Peak Oil, Fracking, and Fashion

“There’s no such thing as gas shortage man, its all set up by the government, everything’s controlled by the oil companies like I heard about this guy who invented a car that runs on water man, its fiber glass, air cooled and it runs on water!” – That 70’s Show

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That twisty line is the road to the North Slope.  The straight line is the Alaska Pipeline, see all the dead wildlife?  No?  Good times.

There are a lot of new readers to the site, so I thought I’d throw out some general notes: 

  • New posts every Monday, Wednesday and Friday. My time, so if you get up early in London, might not be there yet.  You know who I’m talking about.

  • Mondays are Big Ideas (Wilder Weekly Wisdom). Wednesday is Wealthy Wilder.  And Friday is focused on health, mostly. 

Energy from oil allows us to move at great speed through space, hurl our ideas to one another at nearly the speed of light, and grow and move food to feed billions that would otherwise have no chance at life.  It heats us, cools us, and, most importantly, cools our beer.

Energy from oil is the most critical question of our lifetimes.  Unless you count fashion.  And I have NO IDEA what I’m wearing tomorrow!!!

There’s always some fuddy-duddy in the background during the party on Saturday night saying, “Hey, dudes, you are going to have SUCH a hangover tomorrow.”  In the 1950s, that party was oil and the person was M. King Hubbert.  And everyone smoked and drank martinis, and listened to Sinatra on their gramophones.

In a really short version, Hubbert said that there’s really only so much oil in the ground.  I know that you’re saying, “Duh, John Wilder, we know that, since the Earth is essentially a finite bounded sphere.”

Well, Mr. Internet-Smart-Pants, Hubbert made his claim on a much more immediate basis.  We were going to hit peak production in the whole world in 2000.  Here’s his original graph:

Hubbert_1956

(Source, M. King Hubbert, 1956)

Amazingly, Shell Oil paid him to do stuff like this.  At work!  Sounds like a job John Wilder needs.

From this, you’d take it that we currently live in a Mad Max® style Road Warrior© land populated by ex-football players chasing Mel Gibson.

ROAD WARRIOR

But no, I have it on good advice that Australia is currently engaged in a long term war against New Zealand, where the primary combat mode consists of Australia discussing the quality of wool produced by New Zealand sheep (shameful, what!) and New Zealand continues to pummel Australia in rugby.  (Note to Australia – I’ll get off your back when you get above 1% of my monthly visitor count, and I’ll start drinking Fosters® again.)

So what happened?

Well, Hubbert was really kinda exactly right.

Here’s the graph of what Hubbert predicted for United States oil production.  There’s a lovely peak in 1973.  Hubbert drew this out almost 20 years before then, so he nailed it, within months of actual United States oil production.  This prediction was almost spot on and pointed to the first time that OPEC (Oil Producing and Eating Communists) could use oil as a weapon, which they did with the Oil Embargo of 1973.  Thankfully, the federal government controlled oil prices so that they could ensure that we had very long lines at the gas stations.

hubbert united states

(Source, M. King Hubbert, 1956)

But then we get to something interesting – here’s the graph of oil production since then.  There was a secondary peak in the late 1980’s.

chart

That secondary peak was from production coming from Alaska’s North Slope shooting down the pipeline and buying freedom and crushing the Soviet Union.  Part of Reagan’s strategy to bring down USSR was to deprive it of cash.  The Saudi government opened the spigots, the United States drilled away, and, the Soviet export of crude oil no longer brought it the cash it needed for Pez® and nuclear bomb parts to build more missiles to get through the missile defense screen we were pretending to build.

Reagan destroyed the Soviet Union . . . using cheap oil.

But, like I said, Hubbert was still pretty much on the nose with his US prediction, since he excluded new technology and unconventional (Arctic, Deep Sea) oil.  The Arctic was really the first of the extreme locations that we looked for oil in the United States.  We followed it up with locations mind-numbingly deep in the Gulf of Mexico.  And that’s how we extended Hubbert’s curve.  But then oil hit $120 a barrel.  People freaked out!  The end of cheap oil was everywhere!

First we extended Hubbert’s curve.  Then we blew it out of the water (in BP’s case, they took that a little too literally in the Gulf of Mexico).

That last little spike upward?  That’s oil from fracking.  Yes, whereas “frack” used to just be a made-up cussword (you know, like “felgercarb”) on Battlestar Galactica, “frack” now stands for money.

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Fracking is the process of drilling horizontally into an oil-bearing layer of rock and jacking the pressure up higher than a Colorado bed and breakfast.  Bits of sand and chemicals are introduced to hold open cracks in the rocks to allow oil to flow out.  And how does it work?

Fantastically.

The oil and gas produced from fracking allowed the US to reach near all-time production in a relative eye-blink of a time.  It’s distorted the entire economic picture of the world again, since the US can effectively produce a significant amount of its required production in a fairly quick period of just a few years.

This new technology allowed the world to find new reserves that were unthinkable in the 1950’s.

But are they good reserves?  Fracked oil and gas produces about 85 units for each unit of energy invested.

Let’s compare them to the rest of the crowd:

eroi

By Mrfebruary – Own work Data from Table 2, Murphy, D. J. and Hall, C. A. S. (2010), Year in review—EROI or energy return on (energy) invested. Annals of the New York Academy of Sciences, 1185: 102–118. doi: 10.1111/j.1749-6632.2009.05282.x http://onlinelibrary.wiley.com/doi/10.1111/j.1749-6632.2009.05282.x/pdf, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=16238068

Wow.  Fracked oil produces MUCH more energy than most everything we currently produce.  And while we’re right now fracking only the best spots, and the return on energy will drop, it’s still really, really high.  Oil sands up in Canada have about a 4:1 return, so I expect, based on their relatively poor energy production (plus huge unpopularity) that they’ll not be an investment hub in the near future.

And, I’ll admit – I didn’t see this coming.  My original take on fracking was that it was a side-show – that the energy produced would actually be an energy drag on us – taking almost as much energy to produce as it took to drill the wells.  Nope.  Totally wrong.  Fracking will be with us for decades.

Why do I predict this?

  1. People like driving.
  2. People like plastic things.
  3. People don’t like living cold and in the dark.
  4. Given the current return on energy invested? Fracked oil is huge.

I would guess we have at least 10 years’ worth of high quality fracked oil, if not 20 or 30.  I don’t have the data (and couldn’t find it easily) but this may be the most important question of your life – how does fracked oil impact the Hubbert curve?

