Myths are the stories people live by. They are the stories that give living meaning and allow people to put themselves into context. Now, the interesting thing is that you can have two myths which are superficially different but are still (almost) equally useful [if they have the same underlying structure].
The ERE myth, is that if you work and save hard, you can retire in short order. This is a functional myth. It is a working theory that is different from the Middle Class myth, that is, if you work all your life, you can get to buy a lot of things at the mall. That is also a working theory. Now, the Middle Class myth produces a highly specialized worker that relies on consumption for all his needs. A worker that is subject to disruptions and at the mercy of the system, hence the focus on emergency funds and index funds, an ant utterly reliant on the continuing function of the ant hill (I suspect middle class consumers live in a constant state of financial worry?!). The ERE myth produces a resilient generalist with several sources of income, the skills to create solutions that do not rely on money, and an environmental resilience that has a certain ascetic zen-like attitude.
Now, there is another myth that produces the same functionality as the ERE myth. The myth that the world is on a tipping point. I am not going to go into the details here. Either you believe it or you don’t. I am also not going to give the reasons; I’m sure you have all heard them: global warming, peak oil, and overpopulation, the latter is sometimes euphemistically known as “food insecurity”. This is the real reason I am writing this blog, and so here I am essentially coming out of the doomer closet. I think that with ERE I have found the optimal solution. You can not tell people that the world is going to change radically: Only 1% will listen, because most people are reactive and currently culturally inclined to be optimistic. However, early retirement can be sold because it is in the realm of the comprehensible for a greater fraction of people, 10%; and it sounds good too. The good thing here is that if I am right, an ERE lifestyle will leave you better prepared for a changing world. If I am wrong, party on. You’re retired, go have fun, while everybody else keep on working to buy stuff and pay interest and dividends to you. It’s a win-win solution. Alright, enough about my modest attempts at social engineering. Onto the dooming …
I do not think a total collapse [of the civilization of the developed world] is far fetched. Consider the Roman Empire. Among other things, they had indoor plumbing, not to be seen again for the size 1500 years, and ditto for the size of their cities and their engineering and building techniques. [It's a hard thing for us to imagine that people did things better a thousand years ago than we are even capable of doing today. Just try to wrap your head around a hypothetical case.]
I do think decentralization is the answer to world-empire model (*). We in the developed world are, essentially fighting nature, as we have run out of places (other countries) to conquer for resources (the Middle East was just the last stand). Once, the costs of that become too high, complexity will collapse. Yes, the houses and roads and all that will still be around, but there will be no technological support to build new iPods by sourcing material from all around the world, etc. Consider that your ability to buy an iPhone relies on Apple being able to ship exotic minerals from many different countries, some of which are unstable, to China (or where ever it’s assembled) which is only possible due to a complex system of sourcing that relies on cheap energy, this only being possible from a continuous military presence in the Middle East. All this is very expensive (and paid for by the government which takes its money either from workers (Democrats) or savers and fixed income recipients (Republicans)), and it has diminishing returns.
In the future, a 100 years from now, once your iPod is dead, it will be repaired rather than replaced — and once it is unrepairable, that is the end of the iPod experience. Forsooth, try to see if you can build a toaster from scratch. A bigger problem is that we have destroyed many of our local resources (where are you going to mine the metal for the toaster). Hence, what will happen is a decentralization, an insourcing, a localization. The raw resources will be in reusing and recycling resources already in existence, that is, remaking. The future winning companies will not be companies that can create value based on brands, that is, on air or abstract dreams, information if you will. Such dreams ONLY exist if things like food, shelter, and conveniences are so established that people do not need to think about them. The same goes for scientific research. Scientist’s brains only function if they have food on the table—the modern day hyperspecialization is really in a precarious state. Take away two generations of scientists and their instrumentation and future scientists will not be able to replicate the experiments in the papers. I’m not kidding you! Now, the future winning companies will be those who manage to solve the interface from information and back to reality: 3D printing, remaking, refashioning, and building things that are meant to be truly recycled—most recycling today is actually downcycling to an increasingly lower grade of material. The future “degrees” will be in construction and engineering. Not finance , marketing, brand building, etc. The difference between the two is that the former connects humans to nature (something that is sorely lacking today) and the latter connections humans to humans or rather humans to systems invented by humans.
