The DIY Poverty Trap

In my previous post I explained how allowing people to specialize in a trade or a skill drastically increases the standards of living for society by allowing us to produce not only MORE, but higher quality goods and services.  However, such specialization, by necessity, requires superiority and excellence, both of which have been under increasing attack since the 1960's.  These attacks have economic consequences, which is the topic of today's post - the "DIY Poverty Trap."

Because of what amounts to nothing more than rank parasitism and envy, America's pillars of excellence, superiority, achievement, accomplishment, and success are all under attack.  The attacks come from all fronts, be it political (the rich don't pay their fair share), educational (privilege, sexism, racism, and all the other childish pablum of academia), corporate (CSR, diversity, etc.), racial (stop acting white, Oreo), or social (27th place trophies, not keeping score, fat acceptance, etc.).  However, while this results in a general, society-wide hatred of those who wish to pursue excellence, the economic effects fall into two general categories.

The first is that it deters those who have already achieved excellence and production in their respective fields.  A doctor, an entrepreneur, an engineer, etc., somebody who is making good money stops and asks him/herself,

"Why the hell should I work more?  Why the hell should I pay more in taxes?  Why am I working for these parasites, ESPECIALLY when they villainize me and blame me for all of their-largely-self-inflicted problems?  Screw that, I'm going Galt/on vacation/moving the headquarters overseas/etc."

The result is less economic growth than what would have been had these people not been as progressively taxed or politically and socially stigmatized.  Medtronic would not have moved overseas.  Google and Apple wouldn't be parking their money in the Caymans.  And people might be willing to invest in the US.  It's hard to estimate what economic growth would have been had we championed success, rich people, and excellence, but in merely getting rid of corporate tax rates an estimated $2 trillion alone would be repatriated over night into the US economy.  Regardless, because success and excellence are under attack, those capable of it choose to scale back or not participate at all.

The second economic effect is a consequence of the first.  With all those "nasty" productive, successful specialists leaving or at least not investing in the US, economic growth has dropped to about 55% of what it used to be back in 1940's-1960's.  Naturally, employment has suffered both in terms of UNemployment and UNDERemployment, especially amongst the younger generations.  So instead of being contracted right out of a high school metals program to work at Boeing in 1948, you are begging and pleading to get a job at Starbucks with your Masters in Nutrition in 2015, replete with $70,000 in student loans.  Regardless, they too are not achieving nor pursuing excellence.  They are merely getting by because of the lack of economic opportunities.

But while both groups are not producing specialization and excellence, the reasons are quite different.  Group 1 is capable of it, but CHOOSES not to.  They have no incentive, they have no desire.  They are opting out of gracing society with their excellence.  Group 2, however, doesn't have a choice.  They are not CAPABLE of providing excellence and specialization either because they lack the skills or there is no economic opportunity for them to do so.  Thankfully, for Group 1, it doesn't matter.  They've largely "got theirs" and can afford to merely scale down.  But because of the lack of economic growth it is the young generations stuck in Group 2 that fall into the "DIY Poverty Trap."

To understand the "DIY Poverty Trap" you have to think of it as the opposite of The Law of Specialization.  With specialization, as evidenced in the previous post, you are allowed to trade your units of time for other people's units of time so that you may specialize and create superior, cheaper goods for them, as they in turn create superior, cheaper goods for you.  It is why it's nearly 300% MORE EFFICIENT for my girlfriend to work in her specialty (accounting) and pay for a professional who specialty is manicures and nails, than try to do it herself.

However, this hinges on one very important assumption that was (purposely) kept out of the previous post's discussion - wages.

The only reason it was economically efficient for The Girlfriend to outsource her French nails to a pro was because her wage was adequately high enough to afford the specialized services of the salonist.  Had she no SPECIALIZATION or EXCELLENCE in her field of accounting, she would only be making $8 as an unskilled laborer/nanny/barista and instead of 119 minutes of her life spent on getting French nails, it would have cost her 265 minutes.

