Why we are poorer than our parents generation

Something I’ve noticed over the years is that most of the alt-right nerds on the Internet tend to have very little real-world experience. Consider the following meme:

This right here seems created by someone who wants to LARP the 50’s, but whose closest equivalent to interaction with the real world consists of anime dating sims. The “ideal” alt-reich wife on the right is a stay at home mom in her 20’s, while her husband slaves away in some cubicle somewhere. The question I’m going to ask is: What the hell is her husband’s job? Does he work at Google but telecommute from Estonia? How do you expect to raise a family on a single income exactly?

For some full disclosure, I’m in my late twenties now, work 40 hours a week in a cubicle, with a decent slightly above median salary (39,500 euro on an annual basis). Over the years, I’ve saved ~40,000 Euro in my bank accounts, matrass and Chinese crypto exchanges, through some investments and frugal living. I have 9000 euro of college debt left, but subsidized loans with 0% interest rates mean I have no incentive to pay off the loan. I don’t have a spouse with an income. Overall, I’m doing exactly what you’re “supposed” to do. So the question I want to consider here is: If I wanted to live the alt-reich nazi dream and find myself a barefoot and pregnant obedient little kitchen-slave, what kind of house could I imprison her in?

If I wanted to apply for a mortgage, I could borrow 173.894 euro. This is assuming I don’t have a spouse with an income and neglect to mention the 9000 euro in college debt. If I mentioned the college debt, I’d be left with €76.364 euro that I could borrow. Why is that? They don’t count your actual current debt, they count the original debt that you had. That’s completely absurd and I have no idea what kind of logic underlies that phenomenon, but it’s a regular Dutch tradition now not to mention any college debt, as there’s no legal obligation to mention it.

So let’s assume we have 173k I could borrow and 40k I could devote to the hoouse myself. Round it down to 210k. What kind of house can you buy for 210k? Demands are as following: It needs to be near my job, so it would be in the province of Utrecht. In addition, I’d pay a 2% tax over the price of the house, as well as some costs to refurbish the house and move over all my belongings. So, let’s say the maximum price I can afford would be 200k.  So, what kind of house does that leave you with?

This is what you end up with. There’s no room for the permaculture garden where the alt-reich nazi tradwife digs up the organic turnips while her aryan baby sucks on her teat as part of the outdoor lifestyle that gives her such a healthy tan. Instead, if she wants a healthy tan, her main option would be to sit on this balcony:

The question is: Is this a good idea? My answer would be: Probably not. Within the next five years, the value of the house will probably crash as the current economic bubble comes to an end and the babyboomers start dying and moving into assisted care houses. If the prices crash far enough, I would find myself unable to sell the house without being left with a debt.

But let’s imagine I don’t settle for the virtuous tradwife but stick my bits in the “”liberated” feminist”. She apparently has a minimum wage job. Dutch women don’t work 40 hours a week and a 40 hour minimum wage job makes you consider suicide, so let’s assume she works 32 hours, which leaves her with 1,300 a month. Now we could borrow 248.790 euro! Suddenly, you’re looking at something worth considering.

It’s not great, but it’s at least something that doesn’t make you want to hang yourself from your balcony. You’d be able to give the kid a room and you’d be able to grow a day’s worth of turnips. Now you might argue I’m being unfair to the alt-reich nerd. After all, it’s the fault of the (((zionist space lizards))) that women have to work. However Dutch women are actually the exception in Europe, in that they don’t work forty hours a week. In other countries, the tradwife neetdream would be even more ridiculous.

Of course there’s an exception possible, if mom and dad bail you out. That’s how the Dutch government solved the Dutch housing crisis: You can give your children up to 100k tax-free! Obviously this shows what kind of cloud-cuckooland our politicians live in. It solves the problem for their own crowd and the people they meet at the cocktail parties. Most Dutch people however don’t have 100k laying around to give to their kids. In addition, giving wealth kids more money merely drives prices up further. People need a place to live, so they’ll pay what they need to pay for a house.

The solution would be to build more houses, increase taxes on wealthy home-owners and reduce speculation. The main reason this problem exists is because houses turned into speculative investments. It’s also a symptom of societal crisis. I don’t care if we have smaller phones now, if I need to spend four years in college and two incomes to buy a house that my parents could buy with a high school degree and a single income, society is in decline. The stock market might continue to make yearly highs, but the lived experience of average people is that they’re gradually being forced into a corner: Living expenses are going up, debts are constantly increasing and raising children is becoming unaffordable.

According to soft liberals the solution to every problem under the sun is more “education”, but the lived experience is once again that we’re now stuck doing the same job with a four year degree that once required a high school degree, the main difference being that you now have four years of college debt instead of four years of savings. These ivory tower intellectuals look at women’s birth rates going down after education and assume that education makes women want to have fewer children, willfully blinding themselves to the simple fact that they can’t afford to reproduce.

