4 ms·

I would also make the economic argument that a rich person that is still frugal is actively exacerbating income inequality. If Warren Buffett is indeed still p

I would also make the economic argument that a rich person that is still frugal is actively exacerbating income inequality. If Warren Buffett is indeed still paying only $3 for breakfast every day, that's giving a big middle finger to the economy. Money is half of the circulatory system of the economy. When it pools too long in one spot, it clots, and then a thrombosed clot can cause damage somewhere else. He really needs to spend more on breakfast. As one of the richest individuals on the planet, even if he just wants a sausage muffin, it should really be made from only the highest quality agricultural goods, with a lot of personal services added. If he can't manage to swallow that level of ostentation, buying thousands more of the consumer-grade item than he could eat personally would also work. The only reason for poor people to permit rich people to continue existing is that concentrations of wealth allow for the development of novel classes of goods and services. There would be no luxury yachts if nobody could afford more than a fishing reefer. There would be no Acura if nobody could afford more than a Honda; no Lexus above Toyota; no Cadillac above GM. The luxury goods and services are the early adopters. Without them, some technologies would have died at inception, never to make it to consumer-grade products, because they were too big and expensive. Anyone can spend small. Everyone else needs the rich folk to spend big, whenever they can. If you don't buy the best, you are not doing your job as a rich person. If you aren't spending on someone's wage, you aren't really "creating jobs". If you can afford to have your cabinets painted instead of doing it yourself, hire someone for that and get back to being the QC/beta-tester for humanity's R&D. This crap where you "retire" and pretend to be rustic and homey isn't helping anyone. If you want to live like a poor person, that's easy; just get rid of all your money. Give it to someone more willing to spend it. Frugality stops once you can pay all your bills from your paycheck and still have some left. After that, it's called stinginess or miserliness.

