What Would Happen if More People Were Financially Independent?

Posted by 23 October, 2008

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I previously wrote about 10 Reasons Why I Want You to Be Financially Independent. I gave my 10 reasons, but I also asked what would happen if more people were financially independent. There were a few areas in our lives that I thought might change.

1. Would the US be happier?

2. Would there be a shift towards people studying the arts?

3. What would the stock market be like?

4. Would professional sports be as popular as they are today? Do people need this distraction if they are no longer going to jobs that they may not enjoy?

5. What about movie stars/celebrities? Would they be as popular as they are today?

6. Would we see a huge spike or slow-down in innovation?

7. What about professions such as psychology? How would it affect them?

8. If more Americans were financially independent, would we produce as much waste as we do? If we have more time, there is potentially less hustle and bustle and perhaps people would be able to fix household items that break instead of tossing it and going to Walmart to buy another.

I don’t know the answers, but I have my opinions. Before proceeding, I wanted to highlight what other people thought and discuss.

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Susan Schwartz:

Interesting scenario.

1. Would the US be happier?

Probably not. We might be more at risk if the rest of the world remained financially insecure. The level of resentment is already high, and I think it would get worse. But we’d probably be, by and large, more relaxed. I suspect, however, that some people would lose their money and some people would grow more. Because money is such a source of marital strife, there might be fewer divorces, less gold-digging by either gender, and less vicious divorces…maybe.

2. Would there be a shift towards people studying the arts?

I would love to see that. I read the list of majors students are taking these days, and I’ve asked “do you like it?” “It’s very useful and stimulating. It’s challenging.” BUT DO YOU LIKE IT?
It’ll let them make middle management and justify the horrific expense of college and grad school. They don’t have to like it; they have to do it. Actually, they don’t; but it’s a risk most people don’t want to run, and I can’t say as I blame them.

3. What would the stock market be like?

It’s still global? Still crazy. People are -interested- in it. The numbers that we’ve been tossing about — worst week, biggest loss, biggest gain, longest drop, biggest percentage drop — these are like BASEBALL statistics. Some people with more money than they and their families and their family foundation will ever spend invest professionally because they’re fascinated.

4. Would professional sports be as popular as they are today? Do people need this distraction if they are no longer going to jobs that they may not enjoy?

There might be even more sports, as people had more time to devote to participating in or observing -real- excellence. The migrations to trading camps would become hordes.

5. What about movie stars/celebrities? Would they be as popular as they are today?

What I said earlier about the pursuit of excellence, especially if more people studied the arts. But I think it’s human nature to look for people who seem more interesting and somehow more glittery.

6. Would we see a huge spike or slow-down in innovation?

With no need for desperate growth…I think at first we’d see a slowdown followed by growth as people got to work on what REALLY interested them, as opposed to what generated bottom-line results.

7. What about professions such as psychology? How would it affect them?

I think more people would study themselves; fewer would come in complaining of anxiety from external causes.

8. If more Americans were financially independent, would we produce as much waste as we do? If we have more time, there is potentially less hustle and bustle and perhaps people would be able to fix household items that break instead of tossing it and going to Walmart to buy another.

I think I’d have too many projects. This is a nice thought, but I don’t expect it.

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Les DeGroff:

That said, I think it is an interest question, and topic to consider because unless we blow it big time, we will have a future where such a thing is possible, along with greatly extended life spans.
Several of your sub-queries, hinge around how such a self sufficiency is enabled from the current economies…it might be technologies deflating living resource prices making in cheaper to live…in a speculative science fiction example, biotechnology creating house-trees and permaculture for the urbs. It might also be a political/economic restructuring either by a negative income tax or a requirement that money creation go through citizens rather than banks and current capital holders. Also from the science fiction space, might be a virtualization addiction where large portions of population drop out of competing and lower their consumption to basic rations plus being “jacked in”. The mythical depictions of nanotech with reproductive and anything producing machines would be another path to deflation.
Before I get to bullet points, one of the largest issues in self sufficiency may be land resources vs demographics. If populations continue to rise and the life extension I expect occurs, the key resource shortage may be real estate.
People in the US would probably not be significantly happier in aggregate. There are fuzzy social paradigms, “conservation of worry”, “retention of stress” and such that find when one level of concern is resolved, others substitute. There are also the perennial, non economic issues of dominance, love, competition. This hits 7, unless humanity is transformed, therapists and related frauds would still be present.
Items 2, 4 and 5, I think are all related. With in the population, there are groups that are actively doing, in the arts, sports, …. there are other large groups that are more passive consumers of entertainment and art.
The financial markets, even after we get through this crisis are not prepared for the changes that an enabled population would require, thus radical changes… in banking, industry, creation of wealth.
Innovations IMO would be a harder call, if one looks at such a transition as the thinkers about a technology singularity do, there would be a great increase and then we do not know. IMO, there are pressures in both directions, innovation including in the arts, and in look and feel would increase in and for a leisure society, but a long life (hundreds of years typical healthy lifespan) world might also become quite conservative.
As for waste, it depends on enabling technology and perhaps the level of luxuries that are considered basic in the new world.
Two more critical factors, are of course energy consumption and sourcing and the costs of health care (and life extension). 🙂 I would be half as frantic about getting on with being employed for the remaining decades of my working life if I thought I could afford double digit inflation in medical services. OTOH, my own artificial intelligence automatic doctor and pull pusher would reduce those concerns.

