Couldn’t agree more: The Golden Handcuffs.
Sometimes it feels, I don’t know, wrong to speak/write about the problems of earning too much at a job. But the idea of golden handcuffs, or indeed the Hedonic treadmill, is well worth consideration. Thoughts:
- Simply put: earning high compensation is great, as long as it comfortably exceeds living standards. Otherwise you get locked into a job which you may not like, just to pay bills which seem other-worldly.
- For example, I’ve read about families struggling on $250,000 a year or so; by the time the mortgage is paid, car payments are made, and private school tuition covered, there’s hardly enough for shopping at Whole Foods – let alone saving for retirement. That family is frankly worse-off than many families earning median income, but more accustomed to a lower living standard.
- It’s another reason to heed advice such as: continue living like a college kid when you leave school. Once the living standards expectations go up, they rarely come back down.
- Another piece of advice I would like to thank Aswath Damodoran for: when entering a high-paying career path (in my case, investment banking), live poor and save loads. The goal should be fuck you money; in this case, the ability to tell your boss – who has just told you to work another all-nighter for no good reason – exactly what he/she can do.
I just finished reading The Economist’s special report on technology and economic growth; synopsis here. In a nutshell, a ‘third industrial revolution’ brought upon by technological change has some serious consequences for economic development globally. Pain is here, and will come, for very many people employed in jobs which can be automated by intelligent computers (think teaching, diagnosing illness, driving/trucking, …). There aren’t obvious new roles for the folks displaced, as tech-heavy sectors need few people.
This leads to the ‘hollowing out’ of the workforce, to borrow The Economist’s words: high demand for the lowest-skilled and highest-skilled labourers, but not much demand for the middle majority of labour. Economic development may get stymied, as technology-intensive manufacturing means less need for low-skill, low-wage labourers in emerging economies; there’s no easy first step out of poverty. So what do we, as a society, do with those left out? Read the special section for The Economist’s take (subscription required….ugh); among their ideas are education, pro-business policy, and a guaranteed minimum annual income.
Regarding the education point: if the world really only needs 5% or so of the population to do the high-skilled stuff (engineering, managing, creative types), is it fair to prioritise 50%+ of kids to get a college degree? Sounds like a bad bet, unless in future we’ll need college degrees to perform hair cuts and cook food for others. And what does this do for inequality within countries? Can we get enough tax from the rich to pay for the hollowed-out class?
A related point: hedonic adaptation, or the hedonic treadmill. Keynes wrote in 1930 that in a hundred years we’d work 15 hours a week, due to all the wonderful efficiencies wrought from technology. Seeing as we’re still working around 40 hour weeks, what’s all the technology good for? Well, this free blog is one nice product, as is the smart phone and HD television I take for granted. Due to hedonic adaptation amongst us, I reckon we work a huge number of hours merely to sate newly-found ‘needs’ that have arisen over the years.
So maybe part of the ‘hollowing out’ problem can be reduced by the following:
- Keeping up with the Joneses is nonsense. Keep an appreciation of what’s truly necessary to live. The guys at some of the extreme retirement blogs (links at right) have some pretty ingenious ways of living with less.
- Creativity and group-think is still valuable. Perhaps the hollowed-out folks can sell their creativity and thinking via blogs like this, and/or through freelancing websites like elance.
- Appreciate how far we’ve come. Add in some navel-gazing. Technology has undoubtedly helped us come a long way. As The Economist mentions in their piece, communication, entertainment and education have become all but free of charge to anyone with access to the internet. Make use of it!