I know that many folks are of the hope that we will get rid of oil, natural gas, and especially coal.  I’m sorry for you, really, because as the graph of United States energy consumption shows (below):

renewable energy

  • Renewables are pitifully small and, if they keep growing at this rate, might be 20% of the energy in the country by 2435.
  • Oil use dropped when it was a $120 a barrel. Headed back up now.
  • Natural gas is now much cheaper than a decade ago since they’re finding it everywhere (fracking). Huge growth.
  • Coal has dropped, primarily due to making it tough on coal electricity providers. Still a huge player in electricity production.
  • Nuclear is level. The things are horribly hard to build and hard to get rid of, too.
  • Biomass is steady-ish.
  • Hydroelectric (our best ROI!) is flat and at the bottom. Nobody wants a new dam, but you have to have dams to have the cleanest energy source possible.

But let’s see how that compares to the rest of the world:

Bp_world_energy_consumption_2016

By Martinburo – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=53803246Oil
  • Oil, increasing.
  • Coal, increasing. A bit of a drop off (probably mainly the US).
  • Natural gas.   Steady.
  • Meh.  Mainly replacing nuclear.
  • Nuclear – dropping off.

I’m pretty much at the point where, although I see that forests of wind farms have been built, and California has this Death Star® array where they fry birds with a million mirrors focused on a big Rubik’s Cube® filled with molten salt, I’m not impressed.  Okay, I really am impressed that they talked someone into building this Dr. Evil-style structure out in the desert, and I’m expecting it to show up in the 2028 movie, Kingsmen:  Diamonds Sunlight are is Forever.

Just like you, I’d love to live in a world powered by clean, renewable energy, where everyone loved one another, and Disney® wasn’t in the process of destroying Star Wars©, but that’s not where we live, and if we tried to go there?

Billions would die. (not from the Star Wars™ thing, but from the lack of energy thing)

Fortunately, not many would die where I live, but mainly in the rest of the world.  I’d be fine, and, probably you too since you’re a reader of this blog and thus smarter than 99.999% of humanity and everyone in Australia (again, Australia, I know you speak English, so start visiting and I’ll activate a truce).

Unless we get a breakthrough in physics or oil suddenly disappears from the Earth due to a virus cunningly devised by an evil scientist named Mike, oil will be the primary power source for decades.  After that?

It’s the most crucial question that we’ll ever face as a species.

Except for fashion.

Oh, I do know what I’ll wear tomorrow!  That was easy!

Risk of Sudden Wealth . . . Over Rated? Are you Nic Cage, or Keanu Reeves?

“What’s in the bag? A shark or something?” – Nic Cage, The Wicker Man

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How I imagine Elon Musk hunts for ducks.

In panning for gold, I can’t help but wonder what would happen if I found a whole bunch, all at once.  My mind wanders.  All the beef jerky I could wear.  All the Lear® Jets I could eat.  I’d be fine, right?

Well, it seems like there are a pair of psychologists (Joan DiFuria and Stephen Goldbart, LINK) who described “Sudden Wealth Syndrome.”  They describe the following symptoms (my comments in parenthesis):

  • Anxiety/Panic Attacks (Try the Panic Attack from not being able to pay your Pez© dealer, I assure you they don’t take kindly to folks who can’t pay for the sugar)
  • Worries About Money (Hmmm, this seems a bit forced?)
  • Worries About Stock Market Volatility (Elon Musk probably doesn’t lose much sleep in his orbital habitat)
  • Insomnia (I can see millions of dollars keeping me awake all night – especially since I’d be partying in Elon’s orbital habitat)
  • Irritable Mood (Yes, I can see being irritable because I was too flush with cash, and I get mad because my pancakes are too fluffy)
  • Guilt About Having Money (This is real – otherwise explain why every Hollywood actor wants ME to pay more in taxes)
  • Identity Confusion (Once I found a twenty dollar bill, and became convinced I was Luke Skywalker© – but in truth, I was 12)
  • Fear of Loss of Control (The idea of being without a mortgage should make us all shake with fear)
  • Paranoia (Are you threatening me?)
  • Depression (I’m so sad, I can’t count as high as my money, no matter how long I live!)

From that description, it sounds like winning sucks, eh?  I assure you that, in the choice between having money and not having money, I MUCH prefer having money, and as a business model, catering to very, very wealthy people with neurosis is probably very profitable.  I like the way those guys think!

But let’s put this in context.  Think about the behavior of the typical twenty-something starlet or rock star that’s rolling in cash?  They tend to make a lot of poor choices, primarily because nothing in their experience has prepared them for the sudden onset of cash.  By contrast, many of the folks who do really well with money at an early age (Think Bill Gates and Paul Allen) had a really well-to-do upbringing.  Not rock star rich, but they were going to exclusive private schools.  They’d been taught how to deal with money early on, and, likely never had to worry much about not having it.

But let’s pick on Nicolas Cage.  Why?  Face/Off is probably reason enough.  Really?  Swapping faces with John Travolta?  That’s the movie plot?  I won’t pick on Shia Lebeouf because that’s like a velociraptor picking on a kitten.

Nic Cage (he told me he didn’t mind me calling him that when I imagined talking to him) made millions as an actor.  He could have done that if they only paid him a dollar a movie, but he made much more, at least $20 per movie.  Again, he made millions.  $150,000,000.  Yes.  ONE HUNDRED FIFTY MILLION dollars.  American dollars, not fake ones like they print in Canada.

He spent it all.  ALL OF IT.

On what?

  • An $8 million dollar castle in England. He spent millions fixing it up.  Never spent a night there.
  • An island.
  • Four yachts. At the same time.
  • A pair of rare albino king cobras.

Let’s face it, the man had a whole small country plus a navy (yes, four boats is more than in all of Canada) plus king cobras.  I’m not sure why he didn’t get three albino king cobras, but, he settled for two.

Seriously – was Nic Cage trying to live exactly like the bad guy in an Austin Powers movie?  No, I think that there’s something missing, plus nobody can figure out how to tell a guy not to blow all of his money on shiny things.

From observation, I do think that sudden wealth, or worse, sudden wealth and fame is not really good for you.  I think that it can greatly distort the sense of self.  Bill Murray said that everyone is a jerk (not exactly the word he used, but you get the idea) for the first year after they become rich and famous.  He then followed up with the observation that some people never snap out of it.

And, from the way that stars handle fame, it looks like many of them fall into DiFuria and Goldbart’s Sudden Wealth Syndrome.  They’ve got money but the feelings that they have wrapped up around the money give them a lot of guilt.  Some, however, seem a bit more grounded:

It has been reported that Reeves gave approximately US$80 million of his US$114 million earnings of The Matrix sequels, The Matrix Reloaded and The Matrix Revolutions, to the special effects and makeup staff. – Wikipedia

That seems a bit more grounded.  Warren Buffett lives in a house that (per the Intertubes) is worth $652,000.  I’m pretty sure it’s paid for, since Warren is worth $76.7 billion dollars.  That also seems pretty stable, since he bought it in 1958.

