Trinkets of frivolous utility

We’re living in an “age of anti-ambition” says Elle Hunt. And Stefan Stern says increasing numbers of over-50s are taking early retirement. As one of that happy band, let me suggest why.

It’s because with a modest effort, you can live well on around an average income, having days out, city breaks and good holidays. And – which is insufficiently remarked – such an income gives you access to the greatest books, films and music (unless you want to go to the opera or god help you, an Adele gig.)  

Beyond a certain point therefore – attainable by most middle-class 50-somethings – the acquisition of wealth becomes futile. There’s not much point buying a big house because you can only sleep in one bed at a time. Fancy cars will just get caught in traffic jams or by speed cameras. Expensive restaurants often serve bad food to the world’s worst people. And cruises are, a friend tells me, the Daily Mail at sea. His point generalizes. Expensive pastimes such as golf, horse-riding or yachting are all excellent ways of meeting people I would pay good money to avoid*.

One look at the mega-rich shows the futility of great wealth. Jeff Bezos, for example, goes on amusement park rides alone and makes brief trips into near-space, thereby only emulating a mid-ranking Soviet Union Air Force officer of 61 years ago. That’s a pathetic return on billions of pounds.

Scientific research corroborates all this. Whilst there is some albeit mixed evidence that money does buy happiness, it does not buy much. That’s why things like a good social life have such high monetary equivalence in terms of their impact on well-being: they, more than money, make for a good life. Which is nasty, because the hours spent accumulating money can prevent you developing a fulfilling social life.

As Porter Wagoner sang

Money can't buy back your youth when you're old
Or a friend when you're lonely, or a love that's grown cold
The wealthiest person is a pauper at times
Compared to the man with a satisfied mind

He was echoing some other great thinkers. Wealth and prestige said Adam Smith “are mere trinkets of frivolous utility”:

Power and riches appear then to be, what they are, enormous and operose machines contrived to produce a few trifling conveniencies to the body…They keep off the summer shower, not the winter storm, but leave him always as much, and sometimes more exposed than before, to anxiety, to fear, and to sorrow; to diseases, to danger, and to death.

In 1930 Keynes looked forward to the economic problem – that of securing subsistence – being solved, a stage which some of us have achieved. When this has happened, he wrote:

It it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.

From this perspective, the question is not why people like me are stopping working or downshifting, but why more well-paid people do not do so.

One answer is that they’ve made imprudent life-choices. Ex-wives, private education for one’s children, drink and gambling habits, yachts, fast cars and a desire to live in London all keep the City supplied with senior staff.

So too does something else. Many successful people don’t regard work as something to be escaped at all, but as a means of fulfilment.  Warren Buffett and even Elon Musk think what they are doing is fun. Paul McCartney and the Rolling Stones have kept working into their 70s and 80s, but their contemporaries who became accountants have mostly stopped.

This might help explain why the UK has relatively few unicorn businesses. At some point in a company’s history, running it stops being a fun job of solving engineering and coding puzzles and becomes instead grunt bureaucracy. Why not then sell up to some bureaucrats and live off a few million? There are several reasons: ego gratification; power; prestige; a sense of being a success; or a desire to beat your peers or father. A desire for what money buys, however, is, I suspect, low on the list. 

For those of us without these other motives the one great thing that wealth buys is not so much goods and services as freedom – the ability to step out of the rat race.

If they’ve read this far, younger readers will be screaming their heads off: “all this is the solipsism of a privileged boomer.”

Which it is of course. They don’t have my luck in being able to retire early, simply because the unaffordability of housing means that cash that would otherwise go into pension savings is diverted towards mortgage or rent payments or paying off student loans. High energy prices, of course, have the same effect. Rather than save for retirement, as I could in my 30s, today’s young people must support rentiers.

Their righteous discontent, however, demonstrates my point. They take little comfort in consumer goods such as smartphones and flat screen TVs because these are indeed trinkets of frivolous utility. What really matters to them is the freedom that would come from being able to live cheaply – a freedom that has been stolen from them.

