Newsletter 02/26/22
I was thinking about the different ways people have tried to compensate for increased costs. Two ideas come to mind. One is the philosophy of transcendentalism, which Thoreau promotes in Walden. Transcendentalism encompasses a bunch of things, among them is an increased importance of nature.
This week's post is a bit long; above is some music to listen to as you are reading. Check out my Spotify playlist Aurora-Hans Zimmer if liked these scores:
A free Notion template
I combined ideas from Ali Abdaal (I can't seem to find the original template that I got from his site) and Red Gregory (her template is linked here) to create a daily journal that I swear by.
Things I have been contemplating:
Last week, I introduced that I was reading Capital in the 21st Century by Thomas Piketty.
Here is a quote that I found quite interesting:
To proceed further, it will be useful to break the top decile of the income hierarchy down into three groups: the richest 1 percent, the next 4 percent, and the bottom 5 percent. The bulk of the growth of inequality came from “the 1 percent,” whose share of national income rose from 9 percent in the 1970s to about 20 percent [from] 2000 [to] 2010 (with substantial year to year variation due to capital gains), an increase of 11 points. To be sure, “the 5 percent” (whose annual income ranged from $108,000 to $150,000 per house hold in 2010) as well as “the 4 percent” (whose income ranged from $150,000 to $352,000) also experienced substantial increases: the share of the former in US national income rose from 11 to 12 percent (or one point), and that of the latter rose from 13 to 16 percent (three points). By definition, that means that since 1980, these social groups have experienced income growth substantially higher than the average growth of the US economy, which is not negligible.
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In my view, there is absolutely no doubt that the increase of in equality in the United States contributed to the nation’s financial instability. The reason is simple: one consequence of increasing inequality was virtual stagnation of the purchasing power of the lower and middle classes in the United States, which inevitably made it more likely that modest house holds would take on debt, especially since unscrupulous banks and financial intermediaries, freed from regulation and eager to earn good yields on the enormous savings injected into the system by the well- to- do, offered credit on increasingly generous terms.
In simple words, what Piketty is trying to say is that the financial crisis that befell the USA in 2008 had as much to do with the inequality of income growth across the various socioeconomic strata in the USA as it had to do with the increasingly aggressive trade deficits that the USA took, (these deficits are balanced internationally by trade surpluses in Germany, Japan and China).
This is due to the fact that the top 10% of income earners’ incomes actually grew way more than the incomes of the bottom 90% As such, bottom income earners leveraged themselves on credit granted by a deregulated lending industry (which still exists today).
To enter into the top 10% of income owners back in 2014 (when the book was published), one needed a salary of about 100 000$. Today, just 8 years later, in most places un the USA, to enter into the same group, one needs a salary of 200 000$. Minimum wage today in the USA ranges from 5$ to 15$ depending on the state, with Alabama, Louisiana, Mississippi, South Carolina and Tennessee having no minimum wage requirements.
2. I was talking to my dad about inflation. Here is a quick fact I garnered from that conversation: inflation statistics don’t take housing, gas prices, and food into account, despite these being three of the biggest expenditures for most people. Therefore, published inflation rates, in my view, are not a true measure of the changing (and largely decreasing) value of your savings.
This next thought is speculation, so take it with a grain of salt. It may make sense, therefore, that if people put money in the stock market, at least in part in order to prevent their capital from devaluing, that the market try to find ways to become detached economic reality (as it is currently described) and soar to new heights. Let me know if you find something that confirms or refutes this idea!
3. I was thinking about the different ways people have tried to compensate for increased costs. Two ideas come to mind. One is the philosophy of transcendentalism, which Thoreau promotes in Walden. Transcendentalism encompasses a bunch of things, among them is an increased importance of nature. In Walden, Thoreau assumes a sort of 'zen affluence' living on ‘unimproved land’ (to put it in economic terms) so basically, at least in his case, in the forest. The problem with this method, of course, is that it requires at least some detachment from civilization. Another idea came up when reading Being Mortal by Atul Gawande. In it, he talks about kids living with their parents, as is typical in South Asian societies. While, for many years, the west has asserted that children should become independent as early as possible, this has not always been the case. Emily Dickinson, the poet from Amherst Massachusetts, lived with her parents until they passed away when she was in her early forties.This method gives children more time to become independent, and allows them to stay integrated in society; however, it too has its drawbacks. One, parents may not have enough resources to help all of their kids. Two, intergenerational power struggles can often occur in the home. Gawande says that this has been his family’s experience back in India and he asserts that people will always choose a more independent mode of existence if possible. I personally argue, and I believe that Gawande would agree, that people would probably prefer a more independent lifestyle but few would go to the lengths that Thoreau did to achieve it.
Another interesting thing to think about is that Gandhi read a lot of Thoreau. Gandhian economics believes in alleviating poverty through small scale cottage industry and improved farming.
Some purchases I made:
I decided to buy some lights so that my face would look slightly better on video. The ones I got were from Neewer, I would highly recommend these. They are pretty cheap, come in at about 50$ and work wonders for how you look on camera.
2-Pack with Adjustable Tripod Stand and Color Filters for Tabletop/Low-Angle Shooting, Zoom/Video Conference Lighting/Game Streaming/YouTube Video Photography
I also decided to buy the HyperX Solocast, but unfortunately, when mine arrived, it didn’t work with my computer, their tech support didn’t pick up even after I waited for a few hours, so I did end up returning the thing. That being said, the mic has gotten a lot of really positive reviews online, so maybe I just got unlucky.
USB Condenser Gaming Microphone, for PC, PS4, PS5 and Mac, Tap-to-Mute Sensor, Cardioid Polar Pattern, Great for Gaming, Streaming, Podcasts, Twitch, YouTube, Discord, Black
Books I am reading:
Walden, Capital in the twenty-first century, The Henna Artist, Being Mortal, Complications
As you can see, I didn’t finish any of the books that I was working on last week, and have added even more to the roster. If you are someone who is trying to take up reading, I would actually highly encourage this approach. It is okay to get tired of reading a story and pick up another book. Mixing like this also allows you to merge different ideas from different authors and therefore forge a unique perspective.
Some thoughts on Russia:
Not in any way a complete picture but some thoughts from the past worth considering today.