Lottery winners also seem to have a problem.  The first problem they have is the inability to do math.  Now, if there’s a tax that I like, it’s a tax on folks who can’t do math.  But the general saw is that some sort of karma hits the lottery winners, and makes them miserable.  And those stories are the big ones in the news.  But the reality?  85% of winners keep going to work (based on one study I saw) and most of those (60%) were still working at the same place they were before they won the lottery.

It seems that we almost want to hear the tragedy, because it suits our sense of fairness – this poor person who didn’t know math lucked out, but, boy, karma got ‘em in the end.  Nah.  Most of them seem to do just fine – more like Warren Buffett, less like Nic Cage.

Me, if someone bought me a lottery ticket that one, or I hit a pocket of gold worth $150,000,000?  An 8,500 pound (that’s about 17 kilograms) pocket of gold?

I’m headed to the Musk’s space habitat.  Beer’s on me.

How People Get Rich, and How To Do Well At Work

“My last job was at a Taco Bell Express. Then they became a full Taco Bell and I just couldn’t keep up.” – The Office

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Pugsley before his first day at his new job in the salt mine.  

About 47.6% of the American economy consists of books that purport to tell you how to get rich.  (The other 52.4%?  Equal shares of pictures of naked ladies and Pez®.)  But how did the rich folks get rich?  Let’s make the assumption that you’re not going to be James Bond Enemy Island Secret Volcano Space Program Rich, since Elon Musk seems to have that market cornered . . . let’s still ask the question, how do people get rich?

  1. Inheriting it is the old fashioned way to do it. 30-40% of the Forbes 400 richest Americans . . . inherited it.  You never really hear this part of the story, because the story “Baby Billionaire Born” is not nearly as compelling as “Unsung genius invents an app to get a cab driver to come by your house and trim your nosehair with your iPhone.”  An astonishing 60% of American household wealth is inherited.  So, unless you’ve got great-aunt Grunelda leaving you a stash of cash, this isn’t in your wheelhouse.  For reference, we Wilders have little inherited wealth, but are willing to learn what it’s like for science if you want to cut us in on your will.
  2. Investments and Real Estate – 127 billionaires got their third comma from FIRE (Finance, Insurance, Real Estate), which we talked about before (LINK). In 2013, per evonomics.com, the ever-hated top 1% made 21% of the US income, which I’m sure they were pretty fond of, since that’s out punching your weight by 20 times!  But the big driver to their wealth?  Gains from their investments.  In 2013, they raked in 35% of the business gains (things like dividends, interest payments, stock price gains, and real estate, etc.).  Really, the big drivers were stock and real estate.  So, if you’re not born with cash, this seems to be the most reliable way to get buckets of it.
  3. Tech, Media, and Energy, combined to create 123 billionaires. Now don’t cry too much for this bunch being in third place, since it includes folks like Bill Gates, Jeff Bezos, and Larry Ellison.  (I refuse to add Zuckerberg because he’s such a tool.)  It’s pretty cool that these folks managed to make bank by changing forever the way we use computers (Gates), purchase stuff (Bezos), and, well, whatever the hell Ellison does that allows him to own Hawaii.

As we’ve discussed before, a job is less preferable than owning a business, where you have other people working to make money for you, but it is possible to get into a pretty good position with a job.  This isn’t the last post where we’ll discuss this, because most people have jobs, don’t own businesses, and aren’t blessed (yet) with a really cool investment portfolio.

So, how can you maximize your income as an employee?  Here are my first ten (not my top ten, just the first ones):

  1. Do something valuable that requires you to think. College is a stupid idea for many people.  Honestly, lots of people going to college really don’t belong there – it’s just like four more years of high school for them.  Since employers can’t (by law) give IQ tests, they use college as a rough screen for IQ.  They want smart-ish workers (not TOO smart, mind you) and they use a college degree for a screen for that as well as the ability to defer pleasure now for a payout later.  Unless you’re going to get a degree that is required for the field, like science, engineering, law, medicine, accounting, finance, and teaching – I would think twice about college, especially if you choose a major like anthropology.  Seriously, fast food workers make more money than anthropology professors.  Smelly teen age fast food workers.  Also avoid: sociology, anything ending in “studies”, communications (The Mrs. has that one), recreational studies, art, classics, public administration, exercise physiology, media management, music therapy, etc., etc.  These are “degrees” made up by universities to extract the maximum student loan value from you.
  2. Pick the right industry. Pick an industry where there’s huge oceans of cash swimming around.  I’ve listed them up above – finance, real estate, energy, technology.  Pick one of those.  It’s still not easy to get rich there, but there is a TON of money floating around in those businesses.  Teaching?  Not so much.  Regardless of how much fun you have doing it, if you can’t support your family, that is going to suck your energy out like a cat eating a banana.  Find something that you can do that pays well, and do that thing.  Not many engineers (for instance) end up as really rich dudes.  That’s fine – the median engineer does well, but often doesn’t get to the top slot.  There were a LOT more guys with business degrees than engineering degrees, and you’re only seeing the ones that were good AND lucky that get to the top.  You’ve got to be good, but you’ve also got to be lucky (which will have its own future post).
  3. Work harder than the next guy – and be a closer. The only reason to watch Glengarry Glen Ross is the scene where Alec Baldwin, in no uncertain terms, illustrates that you have to work hard, and also have to show actual results.  I’ve linked to it below.  Be warned – the language and content are R-rated, so if you’re squeamish about naughty words and crude concepts, skip it, but this seven minute scene he’s in got him a nomination for best supporting actor.  Seven minutes.  Really, working hard is important because it sets the stage for results, but results must  (Note:  a recent study showed that bosses only care about how much time you’re in the office, and think if you’re there a lot, you’re working hard.  Guess they never heard about goofing off?)  Are results the only thing that matters?  No.  But they matter A LOT.
  4. Don’t scare your boss. If you work hard and are smart and are getting great results, you should be setting yourself up for amazing success, right?    You might be one step away from being fired.  Bosses are people, too, and most of them don’t want to be eclipsed by an employee, namely, you.  If you’re reading this blog, there is a good chance that, besides being handsome and bullet-proof, you’re smarter than your boss.  With a good boss, that’s okay – he (or she) wants to teach you and allow you to grow.  With an insecure boss?  Oh, my.  With an insecure boss who doesn’t have skills?  Competence is a death warrant, or at least a quick ride to a pink slip.  If you have a scared boss?  Act stupid.  Give them bread crumbs to come to a good decision, and then allow them to take the credit.  Most importantly?  Align your incentives so if your boss makes you look bad, it is a reflection on their leadership.  Sometimes none of this will work.  Look for a new job or a new position in the company, but be prepared to exit involuntarily.  Insecure people are horrible (more on this in a future post).  One other note?  At some point you will have a really horrible boss.  Deal with it.
  5. Stay off of lists. HR has a list of people who, say, didn’t do training.  Who showed up late to work.  Who go one too many times to Facebook on the company Internet.  Who call a radio station 3400 times in a month attempting to be caller nine with the phrase that pays (this actually happened to someone I knew).  These lists might be petty lists, with “insignificant” actions or behaviors on them, but your very presence on the list turns you into your boss’s enemy, because you just became someone he has to defend to HR.  A boss, even a good one, will only go to that well so many times.
  6. Be flexible. No, not like a gymnast.  For your boss, your job description is only the barest suggestion.  If he or she asks you to learn to translate ancient Babylonian tablets instead of your job, which is generally being an accounting clerk, TRANSLATE THE TABLETS.  A job isn’t an argument, and if you make it one, you become . . . another pain to your boss.
  7. Be firm when your principles are involved. Even if means your job.  When I was doing an internship in college, the boss asked me to do something I knew to be technically illegal (like a real “go to federal prison” felony).  I told him no, I couldn’t do that.  He was on the road, and called, yelling at me to do the illegal thing.  I went to his boss (VP), and told him about the illegal action, and explained why it was a felony.  The VP made one minor comment, but was in agreement with my boss.  I told my professor (that I was taking a business organization class from) about the situation, and asked what he thought I should do.  He told me, “Well, it looks like you already quit.”  I thought about it, and, yeah, I had quit, but I was the only one at work who didn’t recognize it.  I turned in my notice the next day.  They weren’t surprised.  Don’t be a felon.  Don’t compromise your basic beliefs for a job – that’ll tear you up inside more than having a Chihuahua with needle-sharp teeth surgically implanted next to your spleen.
  8. Be a solution, not a problem. I have a rule with people who work for me – don’t come to me with a problem.  Come to me with a problem and two or three suggested solutions.  Most of the time I take one of their solutions.  Some people?
  9. Be nice. Those people you’re working with?  They talk to your boss, too.  And if you’re nice to people?  Good karma accumulates.
  10. Be on time. Just do this.  Being late shows a lack of respect for whatever you’re late to.

