Effects of Gambling on Economy

[LikesToLose]

You admit there are problems to solve? Like what, human nature?

The problem with your whole philosophy is that you don't see yourself as greedy, but you are. You want to have an "upper middle class" livestyle, without having to work the majority of your life. I put upper middle class as around $80k per year, maybe your expectations differ some, but let's just use this as an example. The US average household income is about $42k per year and that includes the huge incomes generated by the ultra wealthy. How do we acheive $42k? In general, people dedicate themselves to a productive career that has a high expected return, money being only 1 of the measures of return. They work overtime, they get an education, they show up to work on time, all the time, earn promotions and move up. They also find other ways to generate income other than being an employee, like starting a business of some sort, investing time, energy and money into 'passive income streams'. In short the average of $42k is achieved by an average dedication and talent.

To reach upper middle class income of approximately twice the average, it requires above average investment of dedication and talent, or another way, is that to get above average returns, one must generate above average results. A network technician makes more money and has more interesting work than a grocery bagger because her has invested more effort in learning his trade and has more talent to invest in his career. In many cases, 30, 40 even 50 years of dedication are devoted to a given profession to earn the current average.

Real estate investing would be another great example. It offers great rewards and is capable of generating this passive income stream. Some sort of asset building enterprise such as this would allow you to build an income of the upper middle class without having to work in a shorter period of time than working. Perhaps as little as the 10 year period of which you speak.

What will it take to get there? Let's see: Education in successful real estate investing, tenent management, local city ordinances, taxes, accounting, household repair. Experience: You must become an expert in all of these facets of the business and only time will and learning from mistakes will make you an expert. Time: You will have to devote additional time to the business, outside of a normal job. It is not uncommon for small business owners to spend 100+ hours a week working for themselves. In real estate, you may have to fix a leaky water line immediately to avoid a $4,000 repair job on the floor support. Risk: You are putting a $100k property into the hands of someone who doesn't have enough responsibility to keep a good credit score. There is an element of risk there I think.

Now lets get back to your ideals of communism, where everybody is able to achieve an income of twice the average, only by taking their turn doing some work. I would love to work for 10 years, not really have to dedicate anything but my time and achieve the same results. That would be great. Maybe I could bag groceries for a while, or work on the loading docks, then when I'm thirty, I can retire and pull down $80k a year retirement for the rest of my life.

The problem is that in order to have the things I have today, someone had to take a risk, start a business, build my car, my lawn tractor, my backup generator, my kids Christmas presents, wife's spa days, etc, etc, etc. All the [censored] I buy that makes me upper middle class. But nobody is putting forth any sort of above average effort, because like me, why would you take any risk or devote anything extra? Who is going to open a hardware store, a spa, start a factory, make the toys. There is no reward. After ten years, or twenty, or however long you dedicate yourself to a pursuit, you get the same thing as if you dedicated the minimum. What about doctors? They study for about 12 years post high school before they actually become doctors. If you choose to be a doctor, do you have to work your whole life or 22 years, because your schooling isn't considered working? Or do you just study for 10 years, and retire and we have no doctors?

Which all leads (at great length) to the fact that we couldn't achieve today's average income of $42, with the current extrordinary, lifelong effort that we put in. To acheive $80k household income with 10 years of minimum effort is not some lie by the ultra rich to keep you working, it is basic fact. Who is going to produce the stuff that you want with your upper middle class income? And if you can't buy the same stuff you can today with $80k, are you still upper-middle class?

Foreigners? What, the Chinese don't deserve to live in your utopia and you expect peace? This can't be right because that would turn them into the slaves and there would be revolt and war. So now we have to take the world average salary of 59 cents per year (Just making that number up) and give everyone double the American standard of living. That's great, except that the US has about 5% of the populate and uses about 30% of the earth's resources. Perhaps there is some math that I'm not aware of, but this doesn't seem possible.

There are no robots or current technology that can solve these problems. If you want to imagine a magical solution that we can mine all the resources we need from astroids and that a robot can be invented and produced for pennies that will handle the grunt work and allow everyone to live very high on the hog for nothing, then take a look at the industial sector, all the way back to industrial revolution. This is the biggest area of productivity increases from automation ever, IMO and 'greed' messes it all up.