The fact that the economy continues to grow conceals a bigger problem, the fact that most of the growth ends up in the hands of a tiny minority of the population. What’s growing doesn’t seem to be anything physical, it’s primarily fictitious wealth, wealth on paper. Wealthy Arab royalty can buy European paintings at inflated prices and Sillicon Valley tech moguls can throw money at whatever they expect to be the next Facebook, all of which ends up translating to greater GDP, but none of which helps Joe Schmuck pay his rent and utility bills.

I’m not telling you anything new here, everyone you talk to speaks of the sensation of a noose tightening around their neck while the media insists that every metric suggests we’re doing better every year. Most people have noticed something is off, but the explanations you hear tend to vary widely. Hip young lefties who went to college blame “neoliberalism” or some other trendy term akin to that, chronically unemployed angry white males will blame “the Jews” or some other trendy term akin to that (Zionists is the fashionable term these days I think).

My suggestion is as following. What we’re experiencing is a consequence primarily of three facts: The world’s actual physical resources are in decline, society has started to operate less efficiently than it used to operate and the world’s remaining resources now have to be shared with more people. This is what I think is going wrong. I’ll briefly explain all three of these issues.

Resource decline

In the 19th century, a copper mine looked like this:

Now it looks like this:

The best ores have been dug up, so now we’re left with the mediocre stuff that takes a lot more energy to refine. In the 19th century you could encounter 90% pure copper. Today a mine with 0.3% copper by weight is a good mine. While we’re at it, here is the coal mined in the United States:

That disappearing blue line is anthracite, the best kind of coal. Bituminous is the second best, after which comes sub-bituminous. The worst kind of coal is lignite. You can’t transport lignite very far, you have to burn it where you dig it up, as transporting it rapidly consumes more energy than you get from burning it. Lignite is also the most polluting kind of coal, per unit of energy it produces. As you can see, the United States didn’t start using lignite until the 1970’s: There was too much good coal left, so there was no point in using lignite. By now, it’s rapidly growing as a share of the coal the US uses.

This graph doesn’t tell you the whole picture. Generally the coal miners now have to dig deeper in the ground to get the coal, so they’re left with more overburden. They also have to start using less attractive locations, like places where people live. In Germany towns now need to be evacuated, to dig up the coal that the economy needs.

Something similar is going on with most other resources you can think of. Oil? It used to spew out of the ground like a geiser, but now we’re exploring the depth of the oceans to find some oil. Some people think peak oil is a conspiracy of the oil companies, but those big platforms in the ocean are not meant to keep engineers busy, they’re built because that’s the only stuff we have left on our planet.

How about fertilizer? We used to dig up guano from islands, now we’re dealing with rock phosphate from Morocco. Somewhere in the 2030’s we’ll probably hit a peak in global phosphorus production, at which point the global food system will need to start changing rapidly, to allow us to keep everyone fed.

Global equality

As Europe and the United States gradually lost our cheap resources, production costs in our nations began to climb. It became cheaper to outsource manufacturing to non-Western nations, like China and India. As these nations develop, their citizens begin demanding the kind of luxuries we take for granted: Cars, meat, internet and other products. However, all of us are competing on a global scale for resources that are in short supply. Here you can see the share of the world’s wealth in different nations:

Since the start of the 21st century, the Western world’s share of our global wealth has started to decline. We now have to compete with nations like China and India. Indian companies are mining coal in Australia, Chinese investors are buying houses in London and Amsterdam and leaving those houses empty as a store of value, Indonesians are starting to eat increasing amounts of meat. One way or another, the purchasing power of these people ends up reducing our purchasing power in Western nations. This is especially the case for products that are inherently in short supply. The cost of sequencing a genome or delivering internet can go down due to technology, but property is inherently limited by physical space: We can’t all have a nice house near the beach. If Chinese people now have the kind of money that allows them to buy a house near the beach, it might no longer be an option for you.

Decreasing efficiency

This is an angle to our problem that tends to be ignored in my opinion. It’s not just the case that we have fewer resources than we used to have: We’re using our resources in an inefficient manner. I can think of a long list of examples of this trend. Consider cryptocurrency. It’s completely stupid to waste energy on mining bitcoin, but people are nonetheless doing it. Why are they doing it? Because some wealthy people need to launder money. Bitfinex becomes rich by laundering money from Colombian drug cartels. To keep their business going, they need to inflate the price of Bitcoin. When the price of Bitcoin goes up, Bitcoin consumes more electricity. Cryptocurrency now seems to consume around 0.5% of the world’s electricity.

Wealth inequality tends to decrease economic efficiency, because wasting resources becomes a status signal. If you had a green lawn as a British aristocrat it signaled your wealth, as it revealed that you don’t have to work all your property. It essentially demonstrates: “If our family ever falls on hard times, we always still have this plot of land that we could use.” Americans in the New World began copying this ritual, which led to the now infamous American lawn, carefully manicured with lawn mowers, leaf blowers, pesticides and other junk.

