Why we all will need to be more financially astute as we age.

[ERD50]

People have this erroneous assumption that the world economy is a zero sum game. That if China and India become more wealthy, than we must become less wealthy in absolute terms. It's not true.

Good point, but maybe 'not true' is overstating it. I think it is just one possible outcome. A super-simplistic example, numbers picked just to illustrate the point:

Lets assign an index of "100" for the standard of living of the median US citizen, and "10" as the standard of living of the median China citizen. Sum is "110" units.

Ten years later, maybe China has increased its index to "30", but due to the 'flat world' effect, the US index has fallen to "90". Sum is "120", it represents improvement overall from "110", so it is not a zero-sum game, but the US still had a decrease in its index in this hypothetical illustration.

Not a prediction, just an observation. - ERD50

 

[Gone4Good]

Good point, but maybe 'not true' is overstating it. I think it is just one possible outcome. A super-simplistic example, numbers picked just to illustrate the point:

Lets assign an index of "100" for the standard of living of the median US citizen, and "10" as the standard of living of the median China citizen. Sum is "110" units.

Ten years later, maybe China has increased its index to "30", but due to the 'flat world' effect, the US index has fallen to "90". Sum is "120", it represents improvement overall from "110", so it is not a zero-sum game, but the US still had a decrease in its index in this hypothetical illustration.

Not a prediction, just an observation. - ERD50

Sure. Anything is possible. But the scenario you laid out assumes our economy shrinks in real terms . . . and yet our economy continues to grow.

 

[ERD50]

Sure. Anything is possible. But the scenario you laid out assumes our economy shrinks in real terms . . . and yet our economy continues to grow.

Not necessarily a conflict with my overly-simple example, I don't think. If the population grows by a factor greater than the standard of living factor, you could still have economic growth (I assume you mean GDP here). I'm thinking over a decade or more here.

Now that I typed that, I'm not sure there really needs to be such a direct correlation between GDP and standard of living (although typically and historically there is). Taking a more micro-view, couldn't this be similar to a business that increases sales, but had to cut profit margins to do it? Don't they effectively have a larger 'GDP', but maybe a lower standard of living (profits)?

Maybe that is a bad analogy, I dunno.

-ERD50

 

[Gone4Good]

Not necessarily a conflict with my overly-simple example,

Agreed. It is certainly true that GDP can grow at less than the population growth . . . which still reflects a shrinking economy, if not a shrinking GDP. Another possibility is if imports decrease and exports increase, the standard of living declines for a given level of GDP. That is certainly a possibility considering our trade imbalances. Growth in income inequality could also lead to a declining standard of living for the majority with a vastly improving situation for a minority.

But I guess what I'm trying to get at isn't whether it is possible. These scenarios, and certainly far worse scenarios are possible. What I'm trying to understand is why we should think them likely?

My strong view is that people really do assume economics is a zero sum game. If someone is rich, it is because they exploited someone who is poor. If China is becoming wealthy, it must be at our expense. Certainly their are instances where that is true. I just think its more the exception than the rule.

 

[samclem]

"Are you better off now than you were $4 trillion ago?"
-- Seen on sign in front of a local small business in Dayton, OH

 

[Dog]

Sadly, I look at the decline of our country's work ethic. I'm seeing an increase in folks not wanting to work. Seeing more and more employees working the FMLA system, or bragging about working for the goverment (really on unemployment) or just showing up and doing the bare minimum - just enough to keep their job. We've had recent job offers declined by college grads because the job sounds like too much work. Recently a terminated employee bragged that they can live off unemployment (thinks it will be extended indefinitely) and will now have free healthcare. Please tell me that we are not becoming a "handout" society.

 

[kcowan]

Recently a terminated employee bragged that they can live off unemployment (thinks it will be extended indefinitely) and will now have free healthcare. Please tell me that we are not becoming a "handout" society.

It will raise the bar but it will never destroy the desire to get ahead.

 

[Gone4Good]

Sadly, I look at the decline of our country's work ethic.

Yup, early retirees and wannabees really need to crack the whip on those other slackers.

 

[MichaelB]

Yup, early retirees and wannabees really need to crack the whip on those other slackers.

Ditto

 

[haha]

Sadly, I look at the decline of our country's work ethic. I'm seeing an increase in folks not wanting to work.

You've been spending too much time on ER.org.

Ha

 

[HawkeyeNFO]

I'm seeing an increase in folks not wanting to work.

Nobody WANTS to work. That's the point of ER anyways, stop working. People work because they have to, it facilitates getting paid, and with your money you can buy things, like food.

 

[MichaelB]

Nobody WANTS to work. That's the point of ER anyways, stop working. People work because they have to, it facilitates getting paid, and with your money you can buy things, like food.

Disagree! Lots of people like to work, contribute, generate, produce, and share. It's not work, it's job. As in working is ok but the job sucks.

 

[Nords]

It will raise the bar but it will never destroy the desire to get ahead.

I dunno... I hear that it's possible to exist (maybe even live) "on the dole" in Australia, and IIRC their government provides healthcare for all without running a deficit.

I could be wrong. That country might be a financial train wreck too.

But if this Utopia is indeed fact then I'm not sure what would inspire me to strive to get ahead...

 

[Gone4Good]

Recently a terminated employee bragged that they can live off unemployment (thinks it will be extended indefinitely) and will now have free healthcare. Please tell me that we are not becoming a "handout" society.

Be sure to check in with him in 18-24 months to see how that's going for him.

 

[kcowan]

I dunno... I hear that it's possible to exist (maybe even live) "on the dole" in Australia, and IIRC their government provides healthcare for all without running a deficit.

I could be wrong. That country might be a financial train wreck too.

But if this Utopia is indeed fact then I'm not sure what would inspire me to strive to get ahead...

It is also possible in Canada to exist on social programs, and this interferes with the entry level job market. There are some families that are third generation welfare recipients. But the bar is set pretty low.

OTOH, what about the 67 year-old seeking employment in the US because she is afraid she has breast cancer and wants to get a job before it is confirmed.

 

[kcowan]

I dunno... I hear that it's possible to exist (maybe even live) "on the dole" in Australia, and IIRC their government provides healthcare for all without running a deficit.

I could be wrong. That country might be a financial train wreck too.

But if this Utopia is indeed fact then I'm not sure what would inspire me to strive to get ahead...

The bar is set pretty low in Canada where there are third generation welfare recipients. Yes you can live but not flourish.

OTOH there is the 67 year old woman seeking employment in the US only because she fears she has breast cancer but wants a job befoe it is confirmed.

 

[rescueme]

I dunno... I hear that it's possible to exist (maybe even live) "on the dole" in Australia, and IIRC their government provides healthcare for all without running a deficit.

True, the Aussies do have government sponsored healthcare (that all workers must contribute to), but the services rendered under this program are "less than ideal" (as stated by our tour guide last June).

She had a "situation" that she needed to have attened to during our trip, and she went to a "privately paid" hospital (e.g. she had a separate health insurance policy beyond the government requirement) to get a needed service, quickly.

As she said, she would not want to spend any time in a hospital that was rated within the "government plan".

Even when the goverment takes responsibility, not all care is equal, it seems...