EnFinlay 9y ago
I fundamentally and vehemently disagree with you.
- xboxnolifes 9y ago
  second this
- lhnz 9y ago
  Why? He is fundamentally correct. If you are rich and decide to stop hiring people from your community to build extensions to your already large house, then the money is just going to be pooling in your over-sized bank account: potentially just being deployed by a bank to create profit for other rich people.
  - EnFinlay 9y ago
    Although you are correct that money I don't spend remains in my possession, I disagree that there is any morale obligation to spend as much as possible. Overconsumption is not a viable solution to many problems.
zdragnar 9y ago
Why do you think spending more than he needs or wants to on breakfast is the most valuable use of his money? Surely re-investing it or other expenses will help far more people. As a sidenote, if you are spending all of your money after paying your bills off, it sounds like you're not saving anything, which is a recipe for disaster. You should most certainly not consider such a person to be miserly.
- logfromblammo 9y ago
  Consumption is the most valuable use of money. Saving is trading consumption now for consumption later. The later you delay your own consumption, the longer it will be until the person eventually providing your goods and services will actually be paid for them. Investment is somewhere in between, where you pay something in advance for the consumption to occur later. I don't really care if Buffett spends on one $3000 breakfast sandwich, or 1000 $3 breakfast sandwiches, or 10000 $0.30 vaccinations, so long as he spends. He certainly has ample savings and investments for himself, and doesn't seem to intend to support his own descendants in a lavish lifestyle. That spending is what pays other people's living expenses. It is up to him to spend in a way that reflects his personal values and preferences, but if he chooses to accumulate wealth, rather than circulate it, that benefits only him, and no one else. Spending only $3 on a breakfast signals that Warren Buffet does not greatly value breakfasts, or the cultural practice of breakfasting. That's fine. I'm not a big fan of it myself. But when I skip breakfast, I may be signaling that I don't have $3 to spend on breakfast. Strictly speaking, hardly anyone does genuine saving anyway. Most people with money to save will deposit it in a bank, which then invests it and just pretends it is being saved through mathematical fictions. The recipe for anti-disaster is to spend on insurance and to buy financial instruments that promise a steady income. Burying your gold just makes you worry about where your gold is buried. Once you have that $X in your portfolio, and are living comfortably on the 3% return from it that you can safely spend annually, then in my opinion, it is then your economic responsibility to spend that whole budgeted amount on things you like. If you aren't spending more, you must be entirely satisfied. And if you are entirely satisfied, you don't need more money to spend. If you don't need more money to spend, you don't need to buy additional income. And if you don't want to spend and don't need to invest, then what are you saving it for? If you continue past that point, you are crossing a rich-person event horizon where you can't send money out as fast as it comes in. You will start sucking ownership out of the economy and asphyxiating businesses that would otherwise be viable. In the end, you will either have to start frantically giving away money, people will have to start stealing it from you on a massive scale, or you will become a wealth singularity as everyone around you starves.
mr_spothawk 9y ago
> Frugality stops once you can pay all your bills from your paycheck and still have some left. After that, it's called stinginess or miserliness. how do you expect to get to a place that enables you to farm with your comrades if you're all too busy getting a paycheck? imo, you MUST take care of yourself and your financial needs before worrying about how stingy or miserly you are.
artimaeis 9y ago
I think you're discounting the utility of an extremely wealthy person's capital as a vehicle for greater change. That is, Warren Buffet probably can't move the needle much through consumption of goods. Even if he replaced his $3 breakfast with a $300 breakfast it's just not going to have a huge net effect. Instead if he manages his finances carefully and leaves himself capital for investments then he's able to influence entire markets at once. This is a lot more effective use of his leverage than simple consumption because it drives innovation, fosters competition, etc. There's certainly something to be said on your points of wealthier consumers pioneering technologies and solutions for the rest of the world. I believe it's more realistic to look at the upper-middle-class for that sort of thing than the ultra-wealthy though, as people like Warren Buffet are the 0.1% of the 0.1% of the 0.1%.
- logfromblammo 9y ago
  Musk is being far more productive with his accumulated wealth than Buffett (my opinion). Once he can buy his breakfast sandwich for $3 at a restaurant on Mars, I will revise my opinions on how he chooses to spend his money. Until then, I will continue to believe that thrift and frugality are the domains of the poor, and when the rich dabble in it, they are essentially forcing the truly frugal to become more so.
  - jpindar 9y ago
    What do you think Buffet does with his money? Do you think he has a warehouse filled with hundred dollar bills?
zokier 9y ago
What do you think Buffett is doing with his wealth, keeping it in a money bin like Scrooge McDuck?
- logfromblammo 9y ago
  ~I sort of imagined more of a kinetic sculpture, like Buckingham fountain in Chicago, except filled with silver pennies and tiny rails and springs and flippers and catapults. And he'd just stand in it wearing a hard hat, letting the little coins fall all over him and roll back into the hopper, to be thrown up in the air again.~ He buys companies with it. He invests and invests and invests during the day, and at night, he sits in his $150k house, with all the lights turned off except the room he's in, with the mechanical thermostat set low in the winter and high in the summer, mending his own socks. He's an octogenarian, and it doesn't look like he has any plans to support the luxury goods and services industry any time soon. Nor does he seem all that interested in starting new, risky ventures with a lot of R&D. Instead, he has pledged to leave the majority of his fortune to the Gates charity, so they can spend it for him. He literally can't think of enough ways in which he'd like to spend his earned wealth, and has to give it to someone else. It's not quite leaving it in a money bin, but there's a luthier out there severely disappointed that the best ukulele never made won't be bought by the richest ukulele player that ever lived, because he's just fine with the same $15 model they sell to elementary school kids. There's a professional cook out there severely disappointed that after all those years in school and as a sous chef, the guy that could give someone a break on the way to their own restaurant is still eating his breakfast at McDonald's. And there's a Patreon dependent only one $10/month subscriber away from making rent. And a Lyft driver that would rather be a personal driver. And a landscaper that is one big account away from buying another truck and hiring more employees. And a TaskRabbit peon that would rather be an executive assistant. And a gym teacher that would rather be a personal trainer. He's just not doing what everyone expects from people with enough money. He's selling underwear and insurance policies and Dilly Bars, and not buying anything fun and expensive from any of the people who would desperately like to sell something fun and expensive, to anyone who could afford it. Gates is buying malaria and parasite eradication. Musk is buying a Mars colony. Buffett is buying all the same old boring crap that poor folks can buy.

EnFinlay 9y ago

I fundamentally and vehemently disagree with you.

xboxnolifes 9y ago
second this
lhnz 9y ago
Why? He is fundamentally correct. If you are rich and decide to stop hiring people from your community to build extensions to your already large house, then the money is just going to be pooling in your over-sized bank account: potentially just being deployed by a bank to create profit for other rich people.
- EnFinlay 9y ago
  Although you are correct that money I don't spend remains in my possession, I disagree that there is any morale obligation to spend as much as possible. Overconsumption is not a viable solution to many problems.

zdragnar 9y ago

Why do you think spending more than he needs or wants to on breakfast is the most valuable use of his money? Surely re-investing it or other expenses will help far more people. As a sidenote, if you are spending all of your money after paying your bills off, it sounds like you're not saving anything, which is a recipe for disaster. You should most certainly not consider such a person to be miserly.