Let's focus specifically on clothes. Clothes used to be made from wool sheared from the family sheep by dad and woven by mom. People generally had only a couple sets of clothes that they wore every day. If they were lucky, they had a nice set of clothes for Sunday church. Now, along comes automation and the farmer sells his wool to the factory and buys clothes. But of course, the owner of the factory needs to charge more for the clothes than he pays for the wool because he has to pay for the machines and the people that run them and he of course has to eat, too. So the farmer raises more sheep that wool he uses and the wife doesn't have to make clothes anymore, so now, she helps raise sheep. But the net effect some people work in the factory, some people raise sheep and some people are out of work because clothes are being made more efficiently and there is not enough demand for wool for everyone to raise more sheep.

Now, this would be fine, except for 'greed'. For some reason, people want newer clothes. They want different sets of cloths. Follow this increase of efficiency to today. We now have closets full of clothes for every member of the family and people keep buying more and more. If people were satisfied with what they had, we would all still were very durable, wool tunics like they did in medieval times. I want better clothes than that and so do you.

I also apparently need 2 cars and three tvs, a cell phone, 3 VCR's and 2 DVD players, a Playstation, hot tub, etc, etc, etc. Is it that people can't afford a house on 1 income or that they can't afford all other crap that didn't exist before 1950?

No increase in productivity will ever lead to your utopia, because human desire has no real limits. You say 'upper middle class' lifestyle. That means that you can buy or do almosts anything you really want to. What you really want is to be one of the ultra rich and have no finacial limits placed on you, but you don't want to have to work for it. So to make yourself feel better and superior to capitalist pigs, of welfare cheats who want to government to buy them cable and a color tv, you invent this utopia and it is everybody else buying into the myth of capitalism that prevents you from having what you think you are entitled to. We are all fighting for a slice of a limited pie, except you want to magically make the pie 1000 times bigger and split it equally.

Have a great day
Mark

PS: True democracy is as scary as pure capitalism.

[AmericanAirlines]

Hi Mark,
A bit pressed for time at the minute... some unproductive sort smashed up my car to try to steal gifts that weren't in there. But I'll get back.

Anyway, quickly, communism is *not* my ideal. But niether is the current system. I admit, I don't know what the answer is, but this isn't it.

I have worked. And D@MNED hard. If that weren't the case I would say calling me a whiner would be true, but it isn't.

Problem is there's not correlation between work and reward as you seem to state. It's a crock. Any celebrity or old money decendent is a good example. Hell, the garbage man works harder than Britney Spears or Micheal Jackson, true?

Anyway, when I get time I'll respond. But it seems clear to me that maybe you worked hard and *did* get the expected rewards and so are perhaps not as bitter as I am.

Sincerely,
AA

P.S. Yes, I agree, greed is the root of the problem. No I do not agree that I am greedy given what some people have.

I do appreciate the detail of your response.

[AmericanAirlines]

Hi Eastbay,
I agree. And think it may be one of the things that's flawed about "market will bear" pricing, from some perspectives.

It was a rhetorical question designed to get folks to see that the results of productity gains and longer work weeks has not been recieved by those doing the actual work.


Sincerely,
AA

[AmericanAirlines]

Hi Eastbay,
I have a Comp Sci. degree. But not from MIT or a "big name" school. I think we realize that's a game.

I don't believe paychecks are really cut to the value of the individual. Consider... what does a CEO really do?

As for not working. Theoretically, ownership of the correct assets should make it possible. Granted, I do see your point, and some philosophers think rewards should be based solely on work done, and not assets.

In any event, since I believe that productivity gains have been siphoned upwards and that if the gains of productivity were spread evently, we could all retire many years sooner... the idea that I've already paid my dues... but not recieved the rewards... supports that idea of being done with working.

That's my primary gripe if it isn't clear. That I (and many others) have paid the dues... but been denied the membership. And *that* is a systemic problem.

Gotta run right now.

Sincerely,
AA

[LikesToLose]

AA:

Sorry to hear about your car getting broke into. I once had an old (even at the time) analog cell phone stolen from my car. I left it on the seat in a downtown parking garage, because they give away better phones than that piece of garbage. Didn't care about the phone but the smashed glass all over the inside was a major pain.

Let me respond to your points then I'll try moving the discussion to a different tact.

I think that you are talking about the ideals of communism, large scale communnal living. Communism strives to create abundance for all, shared equally. A worker's paradise. "From each according to his abilities, to each according to their needs." While these are the ideals of communism, the implementation changes drastically. Someone has to make the decision of who has what ability and who has what need. Attempting to do it democratically doesn't work because in a democracy, everyone votes for their own good instead of the common good.

