I wondered where your title was going with this. Point well made, and as a real estate appraiser (day job) in Los Angeles, I see daily the object of desire - a 1930s 2BR/1BA 841 square foot house on a 5200 sf lot, sold for $1,200,000. The owners parents bought it in 1970 for $25,000. I get the time value of money, but did $25K feel as far away then as $1.2M does today? The argument you make is attractive, in that we should live in the moment. What with the state of the world today, maybe that is the answer?



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Perhaps tangential, but I wonder if there's something to the way in which our culture has shifted away from thinking of "virtue" (qualities important for their own sake) to something more like "merit" which often presents/aspires to the same, but in practice seems inescapably tied to situational things like circumstance and privilege.

For instance, in one sense my wife and I are the picture of "sound financial literacy": we both have excellent professional jobs, healthy emergency funds, savings, retirement accounts, and we waited to buy a house until we could put 20% down in a major East Coast metro. And while proportionally we spend less on "splurge" expenses than many others do, that's not a factor of inherent frugality or stoicism, it's just because our combined incomes are high enough that we don't have to worry about dropping several hundred dollars in the first hour of Brandon Sanderson's kickstarter for his 4 surprise novels.

For someone *not* in such a privileged position, the societal benefits of showing the underlying virtues is non-existent or even negative, so perhaps that's where the disconnect arises? Virtue is valuable *for its own sake* but when society penalizes it in practice while hailing "merit" that is at least in plurality really "good fortune" of course you're gonna end up with really weird extrapolations...

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May 23, 2022·edited May 23, 2022

This is an excellent post. I'll add my n=1 anecdotal experience to your assessment. My (much older) dad grew up in the Great Depression and went to college on the GI bill. He bought a modest bungalow in the DC suburbs before he went to college to house his first family he'd had with his high school sweetheart. They drove around in his singular, but brand-new Buick.

Like most young men of his generation making very little in the much-healthier but still low-paid field of journalism, he wasn't exactly flush. He didn't eat avocado toast or wagyu beef. But he could still afford the whole package of stay-at-home wife, kids, house, and new car in his mid-20s in a way that I, his son (born into the upper-middle class with a very expensive university education and much higher earning potential doubled with my similarly higher-earning partner), could never afford a half-century later in the same metro area. Getting married? Kids!? New car!?!? An actual house!?!?!? Now, we like to castigate ourselves and compare our debased morals with the thrift and grit of a Great Depression baby like Dad. And being a modest daily spender, combined with juicing the newspaper expense account for meals and not having any student loans, certainly helped. But more than that, it was just down to everything else fundamental just being radically less expensive.

I can't complain too much. Because I do have all those American Dream-type things now. But it didn't happen for me for another decade in my life, in my mid-30s. And only really because I left the United States and live in a country where having the American Dream is far more accessible. And I found that it's not just home price inflation and student loan debt servicing that blocks access to my parents' late 20th Century middle-class life: It's the cost of healthcare, childcare, transit, etc. I've tallied up the latter line items and that would literally run our family $50K extra for the first 5 years of my son's life if we were to move back to the US tomorrow. Even now, with a dual-earner household of two higher-paid tech workers, I just couldn't afford the life my dad could afford at age 28. And I really can't afford my own childhood--the life that we all thought was a little middlebrow and crummy when I was a kid!

Meanwhile, most of my peers and my brother back home will maybe just never afford any of it. Ever. So, instead, they'll enjoy the hedonic pleasures of Ethiopian food and travel to Costa Rica instead of the stability of owning a home or the subtle transcendence of having a family. The child-free, HOA-avoiding, drunken-brunch crowd among my cohort pity my lack of freedom. But maybe they secretly despair of ever "adulting." So, I accept their professions of pity in stride and play along bemoaning the pains of parenthood and the lost joys of unfettered individualism.

This isn't even just a problem for the middle-middle class or the lower tiers of the upper-middle-class. I even have a few friends who make $300K+ (outright rich, in my book) and still can't afford to buy a modest house in their very expensive local real estate market! That's not just annoying wealthy people cosplaying as middle-class for sympathy and to avoid critique: the numbers just don't add up for them in places like New York City, LA, or San Francisco.

To bring this full-circle: I have another quite financially comfortable friend who bought a house just a block away from the house where I was born on Capitol Hill, SE DC. That, my parent's old house, a Victorian "with good bones" (and regrettable surroundings), they bought in the late 1970s for $80K, shortly after they first met. It now sells for ...$3.5 MILLION! My friend's smaller, similarly-dilapidated Victorian "starter home" nearby cost her a cool $1.3M. She will rent it out for a profit for a few years before moving in, to help defer the cost, which is at least less than she'd pay in the Bay Area. Having to buy back my childhood home for perhaps 20x what my parents paid for it is a pretty neat metaphor for all this.

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I tend to look at intergenerational economics from the other side. How many Boomers are able to retire based on savings, investments, and pension plans? Statistically, there's a short list of "haves" and a long long long list of "have nots." The average Boomer has a mere $56K in retirement savings. That's not going to cut it. Municipal and state pension plans (to the extent they exist anymore) are seriously underfunded and just can't pay out as expected.

As a kid in Jersey I used to do chores for locals in one of the many retirement villages in the area. Cleaning, gardening, etc. The old people I worked for in the early 1980s belonged to the GI generation. They paid cash for their retirement bungalows and lived comfortable but modest lives. They often died and left large sums to their children and grandchildren. In sharp contrast, the current crop of retirees leverages up with mortgages when they're already north of 65 and then tap the equity in those homes to put in granite counters and fancy appliances. They will die with negative equity.

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Thank you and kudos on year one. I share your articles frequently. You need to speak at an APA conference (local, state or national!) - You'd be good. - Tony

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