The Pensioner and the Aristocrat

There’s a small movement of personal finance bloggers who argue that a lot of people should be retiring early – think 35 or 40 rather than 65. Work really hard for a few years, save half of your income or more, and live off of the interest for the rest of your life. Of course, retirement doesn’t have to mean idleness; it means freedom to pursue whatever interests you have, whether it’s writing a novel, long-term travel (cheaper than you think!) or even getting back into the industry you love, but with the freedom to only work on the interesting parts.

Lest you think this is only for the 1%, they’re happy to give examples: the Portland office worker making $70k, the CPA who pulled it off after just a few years. The math is simple: cut your spending so they can afford to save a lot, and once your savings reach 25x your annual spending, you’re good to go (assuming a conservative 4% safe withdrawal rate).

Now, this approach is not for everyone – for one thing, many people really enjoy their jobs and rely on work as their major social outlet, and given the “freedom” to retire would want to go right back doing what they’re doing. But I bring it up to demonstrate that most bright people in rich countries – that probably includes you – could easily support an aristocratic lifestyle. If that’s something that we wanted, all we need to do is get a reasonable paying job, grind for a decade, and we’d be there.

Some people are coming to similar conclusions, but they’d prefer the process to be mediated by the government. There’s been a lot of talk lately, from many ideological corners, about a universal basic income – scrapping all our complex welfare programs and replacing it with a guaranteed income. From first principles, this seems doable. Our modern transfer programs cost a lot of money. If we scrap them all and just write everyone a check, it works out to enough money to let everyone live at the level of a grad student. Based on the lives of my grad student friends, that seems pretty awesome.

There are serious criticisms of the proposal as well. Many of the proponents seem to be relatively isolated from the actual struggles of the poor, and how much of it is about being immersed in a bad culture rather than (in the US) actual material deprivation. And they tend to assume that we’d have enough unified political will to prevent these transfer payments from escalating without end when confronted, say, by cute pictures of starving kids whose parents gambled away their dole for the year.

But I’d like to address a different point here: regardless of the merits of the proposal, there’s a lot to learn from the fact that it’s becoming popular today. Let’s leave the quibbles over the bean counting and view the proposal as poetry, as aspiration. What do its proponents think people will do with all their free money? Let’s look at the best written scenario I’ve read on the subject, from Scott Alexander:

Consider your life on a $20,000 a year income guarantee. No longer tied down to a job, you can live wherever you want. I love the mountains. Let’s live in a cabin in Colorado, way up in the Rockies. You can find stunningly beautiful ones for $500 a month – freed from the mad rush to get into scarce urban or suburban areas with good school districts, housing is actually really cheap. So there you are in the Rockies, maybe with a used car to take you to Denver when you want to see people or go to a show, but otherwise all on your own except for the deer and squirrels. You wake up at nine, cook yourself a healthy breakfast, then take a long jog out in the forest. By the time you come back, you’ve got a lot of interesting thoughts, and you talk about them with the dozens of online friends you cultivate close relationships with and whom you can take a road trip and visit any time you feel like. Eventually you’re talked out, and you curl up with a good book – this week you’re trying to make it through Aristotle on aesthetics. The topic interests you since you’re learning to paint – you’ve always wanted to be an artist, and with all the time in the world and stunning views to inspire you, you’re making good progress. Freed from the need to appeal to customers or critics, you are able to develop your own original style, and you take heart in the words of the old Kipling poem:

And none but the Master will praise them
And none but the Master will blame
And no one will work for money
And no one will work for fame
But each for the joy of the working
Each on his separate star
To draw the thing as he sees it
For the God of things as they are'

One of the fans of your work is a cute girl – this time I’m assuming you’re a man, I’m sure over the past four years you’ve learned some choice words for people who do that. You date and get married. She comes to live with you – she’s also getting $20,000 a year from the government in place of an education, so now you’re up to $40,000, which is actually very close to the US median household income. You have two point four kids. With both of you at home full time, you see their first steps, hear their first words, get to see them as they begin to develop their own personalities. They start seeming a little lonely for other kids their own age, so with a sad good-bye to your mountain, you move to a bigger house in a little town on the shores of a lake in Montana. There’s no schooling for them, but you teach them to read, first out of children’s books, later out of something a little harder like Harry Potter, and then finally you turn them loose in your library. Your oldest devours your collection of Aristotle and tells you she wants to be a philosopher when she grows up. Evenings they go swimming, or play stickball with the other kids in town.

