth noting that he's writing this from the perspective of a far more materialistic and status-based society than the US.

I have grown up in a typical middle-class household where one is rightly nurtured into not being extravagant. I was taught to value money (which I thoroughly appreciate). Even though, in my childhood, I always got whatever I wanted, the truth is that I never wanted big, expensive toys.

The author did not grow up in poverty.

Read the link I provided. India middle class < America poverty.

That's laughable. It may be true purely from a global economic perspective where life is measured in dollars, but in quality of life and social terms it's absolutely false.

India's middle class can typically own property and afford servants, and live a life that is far more pleasant than is available to those in poverty in the US.

Poverty is not about who possesses more or less. It has more to do with how much you feel deprived, irrespective of how much you possess.

He actually mentioned in the article that he grew up "middle class". I am aware that middle class in India may be different than in the US, but it is clear that he was never poor - going to bed hungry etc.

>>I am aware that middle class in India may be different than in the US

As an Indian I can tell you, To give you a true perspective almost every one rich in India apart from Ambanis and Tata(Kind of Rockfellers and Rothschilds of India) think they are from the middle class.

The super poor in India die out of hunger. Farmers commit suicide day in and out. The lower middle class barely gets any education and nearly die fighting for opportunity all their lives. The middle class is a little above that.

I can tell you stories of how difficult and crappy my child hood and teenage here was. And we were considered middle class.

The fact that you can start a company in India, and do it relatively comfortably to have your parents support your through, pay your college fees, have a car, and give you comfortable cozy home to live means you are easily among the rich.

In India middle class is an heavily overloaded terminology.

There is the same perception issue here in England. Hugh Muir writing in the Guardian (probably the second most popular left-wing paper) defines "middle class" to mean "private education" which is about 7% of the population. Presumably he considers himself to be "working class"...

"Middle class" in India does not mean what you seem to think. The vast majority of middle class Indians are poorer than most Americans living in poverty.

Read my link - 95% of Indians are poorer than the bottom 5% of Americans. Unless the author defines "middle class" as "top 2%", the fact that he grew up "middle class" is meaningless when comparing his lifestyle to an American one.

A stat to illustrate the point - 1.8% of India (circa 2009) owns a car, likely one that would be too dangerous to sell in the US. For comparison, 25% of American households below the poverty line own 2 cars and 75% own one.

http://en.wikipedia.org/wiki/List_of_countries_by_vehicles_p...

http://www.census.gov/prod/2008pubs/h150-07.pdf

The bottom 50% of America you described, or even the bottom 5%, also does not go to bed hungry.

"Poorer" doesn't mean much. First of all, you should factor in purchasing power; second, constant expenses which are the killer.

In most countries, especially poorer ones, you don't have to own a car to be in the middle class. Neither you have to pay for gas, car itself and parking/garage. You can realistically move by foot and/or mass transit.

Disclaimer: I think I'm in top 5% in my country, probably earn more than USA median and I never had a car.

Clearly you still haven't read the link I provided, which provides numbers after adjusting for purchasing power.

I'd provide you with more statistics showing how wealthy poor Americans are (http://www.census.gov/prod/2008pubs/h150-07.pdf), but clearly you aren't going to read any numbers.

So instead, go watch about 4 minutes of Delhi Belly (good movie, BTW, vastly better than typical Bollywood crap) which always confuses first world types:

http://www.youtube.com/watch?v=IrJS6R-FT-o

(Sorry, couldn't find the whole scene in one video)

http://www.youtube.com/watch?v=L3dkCVXcAVg

That's life for middle class professionals. (Admittedly, a group of non-misfits would have filled the buckets.)

What's so terribly wrong about those scenes? After applying cinema discount.

They don't drink your juice in the USA?

I will pick middle-class Indian over poor American every day, because: you won't get shot, you won't land in prison, you won't have to work three jobs for funny money, you'll have a real family and your children won't do drugs.

Instead you'll be raking in some respect.

What's so terribly wrong about those scenes?