There have been numorous attempts to make your utopian ideals a reality besides the rise of communism. There were like 150 different utopian communities around the 1700-1800's. Most were religiously based and created by immigrants from Europe who were being persecuted. They came for the (relative) freedom to be left alone in America. None of them seemed to have the concept of less work, but they all became economically unsustainable in the long run due to lack economic incentive creating stagnation in a world of improvement. The world got more efficient and had better lifestyles, so the people rebelled.

Then you have the hippy communes of the 60-70's. I think most broke up when they ran out of pot [img]/images/graemlins/shocked.gif[/img]

I think the best example of a working commune would be monestaries and whatever that place nuns go. Certainly not the upper middle class lifestyle, and definitly lifelong work. Plus, it relies on the outside world to support them and could not exist without the donations of the faithful.

In short: Your ideal has been attempted to be implemented and has failed many, many times. Your ideal, would be wonderful. I would love to live in the world you envision. I would be happy if the whole world had food, clean water, shelter, basic medical care and a basic education. I just don't see it as a possibility because in order to give something to A, you have to take it from B. B had to create that something. It doesn't just exist. B will not create the same level of 'something' if you take it all away from him. When you take food from B to give to A, the total amount of food available decreases and no one is better off. This is proved every day by China, North Korea, and even Russia is struggling to get out of it's mess.

The correlation to reward is not work, but value created. I could easily argue that Britney Spears creates the value that she receives. Entertainment seems out of wack, but Britney Spears or Micheal Jackson create a small amount of value for a very large amount of people with a single album or concert. Hence the huge rewards they get. The garbage man may work harder, but he only creates value for 1 household at a time.

However the relationship between value created and reward is not a direct 1 to 1 relationship. Heirs of large fortunes did nothing to create the value, but lottery winners didn't do anything to create the rewards they receive either. In your case, you may not have received the reward you feel you created. I am assuming that you worked hard as a computer tech, anaylst, engineer or something and the company that you worked for downsided you. The problem is that even though you worked hard, you weren't able to create value, because the company you worked for wasn't able to turn your work into money. Not your fault, if that is the case. I was fortunate to leave a computer networking consulting company in '97 and moved to a company that didn't have any real layoffs. So there is an element of luck in the system. In the long run, assets (your labor) will be moved from unproductive work to productive work and the overall productivity of the world will increase because of your job loss. Not that that makes it any easier on you and you have my sympathies.

Now, I have been able to see vicariously the risks of leaving my economic future in the hands of a corporation. Not that I am bitter, but I don't see the path to a comfortable retirement as working for a big company and investing in my 401k. Once the baby boomers start to retire and the stock market plunges and stays down, people will be just as bitter as all those who had pensions at large corporations that went under in the 80's. I think working for a paycheck, no matter how good a check, and counting on stock investments is one of the riskiest financial paths today.

What is a worker bee to do? The answer is certainly not to envision a utopian world and be bitter that the real world isn't more like the utopian ideal. That is not the path to a comfortable, upper middle class lifestyle. It seems more like refusing to play the game because the referee made a bad call. Your situation will not improve until you decide that you are going to make it improve and learn how to do it. Failure is part of the process. It is what tells you that you are on the wrong path somehow.

*Don't try to buy an answer.* There are lots of traps out there to avoid. Want to hear about my option trading and market timing that spent a ton of money on 'education' only to lose more trading? How about gumball machines and tax protesting? How about selling gumball machines to others who want to work at home? (I couldn't lie well enough to sell them). I've got over $40k in mistakes right there.

Things I am trying to pursue (in addition to working 40+):
Poker for profit (Buy a book and study hard)
Real Estate investing (Free internet stuff and the library. NO CARLTON SHEETS )
My wife does 'World of Products' $25 bucks for the startup kit and catalogs + lots of work to get a customer base.
I also know where I can buy 'skill stop' slot machines for $150 each in quantities of 100. They sell on the internet for $250+. That needs a lot of upfront money and dedication with no guarantees.
Find your own niche

The system as it is tends to reward those who create value and it is in your best interest to find ways to create more value than working for a paycheck. Like the entertainer, you can set up a system that creates value for lots of people at the same time and multiply your rewards many fold. I don't have an answer to say "Here, do this and get rich." Anyone who is selling a system to get rich, is probably getting rich by selling the system instead of using it.

I do wish you the best
Mark