So, unless one of you is gonna write me in on your will, and die soon, I’ve gotta go to work tomorrow.  And follow my own advice.  But I’m still saving up for that private volcano island.  Right now I think I can afford a small rock outcropping off the coast of that Pacific island inhabited by cannibals that kill and eat anyone who stops nearby (this is a real place).  But, hey, it’s a start.

This blog is not financial advice, yadda-yadda-yadda-yadda.  Be responsible for yourself.

(Reminder – LOTS of naughty language.)

Kiyosaki and Sources Of Wealth

“You’re not your job. You’re not how much money you have in the bank. You’re not the car you drive. You’re not the contents of your wallet. You’re not your khakis.” – Fight ClubDSC02988

Someone’s Rich Dad?  Yeah, no marble sculptures of Poor Dad.  The Romans took “Got Your Nose” seriously.

I think that Robert Kiyosaki wants you to be rich.  I’m certain he wants you to think that he’s on your side, and he’s also spent a lot of time and effort doing presentations long after I would have retired to my private island off the coast of Antarctica (I like it cold) with my laser penguins.  Kiyosaki has made a metric ton of quarters selling the concepts in his Rich Dad/Poor Dad series of books (Amazon LINK) through both the books and personal consulting (rumor has it personal coaching can cost $45,000, and those are real American dollars, not fake Canadian metric currency).

Kiyosaki’s story is that his natural father was “Poor Dad.”  I’m assuming this book was NOT originally released on Father’s Day.

Poor Dad was very smart, and had a Ph.D. and worked in high government posts, but had a worldview that didn’t set Robert up for financial success.  By contrast, “Rich Dad,” a mentor and friend, explained how getting to financial freedom and wealth really worked.

Kiyosaki breaks the ways that people make money into four categories:

  1. Being an employee. This is most of us, and society works to perpetuate this role.  What is an employee?  One who works for a salary (or hourly wages) and benefits.  We live with a misconception that being an employee carries with it a degree of security, even if it’s less security today than it was in, say, 1970.  If you work for the government, however, it’s more likely that you’ll get malaria from a married vampire bat than get fired. (really)

Being an employee is generally based in . . . fear.  And the ultimate fear that employees have is . . . termination.  The threat of being fired, for many, is a direct threat to the core of who and what they are.

Being fired brings with it:

  1. Reduction in Resources – Most jobs pay enough to keep you coming back, but only a very few offer sufficient extra income to build real wealth. To the astonishingly high 78% of Americans that sometimes or always live paycheck to paycheck, the threat of job loss is especially dire.  It doesn’t help that we, as consumers often increase our individual spending so that it matches our income.  But, I’ve posted about that before (LINK).
  2. Loss of Status – Many men (especially) think of themselves AS their job. When you think about it, this makes sense.  The first question you ask a working-age man that you’ve just met is “What do you do?”  This establishes him the social hierarchy.  Society really does define a man by his work.  Time at work can represent half of your waking time.  In 2015, I spent 48% of my waking time at work or commuting to work, meaning I interacted more with co-workers than I did with my family that year.  Status drives many important hormones, and, for men, stress and job loss actually cause testosterone levels to plummet.
  3. Loss of Purpose – I’ve discussed before (LINK) that purpose is necessary for a real life, and it’s necessary to have a big one. Given the hours and time spent at work, it’s inevitable that work can become our purpose.  When you lose that purpose, you’re set adrift until you find a new one.

In a sense, the employer/employee relationship is a kinda like an “on speaking terms” hostage situation.  They have a job that represents status, purpose, and life-giving resources.  You have all of your time, effort, and passion to trade for that job.  Kiyosaki thinks that’s a bad trade.  But he could buy his own island.

  1. Small Business Ownership is the second income generator that Kiyosaki talks about. And, if possible, it comes off even worse than being an employee.  Being a small business owner entails all of the work of being and employee, plus lots more risk.  His reasoning is that employees at least have the business to fall back on if they have a bad day, week, or year.  Kiyosaki defines a small business as a business where, if you take a day off, the business cannot go.  You’re the spark, the fuel supply, and the tires.  Essentially, you become the whole car.  Or Taco Truck.
  2. Business Owner, which Kiyosaki defines as someone who hires employees (smart ones!) to work for him (or her). Kiyosaki feels that small businesses can’t compete at all against these larger entities, since he can hire great legal, accounting, and HR people and small businesses have to do all of that themselves, generally not very well.  Given that the business has support staff in place, the business owner can focus on the business itself.  The owner can also take a day or a week off and the business will continue to function and generate wealth.  Kiyosaki likes this, since money invested into the business makes more money.  And Kiyosaki breaks with many financial advisors here – debt is just fine in his book as long as the debt is generating more revenue than it costs.  This is his formula for building personal wealth, as well as freeing up time to do . . . whatever it is you want to do.
  3. Investing is the end stage for Kiyosaki. Investing allows for all of the time freedom, plus financial freedom.  All of the wealth you could want.  Kiyosaki would NOT classify your house as one of your investments – it doesn’t generate revenue, and you have to pay for it, so it’s a liability.  Investments generate income.  Oh, and risk?