3 middle class professionals (2 in that scene) all sharing a single grungy studio apartment. One of them is unable to wash his butt because none of them remembered to fill buckets of water during the 2-3 hours/day when the water worked.

You have absolutely no idea what you are talking about when you suggest the poor American works 3 jobs. He probably works 0 (http://www.bls.gov/cps/cpswp2011.pdf), unlike the Indian who is typically working mon-sat (mon-fri at a good IT company). Crime is a huge problem - just ask any woman of reasonable attractiveness.

As for having a "real family", the poor American can choose to marry a woman of good character before having children. He typically chooses not to.

Look, you can complain about "I can't afford a new iPhone poverty" and "omfg someone with a job makes 8x more than my welfare poverty" within the first world all you want. But don't project these intuitions onto India and other nations suffering from real poverty. It leads you to conclusions that are utterly ridiculous to anyone who knows what they are talking about.

I live in Iowa; those things you mention are the comic-book version of America. Nobody is shooting anybody around here; only college students end up in jail, overnight, when they leave the bars at 2AM and wander in the streets and might hurt themselves.

Comic book or statistics?

I guess that mainland states' countryside is one thing and urban poverty in large cities is another thing. One more reason to take income rankings with a grain of salt. As a preedictor of lifestyle.

Oh, and a guy got arrested yesterday when he waved a gun around trying to steal a pair of gloves from a local farm store. Since its -14 degrees F this morning, I have some sympathy for the poor guy.

I lived in rural Iowa for 4 years and currently live in inner-city southside Chicago. The contrast could not be more dramatic. It's not "comic-book" to describe certain neighborhoods like this. However, Iowans (and other midwesterners) are extremely sheltered from the lethal combination of drugs, no family structure, poor schools, etc.

Sheltered = have a stable community and a strong work ethic? To say we're 'sheltered' is similar to, say, the way a lighthouse is 'sheltered' by being built of the right stuff and having a strong foundation.

You are conflating possessions with a predictable stream of income, and you shouldn't really be doing this.

The purpose of income is to buy goods and services. The world bank data I cite gives you data on income, the data on goods illustrates the resulting difference in goods.

If you have any data at all suggesting the Indian middle class is remotely as wealthy as even poor Americans, feel free to cite it.

Yeah, I think I largely agree with this.

A few years ago, my grandmother died and left me a healthy pile of money. Enough that I don't have to have a day job for several years yet, even if I hadn't invested a bunch of it.

I live alone in a two-bedroom apartment in a very walkable part of Seattle. I don't own a car, I don't have kids. I spend my days mostly drawing comics, without troubling myself much with deadlines, or whether they're "what the market wants" - I'm two years into a complex and ambitious comic about a lesbian robot lady with reality problems because it's a story I want to tell.

I have the freedom to do this instead of grinding out commissions, working as a minor cog in animation or games, or doing weird web-dev things in the intersection of "good artist, half-assed programmer". And I have this freedom because of money. I can afford to travel to several comic book conventions every year and make enough to at least cover my costs, and not stress when a new con turns out to have sales so shitty that I walk away from the last day to hit the beach instead.

It is fucking awesome and I really hope I can continue to enjoy this freedom for a very long time.

Sounds like an amazing lifestyle, I'd love to see some of your work

It's pretty much all available free here: http://egypt.urnash.com

And yeah, it's a pretty good life if you can get lucky enough to have the money to do it.

When you know self made millionaires you learn one thing:

"Money is not wealth". Almost nobody that understands wealth holds money, money is a tool for exchanging things and its value decreases with time.

They hold real state, they hold precious metals, they hold stock, they travel, they know people.

The people that made money usually like making wealth and don't fear losing it so much, they learn all their life to handle risk with positive results. It is their children or grandchildren who fear it, because they don't.

The good thing about being rich is that you could be poor whenever you want. You could also help lots of people in your life, which feels amazing.

The one thing I learned from working with a couple of very rich people was that all they think about is how to get money.

Which is why I'm never going to be super-rich, because I don't really care about it obsessionally like those two did.