Capitalism today does a good job of supplying youngsters with new affordable gadgets. But it does not give them the greater goods of real freedom and autonomy.

You might think this is a feature, not a bug. Even if most individuals – beyond a point - don’t need to accumulate material goods, capitalism as a system does: accumulation is its very nature. This isn’t a contradiction. For one thing, even if only a minority of rich people do want to become even richer, it is this minority that gets to run companies. And for another, capitalism is an emergent process which constrains even of the privileged and in which outcomes are independent of individuals’ wishes. As Marx said:

Capital is reckless of the health or length of life of the labourer, unless under compulsion from society…But looking at things as a whole, all this does not, indeed, depend on the good or ill will of the individual capitalist. Free competition brings out the inherent laws of capitalist production, in the shape of external coercive laws having power over every individual capitalist.

You might also think that a system that requires the accumulation of profit also requires a big supply of workers. From this point of view, debt bondage is a good thing: it forces people into employment thus enlarging the pool of pliant labour-power. Elementary economics says that if skilled older people drop out of work the economy loses human capital and hence potential output and (more importantly) profits.

In this sense, Keynes was naïve in thinking that the problem of adjusting to an affluence that makes leisure possible was merely a psychological one – a naivete that arose from his lack of a class analysis. The problem is also that capitalism cannot cope with a society of frugal leisure-seekers.

Or can it? Perhaps this view is too harsh on capitalism. Older people can be one of what Joel Mokyr calls the “forces of conservatism”. They can be cantankerous, hard to manage, resistant to change, and uncomfortable with new technology; to this extent ageism in the workplace has a rational basis. Letting them go might therefore pave the way for productivity improvements and innovation.

Few people claim that the post-mid-2000s productivity slowdown was due to a loss of talented people, nor that the post-1945 productivity surge was caused by an influx thereof. And nor should they. The biggest determinants of productivity are institutions: organizational capital, state capacity, well-functioning markets and so on. Capitalism can survive seeing its more privileged subjects drop out or downshift. Whether it can survive increasingly dysfunctional institutions is another matter.  

* In fact, if you come from a poor background and are in a well-paid job the mere act of going into the office will surround you with people you don’t feel comfortable with. This, I suspect, is an under-appreciated cost of social mobility.

Comments

[Zen Masters]

Enjoyable and stimulating reading.

Interesting point about the benefits to companies (and capitalism more generally) if more older people dropped out of the workforce when they were able - so freeing up capacity to take on younger people who actually need the work. Someone (informed and reasonable - perhaps Tom Forth) on twitter the other week posted an estimate that increasing employee turnover so more young women replaced more old men could boost UK productivity by something staggering like 30%. (Whether young women want that work or would prefer to be mothers as one women I know suggested is another matter.)

On the topic of a satisfied mind and having enough to live on without extravagance. I can attest to this having gone through some tough times in the last 10 years when I was forced to learn to live frugally again. Things have improved somewhat, but I still tend to live (and shop) as though we had considerably less cash than we do. When I do indulge in an extravagance, it tends to be a shared experience with loved ones - such as posh gelato at the beach or a nice bottle of wine for supper. I have stopped buying possessions (books don't count of course).

Keep on writing please.

[Sam]

Seems to tie-in with the "financial independence" movement and the "lying flat" movement. You've possibly written about these previously.

[Buffer]

Having not long retired, the narrative fits. Enjoyable read. Lost it a bit though later on as Marx, Keynes and Mokyr popped up, whereupon, amongst simple stuff for which to be grateful, probably overcome by anti-ambition and modesty of effort. Cruise metaphor amusing.

[Rich]

Nice article and congratulations on your retirement. This strikes a chord, but in the US a big reason to keep working is that Medicare (retiree medical) does not start until age 65, so work becomes a way to have health insurance without breaking the bank. As to keeping someone young out of a good paying job, the work (pensions) is time consuming and dull, and we are hiring but finding few qualified takers (math and stat skills seem headed to Wall Street, and the few interested in actuarial work gravitate to more interesting areas like casualty and health)(insert joke about life being dull here).