“Investing is less risky than being an employee.  Skilled investors are in control of their investments, employees are controlled by a boss.”

Furthermore, Kiyosaki makes this Zen-like statement:  “ . . . you do NOT (emphasis in original) invest with money!  You invest with your mind!”  In other words?  Find the deal and the money will show up.

As I said, this is a different way to look at life – a different lens.  I’ll easily admit that my life since I was 22 has been focused on being a great employee.  At some point, it seems I need to have better investments, but note that Kiyosaki says . . . “Skilled investors,” but, alas, tonight I learned that my Pez® collection is not an investment because it generates no revenue.

Thoughts?

Frugality, Financial Samurai, Mr. Money Mustache, and Early Retirement Extreme

“Hello Mrs. Farnickel.  How are you, today?  Making a deposit, are we?  Great.  We can just put that into your retirement account and make it go to work for you aaaaand it’s gone.” – South Park

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Frugality doesn’t mean that your duct tape can’t match* your car! Splurge!

*if your car is silver

What if you could live the majority of your life without worrying about a job?  What if, instead of hitting the alarm at 5:45AM on Monday morning you could get up when you wanted, and do what you wanted to do?

Scary.  Sounds like International Communism!  The entire world might fall apart!  Beware, the Chinese Overlords are attacking!!!!

Perfectly capable people are exiting the corporate workforce and becoming independent, as in, “I don’t have to put up with another performance review” independent.  Some examples of this are Sam from Financial Samurai (LINK), Mr. Money Mustache – MMM for short (LINK), and Jacob from Early Retirement Extreme (LINK).  I list them in this order from least extreme to most extreme.

Sam lives in Sam Francisco, MMM in Colorado, and Jacob lives on Planet Jacob (Now in Chicago, after looking around a bit on his blog).

Early Retirement the Financial Samurai Way

Sam’s theory is by far the most conventional.  He wants to make enough money from passive investments and activities like blogging that he’s happy.  He thinks that exactly $211,000 a year is happy, because above that he has to give too much money to the government, which makes him not happy.

I think that most people can identify with Sam – he wants to have a big enough income stream (and no real job) that he can go to Tahiti tomorrow for a month and nothing changes, but he also wants to be able to buy all the stuff that he wants (within reason).  He has property (houses and vacation homes) and rental property and other investments.  He (obviously) could make much more – certainly $500,000 plus a year if he wanted to grind it down and devote himself to it.

One of my favorite posts of Sam’s is where he discusses how he can always pick up a tennis game at the public courts with great players who play a lot, but can never get a good game at the exclusive country club because those guys are pouring their lives out in corporate jobs that rip away their soul in exchange for money.  But, on the bright side?  It’s a LOT of money.

Sam doesn’t make the same choice.  Your money or your life?  Sam has chosen his life.

And, even though he doesn’t know me (and this blog doesn’t yet rank) I owe him – his blog gave me a lot of the motivation to restart blogging after my self-imposed eight year hiatus.

Mr. Money Mustache’s Money Machine

MMM notches it up a bit, even though (by everything I can tell) he’s making huge bank (hundreds of thousands of dollars a year) on his website.  It seems that he gives lots of it away.  Because he can.

Mr. Money Mustache is all about flipping the equation.  He and his family live on $30,000 a year (2016).  This isn’t horribly surprising since the average family income in the US is $56,000.  Mr. Money Mustache’s major difference is that he doesn’t have a real job, blogs only when he feels like it, and won’t put up with anyone’s crap.  If you have a deal, you have a deal.  If you need oodles of lawyers?  Probably not your guy.

His thought is the typical lifestyle of someone in the United States is “An Exploding Volcano of Wastefulness.”  He advocates that you save 50% or more of your income, primarily by shunning many of the expense that most of us regularly take for granted, like being a multi-car family; ignore luxury and convenience and focus on true happiness.

Some of his points, along with my commentary:

  • Debt is an Emergency. It’s killing you, and must be treated like an Emergency.  NO FRILLS UNTIL IT’S GONE!  I know I totally violated this rule with the hot tub (LINK), but that really has made us happy.
  • Live close to work. You can bike.  Cheaper and better for you.  I agree, but selling the house because I have to travel 20 more minutes is extreme, so I’m not going to do that right now.  Plus The Boy is a junior in High School.  I’ll skip moving if I can.
  • Don’t borrow money for cars. I agree (LINK).
  • Don’t buy stupid cars. (Same agreement, same link.)
  • Ride a bike to commute. I also agree, but live too far away, and I’m not uprooting the kids for my commute. Note that the car advice alone saves $250,000 in a decade.
  • Cancel Pay TV. Ooops, I start to get a bit scared here.  Three words:  Game of Thrones.  But this is a huge point:  you end up paying money to do something passive that takes your attention and focus, and many times doesn’t make you any better, so you pay for TV three times.
  • Don’t waste money on groceries. MMM has a pretty long post on calories and such here – but he lives on family food budget about 25% of ours, primarily by avoiding high cost packaged/convenience stuff.  We could be better here.
  • Don’t pamper the kids. They’re not in medical school until they’re in medical school.  They don’t need the Princeton of Preschools.  Kids eat paste.  And that’s high school kids.
  • No overpriced cell phones. Again, we can do better here.  Inertia is killing me on this one – the time cost of change.  The Boy gets better service and more data for less than I’m spending.  Just need time to change.
  • Fix your own stuff. This is like a triple reward.  If it’s broken and you mess it up?  It was already broken.  But you learn how to fix things, which makes you better.  And you don’t pay someone else to do it.

We’re buying a new dishwasher because the existing one sucks.  I know we technically don’t even need one, but I like having one.  In this case, Sears® won’t install it.  I’ve done it before, and sighed.  Okay, I’ll do it again.  And save $75 for what will probably be either 15 minutes’ worth of work or an amusing blog post.

But there is a bigger point that I’d like to note – there comes a time when people tend to become more risk averse, and age is a driver to that.  Pop Wilder’s Video Cassette Recorder (VCR) always flashed a continuous noon (or midnight).  He could never figure out how to set the time, and didn’t want to mess it up so it didn’t work, kind of the opposite of mall lawyers attempting to poke their lawyer fingers into a copier to fix it by playing with all the springs and rollers and things.

Short version: don’t lose your youthful desire to tear something up just to figure out how it works.  NOTE:  I AM NOT speaking to medical professionals, especially ones that might work on me.

So according to MMM, follow the above steps and save 50% to 75% of what you make.  After a while?  Just stop going to work, but enjoy all that nice money you made, plus the lifestyle you created.  MMM figures that, once you’ve started living a disciplined lifestyle, 25x your income should last you roughly forever.