Edit: I should say these were self-made millionaires. I have also worked with people who were millionaires just by being in the right place at the right time, and they were completely different and rather careless with money.

This is true. The self-made multimillionaires that I've met and worked with don't just "turn it off" because they've made it. The habits and practices that got them there are something that they carry with them.

Now, of course, they structure their lives so that they work when they want, where they want, and build in a lot of time and space for enjoying the things they enjoy (Superbowl tickets? Vacation with family on the water? Of course.) But they also work a lot.

Nolan Bushnell (Atari) said something like, business is a game and money is how you keep score. If that's their game, let them enjoy it!

This is not a criticism, but are you sure "making money" was all they thought about, or was it that they constantly saw opportunities for making money around them? The two are not the same. The latter is an extremely valuable skill worth cultivating, because even if you don't take advantage of it, having it can be useful someday.

The good thing about being rich is that you could be poor whenever you want.

What? Name some rich people who are now voluntarily poor! I'd happily bet that 99.9999% of multi-millionaires never choose to be poor in their lifetime. But I'm sure lots of them feel amazing about thinking how they could help people.

I believe that was sarcasm however warren buffet is a good example. He's giving all his money away and leaving his kids squat because he doesn't want to create a legacy of trust fund descendants but they certainly won't be poor.

> and leaving his kids squat

His children's charities are getting billions of dollars as well.

>He's giving all his money away and leaving his kids squat

LOL!

I do know one heir to millions who lives on the streets and dumpster dives, thinking that it is morally wrong for him to make use of his monetary advantages in any way.

Obviously not the norm.

While not so extreeme, I have a friend who is similarly an heir to wealth, and eats noodles and fast food and lives in a teeny appartment.

This article and the bulk of the comments strike me as shortsighted. Money is the driver of industry. The more you have, the more you can direct resources towards productive activity.

The idea of money being freedom is a great comparison, which I make myself often. The OP and others here however largely limit their notions to hedonistic freedoms and critiquing buying "things."

What about building that school or the playground in the neighborhood that can't afford it? What about funding fundamental research that is under funded right now? What about starting a job training program for the under employed.

No, there is no such thing as too much money because there is no end to the things that need to be done in the world. So the whole conversation about enough is baffling.

Enough for an individual and enough for a community are different. I as an individual am not building any schools, because it would take many times my lifetime income and dominate my entire existence. Some people are born industrialists; the rest of us want our weekends and family.

After working very hard on things to 'make money' (no goal attached, just making money, boy I was naive) doing stuff I really didn't like to do (building large EJB based systems for banks/insurance and we had entity beans back then!), I had some realisation that actually, this sucks. I alienated my gf at the time, my friends, my family. I worked, 200+ people under me and it sucked. I thought about it a few days, sold off some stock to make sure I could have freedom.

Which I also believe is the main goal of having money. No loans/mortgages, being able to do what you want. And then I started making companies again, doing about the same thing (without the entity beans, or beans at all :), but now it's fun. If it goes badly (the current crisis almost bankrupted one of my companies) I handle it like you are supposed to handle it; in a calculated, company-first, manner. And pull through stronger than before. If you don't have that freedom, you make decisions which often don't reflect the best interest of the company because, well, you cannot pay the rent or feed your family.

I always believed in lots of interests and hobbies (my twitter feed must seem rather ADD, but I actually have a planned working day in which I get to do those things) as I think the biggest waste of life you can have is boredom and now I actually get to make companies around those things. Money in the bank gives you the balls and the contacts to do that while as before that wasn't even an option without right-out prostituting yourself. And the freedom to say no to something which would before have been (or have seemed like) a brilliant opportunity because you just don't want to.

Freedom usually (unless there are health issues in your family/close friends) also buys you no stress which already comes from the above. But having my own fruit/vegetable garden and having the time to prune the trees and prepare nice food from it etc is very far removed from shit in styrofoam containers and not even tasting it during a client conference call.

Edit: I forgot my new-found pet peeve with getting older; people get way to serious over 30. Life's a game and a short ride; money allows you to live it like that.

