Change Our Minds, Change Our Lives?
Let’s start with an extraordinary assumption: that each of us will have to change consequential parts of our lives in the next seven years due to external forces beyond our control.
We’re accustomed to large-scale problems being addressed by the government, but the problems generated by the dynamics I’ve discussed here–hyper-optimization, under-competence, hyper-financialization, the unpredictable consequences of climate change and fragile global supply chains–don’t lend themselves to sweeping diktat solutions.
Even in cases where the State can alleviate the problem, State actions in crises tend to be expedient patches, not permanent solutions. No State can repair broken supply chains overnight, as these systems have been stripped of redundancies and buffers.
We’re also accustomed to permanent abundance. It’s been 52 years since gas stations ran out of gas due to geopolitical events (1973-74). The idea that gas stations could run out of gas and shelves could be stripped bare is incomprehensible to us now–just as it was then, until it happened. Yet the supply chains that deliver all this abundance are even more optimized / vulnerable to disruption than they were 52 years ago.
In the 16 years since the global financial system almost collapsed (2008-09), the vulnerabilities in the system have increased beneath the system’s apparent stability.
It’s been 44 years since the U.S. and global economies experienced a deep recession that couldn’t be reversed with a flood of central bank / fiscal stimulus. Now both the monetary stimulus and fiscal largesse are problems, not solutions.
The transition of advanced economies from industrial economies to service economies coupled with the rise of digital automation tools has created an enormous exposure to the semi-automation of white-collar work that is now the foundation of advanced economies’ earned income.
Much of this work is mandated by regulations and therefore vulnerable to a reduction of the regulatory burden due to cost-cutting, and other major portions are devoted to consumer borrowing and spending, much of it based on fragile asset bubbles: marketing, banking, real estate, tourism, etc.
The potential for the devastation of service employment on the same scale wrought by de-industrialization is incomprehensible to us now, even as entire sectors of employment are already being slashed. The possibility that the unemployment rate exceeds 10% and remains at that level is incomprehensible now–just as it was before the 1981-82 recession pushed unemployment to 11%.
All of which leads to this question: how do we decide to change our lives in a material way? Do we decide to make radical changes in our diet, lifestyle, careers and where we live based on something we read or watched on a screen? Or do we only decide and act when we’re catalyzed by our experience of events / crises?
There are large bodies of research on our cognitive biases and the way our subconscious minds make decisions before our conscious minds are aware of the decision. But the process of consciously deciding to make consequential changes in our lives receives less attention.
Observation suggests that humans generally don’t make big changes until they have no other choice. Few radically change their diet and lifestyle until they’ve had a heart attack. Few abandon a successful career for a risky new venture; most only change careers when their previous career has ended and a replacement job in the same sector is no longer available.
Few sold their gas-hog vehicles in early 1973 because they became aware of the dependence of the U.S. on Mideast oil. Everyone sold their gas-hogs and sought high-mileage replacements only when they had to arise at 4 am to get in line at the gas station before the line stretched around the block.
This reluctance to act before necessity arises results from our innate risk avoidance: why take unnecessary risks with uncertain returns when what we have at this moment is reliable and sufficient?
To act before necessity demands it is so unnatural that those few who act on readily available information without being pressed by necessity raise eyebrows: why radically change your diet if you don’t have to? The idea that the long-term damage being done by our current diet is irreversible rarely changes anyone’s behaviors. As long as we don’t have a heart attack today, we’re good.
We rarely act on information we read or view for another reason: our values remain unchanged, and so our priorities remain unchanged and our set of incentives remains unchanged. This is the chain of decisions leading to consequential change: what we value must change, which changes our priorities and urgency, which then resets our incentives.
We all respond to whatever incentives are present, both in the external world and in our inner life. Once what we value changes, then our priorities change and this changes our incentives.
When I review my own life-changing decisions, most were made when there was no longer any other option: I was done with a career and a place, so I had to move and start a new career. The risks of failure or disappointment were high, but since continuing on the previous course was no longer possible, there was “nothing to lose” and much to gain. In other words, the risk-return calculation shifted from conserving what I had / changing nothing to taking on risk in the hopes of establishing a new life worthy of conserving.
It’s rare that something I’ve read or viewed catalyzed a consequential change. Two such instances provided what I call an operative context for understanding specific risks and gains and acting on this understanding in the real world.