In addition, when wealth is centralized in the hands of a few people, they don’t tend to manage their resources efficiently. If you work for your boss, you’re more eager to spend money on junk than you would if it was your own money you were spending. If you work at a company with a marketing department, you probably know what I’m talking about. Money is spent on forms of marketing that leave you wondering whether anyone genuinely believes it will pay off. This happens because those people need to demonstrate to the rest of the company that they did something useful. In my company we have an office that’s used roughly once a week, in the sense that someone walks to the refrigerator to get beer. We’re paying more for that office than I pay in rent for my house, but nobody cares because it’s nobody’s own money that’s spent there. The shareholders don’t care either, because they have more money than they’ll ever want to spend.

Because wealth inequality within Western societies is increasing, as more wealth ends up in the hands of the 0.1%, wealthy institutes like charities, colleges, churches, corporations and government departments, fewer people have direct control over the resources available to us. Thus, we start wasting our available resources in ways that don’t seem to make sense. In the Netherlands, 17% of office space is empty, in the sense that nobody rents it. In my company, we have office space that’s officially occupied, but practically empty, like the office I mentioned earlier. This is probably the case for numerous companies around the Western world. This happens because in our society, corporations keep growing in power, while our power as individuals declines.

What causes this centralization of power in the hands of corporations and other institutes? A number of things. When you and me die, we’ll probably have to pay an inheritance tax if we managed to accumulate enough wealth. A corporation on the other hand can be a hundred years old, without ever having had to pay an inheritance tax. Whereas you and me earn money because we want to do fun stuff, corporations earn money, for the purpose of generating more money. The corporation as an entity merely wants to expand its control over the world, this is its main responsibility to its shareholders. Thus we shouldn’t be surprised by the fact that corporations keep growing in power.

We could try to tax corporations, but in the digital age that’s becoming rather difficult. If you want to tax Amazon, they choose another city for their headquarter. If you want to tax an online casino, an internet broker or a cryptocurrency company, they’ll find another tropical island for their main office. Human beings are easy to tax, but churches, charities, corporations and other legal entities are generally difficult to tax. This is thus making our society increasingly inefficient.

There are other ways society is becoming increasingly inefficient, unrelated to growing income inequality. As I mentioned before, you now need a four year degree to do the job that once required a high school degree. This seems to happen due to technological unemployment. Unemployed people cause trouble for governments, so governments need to keep everyone busy. If young people go to college, it takes four more years before they hit the labor market. In the meantime, they generate employment opportunities for college professors, debt collectors and other busybodies. Thus society continues to function as everyone is kept busy, even though most of the stuff they do seems useless if you look at it from an emotionally detached perspective (don’t worry though, my job as a blockchain professional is really useful).

Another big form of inefficiency we now encounter is the fact that we now have to take pollution into consideration. CFC’s were a cheap product to use to manufacture equipment, but it eventually became clear that this chemical builds up in our atmosphere. Thus we banned CFC’s and began using more expensive alternatives. When we burn coal, we no longer want to cause pollution that kills the trees and gives you lung cancer, so coal plants have expensive filters and the waste that’s captured is somehow repurposed. In addition, we’re abandoning pesticides that build up in your fat like DDT and switching to pesticides that cause less harm. Eventually we’ll even have to stop emitting CO2 into the air. This will also end up being very expensive.

Finally, human beings themselves are becoming less efficient. It used to be the case that when you had type 1 diabetes, you died as a child. Today we can keep you alive, but this brings rather high costs with it. You’ll need insulin and you’ll need to constantly keep track of your blood sugar levels. If you’re old, you used to die of the flu or other ailments that end up affecting the elderly. Today we can keep you alive by vaccinating you against influenza, but that means we also have to take care of you longer. This is nice of course, in the sense that it allows us to keep family members and friends alive, but it also means that healthcare costs tend to go up every year. It used to be the case that if you got sick you died or got better. Now it tends to be the case that your disease lingers and you continually need medical attention in one form or another.

All of these are problems that continue to get worse, until they become so bad as to make our society unsustainable. At that point, we’re likely to see a massive decline in societal complexity, a global “reset” of sorts. I don’t think we’re there yet, as there is still quite some wiggle room for most people, they haven’t been completely forced with their backs against the wall yet. You think you have it bad now compared to your parents at your age, but the society we live in still has a lot of spare capacity, in the form of resources we’re not using.

My expectation is that we have about two more decades until things seriously start breaking down. Until that time, just expect all the excess luxury to gradually disappear from our lives. You’re living in a house now, but over the years, more and more young people will live in “weird” arrangements. I live in a house I will be evicted from before the end of this year. Other young people will live in offices, or simply with their parents until they’re in their thirties.

Similarly, people’s diet will gradually become less complex. You can buy tropical fruit from around the world, but you’ll increasingly find yourself not bothering. Going out to eat or buying coffee at a shop is also something that will gradually come to an end. Education levels will continue to get more absurd too. Office jobs will be off limits to people without four year degrees, many people will simply spend their entire lives “studying” or following some Phd tract. As it becomes difficult to raise a family under such conditions, fertility rates will start to drop too, ending up at the rate we see in countries like Taiwan.

Ok, so now you’re depressed. Sorry about that. I’ll make it up for you, by revisiting that image you saw above.