I'm surprised nobody has quoted Jean-Jacques Rousseau on money:

I love liberty, and I loathe constraint, dependence, and all their kindred annoyances. As long as my purse contains money it secures my independence, and exempts me from the trouble of seeking other money, a trouble of which I have always had a perfect horror; and the dread of seeing the end of my independence, makes me proportionately unwilling to part with my money.

The money that we possess is the instrument of liberty, that which we lack and strive to obtain is the instrument of slavery.

He did not have a blog, but he did know how to say a lot with just a few words!

By corollary, individual debt is fractional, voluntary slavery.

Or possibly it goes the other way. By being wealthy the truest freedom you enjoy is not having to worry about owing anyone anything.

"Money is coined freedom" - Fyodor Dostoevsky.

Another perspective I read recently is that 'time is the ultimate form of wealth.' Meaning that if you have a lot of money, you don't need to spend your time on things which do not interest you.

The entire basis of money is a Pareto Optimality, thus I would amend that statement to be "The real use of money is to buy freedom at someone else's expense."

Now it's also possibly that if we view money through the lens of a Nash equilibrium, that in the long term we are doing what is best for all of us by constantly seeking greater productivity. Therefore, "On a long enough time scale, the real use of money is to buy freedom for every one as money is traded with those that can achieve the greatest productivity." Money is the lubricant that permits the human machine to find the most efficient means of production.

you should read Debt: the first 5000 years, and you will find that you are wrong; the entire basis of money is NOT Pareto Optimality. The author of this book I think makes a criticism that the economic just-so story of money exists to self-justify economics as a field (while conveniently ignoring that he's doing the same thing for anthropology) but the book is nonetheless an excellent treatment of the muddled history of money.

Great post Paras. However, I wish you would have addressed what you do with your new found financial freedom. I suppose running your business takes up most of your time. That's fine as long as it's enjoyable I guess.

The question here is, if something, what would you have done differently ? Or, going forward, what are you going to do differently ?

Also, the modern economy is poised against us in terms of preserving the value of our wealth. Because of this, I disagree with your final conclusion (the sweating over investments bit..). The hard part about money is making it, but it's also hard to keep it. Inflation eats away at what you have, furthermore, depending on your country (India in this case..) you don't have 250 years of documented economic history to make your investment decisions.

If you've reached your financial goal, mine is 25x of annual expenses then yes, maybe you are truly financially independent and now free. You have literally bought freedom. You're right, materialistic pursuits will probably never lead to happiness. However, for some the road to financial independence is longer than others. And yes, many people lose the plot along the way ;)

Maybe a more apt title for your post would be: "Having a successful business and a good amount of money buys you freedom" ? :)

There's an interesting thread on Quora titled 'What does it feel like to be a self-made millionaire under the age of 25?' http://www.quora.com/Becoming-a-Millionaire/What-does-it-fee...

As you will read through it, terms like insecurity, worry, surprise on unchanged happiness levels would be quite common among the answers.

I have been thinking a lot about investments and have concluded that my main criteria is minimum management. If an investment requires active maintenance and management, it's not for me (unless I'm doing it for charity). This excludes many common investments such real estate and stocks. With others (say fixed deposits, metals, etc.) the post-tax returns are less than inflation so it may not be wise. Right now I have decided to invest mostly in mutual funds.

I'm okay with the risk because the biggest asset I have is myself. The insecurity about future never leaves us, but as long as I believe that I would be employable in future, I can always jump back.

EDIT: added ?share=1 to the URL. Thanks Casseres.

Thanks for your response, the Quora thread is very interesting.

Another question, and this is a little more personal. Also, I don't mean to be accusatory at all or anything of that sort so please don't take it that way.

Do you feel any new found desire to help those less fortunate than you ? I don't mean by providing employment, etc. I'm sure you do plenty of that through your business.

I just know plenty of fairly rich people who feel like they're not 'rich enough' to help those that are less fortunate (even people whose net worth is in the tens of millions!)