Jacob’s Early Retirement Extreme Engine

Jacob at Early Retirement Extreme lives on $7,000 per year.  Combined with his wife, they spend $14,000 per year.  He says he currently has 119 years’ worth of annual expenses saved up as his net worth.  You can probably do that much math, if not, you just might be too short for this ride, the Life Coaster.

Jacob maintains he spends his money much more efficiently than the average person – four times as efficiently.  He uses a 12 year old 12” laptop and, being retired and all, when he wears a suit it’s a $500 suit he bought for $100.

Jacob is probably farthest away from mainstream consumer behavior, and seems to enjoy it – he and his wife lived in a used RV for years.  Me? I have a seven foot stack of books from Amazon in my bedroom that I haven’t read yet.  (Full disclosure – I did read Jacob’s book and there are some great ideas in it).

Me?  I’m not retired yet, and college still looms for Pugsley and The Boy.  The Mrs. and I do have plans, though.  One day after Pugsley graduates from High School we’re moving to a shipping container near the Arctic Circle in Alaska.  Someone has to welcome our new Chinese Communist Overlords!

The Economy, The Fourth Turning, Kondratieff, and You.

“Why? My father would tell the story of impregnating my mother every winter solstice.” – Guardians of the Galaxy, Vol. 2

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Like they keep staying in that HBO show, “Winter is Coming” except that it’s here . . . 

I can predict the future, with pretty amazing accuracy.

You can, too.

If I step into the path of the bus travelling at 50 miles per hour (0.0000822 parsecs per year) and it’s only 20 feet away, well, you can predict that future, too.

You might be saying, “But John Wilder, you’re cheating, everyone knows that you can’t step in front of a speeding bus.”  Just because you can do a thing that everyone else can do, doesn’t mean it’s cheating.  And it is predicting the future.

Now can I tell you who is going to win the next Super Bowl©?  Not with the same certainty, but a bet on the Patriots™ wouldn’t be a bad one, which mirrors every year since 2002.  I can predict with nearly perfect certainty a number of teams that won’t make the Super Bowl.

So, now that we’ve gotten the whole, “You can’t predict the future” business out of the way, I’ll describe the future via the past and via the life of Pop Wilder.

Pop Wilder started life in late autumn of 1921, and got his first job counting out dimes to pay to migrant laborers at the age of five.  His father and another guy (Mr. Potter LINK) started a small farm bank, and, there being no child labor laws of significance back then, they put Pop to work.  Pop’s boyhood home was Spartan.  By Spartan I mean very few furnishings, not that he had to go live in the mountains in the winter with only his spear to prove his manhood.  He told me that was just a joke after he made me do that.

On the bright side?  Pez® was invented in 1927.

Entering Winter (Crisis)

I’m pretty sure that Pop didn’t think much about the stock market crash at the time – New York was far away, and it didn’t seem to impact the small town he lived in very much.  But it did change his entire generation – they learned to hate debt, and distrust the stock market entirely.

As entered his most impressionable age, the nation entered economic crisis:  The Great Depression.  I think they called it “Great” because at least they got legal booze back during the Depression.  Part of the economic breakdown included a collapse of a significant number of banks which prompted President Franklin Roosevelt to close ALL banks in the United States for four days, even the ATMs.  Pop’s father had done a good job managing the debts that his bank had, and his bank reopened without incident, unlike 4,000 banks that remained closed.  The Federal Reserve and US Treasury reacted during the crisis by:

Instead he [Treasury Secretary William Woodin] decided to “issue currency against the sound assets of the banks [as opposed to issuing currency against gold]. The Federal Reserve Act lets us print all we’ll need. And it won’t frighten the people.  It won’t look like stage money. It’ll be money that looks like real money.” –  Federal Reserve History Website (LINK)

Printing money is awesome if you can figure out a legal way to do it.

Pop worked at the bank after graduating high school as a teller until December 8, 1941, when he and a million other American men marched to the recruiting office to sign up for an all expenses paid vacation in either Europe or the Pacific.  After Officer Candidate School, Pop was sent to the Manhattan Engineering District until they transferred him to transport duty.

When I was a wee lad, I asked him if he’d ever been shot at.  “No, but I was with people they were shooting at.”  I finally got the joke when I was older.

Entering Spring (High)

Along with a million other GIs at the end of the war, Pop attempted to get into college.  He was told “no,” by the college he applied to, and just went back to work at his Dad’s bank and got married.  Eventually they had my brother, who is also named John Wilder.

When his father died, he became president of the small farm bank.  He and his brother (along with their Mother) became minority owners.  The original deal had Great-Grandpop Wilder sharing ownership of the bank with Mr. Potter 50%-50%, but over time Great-Grandpop had sold his shares to Mr. Potter when he needed extra money.

This was a time of great civic participation, of Pop Wilder’s generation beginning to take over businesses and run them with great caution, but also with great optimism.

Entering Summer (Awakening)

At some point in here, I was adopted into the family.  Dad turned down an offer to join one of the big banks in the Midwest when Mr. Potter matched his salary.  He worked at the bank his father started for 17 more years, but this was the last raise he would ever get.

Even though great societal change was underway, the United States had great and broad prosperity and resources were everywhere – we thought that, as a nation, we could spend enough money so poverty would cease to exist.  Everyone was “looking for themselves” as divorce, birth control, and abortion set the seeds for the change that was coming in Fall.  Prior to this time, there was a theoretical link between the dollar and gold.  It was primarily theoretical because individual ownership of gold coins and bullion was prohibited in the United States, though one could own silver coins.

With the severing of the link, the price of gold shot up.

price of gold

Even though we had to live through Disco and the BeeGees, we still managed to get things worked out – Jimmy Carter’s values weren’t too far from Gerald Ford’s.

Entering Fall (Unravelling)

Branch banking laws took small farm banks and made them compete with large banks.  Soon after that, banks were for the first time competing across state lines.  What had been a decentralized system (sort of, the Federal Reserve really, really liked New York) became a few small banks, a few regional banks, but most of the assets belonged to the big New York banks.

Mr. Potter was getting old, and he arranged a bank sale and forced the family to sell their shares to the new owner.  The new owner reversed Pop’s policies, and began loaning to people with credit that wasn’t so great.  (“Any idiot with a truck and a backhoe,” per Pop.)  Pop had been proud that he had never foreclosed on a loan – he only lent money to people with sound credit, with income that guaranteed that they could repay.  Pop retired, and the new owner sold to a regional bank.  This happened several times, though Pop stayed on the Board of Directors long after he could hear what they were talking about during the meeting.

“Bone Preserve?  What’s that?”

“No, Mr. Wilder, that’s ‘loan reserve,’ not Bone Preserve.”

In this era the fighting between political parties went from competition to ideological war.

Entering Winter (Crisis)

Pop was on the Board when the bank was declared insolvent in the wake of the banking crisis of 2008, and sold in a fire sale of restructuring.  Pop passed on not long after.