(*) The period known as the Dark Ages was essentially the system dynamical solution to the collapse of the empire. We are talking technology that is easy enough for a small group of people to understand (consider that a very large group of several hundred thousand people is required to develop a handful of genius scientists and the associated technologists). The only form of centralized control for a poor region is religion as this is the cheapest means to control; the more expensive means of control are a central currency system and a government bureaucracy.
There is significant debate over just how fast collapses occur. The Roman Empire collapsed over a period of 50-150 years. This is slow enough for most people (anyone younger than 70) not to notice.
What can you do?
- Stay on course. You need to liberate a significant amount of free time to reskill yourself. I have done that.
- Learn something useful. By useful I mean something that you can do completely by yourself using locally available resources. I think watchmaking is moderately useful. A watchmaker can essentially build a watch from scratch. Building a computer, on the other hand, or anything electronic is practically impossible, However, learning to repair things, even computers, e.g. “marrying” old broken computers to make a new functional unit will be useful. Any kind of contracting will be useful. If you prefer brainwork, consider design and architecture, that kind of stuff. If you prefer medicine, specialize in general practice rather than nose jobs.
- Everybody will need to learn how to compost and garden. This is urgent. With the current methods of industrial agriculture, all the topsoil will be gone in about 80 years. Fortunately, it can be reformed rapidly with biointensive gardening (in nature the process takes thousands of years). This is also more labor intensive. Expect to spend time in the garden every day.
- Get in shape. The next few decades is really not the best time to develop diabetes, high blood pressure, or a body that is unsuitable for physical tasks or require constant hookup to the pharmaceutical industry to function.
- Investments that will do well are real estate, renewable resources, and any kind of waste/recycling management. At least that’s where my money is going to be. Commodities will be the roller coaster if you can stand the swings. Prices will go up, then down, then more up, then not as much down, then even more up, etc., a better bet might be commodity service companies, like drillers, etc. Consider retailers and consumer staples (the sellers and distributers, not the manufacturers). Do NOT invest in long term debt! Technology will be in a long term secular decline (believe it or not).
How far are we?
That depends on your perspective. If you take the view from 400000km, humans are no longer going to the moon and have not been doing so for 40 years. From an energy perspective, the available energy/capita ratio peaked 30 years ago. Real wages have been declining for a good 30 years as well (a connection?). All signs point towards us winning over nature. Unfortunately, we have not figured out how to survive without nature and that is a problem of crucial importance.
On the other hand, we have experienced a technology revolution in terms of personal computing and the internet. I’m reluctant to include cell phones here—I do not think they have created much marginal business value, they have merely created the appearance of activity; of course for the hoi polloi they merely act as a drain on funds for entertainment purposes. It’s been 60 years since the last world war—everything since then has been local scale, essentially imperial policing or frontier battles with “unruly barbarians”, which incidentally are getting costlier and costlier (it’s a question of extended supply lines). A solidified empire is safe from external threats. Many civilians in the empire today have never seen war. Longevity has been on the increase although there are now reports surfacing that our generation may be the longest living, in other words, our children are now less healthy than us (they eat too much sugar and move too little) and thus they will not live as long as we do. Of course, qualitatively speaking, the fact that people can now survive for a few years more while hooked into tubes and machines may not be seen as a positive thing. I don’t. However, on another good note, the opportunities for entertainment are now more diverse than ever. It is fully possible to entertain yourself to death; alternatively, keep playing and enjoying the consumer party and that “they” (the very same people that are warning about upcoming trouble) will think of a technological solution while the Titanic is steering into iceberg territory.