[Kevin Carson]

Ties in very well with observations of thinkers like Paul Goodman and Ivan Illich on how high-overhead culture and embedded monopoly rents have crowded out cheap alternatives, and radical monopoly makes it impossible to live cheaply but comfortably.
Incidentally, I just discovered that https://12ft.io/ enables me to evade Facebook's ban on posting links to your blog.

[Donald A Coffin]

You might be amused to discover that, when I attempt to link to any of your posts to Facebook, so my actual friends could read them, the FB Bots say this:

"This URL goes against our Community Standards on spam:
To protect people on Facebook from spam, we don't allow content that contains such URLs.""

[Donald A Coffin]

I retired at 64 (but immediately took on a part-time gig for the subsequent 6 years. But, then, my job was teaching economics at the university level, and I got, and continued to get, a great deal of satisfaction from it. (I certainly did not teach part-time for the money.) But I also knew I could give it up any time with no real loss of income. (Also, if I wanted to take a term off, I could, and I was welcomed back for the subsequent terms.)

[Davis X Machina]

Contentment is wealth...

The old ones knew.

https://youtu.be/pvBtF84VUYQ

[Blissex]

«"Free competition brings out the inherent laws of capitalist production"»

I have been been thinking about that and there is a very big deal there, even bigger than the bearded man realized:

* What that means in modern terminology is that "something" forces people and companies to be optimizing rather than satisficing.

* That "something" is not capitalism, intended properly and technically as the separation of workers and means of production, as such, but competitive markets: buyers will purchase the cheapest/best product, more than one cheap/good enough, so it is competitive markets that are the direct cause of an optimizing approach.

* That optimizing approach means that the lowest direct price/performance is the single goal, regardless of external costs.

* But if capitalism was absent, workers could choose produce for themselves, and not for markets, so they could adopt a satisficing approach, but self-production is hugely impractical.

So the pressure on worse working conditions is not because of the private ownership of means of production, but an optimizing approach if forced by the combination of capitalism, and it does not matter whether it is private, nationalized, cooperative, social, communal, and of competitive markets. The ownership of the means of production relates the distribution of value added, but it is optimizing just for marker price/performance that generates oppression.

It also relates to the "coasian" question of why firms exist instead of just networks of contracts: competitive markets force short-term optimizing approaches, and for many activities a long-term satisficing approach within an organization is more robust, it is not just about transaction costs.

[Blissex]

«The biggest determinants of productivity are institutions: organizational capital, state capacity, well-functioning markets and so on.»

That's a common delusion (the other is that technology is the biggest determinant of productivity), all those are just enabling factors (necessary but not sufficient).

The single biggest determinant of productivity, by at least an order of magnitude more than any others, is abundance of cheap, energy dense fuel.

[Blissex]

«cash that would otherwise go into pension savings is diverted towards mortgage or rent payments or paying off student loans. [...] today’s young people must support rentiers.»

One of the great advantages over tax-based downwards redistribution of property-based upwards redistribution is that the latter is paid for by the politically powerless lower-middle and lower classes who cannot pushback, while the former is paid for by politically powerful upper and upper-middle classes who can pushback quite hard.

[Blissex]

«Rather than save for retirement, as I could in my 30s, today’s young people must support rentiers.»

As usual that "young people" is a very gross approximation, it should be "people with a portfolio long on work and short on property", which includes most of today's young people but not all, and includes also a lot of older people who got shafted by Thatcher's and Blair's demolition of labor union infected industries and areas.

[rsm]

Do you see the problem with saying, on the one hand, that the utility functions of price-setters are irrational (or "frivolous"), while on the other hand assuming prices are nonetheless rational for purposes of productivity measurement?

If you properly propagated error terms for all the surveys and imputed inputs that go into the productivity statistic, would you get noise?

[J L]

Interesting article but no mention is made of how the tax system is influencing people’s decision to retire early or downsize into part-time jobs. Many high earners have decided that it is not worth their while paying higher rate taxes, losing personal allowances and then getting penalised under LTA on their pensions. Witness the record numbers of GPs working part-time and retiring early to avoid LTA. We are good at crushing ambition.