logfromblammo 9y ago
Consumption is the most valuable use of money. Saving is trading consumption now for consumption later. The later you delay your own consumption, the longer it will be until the person eventually providing your goods and services will actually be paid for them. Investment is somewhere in between, where you pay something in advance for the consumption to occur later. I don't really care if Buffett spends on one $3000 breakfast sandwich, or 1000 $3 breakfast sandwiches, or 10000 $0.30 vaccinations, so long as he spends. He certainly has ample savings and investments for himself, and doesn't seem to intend to support his own descendants in a lavish lifestyle. That spending is what pays other people's living expenses. It is up to him to spend in a way that reflects his personal values and preferences, but if he chooses to accumulate wealth, rather than circulate it, that benefits only him, and no one else. Spending only $3 on a breakfast signals that Warren Buffet does not greatly value breakfasts, or the cultural practice of breakfasting. That's fine. I'm not a big fan of it myself. But when I skip breakfast, I may be signaling that I don't have $3 to spend on breakfast. Strictly speaking, hardly anyone does genuine saving anyway. Most people with money to save will deposit it in a bank, which then invests it and just pretends it is being saved through mathematical fictions. The recipe for anti-disaster is to spend on insurance and to buy financial instruments that promise a steady income. Burying your gold just makes you worry about where your gold is buried. Once you have that $X in your portfolio, and are living comfortably on the 3% return from it that you can safely spend annually, then in my opinion, it is then your economic responsibility to spend that whole budgeted amount on things you like. If you aren't spending more, you must be entirely satisfied. And if you are entirely satisfied, you don't need more money to spend. If you don't need more money to spend, you don't need to buy additional income. And if you don't want to spend and don't need to invest, then what are you saving it for? If you continue past that point, you are crossing a rich-person event horizon where you can't send money out as fast as it comes in. You will start sucking ownership out of the economy and asphyxiating businesses that would otherwise be viable. In the end, you will either have to start frantically giving away money, people will have to start stealing it from you on a massive scale, or you will become a wealth singularity as everyone around you starves.

mr_spothawk 9y ago

> Frugality stops once you can pay all your bills from your paycheck and still have some left. After that, it's called stinginess or miserliness. how do you expect to get to a place that enables you to farm with your comrades if you're all too busy getting a paycheck? imo, you MUST take care of yourself and your financial needs before worrying about how stingy or miserly you are.

artimaeis 9y ago

I think you're discounting the utility of an extremely wealthy person's capital as a vehicle for greater change. That is, Warren Buffet probably can't move the needle much through consumption of goods. Even if he replaced his $3 breakfast with a $300 breakfast it's just not going to have a huge net effect. Instead if he manages his finances carefully and leaves himself capital for investments then he's able to influence entire markets at once. This is a lot more effective use of his leverage than simple consumption because it drives innovation, fosters competition, etc. There's certainly something to be said on your points of wealthier consumers pioneering technologies and solutions for the rest of the world. I believe it's more realistic to look at the upper-middle-class for that sort of thing than the ultra-wealthy though, as people like Warren Buffet are the 0.1% of the 0.1% of the 0.1%.

logfromblammo 9y ago
Musk is being far more productive with his accumulated wealth than Buffett (my opinion). Once he can buy his breakfast sandwich for $3 at a restaurant on Mars, I will revise my opinions on how he chooses to spend his money. Until then, I will continue to believe that thrift and frugality are the domains of the poor, and when the rich dabble in it, they are essentially forcing the truly frugal to become more so.
- jpindar 9y ago
  What do you think Buffet does with his money? Do you think he has a warehouse filled with hundred dollar bills?

zokier 9y ago

What do you think Buffett is doing with his wealth, keeping it in a money bin like Scrooge McDuck?

logfromblammo 9y ago
~I sort of imagined more of a kinetic sculpture, like Buckingham fountain in Chicago, except filled with silver pennies and tiny rails and springs and flippers and catapults. And he'd just stand in it wearing a hard hat, letting the little coins fall all over him and roll back into the hopper, to be thrown up in the air again.~ He buys companies with it. He invests and invests and invests during the day, and at night, he sits in his $150k house, with all the lights turned off except the room he's in, with the mechanical thermostat set low in the winter and high in the summer, mending his own socks. He's an octogenarian, and it doesn't look like he has any plans to support the luxury goods and services industry any time soon. Nor does he seem all that interested in starting new, risky ventures with a lot of R&D. Instead, he has pledged to leave the majority of his fortune to the Gates charity, so they can spend it for him. He literally can't think of enough ways in which he'd like to spend his earned wealth, and has to give it to someone else. It's not quite leaving it in a money bin, but there's a luthier out there severely disappointed that the best ukulele never made won't be bought by the richest ukulele player that ever lived, because he's just fine with the same $15 model they sell to elementary school kids. There's a professional cook out there severely disappointed that after all those years in school and as a sous chef, the guy that could give someone a break on the way to their own restaurant is still eating his breakfast at McDonald's. And there's a Patreon dependent only one $10/month subscriber away from making rent. And a Lyft driver that would rather be a personal driver. And a landscaper that is one big account away from buying another truck and hiring more employees. And a TaskRabbit peon that would rather be an executive assistant. And a gym teacher that would rather be a personal trainer. He's just not doing what everyone expects from people with enough money. He's selling underwear and insurance policies and Dilly Bars, and not buying anything fun and expensive from any of the people who would desperately like to sell something fun and expensive, to anyone who could afford it. Gates is buying malaria and parasite eradication. Musk is buying a Mars colony. Buffett is buying all the same old boring crap that poor folks can buy.