Posts Tagged “power”

I write a lot about economics, and honestly I’ve come to understand a pretty good bit about how power is exerted at the macro level (remember economics is about levers and incentives, not money).

At work (and in life) I have no real macro power, but I have seen people who do.  Though I do not like politics from the perspective of Democrats vs. Republicans (since they are largely the same); I do like politics from the perspective of how to influence and how to barter power.

I read Nietzsche’s “Will to Power”; I read Machiavelli’s “The Prince”.  I even read the best-seller 48 Laws of Power.  Sadly I never read Sun-Tzu’s Art of War.

Here is some truth about Power:

– I will never have any….at least not enough to truly influence events on a macro level.  Influence at a local level is nice; however, it will not likely change the general circumstances of my life.

– Money is Power.  Information is Power.  Guns are Power.  I will pretty much never have those in any significant amount (and I don’t want them).

– We aren’t even in the game.  We are pawns.  The top 1% control 42% of wealth in the US.  The flip side is that 40% of the population vies for 1% of the wealth.

– We will never make enough money to escape the hedonic treadmill.  As our salary goes up, so will our lifestyle.  Some people make enough to get our of this trap…most don’t.  Working hard is not the answer.

– We will not be smart enough to “game the system”.  There are a few people at the bottom who draw social security disability that shouldn’t or get too many food stamps, but they are still certainly not the winners.  For us to begin to “game the system” at a higher level we will need more power/information than we’ll likely ever have.

So what is my advice?

CUT EXPENSES…and save.

That’s it.  You thought it was going to be some great revelation, but it isn’t.  We don’t have access to that kind of power.   We play by the rules; we don’t make the rules.

That’s the best most of us can do.  We cannot avoid taxes since we have no deductions.  There is no get rich quick scheme and we’re always faced with potentially crippling medical/education/unemployment/whatever costs.

We will not get ahead by making more money; our lifestyles will go up in lockstep with our salary, but we will be no better off (after about 40K there is no well-being bump from increased earnings).

We cannot pick stocks.  We will not win the lottery.  We will not become rappers and sports stars.  Most of us will never even become managers or VPs.

There are only two sides to the equation:  Expenses and Income.  We cannot affect our income in a way that will allow us to get ahead (where did your 2% raise last year go?), so that leaves Expenses…the only thing we control.

To get more concrete, it is FIXED expenses that kill us.

– A house.  Don’t buy a big, expensive house. A house is not an investment; it never was.  It is a place to live.  Living in a smaller house with a smaller monthly payment is key.  A smaller house will also help your energy bills.

– A car.  Don’t buy a nice car. A car is a waste of money.  Drive the worst car that your lifestyle will allow you to drive…then pick one a little crappier and older.  When you’re out of work and you have 15K extra because you didn’t buy the brand new Infiniti…you’ll be happy.  On a related note, pay cash for your car.  Do not take out a loan.  The car you can afford is the car you can pay for.

Cable.  I fucking hate cable and as soon as I find a way to watch sports online, I will be ditching cable. I can already watch all the shows I want online.  I can get movies (which I can never find the time to watch anyway) through Netflix.   I still find it frightening that I drop nearly 100 bucks a month to watch a few sporting events.

No debt: Don’t get trapped servicing debt, credit card or otherwise.

Student Loans: Don’t go to a good school. They are expensive and will, at the best, get you a good paying job…which will not be all that beneficial for you.  It will be much more beneficial to have no debt and be a hard worker, which will make up for the fact your didn’t go to a good school.  However, do go to a GREAT school if you can get in (Harvard, Yale, MIT, etc.).  This is where the people that make the rules go to school.  If you become tight with them it is definitely worth the money.

What can you spend money on?

– Flat screen TVs, expensive beers, going out to eat, etc:  I’m not saying go crazy, but one time purchases can always be stopped.  Next month simply don’t buy a flat screen TV.  Easy enough. The expense is gone.  This crap about the American consumer being in trouble because they spend too much of frivolous junk is a load of shit.  Those kind of expenses, unless you have some sort of psychological shopping disorder, will not get you in trouble.  It is the recurring expenses, FIXED expenses, that will cause you to go bankrupt.

– Health Insurance:  Unless you’re 20 years old and invincible…buy some, at least a high deductible indemnity plan.  Just wait till you get unlucky and drop 100K on open heart surgery…then try for the rest of your life to recovery economically (and medically) from that.

So that’s it.  That’s being rich:  spending less than you make and having a piece of mind about it.


It occurs to me that I’m giving the above advice to myself and others in my income level, which would be pretty much everyone in maybe the 50 – 90th percentile of earnings.

If you are below that (and most people will be below the 50th percentile by definition)….its still good advice in general; however, there is very little you can do.  Sorry.

Your expenses are likely already cut (except on crap like cigarettes and lottery tickets, which you should definitely cut out), and your income will likely never rise high enough to give you significant options.  The US has poor income mobility, especially at the bottom end.

Not that any one person can’t rise above their station in life.  We can.  It just isn’t likely to happen on average.

There is advice I can give; however, it isn’t likely to have any affect for a good number (if advice could help people we’d all be millionaires as there is plenty of it out there).

It is not that I write off the bottom half.  I have been in it (and may be again), and there are plenty of good, nice hard-working people there.

The fact that so many have so few options is what is troubling…not for me, but the future of the country and our children.

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