Elizabeth Kolbert has an excellent piece in the New Yorker titled “no time” in which she discusses how we have a better standard of living in general, but seem to have less time to enjoy that standard of living. She cites a prediction by JM Keynes who wrote in “Economic Possibilities for Our Grandchildren” in the year 1930 that the standard of living would be so high by 2028 that we would barely choose to work. In other words, our income and innovations would be so vast that we would simply choose to enjoy our much higher living standards. She goes on to try to answer why Keynes was seemingly wrong without really coming to a fully satisfactory conclusion.
Now, I won’t pretend to have the answer here, but I do have an idea or two. And I don’t think that Keynes was entirely wrong. In fact, he was dead right about the explosion in living standards. The life of an American in 2014 is not remotely comparable to the life of an American in 1914. After all, much of what we use on a regular basis today is comprised of goods and services that would have been fit for a king in 1914. And we don’t exactly struggle with items that comprise the bottom tiers of Maslow’s Hierarchy of needs (well, at least not to the extent that we used to). So the question is, why are we so much better off, but seemingly worse off in many ways? My best guess is that we choose to be worse off to a large extent. Let me explain.
A wise philosopher once said “mo money, mo problems“. And what we’ve seen in the USA over the last 100 years is a big case of mo money, mo problems. Americans are fabulously wealthy when compared to the early 1900s even when we consider the fact that wealth has been filtering into fewer and fewer hands over time. And yes, in the last few decades our median incomes and median net worths have stagnated to some degree, but when compared to the rest of the world, Americans are still unbelievably wealthy. After all, the average American comprises the global 1% in terms of wealth.
So I have to wonder if this issue isn’t so much about income and wealth, but more about how we choose to spend that income and wealth? After all, all of these goods that would be considered luxury goods by any other era can’t be totally necessary can they? Do we really need the latest model of the iPhone? Do we really need McMansions? Do we really need cars loaded with more technology than a super computer from the 70s? Do we really need to provide our children with every gizmo and gadget their hearts desire? I don’t know. I really don’t. But something tells me that all of this consumption isn’t really making us better off necessarily, but is often times simply placing more demands and stresses on us all.
So, I have a feeling that a lot of this “busyness” is self inflicted. We put higher demands on ourselves than is necessary, we demand more things than we probably need and we compete aggressively to be able to command the incomes that give us all of these things, many of which are pure luxury items that we don’t need, but we all want. And in doing so we’ve driven the household savings rate down to 5% and household debt to soaring levels all so we can buy more stuff today thinking that tomorrow will be better. But the reality is that that tomorrow often brings more money and more problems. Is it all really worth it? I don’t know. To me, happiness and real wealth is much more than collecting things. But based on our consumption, I am clearly in the minority. And so the chase continues. And so does the “busyness”.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.