Monday, September 12, 2011

Too lazy to work, too chicken to steal

Summary: This post tells a formula for deciding when to quit your day job.

First we define Enough money. It is the monthly sum, which allows you to buy most things you want, so that not working increases your standard of living more than extra income from your day job.

Mortgage is such a huge factor that we exclude it from Enough and account it separately as Debt Costs. It covers both interest and repayments.

Secondly, we assume that investments are the basis of your new income. Investing is the only way to pay once and get money back for the rest of your life with minimal effort, either as dividends, interest or rent. Historically 4% withdrawal rate has proven robust. Even after you spend 4% each year, your pot still grows enough to resist inflation. We also assume 25% tax rate, which is the average of dividend and capital gains tax rates.

You can quit your day job when:
Debt Costs + Savings / 12 * 0.75 * 0.04 + Side Income >= Enough
Debt Costs + Savings / 400 + Side Income >= Enough

Notes about the formula:
  • You need to own 400 euros to get 1 euro of monthy income. 400 comes from multiplying the constant factors. Only with compound interest and lots of waiting is it realistic to get these kinds of multipliers.
  • To get there quickly, you need side income schemes. For example €100 of monthly ad income from a blog corresponds to €40000 of savings. While writing interesting content is hard, it is probably easier than to save €10000/year for 4 years.
  • Side income schemes also provide cover, if you have to explain, what you did for the past few years.
  • Cheaper apartment speeds up the plan by years. There can be €100000 difference in apartment prices between Helsinki and Oulu city centers. If you value big city life, you probably prefer working to idle life in Oulu. Debt Costs depends very much on your lifestyle.
  • If you are near retiring, you can withdraw more. Multiply your monthly pension by 400 to see how much less you need to own at retirement.
  • If side income raises the sum past Enough, you should save the difference to gradually phase out the necessity of side income schemes. Otherwise, you either are not lazy enough for this plan, or have set Enough sum too low.
  • Enough sum raises with inflation.

Sunday, September 04, 2011

Work and idleness 4/4: Individualist take

If it's not personal what you do for 40 hours a week, then what is? Individualism has two sets of attitudes towards work.

The ideal condition is to do what you love. This is based on the idea that you should express yourself and reach your potetial. Your unique life is an identity project, where you work towards reaching your highest potential.

For the rest of us, work is just a way to earn money. Self-actualization is pushed to leisure, for example holiday trips. Work is a little despicaple sign of slave mentality and lack of wealth, visible in phrases like "office drone" or "grease monkey". It is the opposite of life. How tough guy you are is measured by how much money you get, how much ass you kick and how little you give to others.

For both earners and self-actualizers, the impact of work on others is irrelevant.

Individualists admire people who have found "cheat codes of reality" and don't need to work, for example poker professionals, and also people who game the system to distribute income to them.

Problem: Free riders

Societies embracing individualist attitudes run into problems, when having a work ethic becomes contemptible. Not everyone can be idle.

Most people seem to follow individualist work ethic. Citizens vote governments, which allow them to free ride on social benefits, which are never high enough. Governments take debt to fund social spending. Sovereign debt crisis follows.

Work and idleness 3/4: Transhumanist take

During the last 200 years, technology has lifted the Western masses from rags to affluence. The logical end of this trend is Iain Banks' Culture, where robots do all the work, but we are not there yet. Work should maintain and improve the standards of living and guard against risks like nuclear war, which may stop us from reaching singularity. Workers can be classified based on whether they advance this goal.

Maintainers keep the system running at current level. For example postal workers maintain capability to send packets, and soldiers guard against foreign army burning down the nation. We would notice very soon if these people stopped working.

Improvers make technological and political progress happen. For example researchers may develop a cure for cancer, or a politician may remove a wasteful regulation. We would notice big difference in 20 years if these people stopped working.

Leeches neither maintain or improve other people's standards of living. This includes not just people who live on income transfers (it doesn't matter if it comes from state or from dividends of inherited wealth) but also workers who have little impact. We wouldn't notice any difference if these people stopped working.

In the long run, more and more people can neither maintain nor improve standads of living better than robots. In that case it's ok to relax and take it easy, but anyone reading this blog can't use stupidity as an excuse.

Virtues: Efficiency and enlightenment

Technology enables "hard" efficiency, for example food production no longer requires 50% of the workforce to labor at farms. This frees resources also to "soft" wants and needs, like better human rights, social safety net, education, healthcare etc. No matter if your values are hard or soft, efficiency powered by technology delivers it. (But it doesn't deliver relative wants, like being wealthier than the Joneses.)

Politics must ensure that greater efficiency does not translate into more efficient slaughter in gas chambers, etc.

Enlightenment and knowledge help spot opportunities to organize things differently.

Problem: It's not possible to be the only transhumanist around

It is practically impossible to talk with most people about transhumanist impact of work. It is too abstract topic for someone who usually talks about cars and apartments. Also most people only care about how much they and their ingroup get, making it heresy to talk about outgroup's interests. People with a mortgage and a family to provide for couldn't care less if a project produces nothing and it is clear from day 1.

Nowadays transhumanism is to me mainly quiantly naive idealism of the youth.