Thursday, November 20, 2014

Busy day, but more coming

In the meantime, I thought I should mention this long essay by William MacPherson, a former Washington Post reporter who finds himself nearing retirement age and being a lot poorer than he was planning: 
...Against the advice of people who thought they knew better, I bought shares in AOL before it really took off and in Apple when it was near its bottom. I figured Apple’s real estate must be worth more than the value the market gave the company. I was right. Shares in both companies soared. If I’d shut up and stayed home…but I didn’t. On the advice of these same people who advised me against AOL and Apple, I turned my brokerage account into a margin account for someone else to handle, and I left the country again. A few more dips into the well, a few turns in the market, a few margin calls, and when I went back for another dip, the well was empty. The old proverb drifts back to me on a wisp of memory. A fool and his money are soon parted. My adventures were over. 
The story is, of course, more complicated than that—whose story isn’t?—but these are the essentials. It’s unlikely, and it’s not intended, to evoke sympathy. I’d acted like one of those people who win the lottery and squander it on houses, cars, family, and Caribbean cruises. But I hadn’t won the lottery; I’d fallen under the spell of magical thinking. In my opinion, I didn’t squander the money, either; I just spent it a little too enthusiastically—not on Caribbean cruises but on exploring the aftermath of the fall of Communism in eastern Europe. I don’t regret it. When my writing was bringing in a little money I had a Keogh plan, and when I was at the Post a 401(k) account. I’d made a little money in real estate and received a couple of modest but nice inheritances, which together, and with Social Security and the pension, would have given me enough income to live on, had I not felt I’d lost the ability to continue writing and had I forgone, or at least spent more modestly on, my work in Europe and related activities, avoided the margin account, and so on. The “so on,” I should add, included a major heart attack that led to congestive heart failure, a condition that greatly reduced my physical resilience and taxed my already-limited income.  
There are a lot of people like me, exiles from the middle class who suddenly find themselves on Grub Street....
For those who do not have a spouse or children (or other family, as he does) to rely on, this sort of slow drift into poverty has got to come with a slew of negative second and third order effects. Best wishes to the author, and to all of us. 

10 comments:

  1. A very sombre and thought-provoking essay. I suspect that the author's predicament will soon be familiar to quite a few middle-aged chemists...

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  2. Horrible. And the really terrifying part is that the downward spiral to poverty can happen to anybody who is not cushioned by a large amount of money (which is everyone but the top ~2% of income earners). People get old. Bodies fall apart. S**t happens. Virtually anyone is vulnerable to this despite how much "personal responsibility" (I really hate that term) and pull-yourself-up-by-your-bootstrap-ness that a person thinks they have. Don't kid yourself!

    This is the sort of stuff that keeps me up at night. I feel very lucky. I am employed. I am young. I live in an area with a relatively low cost of living which allows me to save a huge chunk of my income. I am healthy. I do not have dependents or needy relatives. How long can my luck last?

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  3. Tough situation, but one that's going to become reality for many Americans once the boondoggle of replacing real pensions with 401(k)s starts to hit. 401(k)s became popular abt 30 years ago, so that should be pretty soon. Fortunately stocks go up....

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    1. Oh, c'mon! Stocks will keep going up! Right! RIGHT?.....

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    2. The job market should be getting better,right? I mean, with health benefits, pension benefits, etc. being shifted to employees, there should be more jobs, right? Or they should be getting paid better. Right? Right?
      (crickets)(more crickets)(still more crickets)

      I guess labor markets act just like livestock markets do...for the livestock.

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    3. Nothing significant has changed in the fundamentals of the economy yet. On macro scale we still measure "growth" with GDP. On micro scale the livestock rejoices that one turkey is going to get spared and that everyone could be a hen, deliver eggs, and live long(er...) and happy(happier...) life.

      Too many trends need to be rebalanced soon to delay it for much longer. This can't be a revolution. Just hard work for change.

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  4. "Just hard work for change". And- as I have been pointing out elsewhere on this blog- that change has to start with ourselves. The fact that we now have an ACS Prez who at least admits that unemployment is THE major issue (even if she doesn't quite appreciate what needs to be done within the organization) is a start. So it's up to us to set the record straight with her.

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    1. Quit expecting institutions to save us. Stop looking for messianic figures to turn things around. Accept the world as it is and act accordingly.

      Perhaps that's the change that needs to start with ourselves.

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    2. Neither of us is expecting institutions to save us. I am a proponent of us changing the institution. From what you have just written, it sounds like you are resigning to accepting the current state of affairs. I would encourage you to show more belief in your abilities.

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  5. It's probably better to just start being poor. Then you never know the difference.

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