We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
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Wednesday, January 4. 2012
From Kevin Williamson's Future tense, V: Everybody gets rich - On unwinding the welfare state:
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Bird Dog ... and if anyone would lie to learn how to darn socks, the way thrifty folks used to do, I'll be giving free seminars.
7% return sounds nice, until you figure in a Carter-era inflation rate of 10%. And if the government beast starts getting hungry you can bet your a** that it will find a way to tax away those savings.
Go back and read the "You're Not Saving Enough" article you linked to in the Atlantic magazine...
Not that it is risk free by any means, but most MLPs yield somewhere near the 7% range currently. There is always the risk of bankruptcy, or tax law change, or distribution rate changes and I don't doubt that prices will fall cause yields to rise if/when the Fed allows interest rates to move above zero.
The biggest and most safe are more in the 5-6% range, but the ones with a little edge to them are around 7, and those with real risk are much higher. Boardwalk pipeline is around 7.5% (not a recommendation). Ferrellgas is at 10.5% (again, not a recomendation). Calumet is also around 10%. Again, none of these are recomendations, they have these yields because willing buyers and willing sellers cross there. The only point is that 7% is not impossible, even in todays market with the fed distorting rates.
If that hypothetical minimum wage worker was looking for something to put away and sit on for 20 years, 7% is quite achievable.
Pretty long piece. I'm gonna need this in graphic novel form for it really to sink in.
Big oopsie in my post above... if anyone would like to learn how to darn socks.... Tut-tut Marianne.
In public grade schools back in the day [1930s and early 40s], boys had to learn "shop" as it was called, and girls had to take "home economics" which consisted of sewing and simple cooking. I tried to talk the management into letting me join a shop class, but no dice. I took quite a shine to the cooking part of Home Ec, since my mother and grandmother had given me a head start, but "shop" with its dark and dangerous tools which could inflict major damage if one wasn't careful, had the allure of the forbidden.
What is that wonderful Heinlein quote where he says that everyone should be able to write a sonnet, cook a meal, deliver a baby, run a country, etc? That was my ambition back then, and it was pretty radical.
As the saying goes, you crack me up. So true, so true. I think you should write a memoire. Much of what you share runs true for many of us.
Happy 2012 to you and yours.
A family living on two minimum-wage jobs right now would be earning around $31k. Subtract cost of living and I'd be surprised if there's 10% left to save. Now, if the 12.4% SS contributions were going to real investments, that would go a long way. They never have gone to real investments.
I had a stunning vision of converting the SS trust fund to a mutual fund by trading shares or doing something similar. The SS money winds up in the private sector and goes there from now on. The trust fund becomes an actual trust fund. Benefits are based on contributions, not legislative whims, and retirees have skin in the economic game because their incomes depend on the economy. When people pass away, there's a principle to bequeath. What's not to like? Oh, yeah, the wealth and liberty, that's what not to like.
A family living on two minimum-wage jobs right now would be earning around $31k. Subtract cost of living
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.... does that include $200 dollar running shoes?
Sorry: I grew up in New York and saw wave after wave of immigrants (including my own Jewish family) start with nothing and work their way up.
While most of my cohort of American Jews were already solidly suburban and went to better colleges - I opted to attend City College in New York, where I saw another generation of young people doing just what my grandparents and parents did:
- guys from Ghana living 3 to a room in Brooklyn, holding down restaurant and security guard jobs while attending college - and both saving and sending money back home.
- Asian kids from the stereotypical sleep-on-mats-in-the-family-sweat-shop going to college (we even did one of our engineering projects in the corner of one of these sweatshops - with old oriental aunties beaming at us "college boys" over their sewing machines...).
My mom worked in urban renewal programs - and saw the Koreans shopkeepers showing with shopping bags of cash to to buy (and rebuild) bombed-out brownstones...
When the official definition of "poverty" is just one car and just one television, I lose interest... and when the official solution is "gimme" I get angry...
Agreed. The average American has lost the ability to live frugally, fails to comprehend what is necessity versus what is a desire, and has a sense of entitlement big enough to break down a team of horses. And not nearly enough work ethic to avoid using government as the mechanism to extort their way to those entitlements.
“’Taxes are the price we pay for civilization,’ according to Oliver Wendell Holmes. This claim has cost us dearly… If we as a nation continue to believe that paying for civilization through taxation is a wise purchase and the only way to achieve civilization, we are doomed.”
I admit it, I've hired illegals to work for me. They've painted a fence, done yardwork, etc.
But here's why I did it. They do exactly what you talk about. These people do what Americans used to do. Work hard, live frugally, not complain.
The people I hired, I paid above minimum wage, gave them transport or fares to arrive and leave, and bought them lunch. In each case, I still saved significantly over what a local tradesman would charge. Why? Because (and I don't fault these people, they are businessmen) they want to live as well as anyone else. But they want to do it on their own terms, by increasing the cost of their services to a point that it's just too much for most middle-income people.