Thus the importance of CHAMPIONING the specialization of labor and achieving excellence in a specific field, and NOT CRIMINALIZING IT, PUNISHING IT, OR MOCKING IT IN SOCIETY.

However, it is sadly not just merely an issue of getting a "specialty" in something and then "boom" the problem is done.  Different economic and sociological variables have conspired that has resulted in a perfect "economic storm" that creates an effective "event horizon" that keeps people in poverty and in the DIY trap.

When you take the:

1.  Low economic growth
2.  Few economic opportunities
3.  Worthless degrees the majority of young people have earned
4.  The crippling debts they took on to buy said worthless degrees, and (heaven help you)
5.  Any illegitimate children they might have had

they are stuck in the DIY poverty trap and will likely never achieve the "escape velocity" needed to get out of it.  The reason why is that they can't even afford to go back to college to retool themselves and learn an actual skill or trade that is specialized enough to pull them out of it.

In short, since they don't have a specialization or are excellent in anything, they cannot barter for other people's highly specialized (and infinitely economically more efficient) skills, condemning them to this effective "lower tier" part of the economy.

And this is where the DIY Poverty Trap comes in.

Since they can't afford specialized services, nearly everything has to be done on their own because it's "cheaper."  Of course, financially it may be, but not time wise.  This ends up costing them more of their time, denying them the ability to spend that time specializing in something.

For example, no more than two years ago, it largely "financially" paid me to fix my own motorcycle.  One time, in what seemed was going to be a "simple fix," I had a piston misfiring, which led me to believe it was time to change the spark plugs.  While my diagnosis was correct, my estimation of what it would take to fix my motorcycle was woefully inadequate.

The spark plugs were underneath a stubborn airfilter and carburetor and very leaky fuel system.  But none of those could be accessed until I removed a very NOT intuitive gas tank.  After many tries, I still couldn't get the motorcycle to turn over correctly, until I realized that in taking off the gas tank I had damaged the starter wire.

When all was said and done it took the following amount of time:

360 minutes of amateurish mechanical work
1,220 minutes of working up at $15 an hour to pay for the $280 mechanics bill

Total life lost: 1,580 minutes.

However, that was when I worked as an UNSPECIALIZED, NON-EXCELLENT security guard.  Well before I discovered I had a god-given talent at being a SPECIALIZED and EXCELLENT asshole and started billing out $100/hour at my new company Asshole Consulting.

Now of course, I don't work 40 hours a week making $100/hour, but for the sake of analysis, assume I did.  And let's also assume instead of trying to be macho, I admit I would probably make things worse and outsource my motorcycle repairs to a professional.  My new "total life lost" would not have been 1,580 minutes, but rather...

108 minutes.

Now this of course assumes the pro would not have severed the starter wire and that I was a full-time "professional asshole."  But they key point is that it shows you just what a DRASTIC and POWERFUL gravitational pull the DIY Poverty Trap is.  It is (in this instance) 10 TIMES LESS EFFICIENT THAN SPECIALIZATION.  A 10 fold "time sink."  And forget motorcycles, consider that nearly every aspect of your life has to be "do it yourself."

Cleaning
Oil change
House repairs
Computer repairs
Cooking vs. eating out
Grocery shopping

The list is endless and the damage is incalculable to your economic life.

The larger point is to realize NOT just how insane it is that our society, politicians, teachers, professors, racial groups, and media types punish and ridicule excellence, achievement, and specialization, but to realize just what an economic price is paid, especially by those who are in the poorer classes and trapped by the DIY Poverty Trap.  Not only are they kept in poverty by the gravitational pull of low wages, but are lied to about how to get out of it simply so certain leftists political parties and academians may stay in power.

And whereas normally I would feel pity and sadness for people stuck in such a position, when they viscerally and enthusiastically accused me and other people who pursued excellence as "privileged," hate us and call us "racist" or "sexist," and dare to demand that I pay more in taxes to bail them out of their mistakes...I just kick back and say...

Enjoy the decline.