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Friday, July 26, 2019

The Concept of Economic Incrementalism

Have you ever wondered by you and just about everyone else in America, much less the planet does not get to live in beautiful mansions, drive expensive head turning sports cars and take private jets to your favorite destinations..

Why it is that no matter how much, long or hard someone works or how much one saves and scrimps and self-denies, it is nearly impossible to be truly wealthy?

It is no accident - the System sets it up this way because otherwise for better or worse, there'd be no world as we know it..

The concept is called economic incrementalism is basically at its simplest terms is like this:
Each employer has employees that do different tasks and functions.. 

And for each worker, that employer has to determine within a competitive economic environment what is the salary based on education, experience, etc to pay someone that is just enough that the worker will not quit yet not so much to allow that worker the financial freedom to just stop working

Each worker accepts the salary offered because the practical need to pay bills and provide toward a family takes precedent over principles such as being underpaid and/or overworked
On occasion a job will pay enough to also allow for savings toward something nice or a rainy day but it is never enough to simply retire; never enough to curse the boss out or punch a co-worker in the face, walking out and never returning

And then to make sure every worker has as little as possible beyond covering the necessities of life, the government takes a portion of each person's toil

If someone pays 25% in income taxes, it means every work day in a calendar year between January 1 and March 30th; all those days dealing with snow and cold rain and rush hour traffic nightmares, etc..  all that earned income goes to the tax man

That is economic incrementalism.
Occasionally the system will allow someone to be extremely wealthy at a young age, usually an entertainer or an athlete and this allows the common masses to have something to dream and fantasize about.. A belief that one day maybe their situation could change into that

The system can afford to allow a few multi-millionaires but not for everyone to become one..

It needs people borrowing massive amounts of money and being in perpetual debt..  student loans, car loans, mortgages, second mortgages, credit cards..

The system to paraphrase from the film Caddyshack, needs ditch diggers too
If everyone was wealthy and able to live out their dreams with no financial worry, who would bother to work the millions upon millions of inconsequential and low/no skilled jobs the workforce needs to function

How could life function other than to raise the costs of products and services to such an ungodly amount that $1 million would be like $100

For an individual to have any chance to succeed within an economic incrementalism society, he/she would have to deny themselves practically everything until their later stages of life

Let's take purchasing a home as an example..
Two people, Andy and Bob are both 35 and plan on buying homes separately that will cost each $200k

Andy wants his home now so he goes the mortgage lending route, putting down $20k at 3.875% interest for 30 years fixed which is the current real time mortgage rate

Using a mortgage calculator, he will be paying just under $1,300 a month which comes to $15,600 a year

After the mortgage is repaid, Andy will have paid out $137,185 in interest making the $200k home total really $337,185
Bob decides to wait and puts $10k away every year until he is 55 then buys his $200k home..

In order to avoid being financially raped for $137,000 by a bank just to have a home, Bob has to sacrifice every dream, fantasy and goal involving home ownership for two decades

The system can not survive if most were like Bob..  It needs lots n lots of Andys

That's economic incrementalism
It forces nearly everyone to keep working and working and denying themselves every expensive tangible pleasure or become a debt slave until one is old and grey and impotent or post-menopausal

Personally, yours truly has chosen the 'Bob' path

It's often been a brutal, tension ridden aggravating experience especially to see peers have it all as I've lived a semi-spartan existence

But to live a debt free life with lots of accessible wealth in an environment where cash is still king, one has to self-deny to near extreme in order to overcome incrementalism and defeat the system.

But since I'm the anomaly and most can not control their instant satisfaction and gratification purposes, the System will always be able to keep firm control over society, and turn in a nice profit doing so..