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I saw this written on a blank sign board in Alaska along the Haul Road to Deadhorse.  Thankfully, the sign was accurate – I was indeed right there.

I bring Pop’s life into this picture because I think his life particularly illustrates how and why business cycles form. These cycles are as much out of the psychology of the people who have money as they are about technological innovation or anything else.  This psychology has very significant implications to society.

The one thing that the economic crisis (followed by the war) did for the country was to clear the debt, but in a much bigger sense, it changed the opinion of the American public against debt.  Pop Wilder hated debt, and lectured me about it every morning while I brushed my teeth.  On days that he couldn’t be there, he had a cassette I was supposed to listen to.

Debt was bad, and Pop had seen the impact of it on people’s lives.  What he had seen as a child defined his life and all of the business decisions that he made throughout his life; further, it defined the psychology of an entire generation.  Pop found it immoral to lend money to those that couldn’t repay it, and would often, after a few bourbons, be a bit morose about the crap he had to take from people he wouldn’t loan money to.  He was saving their financial lives, but they hated him for it.  Outside of the tremendous borrowing for World War II, you can see that the current debt of the United States has no historical precedent (except maybe by the Romans LINK).

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As you can see, whatever it is we’re doing here is equivalent to fighting WWII, but I think it probably involves buying a lot of elephant rides. – Source, Wikipedia

And as Pop’s generation slipped via age to no longer control the bulk of the financial assets of the country, the stock market poured booze in the punch bowl.  The monetarily driven Tertiary Economy (LINK) party started in earnest, debt surged, and greater and greater risk slipped into the picture as large pools of money looked for whatever asset bubble existed that year – be it the first Tech Boom, the Housing Boom, the Pez© Boom, or the Oil Boom.  Certainly fortunes were made in all of those booms, but the busts created greater and greater economic dislocation, and our current economic crisis, when viewed through the lens of history, has always led to armed conflict significantly beyond current levels.  It will end when we’re tired of the total war that we’ve created.  Only after that level of conflict will society set the psychology to avoid debt and war in the minds of the young, and only then can Spring start again.

One note: it won’t look like World War II.  The United States has invested trillions of dollars in treasure to make a World War II style war an easy win for us – no one can touch our military at this point in a conventional war.  Whatever war starts, it’s assured they won’t play by our rules.

Debt Cycles, Fourth Turning and Kondratieff

Strauss and Howe described the future in their book The Fourth Turning (AMAZON LINK, WIKIPEDIA LINK).  This book predicted our current problems.  If Strauss and Howe are correct, we certainly haven’t seen the greatest depths of the current crisis, as we observably are still in a continuation of the old order – we’ve not hit the significant break with the past that we saw at the American Revolution, the Civil War, or the Great Depression/World War II crisis.

Strauss and Howe were not the first group to figure this out, and neither was Nikolai Kondratieff (LINK), a Soviet economist working for Stalin’s USSR, though he gets a lot of the credit.  Kondratieff looked at economic cycles from the standpoint of communism and claimed that there was a fundamental instability in the debt and credit cycles in a capitalist society, leading to inevitable boom and bust, which only proud Soviet Communism could solve.  Elevated at first to a high economic post, he visited the United States and an American sent back word that he wasn’t quite Soviet enough.  Kondratieff ended up first in prison, and then finally well, um, sentenced to not breathe any more valuable Soviet air.

What comes out of the other side is (at least) partially predictable based upon the past.

  1. The peak of the Crisis has not yet been reached.
  2. Signs of the peak can and must include doubt as to the final outcome as well as an event so significant it removes current barriers that separate the majority of citizens.
  3. In the past, the Civil War and Great Depression resulted in significant expansions of state control. These eras were times of national (post Civil War) and then (post WWII) international expansion.  Although it is likely that there will be economic contraction, it won’t necessarily lessen state control.  In Great Britain everything went socialist (for a time).
  4. Religious and civic engagement will rise, this is a constant post-crisis theme.
  5. There will be a sense of shared purpose – variance between Democratic/Republican party platforms will decline.
  6. Civil war is possible. Continuation of a unified United States is not guaranteed.
  7. Pez® production will be temporarily suspended to make more pantyhose for our troops.

Now you’ve reviewed a chunk of the history of the United States through the life of a man who viewed an entire economic cycle and was the perfect age at the invention of Pez™.

We know that life will change, and at some point the Patriots® will stop winning Super Bowls©.

Can you think of other predictions?

Share ‘em below.  And share the post!  Pop Wilder and Pez© compel you.

Careers, Industry, Location, AI, and College

“Well, Newsweek says it’s good to change careers, right after they laid off all their editors.” – The Simpsons

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Is it just me or do JFK and GHWB have tiny heads? Are all presidents made of concrete?

There are numerous aspects of your life that you can’t change – height, eye color, favorite flavor of fruit Gushers®, or the amount of backhair that you want to grow long so you can feel the wind blowing on it, wild and free.  Some of these even have a significant impact on your career – taller people make more money (that’s true), and people who like grape Gushers© best are more likely to want to have their career revolve around astrology.  And those with hairy backs should probably avoid employment in a Velcro™ factory.

But there are factors that are entirely within your control, and math provides some pretty good guidance on how to maximize your pay through career selection or a career change if you’ve still got some time between now and when you’re disappointed by your Social Security check and those stupid kids and their fancy Zima® wine coolers.

  1. Characteristics of the Industry

The choice of industry that you work in will have an amazing impact on your net worth during your career.  Ideally, you’ll chose an industry.  Since you’re reading this, I assume you’re smarter and better looking than 98% of the population and have, instead of an odor coming from your armpits when you sweat, a faint piney smell naturally graces the noses of those around you.  But, like I said, you’re smart – even if you don’t first love what you do, you will certainly learn to like it a lot if it gives you great results.

All industries are not alike, since some of them throw off a lot more money than others.  There’s a reason Apple® has a $500,000,000,000 in cash along with a collection of spleens and spare kidneys – it’s insanely profitable.  Your local Mom and Pop café and pest control store?  Not so much, they can’t afford any internal organs.

To be clear, there are great jobs in every field – there are people in retail sales who do wonderfully – there just aren’t a lot of them.  So, first suggestion, if you want to go fishing, don’t start in a puddle.

I went off to Wikipedia (LINK) and found a great summary of industries in the United States.  It dates to 2002, and no one has updated it for a while because all of the Wikipedia Admins are off updating the Justin Bieber page.

 

I took the percentage of people working in the sectors, and then divided it by the percentage of payroll they got, and the results were pretty amazing.  At the bottom, getting only 37% of the average income, were hotels and restaurants.  If you want to make bank instead of beds?  Not the industry for you.  If you want to make beds instead of bank?  Head on over to the Hilton®.