I respect the people I hired, because they are craftsmen/tradesmen in their own right. But they aren't allowed to compete here. The 'old days' of New York saw people living the way you describe because we had much more open immigration rules and laws. As a result, there was always competition to do a job.
I know I'll get some backlash on this one, because I hired an illegal, or because I'm undermining U.S. workers, or some other nationalistic/patriotic nonsense. Fact is, I am willing to accept whatever people have to say because it doesn't bother me one lick. We are a nation built on competition, and the only reason the competition isn't much of one anymore is because we've changed the rules and rigged the game.
I'm opposed to illegals coming into our country and using our services free of charge. But I don't see that as a problem of the illegals, I see that a problem of a system which gives things away willy-nilly. If I could move to a country that gave me free everything, I would, too (in fact, this is occurring in Belgium right now).
But I hired people who want to work, people who want to live here, people who want to pay taxes and people who want to compete. The only difference between them and the tradesmen in my area is one thing - they lack citizenship. I have no problem with my choice, I respect what these people are going through, and they do a damn good job. And I treated them more than fairly.
I agree with Geoff. With all regards, BD, you picked the wrong quotes out of an article that tried to cover some of the realities of a government-run society. A minimum-wage couple will never accumulate such fiscal independence today, but he addressed other broader issues.
AND, you've hit my camel's-straw-on-the-back moment:
How many people were lined up to buy $180 gym shoes and willing to fist fight for a place in line over the holidays, but unwilling to put aside part of their available cash for future needs.
Visit a foreign country and get off the beaten path (if you dare) to see families of 12 living in 6 x 10-ft discarded shipping containers. Our America is the most giving country -- both domestically and in foreign aid -- than any in this globe. Same goes for protecting minorities' rights. Look to our people going into service to protect the rights of others overseas.
We need to grow up, do our research and appreciate the insight that went into forming this country. Progressive politics has been around for a long time -- the early 1900's bred liberals, anarchists, etc. (some of my relatives) who were ever willing to reinvent the Declaration of Independence and The Constitution for short-term solutions to the dynamic change the industrialization and expansion in our economy -- BTW, generated by the freedoms and forethought of people who deliberated long years on how to structure our country to best protect the individual from the creep of elitism they tried so hard to escape when they came to America and, thereby, give rise to economic freedoms.
Do any of us even know the laws, rules, acts perpetuated on us every day by legislators who don't read or abide by them.
Geez. (this is a small rant)
"modest 7% return"
In which investments, exactly? Which must be nearly risk-free, as we don't want to half the investors to lose their money while the other half prosper.
Sorry not allowed. Those low earners must not rise above their station through thrift and sacrifice. It makes the Ivy League types look bad.
Back in 2000-2001 when they started letting the uniformed services contribute to the Thrift Savings plan, I researched it to help advise my juniors. At that time, no one could contributed more than 10% of their salary regardless, which meant that a low payed employee could never save retirement of a higher paid one no matter how much they were willing to sacrifice. Now, a single junior soldier or sailor could save quite a bit if they wanted living in the barracks or on ship, especially when deployed. And higher savings while young is the best way to compound that interest. It seemed like the rule was in place to keep some lowly clerk from making the GS-13 look bad.
Fortunately, they removed that rule and everyone can contribute up to the IRS maximum now. But it was interesting to see the barriers imposed on the most thrifty either to keep them in their place or to make sure they don't save to much from the tax man.
While retiring on $100,000 a year seems pretty good, there are clearly issues here.
First, and several people mentioned this, is the 7% figure. Interest rates vary. 7% is the assumed growth 'average' for stock investments. Lately, that's clearly been an outlandish notion. Since 2000, you're lucky if the average is much more than 2%. Still, it doesn't make the idea absurd, just not as lucrative. After all, SocSec isn't going to grow any faster, either.
Second, $100,000 a year sounds like quite a bit of money. But I'm reminded of a scene in the movie "Broadcast News", where Albert Brooks' character is a child and being bullied. His curse on the bullies is "None of you will earn more than $20,000 a year!" The bullies walk away laughing "$20,000 a year? Not bad."
"Broadcast News" came out in 1987. Assuming Brooks' character was 30 in 1987, and 12 at the time of the curse, $20,000 a year in 1969 was, indeed, quite a bit of money.
My father, in 1976, asked me what jobs I could think of that would pay me $20,000 a year. So at the time it was still a pretty good salary.
By 1985, when I entered the work force, $20,000 a year was merely OK. By 1990, $20,000 was an entry level wage. Today, entry level is about $40-45,000 in my industry.
$100,000 may seem like a good living wage. But in 30 years, it may be a pittance.
Inflation ravages income.