Handy Tip: Add ?share=1 at the end of the URL so others don't have to log in to read all of the answers.

Thanks for sharing, it was a good read.

Paras,

I enjoyed your article. I too grew up in a middle class family, much the same as you. I was taught to work hard and to use good motives when working.

I remember early on, deciding not to take part in activities because I just focused on the money, I was 16 years old. I consider it unfortunate that I repeated that decision many times until my late 30's.

Looking back I missed out on many of the experiences that later brought me much joy.

So now what?

I try to focus on the experiences, instead of just getting the money. I have experimented with less money, and the joy was still there. However I still need money, I still want and work to be comfortable. " I work with many that just focus on the money and point out that "with so much money you can do good for others." I think you can do good for others before you get 'the big pot at the end of the rainbow.'

Keep sharing.

The parable of the fisherman and the investment banker.

http://popculturemeetspsychology.blogspot.com/2011/06/invest...

> And, although it might be true that certain people just get kicks out of making money, science definitely tells us that certain things make us predictably more happy than others. So people who are irrationally attracted to hoard are just victims of uninformed biases.

While the statement on science is accurate, those kinds of results are statistical. So, it's incorrect to extend that result to every individual. While people who chase money may be statistically likely to be "victims of uninformed biases", not everyone will be.

I liked this article because unlike many on this topic the author's viewpoint was fairly nuanced. However I still think the author goes too far in his claims of how useless money is.

First, raising children is very expensive, and to put 2 or 3 kids through college requires a lot of money. And most single people would like to have a family at some point, so they need no excuse for saving money.

Second, money (and conspicuous consumption) is a social signal, and demonstrates your ability to earn that money, which not everyone can do.

I can only just barely imagine the things you're talking about as real things that really happen. Surely they can only happen to other people - to another class of people. My parents didn't put any of us through college. I don't have a family and don't expect to. Sometimes I forget these things are real for some people. I think of them the same way most people think of fame and riches.

The real use of money is to pay taxes.

I thought deeply about this when I read something that Bill Gates said answering a question a while ago. At some point he said that he could understand that people wants to be millionaire because the freedom that brings, but after a threshold the burger is the same for everybody.

Freedom in that context is a weird concept, specially when you see a lot of rich people that are slaves of money. I guess it depends on the personality.

That quote made a big impressions to me also. It was from a Q&A session at UW from late 2011. Here is a video: http://www.geekwire.com/2011/its-hamburger-insights-bill-gat...

Thanks! :)

"A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do." - Bob Dylan

Overall, I agree with the post.

> The freedom to do whatever one wants, wherever one wants (within moral limits, I hope).

This overreaches. You cannot do "whatever," "wherever". This implies complete control over one's circumstances, which is obviously absurd.

More precisely, money buys increased control over your circumstances and life. This is very valuable and empowering, but it is clearly limited.

>A life spent mostly hoarding money and possessions is a wasted life

I find it interesting that an article whose tone is one of optimism is so judgmental.

If you see something wrong with that statement, why not point it out?

If someone said getting hooked on heroin and dying with 16 is a waste of a life, would you consider that judgemental, too?

To me it's just obvious that people often confuse symbols and things, and not only hoard possessions and money, but other symbols as well. And if I forget that for a while, the advertisement geared towards them reminds me. If that is being judgemental, so be it. I like to think it as being unable to miss certain things.

I think the takeaway is that life would be best spent finding out what it is that truly makes you happy and then pursuing that. A lot of people think 'more money' is the answer to that.

More money is just a way to be able to pursue whatever you think will truly make you happy. Whether that's kayaking, kung-fu, dancing, golfing, getting laid, going out for dinner, going on vacation, etc.

A means, not the end.

Some people just lose the plot on the way and continue down the more money path forever. Those are the people who end up living to work and not working to live.

> A lot of people think 'more money' is the answer to that.