  • The best, earning more than twice (!) the average national payroll, was “Management of Companies.” Over 2.6 million people worked in this category, and it is a Tertiary Sector (last post) part of the economy.  Keep in mind, people that work in, say, the hotel as mangers are called out in that category.  These people are employed as managers as an industry.  Amazing! And also not a surprise – the bosses are pretty good at negotiating their salary up as well as yours down.

 

  • The next best was Utilities, earning 187% of the average income, but there are only a few jobs (660,000) in this industry, so it’s a bit harder to get in. This is a Secondary Sector job, so tends to be much more stable than the Tertiary Sector work.

 

  • Finance and Insurance, are third on the list, with 168% of the average income. This didn’t surprise me at all, since, like the managers, the golden rule of “He who has the gold, makes the rules,” applies, and these folks are the gatekeepers to the gold.  Over 6.5 million people were employed in this sector, living off of your insurance and interest payments.  These are Tertiary Sector jobs.

 

  • The next was a nerd tie: Scientific/Technical/Information, making 152% of the average wage. It is a revenge of the nerds, since they make more money than most of the football linemen that gave them wedgies, but less than the preppy tennis players who dated Buffy.  These are also Tertiary Sector jobs.  Notice the pattern, here?

What’s missing from this list?  Doctors!  The medical field is less than average as far as pay goes.  The four bullet points above account for 19% of the workers in the country, but make 38% of the US payroll.  So, if you’re hunting for a job that pays well, it’s hiding up there.

  1. Location, Location, Location

Cost of living has a huge impact on our ability have spare money to invest and save for our future, or to spend on something nice, like mosquito repellent or Chiclets®.  Living in a high cost area, like LA or New York City?  Yikes!  Sam over at Financial Samurai got a huge number of hits (and me for a reader) when his post about Scraping By On $500,000 A Year (LINK) exploded all over the internet.  In it he created a hypothetical family that was just squeaking by on $500,000 a year.  It was controversial because so many people failed to feel a lot of sympathy for the family and yelled at their computer screens to the fictitious family on how stupid they were.  Not the brightest bunch, right?  Anyhow, I responded with how to Live Large on $50,000 A Year (LINK).

Location matters, and most of the time you don’t get paid city wages to live in the country where you can buy a house (not a great house, but a house) for $10,000 straight up (this is true).  Generally, though, the wages don’t go down as much as the house prices do here in the sticks so you’re net ahead.

There are some great upsides to small town living – there’s less to spend your money on, commutes are generally better, and if you forget to close the garage door ALL NIGHT LONG (thanks, Pugsley) you find that everything is still there in the morning.  (In truth, one night Pugsley forgot to close The Mrs.’ hatchback on the Wildermobile II, and left it open all night.  We found a cat inside, and some spiders, but that’s it – not a thing missing.

The downside of low cost (and high trust!) living is that it is much harder to meet and make connection with high-powered folks who could help your career.  For instance, when I lived in Houston, I knew a guy who is friends with a former President.  He gave me his baseball tickets for one game.  The view is below.  And no, I didn’t bother them.  Generally, you won’t make/meet that kind of people in a small town (though there are exceptions, like Batman – LINK).

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The guy directly in front is a Secret Service guy.  When Pugsley dropped a cup of ice, his head whipped around like Justin Bieber on a merry-go-round as pushed by The Rock.  He assessed the three year old as “not a threat.”  He doesn’t know Pugsley!

  1. How likely is the job to be outsourced/done by Artificial Intelligence?

Much more likely than you think.  The BBC has a website (LINK) that calculates the likelihood that your job will be automated within the next 20 years.  The internet has already killed formerly lucrative and widely held jobs, like travel agents – used to be one in every little town – now? Gone.  Newspapers are on the way out.  As I mentioned before, truck drivers are “soon,” and then we’ll have a surplus of people who like biscuits and gravy without a job.

 

Trends in information will drive careers, too.  How long until competition from people like hurts traditional publishers?  Already there.  Pewdepie has more reach than the Wall Street Journal (this is true!), and that’s good – this flourishing of media outlets will effectively kill the gatekeeper, allowing us ever greater freedom of information sources.  But the people at CNN won’t like it a bit as they compete against . . . everyone.  Anderson Cooper might have to find a job cleaning pools, or delivering cotton candy to orphanages.

  1. What credentials are required?

Lastly (for this post) when contemplating a career, what credentials are required?  As I’ve mentioned before, only a few college degrees make any sense nowadays.  Anthropology?  French literature?  You’d be better off in a coma for four years – at least you wouldn’t spend $100,000 plus on a degree best suited for working as a barista.

Additionally, the costs for college are heading up much faster than inflation – and have been for years.  The reasons for this are really simple – a goldfish will grow to match the size of his tank, and my butt will grow to the size of my jeans, and a college will grow to consume every possible dollar of federal student aid and student loans that a student/parent combination can take out.  And buy climbing walls, and safe spaces, and pay for new girl’s luge/rifle team uniforms.  Ohhh, and have you seen the latte machine?

For many in the future, I’d suggest you skip college, unless your career demands it.  There are a few jobs that require the credentials you get in college:

  • Doctor – includes all types. Some of them, however, have salaries that don’t justify the cost of medical school.  That’s right – medical school used to be a slam dunk win, let’s buy the Mercedes.  Recently I read of a doctor that had student loans high enough that she would never be able to pay them off.  And student loans cannot be discharged in bankruptcy.  Only release?  Death or moving to Canada, which is like death, but with better food.
  • Lawyer – Used to be a great ticket to the upper middle class. Still is, for some, but the median income of lawyers keeps dropping over time.  A good corporate lawyer will always be needed, but paralegals in Bangladesh can do the work more cheaply than a new associate.    And when Lawbot2000® hits the court room?  Look out!
  • Professor – Overdone – unless you’re politically connected, you’ll die a pauper. But one with leather patches on your tweed jacket.
  • Engineer – Still pays out, but losing its ability to pay out as costs increase. Lots of managers come from here, but automation will pull even more jobs.  Plus, how many trains are there, anyway??
  • Accountant – Required, and a lower tier school will do just fine, if you can avoid the AI rollout that will eliminate most of the jobs.
  • Teacher – Will eventually be replaced by “coaches” who help students after they watch the Led Zepplin of tutors on the web.
  • Veterinarian – Still costs a lot, and probably is dicey as far as payout right now, and soon kittens will be self-repairing.
  • Optometrist – I can see this being automated out of business. See this, get it?
  • Dentist – This profession is eliminating itself through technical advances – fewer dentists are needed now than in the past because they’re so darn good.
  • Psychologist/Psychiatrist – Talking about this field just depresses me.

So, keep in mind it’s all changing, and maybe with stem cell therapy, in ten years you can be taller, too.  Just think the salary that 6’10” tall you (that’s 8 meters tall) will command!