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401K and other issues
Oct. 8th, 2008 11:39 amI finally took a look at my retirement savings. Down about 16%, not terribly horrible, and better than a lot of other people. It's funny how things look different at different times; before, I thought I "understood" my retirement account, but now of course I have a million questions. Like, how much of my return consists of dividends, and how does the "price" of the fund on the ticker relate to total return? I get the impression that on a lot of these the dividends are paid out so as to keep the share price constant.
Anyway, c'est la vie. I'm surprised by the current dow drop by not TOO surprised. I still focus on the long view, which is easy to do since we have already taken pains to eliminate fixed expenses in advance of the crunch, and are relatively unaffected by short-term turmoil.
So maybe I lose on making accurate predictions but win on taking action. The nice thing about having pie in your face is that it's SO DELICIOUS.
(I think it was Steven Hawking who made a habit of placing bets contrary to his personal belief. If he was wrong, the bet payment would be his consolation prize. There's a lot of wisdom in that.)
Some brief thoughts on a "depression" - keep in mind that our world is very different from that of 1930. Back then, hunger was already widespread in America, and basic material needs were hard to come by. Life was dominated by production and survival, so any small loss had big consequences for real people.
Still, this chart of per-capita GDP in constant dollars illustrates the long-term effects of that era:
Short-term disruption, but no long term impact on total growth. Which has been, in the long run, remarkably constant.
Today, American food production vastly outstrips our needs - meat might get awfully pricey, but you probably eat too much of it anyway. We are so awash in material items that it is safe to say nobody will ever suffer for lack of a shovel. The housing glut is just that - we have more housing than we actually need. Our economy is in many ways much more dominated by competition. And if the whole economy deflates, it's that competitive part that deflates first. I don't expect primary production to suffer all that much.
There is no question that America can support itself in style through almost any financial calamity. The issue, as always, is not so much a shrinking GDP (which is so far in excess of our actual needs it's ridiculous), but rather inequality. A falling dollar and subsequent increase in on-shore manufacturing has the potential to reduce inequality by cranking up employment. But there are also many opportunities for the poor and powerless to get fucked harder than ever. This is why I think it's so important to have a Democratic administration next year; I see this as a great time for spending on social programs.
I also have one really earnest suggestion that could greatly improve American quality of life: the deregulation of medicine. It's not so hard. Simply demand that all physicians and specialists adhere to some certification program, and let them pick which one. Certification programs could then compete on the free market for professionals and their customers, entirely on their own terms. The AMA would still exist, and you could always get traditional medicine. But the need for competition is clear; my dog can get excellent medical care for something like ten percent of what it costs for a human. If I needed to fund a half-million-dollar operation myself, but could get it for $20K from a veterinarian, I swear I would do it! And I bet most vets could undertake it with total safety and competence, if it were legal to do so.
The reason this is so important is that the medical system is the one thing we're going to lose if serious action is not taken. Again, back in the 30s, most of what you get in modern medical care was simply unavailable, so in a way the medical care crisis is a crisis of modern privilege rather than something fundamental to our survival. But it could be handled in much better ways than it is today.
Anyway, c'est la vie. I'm surprised by the current dow drop by not TOO surprised. I still focus on the long view, which is easy to do since we have already taken pains to eliminate fixed expenses in advance of the crunch, and are relatively unaffected by short-term turmoil.
So maybe I lose on making accurate predictions but win on taking action. The nice thing about having pie in your face is that it's SO DELICIOUS.
(I think it was Steven Hawking who made a habit of placing bets contrary to his personal belief. If he was wrong, the bet payment would be his consolation prize. There's a lot of wisdom in that.)
Some brief thoughts on a "depression" - keep in mind that our world is very different from that of 1930. Back then, hunger was already widespread in America, and basic material needs were hard to come by. Life was dominated by production and survival, so any small loss had big consequences for real people.
Still, this chart of per-capita GDP in constant dollars illustrates the long-term effects of that era:
Short-term disruption, but no long term impact on total growth. Which has been, in the long run, remarkably constant.
Today, American food production vastly outstrips our needs - meat might get awfully pricey, but you probably eat too much of it anyway. We are so awash in material items that it is safe to say nobody will ever suffer for lack of a shovel. The housing glut is just that - we have more housing than we actually need. Our economy is in many ways much more dominated by competition. And if the whole economy deflates, it's that competitive part that deflates first. I don't expect primary production to suffer all that much.
There is no question that America can support itself in style through almost any financial calamity. The issue, as always, is not so much a shrinking GDP (which is so far in excess of our actual needs it's ridiculous), but rather inequality. A falling dollar and subsequent increase in on-shore manufacturing has the potential to reduce inequality by cranking up employment. But there are also many opportunities for the poor and powerless to get fucked harder than ever. This is why I think it's so important to have a Democratic administration next year; I see this as a great time for spending on social programs.
I also have one really earnest suggestion that could greatly improve American quality of life: the deregulation of medicine. It's not so hard. Simply demand that all physicians and specialists adhere to some certification program, and let them pick which one. Certification programs could then compete on the free market for professionals and their customers, entirely on their own terms. The AMA would still exist, and you could always get traditional medicine. But the need for competition is clear; my dog can get excellent medical care for something like ten percent of what it costs for a human. If I needed to fund a half-million-dollar operation myself, but could get it for $20K from a veterinarian, I swear I would do it! And I bet most vets could undertake it with total safety and competence, if it were legal to do so.
The reason this is so important is that the medical system is the one thing we're going to lose if serious action is not taken. Again, back in the 30s, most of what you get in modern medical care was simply unavailable, so in a way the medical care crisis is a crisis of modern privilege rather than something fundamental to our survival. But it could be handled in much better ways than it is today.