When they reach college age, your daughter is so thrilled at the opportunity to learn from her intellectual heroes that she goes to Chase-Bear-Goldman-Sallie-Manhattan-Stearns-Sachs-Mae-FEDGOV and asks for a loan. They’re happy to give her fifteen thousand, which is all college costs nowadays – only the people who are really interested in learning feel the need to go nowadays, and supply so outpaces demand that prices are driven down. She makes it into Yale (unsurprising given how much better home-schooled students do) studies philosophy, but finds she likes technology better. She decides to become an engineer, and becomes part of the base of wealthy professionals helping fund the income guarantee for everyone else. She marries a nice man after making sure he’s willing to stay home and take care of the children – she’s not crazy, she doesn’t want to send them to some kind of institution.

Your younger son, on the other hand, is a little intellectually disabled and can’t read above a third-grade level. That’s not a big problem for you or for him. When he grows older, he moves to Hawaii where he spends most of his time swimming in the ocean and by all accounts enjoys himself very much.

You’re happy your son will be financially secure for the rest of his life, but on a broader scale, you’re happy that no one around you has to live in fear of getting fired, or is struggling to make ends meet, or is stuck in the Rust Belt with a useless skill set. Every so often, you call your daughter and thank her for helping design the robots that do most of the hard work.

Note how different it is from the lives of the Aristotle-reading, Kipling-quoting class today. If I had to sum it up in one word, I’d say it’s independent. Not only are you socially independent, living in a remote mountain cabin with a small group of close friends, you’re intellectually independent too. Freed of the anxieties of citation-mongering or trying to land the big sales account, our protagonist embarks on an isolated intellectual quest answerable only to himself for his progress. His life – as full of intellectual ferment as it may be – looks, and feels, leisurely. [1]

This rigorous yet free life of the mind sounds extremely appealing to the intellectual 1%, and living in this utopia would be reason enough to favor a universal basic income, even leaving out all the selfless stuff about fixing the culture of poverty. Yet upon reflection this is not a dreamy utopia of the far future, but an attempt to recreate an aristocratic lifestyle of the past. In exchange for giving up some worldly status-climbing and wealth, you get a position of moderate freedom – and a moderate amount of guaranteed prestige.

That bit about guaranteed prestige might sound trivial, but it’s the one thing that makes all the rest of the setup possible. Having a floor of status you can’t fall below seems somehow necessary to allow intellectual freedom.

As we’ve demonstrated, the Colorado retreat is perfectly feasible right now. Certainly Scott himself, set up to make a physician’s salary, can easily retire after a decade, even including the low-paid years of his residency. But there’s no narrative in our head that painting landscapes and reading Aristotle all day is okay, let alone admirable. Someone trying to live that life would be much less respected than a practicing physician – if they’re not just regarded with frank incomprehension and skepticism. And so, the idyllic retreat slowly gets worn down among constant questions from parents when you’re going to get on with your life, the lack of nearby parents who understand and approve of how you’re raising your kids, and the gnawing worry that even your intellectual work will never be as cool as what those kids at Harvard or Mountain View are working on. And so smart people march on to officially approved lifestyles and become doctors and coders and accountants and postdocs, and yearn for that rustic mountain cabin in the Rockies.

But until very recently, they had another option. Even after the death of the old aristocracy, there was a pretty guaranteed way to live a low-key life of the mind; you could join academia. Now academia today is a rat race like any other prestigious career track, and if you want to make it you have to apply your nose firmly to the grindstone and not spend too much time fooling around. But it’s really only quite recently that academia was so difficult and Darwinian to try to break into. James Watson, as recently as the 1950s, was a mediocre college student until he read What is Life, got excited, and decided to go to grad school in Indiana to work on it. Today he wouldn’t stand a chance against students who had spent undergrad getting good grades, working with the right mentors, and generally jumping through the right hoops.

I think the basic income folks are fundamentally reacting to this shift, this closing of the last sanctuary of aristocratic intellectual freedom. That’s why they have a low-resolution view of the poor but portray an incredibly compelling portrait of what an aristocratic intellectual life could look like. The proposal isn’t about economics, it’s a cry for help, a semiconscious cry of pain at the possibilities that were lost as the last academies closed their gates. And whatever one may think of the policy proposal itself, I think this pain is perfectly real, not only for individuals but for a society’s intellectual health, and whatever else they do, the proponents have done a great service by articulating it.

But their limitation is a belief that money is the key problem that needs to be solved. That’s clearly not the case – if there was that much demand for an aristocratic lifestyle, we’d at least see the richest 10% of Americans pursuing the early retirement path – it would be a full fledged subculture rather than a couple crackpot bloggers. Instead, the wealthy and well-educated work harder at their careers than anyone else.

And so the universal basic income is a red herring – the limiting factor is cultural, not economic. We already have all the wealth we need to take a real stab at mass aristocracy. All America could be an Athens, if we had the culture to support it.

[1] The only dissonant note is the notion that our protagonist wins a wife with his art, which hints that status is still the ultimate scarce commodity, and that the drive for status could ultimately become as all-consuming as at Versailles.

This piece was reposted from our previous blog.