I'm don't believe this is true, at least directly. I believe people start out thinking that they just need to make X amount of money to fulfil their dreams. The problem is once they start earning money they start changing their lifestyle to match it. Once they are in this situation it is hard to give up the restaurants, cars and houses to chase their dream. As such they decide they want fancier restaurants, fancier cars and even bigger houses which requires more money. It's sad, but people who are comfortable are unlikely to change much, even if the result would make them a lot happier.

Well, it's a truth most people realise later in life. If someone would've told me that when I was 22, I wouldn't have believed it. Actually, if someone would've said that exact sentence to me, I would've believed it, but I didn't think I was doing that. In hindsight, I was. I realised it early enough luckily.

I wasn't being judgmental, mere factual. My hypothesis is that people want to maximize happiness/well-being and hoarding money and possessions is a suboptimal way of doing that.

On a slightly related note, Sam Harris has written an excellent book 'The Moral Landscape' where he argues that science and scientists __should__ be judgmental towards morals and life choices.

I really like the idea of money as freedom. I'll take it a step further though, and that is the ability to generate at least somewhat passive income whether from a business or from investments. Not having to make money right now is key to freedom.

We don’t make movies to make money, we make money to make more movies

- Walt Disney

Heh. Not anymore: Disney implements a "vault", where they stop selling movies for a certain amount of time in order to drive new sales when they re-release.

Disney was doing that with theatrical re-releases long before there was such a thing as a VCR--much less a DVD.

Although I'm nowhere near financial freedom, I've been wondering lately what "freedom" means in a strictly material sense. Inflation, bad investments, etc. can eat away at a bank account. But material objects seem to be more secure. The problem, of course, is balancing this need for reliable physical possessions with my (and many other's) minimalistic tendencies and general dislike of "stuff".

Here's what I've got so far:

- a nice house in a nice neighborhood, tricked out with the best in security, fitness, intellectual and entertainment devices. Add in renewable energy sources via windmills/solar panels/ etc to truly be self-sufficient.

- enough canned food and rice to last multiple lifetimes.

buy freedom? from whom are you going to buy it? who has a freedom for sale? do they have excess supply of it? or would they build a one for you? or are they going to sale you their own one?

The "real" use of money is dominance. Between you and the things you need or want, money is a proxy controlling access to those things. Control the money, control the people.

If you need money to buy it, it's not freedom, it's power.

Disagree. Money does not equal freedom. I know plenty of poor people who live freely and plenty of wealthy people who feel trapped. What money really is is a placeholder for time.

It's possible to go to Antarctica with someone else's money. That's the satisfying thing. Make it a win-win arrangement (I'm not talking about freeloading).

What are you talking about then?

There are two scarce resources: human lifetime, and mineral resources. Money lets you assign the disposition of some of those.

"money only buys you choices" I lived nearly homeless for a year. never felt more free, didnt cost a dime.

strange that here's such a hype around this article. Money is a tool. That's it. Use that tool. If you begin to worship a hammer, you're fucked. If you see people who are fucked, help them for the first time. If you see that they like being fucked, then these people are tool. Use that tool.

"money is a side effect of excellence, and if it's not - at least you're still excellent"

- me

The real use of money is to fund your next startup!

I'm kind of disappointed, I was hoping for a bit more than a "rich people get obsessed with getting richer" type of story (still a good piece).

Freedom is indeed bought with money, but not in the way that most people think. There's a shell game going on right now for the lowest class worker.

At the time the US economy had it's "oh shit" moment around 2007-2008, I was working at a marketing research company. At the time I was working from home being paid by the hour, but there wasn't a lot of work coming in. I was broke most times after paying bills, so I had to find a quick patch job.

I began working at a McDonald's. At this point I was staying available online for most of the day until the afternoon, at which I would go to McDonald's and work all night. I found a bartender gig and started to work that on my off days of McDonald's.

At that point, I was making good money, but there wasn't any time I had to myself. I ended up quitting the marketing research job, as I was making more from McDonald's alone.

Now I was making OK money, but still not having a single day off. The bartender gig was getting more and more violent (I worked at a rough R&B club getting paid under the table). I eventually left the bartending job (there was a shooting there less than a week later). I don't think I need to explain what life was like working only at McDonald's, even if I was being paid more than most non-managers.

