Armchair futurist on prudent men, lowering incomes, managing expenses and following the breadcrumbs

A Facebook pal posted this thought:

The prudent man does not lower his debt by lowering his income. Rather, he lowers his debt, first, and is then free to lower his income.

Being the armchair futurist that I am, my response:

I advise people to lower income expectations and expenses for several reasons.

The trend since the late 80s has generally been one of income stagflation. Most folks did not notice it because inflation was low, products became more plentiful and ever cheaper, plus more families moved to a two income model. We also supplemented our lifestyles with putting more expensive purchases on longer term buys and we maximized our equity. That does not change the fact that real income has been sliding for decades.

Since 1998 the labor market in the USA has consistently declined in the total percentage of folks with jobs and/or benefits. More people have become commoditized. Many workers bring little actual value to their employers that cannot be replaced within a very short time period.

Throughout the 1990s we talked about doing more with less. We could and sometimes did. But there was little incentive to accelerate the process because profits were good and disruption to organizations usually caused a short-term drop in profits within 2-4 years after these morale busting changes.

The great crash of 2008 changed that. We were no longer worried about chaos from change. Change visited us quarter after quarter.

Organizational change now represented survival and hope for making up for the lost $$$ of 2008-early 2010. The Top 1% did lose big. But that change investment paid off, which is why income and investments of the Top 1% (and Top 10%) increased their take by almost 19% over the last 24 months.

In the end we have learned that we can do more with less … FAR LESS … the recent return of one of the largest textile plants in North Carolina did so by cutting their workforce from 2000 to just 140, without any cut in production quality or quantity. Quality actually increased.

We live in a commoditized society where few can justify some inherent $$ value if and when we find a way to do more for less … or even the same.

For the future, we need to be talking about much more than just doing yesterday better.

Sometimes we need rethink the meaning of what it all means. The answers are not going to come from the left or the right, or even from the squeemish middle hoping to eek out some kind of good deal. Times have changed. We need to jettison some of our pride and doctrines and admit that we need new answers — answers which may violate our own dear cherished principles which are often broken and fail to deliver on answers for the future.

7 thoughts on “Armchair futurist on prudent men, lowering incomes, managing expenses and following the breadcrumbs”

  1. Good advice. My comment on your last post touched on this. The “reset” is here, and everything has changed.

    All of those doctrines, philosophies, etc. are just the latest version of evolving ideas regarding how to organize society. Every previous version only got us so far before they either had to evolve or be replaced. We got a lot of mileage out of Monarchies for example; however, they are now “what was”.

    The old ideas are running of of steam. Even our fragile democracy, and free market principles are just the latest experiment. Folks who believe either will last forever haven’t been paying attention to history. Nothing lasts forever.

    Considering the opposing forces fighting for control over the rest of us, I wouldn’t be surprised by a revolution at some point in the future, and am glad I probably won’t be around to see it. The automation of which you speak and incrasing income inequity will probably provide the seeds of that revolution.

    I don’t know what’s next; however, I do know it will be “different”. That doesn’t necessarily mean better or worse… just “different”. Those who can adapt will do well. Those who can’t… won’t.

    Well written as usual, Bill. Let me know when you have time and energy to finish this conversation over coffee on my front porch.

  2. You nailed it! It ain’t gonna get better any time soon. As I tried to say 10 years ago, we are (were) living in the best times in history and it cannot last. Unfortunately, I think I was right on that one.

  3. After reading the business section in today’s Washington Post, I have to wonder what the future holds for anyone.
    Blackberry is laying off 4,500, the FBI needs to cut their budget by $800 Million, Wells Fargo plans to lay off an additional 1,800 employees from its mortgage department, after cutting about 2,300 jobs from the same unit in August.

    This entire article was depressing news regarding unemployment benefits:
    http://www.washingtonpost.com/business/us-unemployment-aid-applications-rise-to-309k-though-data-still-affected-by-reporting-delays/2013/09/19/e7d16a44-2128-11e3-ad1a-1a919f2ed890_story.html

    This one said we’ve finally reached bottom…except I thought we’d already done that…this is supposed to be the recovery!
    http://www.washingtonpost.com/local/poverty-and-income-levels-flat-for-first-time-since-recession-began/2013/09/17/a3642af0-1fab-11e3-94a2-6c66b668ea55_story.html

    People that can’t find work, run out of unemployment, then claim disability…how long before that boat springs a leak?

    7,000 people showed up at a job fair in Prince Georges County…to apply for work in a mall!

    I don’t mind lowering my expectations. I don’t mind trimming more and cutting more from my budget….but people like me, who have had disposable income and are now no longer able to contribute to political campaigns, charitable causes, vendors and merchants are eventually going to make a lot of others unemployed, too!

  4. Does then mean we must be content with an unemployment rate that hovers around 7.5-8%? If that is the case, what is to become of the chronically unemployed? Will the number of “poor” increase at the expense of the middle class? Will we slowly slip into a large second rate country? Or perhaps we must redefine the workweek at something far less than 40 hours, which it already is for many. If we do this, then will it be necessary to increase the hourly wage in order for people to do more than just get by or will “just getting by” be the new norm? Will this require an increase in government aid programs? and if so, where does the money come from to fund these programs?

    1. Those are some interesting questions, George!

      It’s easy to see that both Bills, Al, you and I all have a slightly different perspective as we calculate our responses.

      I still don’t feel the need to “blame” anyone, but Dear God, I wish some voice with real authority would come forward and make the people of this country wake up and pay attention! I have always had more concern for others than for myself, but I confess to becoming increasingly self centered as our own personal crisis continues to evolve.

  5. I wonder when we will say, “Maybe automation wasn’t such a hot idea after all.” Yes, automation has been great for the “bottom line” but the end result has meant more and more people out of work and no where to turn. All of this has been done in the name of profit such that the rich have gotten richer and poor have gotten poor. Yes, a revolution might come–the poor proletariat against the wealthy. Sounds like 1917 all over again doesn’t it?

    1. Automation will happen one way or the other. It is as inevitable as someone sitting six feet from a TV and choosing to use the remote control rather than getting out of their chair to change a channel or to adjust the sound.

      We just have to be flexible … and fast! … at dealing with something that will change our live quicker than we are accustomed to dealing with. This will be especially be true since automation will represent one of the largest and fastest transfers of human wealth in history and will deplete the ability of the general population to enjoy its current lifestyle without some major disruptions.

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