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Chris Miles:

Interesting questions to ponder. I would ask, “Is financial freedom merely HAVING the resources or BEING financially free by being non-attached and therefore make money more easily. From my personal experience as well as seeing many become “financially independent”, most thought it was a state of HAVING and now no longer have it. By HAVING more money, it amplifies the perspective of the person. Money does not change the person, it only amplifies who they really are. If someone was stingy before getting money, they will be stingy after receiving it. If someone spent their money to serve others while living paycheck to paycheck, they will continue doing the same. The only ones that think they will change are those who have never been financially independent.
Furthermore, how would these people become “financially independent?” Did they get lucky in the stock market or real estate? Unless someone has learned how to serve and solve problems that creates a need in the marketplace, their financial freedom won’t last. If one becomes financially free by merely throwing money at some investment, they will likely lose it at some point.
To answer the above questions, if people became financially free by brainlessly living on income generated by some investment, all of the above problems will be amplified. More money will be wasted leading to greater debt. Sports professionals and entertainers will be paid more because they will spend it frivolously. Stock and real estate markets would be more volatile and psychologists would be busier than ever. Money has never solved problems nor created problems. Money is only a tool that brings out people’s true colors.

Links:

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Shawn Carter:

1. Of course. Having wealth and being dependent on the government/relatives is a world of difference.
2. Maybe. People are always studying the arts: bill boards, web, Mtv, etc.
3. No difference. Stock market is based on psychology, which remains the same regardless of wealth. In fact, people would be more fearful and more conservative.
4. Popular sports probably would be more popular, since you could affford 120 channels and tickets to the game at anytime.
5. Movie stars would likely not be as popular, but people love gossip regardless of wealth.
6. I think you would have a spike in innovation due to the smart money being smarter… ie. you don’t get wealthy without using your brain to invest wisely.
7. Better paid psychologists. Maybe less, since wealth tends to get rid of other vices, since you have to be stable to remain wealthy.
8. Probably more waste. There might be more conservation programs and recycling.

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Jim Parker:

Current US Tax law promotes debt & spending: can write-off the property taxes & interest on the mortgage, can take-out a second mortgage and take another write-off, if you have credit card debt can roll that into your second mortgage and write that off too.
Why bother saving when your interest, capital gains & dividend payments are taxed, oftentimes at ordinary income tax rates.

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Coby Neill:

It would be heaven on earth.
Peace, creativity and joy would dominate.

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Rob Schmansky:

Reduce the tax burden and create a situation where your govt is financially independent and you’d see a lot of positive answers to your questions.

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Sam Brannon:

a – its completely possible
b – under the current societal structures, somebody would always be working to change that. to achieve it and maintain it would take a new level of awareness/consciousness
c – if we could figure out a way to maintain it, creativity would be unleashed across all arts and sciences… it would truly unlock the collective human imagination.

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Lots of great answers. I’m going to give it a whirl.

1. Would the US be happier?

My opinion is that the US would be happier. We would no longer have to burden ourselves with working at a job we don’t necessarily enjoy (if that happens to be the position of the person). Our relationships would have less strain since we aren’t worrying about money. I’m not sure about you, but I spend quite a bit of my mental capacity thinking about making money. Without worrying or thinking about money for many hours out of the day, I would be able to “laser focus” on making me and the people around me happy.

2. Would there be a shift towards people studying the arts?

I don’t think there would be a major shift towards the arts. I think most people in general end up where they would like to be. I think that a lot of people that majored in something for the purpose of making money (i.e. Doctor, Lawyer, Engineer) will eventually find their way towards their calling in life regardless of their financial independence status.

3. What would the stock market be like?

I think you would see the stock market become more turbulent. As stated before, the stock market is global. I think you would actually see it become more turbulent once the majority of trading is done by less stable (my perception) countries with a lot more people (assuming that Americans are not trading as often due to their financial independence).

4. Would professional sports be as popular as they are today? Do people need this distraction if they are no longer going to jobs that they may not enjoy?

I think people will enjoy sports whether they are financially independent or not. For a lot of people, it’s part of their culture (Hook’em Horns!).

5. What about movie stars/celebrities? Would they be as popular as they are today?

I do think they would remain popular, but perhaps not to the same degree. If more people are financially independent, they will most likely be very conscious about money spent and thus will not be as tempted to dress like movie stars.

6. Would we see a huge spike or slow-down in innovation?

I think we would actually see a spike in innovation. Some people are born innovators and I don’t think you can take that out of people.

7. What about professions such as psychology? How would it affect them?

I think people would have more time to fix their own problems and the profession will decrease in usefulness.

8. If more Americans were financially independent, would we produce as much waste as we do?

I think financially independent people tend to be frugal. Frugal people tend to be very conscious of waste thus I think less waste would be created.

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What are your thoughts?

Related Posts:

10 Reasons Why I Want You to Be Financially Independent
Will Your Ambition Beat You?
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How to Be a Master Flipper
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