It's a bit hard to communicate what was exactly wrong with this picture. As a low wage worker, it was impossible for me to both have time and money, or leverage either of them to get myself into a better position.

When I had money, I had no time to leverage it. I couldn't finish a degree, I couldn't even keep a girlfriend. It was easy to slip into depression and substance abuse. I drank a lot. When I did get the chance to go out and have fun, it was to the extreme.

When I didn't have money but I had time, it was equally as bad. I couldn't go out to bars, I barely could keep up on bills. I couldn't take time off to go to the doctor. I couldn't afford to lose hours, nor afford the doctor's visit. When I had to go to the emergency room, I had to take the hit to my credit. I couldn't go across town or go to the show, I was behind on either electric or gas most months. And electric people have no qualms in shutting off your power and then laughing in your face when you say you can't even cook food.

It's interesting to me that when you're in that trap, it's almost impossible to pull yourself out. On one end of the spectrum, if you have the money to better yourself, you don't have the time to do so. You can't leverage the three jobs on resumes, nor is that a replacement for a degree.

On the other end, if you work one or two jobs, you don't have money enough to get a degree, or take a vacation, or take sick days, or go to the doctor, or change cities, or go to a concert, or have a night on the town, or even (sometimes) keeping internet.

So yes, I would argue that the real use of money is to buy freedom. It's just that most don't realize it, until they are stuck at the very bottom wondering how the hell they can get out. I'm not saying I did everything perfect, but I don't feel I did anything horribly wrong either.

And I'm doing fine now. I ended up getting with a start up doing Node.js and frontend JS work, which was enough to jump start my career.

EDIT: And yes, technically I'm falling into a logical fallacy here: https://yourlogicalfallacyis.com/anecdotal

I did some analysis of the basic costs of living in Austin, TX for a minimum wage worker and found if fairly good decisions are made about $2000 a year can be saved at 40 hours of work a week 50 weeks a year.

How much money were you spending on alcohol and the few times you went out "crazy"? Substance abuse sounds like a few beers a night - costing $20 a week or so? That's two hours of free time (closer to three) a week.

I would really like to see a breakdown of your expenses during that period of your life.

And I really couldn't give one, at least in this setting. And really I've yet to see a good estimate for cost of living. Full time in minimum wage-land is 35 scheduled hours, less if you are let go early. Getting behind on bills also constitutes additional fees.

As far as what I remember, I ended up having about $100-150 left after bills per pay period. There are other factors here as well, bad roommate, car accident, that I'm not going into.

"the pieces of green paper have value because everybody thinks they have value."

Freedom is fallacy.

Those two statements don't really connect.

Money has value because people think it does, but also because it represents economic value. Once you can buy enough economic output to sit at the top of maslow's triangle then you're free to pursue whatever arbitrary things you please.

It's not an abstract concept, it's a cold hard fact that's held true for centuries.

"Freedom is fallacy."

Not really. Having money and working for myself means that I don't have to take orders from a boss or a manager that tells me I need to work another holiday or weekend..only because of their own incompetence.

I can also take vacations when I want (which doesn't happen as much..because I do need to run a business) and I don't have to request a day off when I'm sick.

This is freedom to me, even though it is based on a piece of paper that's worth is only in someone's mind.

This is what I have been working on..for the last 8+ years and achieved it last year.

totally agree

quite agree

My take: I really need to own a good apartment. Half commute time is a life changer; not having to cough up rent every month is a life changer; being able to rent it out and move to Southeast Asia and/or get unlimited run time for project/business/startup is a life changer.

Once this is accomplished I never strictly 'need' to work unless I need something extravagant or more savings or family :) In theory anyway.

Good post, but what i don't find to get is the assumption that having or not money fall in some sort of polarity context: "Having money is bad or good?", Neither is something that is needed just that.

Money is an enormous source of suffering. Worldly life and the pursuit of money is a hamster wheel. Poverty and service is the only freedom. I'm not kidding.

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