One was reading an article describing the benefits of a Solo 401K for self-employed workers. Unlike a traditional IRA which has an $8,000 annual limit for over-50 workers and $7,000 for under-50 workers, or SEP IRAs which are limited to 25% of the employee’s compensation, Solo 401Ks allow the self-employed to sock away the majority of their taxable income if they can manage to live frugally.
For example, if a self-employed couple earns $45,000 each in taxable income (household income of $90,000) and they can live on $30,000, then the remaining $60,000 can be sheltered in their Solo 401Ks ($30,000 each).
Consider the difference over 10 years:
traditional IRA, $8,000 X 2 = $16,000 annually X 10 = $160,000.
SEP IRA: $11,000 annually X 2 = $22,000 X 10 = $220,000.
Solo 401K: $30,000 annually X 2 = $60,000 X 10 = $600,000. That nearly $400,000 difference in tax-sheltered retirement funding is consequential, especially for those of us with moderate incomes.
And unlike the other retirement funding options, a Solo 401K can be invested in precious metals and income producing real estate.
This one article changed our understanding by providing actionable information, which changed what we valued, what we prioritized, and what incentivized us.
Very little of what we read or view is actionable. Most of what we read and view are narrative envelopes, rehashed, repackaged tropes that are ultra-processed for easy consumption. Abstractions, opinions (capitalism good, capitalism bad, etc.) and ultra-processed narratives aren’t actionable and therefore cannot act as catalysts for life-changing decisions.
Lists are ultra-processed snacks. Does anyone start reading a book a week or start walking a mile every day after scanning a list that included these as “good things”?
Another category of content is actionable but the costs are high and the effort required is enormous, so unless we change what we value and prioritize, we’re not going to change our lives in any sustained, consequential fashion.
This category includes videos like this one: The New Hurricane Threat for Hawaii (56 min), which explains why the risks of hurricanes striking Hawaii are rising and how to mitigate the risks by strengthening our homes.
It turns out our house is at higher risk than most due to its age (70 years), type of construction (single-wall), and two-story height on an exposed slope. Putting this together with the increasing risk of a hurricane, I concluded that the risk-return calculation favored investing a relatively modest sum in cash and labor (free since I can do all the work) to reduce the risks of catastrophic damage to our house in the event that what everyone else seemed to consider a near-zero-risk–a hurricane–did occur.
Only a few people I recommended the video to took it seriously, and of those few, only one other homeowner took any action at all: he installed a 120-gallon water tank but has yet to attach the gutter downspout to fill it.
Some might say, “just buy hurricane insurance.” There are several problems with this strategy: 1) insurers no longer offer hurricane policies for single-wall homes, and 2) as a former builder, I anticipate the near-impossibility of getting a crew, materials, financing and permits to rebuild my house in a timely manner if a hurricane damages / destroys numerous other houses.
The wiser strategy is to conserve what we have by hardening our home’s structure and “owning our own utilities” as outages of water and electricity may well last a week or longer. We’ve spent about $12,000 to date, not a small sum but modest compared to the $500,000 price tag to rebuild (and the rebuilt house would be inferior, as the redwood walls of the existing house are irreplaceable today).
We installed a 500-gallon water tank, hundreds of structural ties and clips, shear walls and foundation-to-hip-rafters straps, plus 5.5kWh of battery storage (comparable to Tesla’s 7 kWh Daily Powerwall battery) and 800w PV panels. We also have pre-cut plywood or polycarbonate panels to protect all the windows. Toss in a pantry of food supplies and several spare propane tanks, and the odds of our surviving a hurricane with relatively modest losses have increased exponentially with this multi-month investment of cash and labor.
To my mind–which admittedly defaults to worst-case scenarios based on my life experience of bad things happening despite precautions–this is money well-spent even if a hurricane never devastates the island. It is insurance, and like any insurance, it’s a “waste of money” until you need it.
I don’t know anyone else who acted on this widely available information about the increasing risks of a hurricane hitting the island. This is not to pat myself on the back (why pat yourself on the back for being paranoid / crazy?) but to highlight our innate reluctance to change our lives in consequential ways before we have no other option or damage that can’t be undone has already occurred.
Changing our minds is difficult, changing our lives is even harder. “The early bird gets the worm” and “when you’re thirsty it’s too late to dig a well” might become advice we will collectively wish we’d acted on before events reduce our options.
CHS NOTE: It would be nice to be a Trustafarian or the recipient of a 3-letter agency Black Budget line item, but alas, writing is my only paid work/job. If something here is actionable and could change your life in some useful way, please note that I am grateful for your readership and blessed by your financial support.