> If no one was a millionaire, a small house in California wouldn't cost that much.
It depends how this is structured. If the limit is you can't save, this actually puts pressure on housing prices as people are looking at ways to 'productively' spend the money.
Yeah, the blurb does literally say, "No-one deserves to be a millionaire." That threshold is the wrong choice, at least with prices where they are today.
If you do the math, millionaire is just about where your assets start to balance your liabilities. By liabilities, I mean the cost of a modest and frugal life. In that fuller accounting, the millionaire is merely the freedman, the person who has climbed out of the debt-hole into which almost all of us are born.
Let's do the math.
1. A millennial can get a decent Gold PPO plan on the health insurance marketplace, including basic dental and vision, for about $500/month. Anything below Gold merely coinsures ER visits and does not actually protect against catastrophic loss.
2. If you move to a cheap city and shop around, you can rent a decent one-bedroom apartment for $1,300/month. Even in a cheaper city, it will not be new and it will not be downtown.
3. Now consider utilities. Say $30 for a cheap cell phone plan, $50 for Internet, $100 for electricity (if you have electric heat), $20 for water. That's $200/month total
4. Allow another $80/week for groceries and $100/month very-occasional minor luxuries (get lunch out, get Starbucks).
5. Finally, let's say you really hit the jackpot with apartment and job location and are able to get by with a monthly bus pass costing $50/month.
We're at $2,230/month, or $26,760/yr.
Now assume you can get a 3% real yield. To finance your $26,760 annual costs, you need $892k invested -- nearly $900k.
This analysis has assumed unusually cheap rent and lifestyle. Add in car payments for a Corolla, or a less optimistic rent, and you're quickly at $1M needed. Yet I'm still talking about living frugally. I'm also assuming no childcare expenses.
So, for those reasons, and because $1M is a nice round number, I simply summarize that $1M is actually zero.
And it's only zero in a cheap place. If you're in California with only $1M you're still in the hole.
...
Yes, there is a problem. The natural world was expropriated from us before we were born, we were born into a system we didn't choose, and we must work off an indenture we never signed up for. So I agree with much of the spirit of what the author says.
But, quantitatively, if everything else about the current system remains as it is and we are only talking about where the cap is, then $1M is too low. Because $1M is merely where assets begin to balance a single person's liabilities.
You forgot a big asset on this hypothetical balance sheet: the individual's (your) productive output over their lifetime. Until we get to a point where all existing, and all possible, human output can be done by machines at no cost to anyone, the 'indenture' is more of a reciprocal arrangement where you trade your output for others'.
The scenario you outlined is one of unimaginable privilege for most humans living today, and arguably most humans and non-human animals through history. A climate controlled, personal living space in a safe society, varied and effectively limitless food/clean water, modern conveniences like a car/internet/telephone, access to healthcare by highly-trained doctors -- completely free of drudgery and effort (i.e. work).
macintux|2 years ago
(I'm not defending the thesis, but it needs a stronger argument against than that.)
anon291|2 years ago
It depends how this is structured. If the limit is you can't save, this actually puts pressure on housing prices as people are looking at ways to 'productively' spend the money.
FooBarBizBazz|2 years ago
If you do the math, millionaire is just about where your assets start to balance your liabilities. By liabilities, I mean the cost of a modest and frugal life. In that fuller accounting, the millionaire is merely the freedman, the person who has climbed out of the debt-hole into which almost all of us are born.
Let's do the math.
1. A millennial can get a decent Gold PPO plan on the health insurance marketplace, including basic dental and vision, for about $500/month. Anything below Gold merely coinsures ER visits and does not actually protect against catastrophic loss.
2. If you move to a cheap city and shop around, you can rent a decent one-bedroom apartment for $1,300/month. Even in a cheaper city, it will not be new and it will not be downtown.
3. Now consider utilities. Say $30 for a cheap cell phone plan, $50 for Internet, $100 for electricity (if you have electric heat), $20 for water. That's $200/month total
4. Allow another $80/week for groceries and $100/month very-occasional minor luxuries (get lunch out, get Starbucks).
5. Finally, let's say you really hit the jackpot with apartment and job location and are able to get by with a monthly bus pass costing $50/month.
We're at $2,230/month, or $26,760/yr.
Now assume you can get a 3% real yield. To finance your $26,760 annual costs, you need $892k invested -- nearly $900k.
This analysis has assumed unusually cheap rent and lifestyle. Add in car payments for a Corolla, or a less optimistic rent, and you're quickly at $1M needed. Yet I'm still talking about living frugally. I'm also assuming no childcare expenses.
So, for those reasons, and because $1M is a nice round number, I simply summarize that $1M is actually zero.
And it's only zero in a cheap place. If you're in California with only $1M you're still in the hole.
...
Yes, there is a problem. The natural world was expropriated from us before we were born, we were born into a system we didn't choose, and we must work off an indenture we never signed up for. So I agree with much of the spirit of what the author says.
But, quantitatively, if everything else about the current system remains as it is and we are only talking about where the cap is, then $1M is too low. Because $1M is merely where assets begin to balance a single person's liabilities.
briHass|2 years ago
The scenario you outlined is one of unimaginable privilege for most humans living today, and arguably most humans and non-human animals through history. A climate controlled, personal living space in a safe society, varied and effectively limitless food/clean water, modern conveniences like a car/internet/telephone, access to healthcare by highly-trained doctors -- completely free of drudgery and effort (i.e. work).
rufus_foreman|2 years ago
You can get an apartment in a cheap city for under $800 a month. In a cheaper city it will most likely be downtown, and that will be a bad thing.
unknown|2 years ago
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