Admitting that I once believed I had all the knowledge I needed, I’ve come to realize that learning is a lifelong journey. For those who may have questioned my wisdom, you were right.
As a self-proclaimed freelance writer, I created a Substack account a couple of years ago. Substack is an online platform that allows writers and content creators to publish and monetize their work. Social media with a more focused purpose. It’s primarily known for its email newsletter service. You can find me there as @thelongwayhome1. Try the free email newsletter.
Like all things related to the numerous social media sites out there, I’ve struggled to figure it out and establish a presence. Tech isn’t my strong suit, nor is self-promotion—a common theme needed to succeed in online services.
Now that the Bohunk and I have managed to downsize (see Swedish Death Cleaning) and settled into our urban lifestyle, I’ve restarted my Substack account. I’ve already spent too much time reading others’ posts to see what fellow writers are up to, hoping to learn some new tricks.
In mid-August, I came across an article by Max Prosper of Free Range Finance that gave me a new perspective on capitalism and its role in our country’s well-being.
Prosper points out that all advanced nations have a mixed economy with elements of capitalism and socialism. None is purely capitalist or socialist.
While predominantly capitalist, the United States, with its emphasis on private ownership, free markets, and profit, also has elements of socialism. Several government-run programs and regulations are designed to provide social welfare and public services that a pure free-market system would not. Social Security, Medicare, Medicaid, unemployment insurance, and public education all use taxes to provide a social safety net and support. Socialist principles are also evident in the government’s ownership and management of essential services and infrastructure like public utilities, transportation, firefighting, law enforcement, and the military.
These programs don’t make the U.S. a socialist economy, though.
Prosper identifies consumerism—the culture of excessive spending—as the real cause of personal financial problems, not capitalism itself.
Consumerism is a social and economic order that encourages the acquisition of goods and services in ever-increasing amounts. It relies on the concept of planned obsolescence and sophisticated marketing to create a desire for new products and trends — the fads I wrote about earlier. Just think about the ads you see for drugs that treat conditions only a small percentage of us may ever have.
Prosper writes, “One of the most common misunderstandings in personal finance is that capitalism and consumerism are the same thing.”
To illustrate the impact of consumerism on financial independence, Prosper compares household savings rates in six mixed-economy countries. South Korea leads the way with a 35% savings rate. The U.S. is in fifth place, with a 4.7% savings rate, just beating out the UK and less than half its savings rate of 50 years ago.
Prosper points out that while a South Korean saving at 35% of their income will be financially independent in 21 years, their American counterpart, saving less than 5%, will work until they are physically unable.
In my early earning years, I was a committed free-market capitalist. By 1990, I’d come to ponder whether unfettered capitalism is really a net good. I concluded there was a fatal flaw in what I call the three Cs: Capitalism, Consumerism, and Cancer. All three rely on unrestrained and unpredictable growth, and they tend to destroy their hosts. Capitalism, when unchecked, leads to inequality and exploitation. Consumerism, driven by capitalism, encourages excessive spending and waste. And Cancer, we all know about that.
The aggressive downsizing that the Bohunk and I did this year made us aware that we have been victims of consumerism. Since settling into the urban wilderness here at the Head of the Lakes, I see how rampant consumerism is. Less than a block away from our humble abode is a mini-storage facility advertising 178 indoor storage units.
I struck up a conversation the other day with a guy moving a snowmobile and other stuff into a storage unit. He’d been storing his things at a building a half-hour drive away. After being on the waiting list for over a year, he now has a place to store his belongings just six blocks from home.
Many factors influence our nation’s economy. But suppose we all reduce our spending, slowing the increase in consumerism, and increase our savings rate. What kind of transformation would that bring?
The three Cs are just another thing that keeps me awake at night.
