Robbing from others to give to the poor, or leeching off people's hard work - both seem very noble... Funny how each side (Robinhood or FIRE) try to justify their choices.
Presumably because you're sitting back and retiring while everyone around you still work. The logic is flawed though, because it doesn't account for the fact that you had to forgo consumption in order to build up a reserve to retire early.
I'm very curious about the ethics of early retirement. Forgone consumption seems like a reasonable justification. But surely there is a limit? If I retire by early and through compounding interest amass a fortune that would allow my children to retire before they even enter the work force, is that ethical?
Similar scenario: I take up arms to aid the king and in turn ensure stability and peace for society. The land I'm given as compensation allow my lineage to live as nobility for centuries. Is that ethical?
I'm making hyperboles not to discount your logic but to show an extreme and try to pinpoint where the limit is. For what its worth, I'm saving quite aggressively and live very modestly for the sole purpose of increasing my leisure, perhaps to retire early. So I am obviously not making this argument as a way to bash FIRE practitioners. I am genuinely curious about the ethical implications of compounding rewards for legitimate sacrifice. Of course someone who works hard in their youth without consuming should be able to retire earlier without guilt. Though I think Warren Buffett is on to something in his disdain for dynastic wealth.
>If I retire by early and through compounding interest amass a fortune that would allow my children to retire before they even enter the work force, is that ethical?
It's easy to argue it's unethical by invoking utilitarianism. Unfortunately that also means basically anyone with a white collar job in the first world are unethical, which I'm not sure most people would agree. Other than that I can't think of any convincing for why that's unethical.
My take would be that actively working against both equal opportunity and equality is unethical. By giving your children a giant leg up, you're taking from all of the others.
Imho society should be liberal in letting people acquire and enjoy their wealth, and strictly limit the passing down of wealth to prevent dynasties and having someone's opportunities decided by their parents' means. This would solve a lot of compounding problems. However, people are generally pretty terrified of not being able to let one's own kids inherit the entire fortune and sharing it with other random kids too. We'll likely continue along those lines for a long time coming, whatever your stance on ethics doesn't stand a chance against family bonds and their voting power.
It's not flawed though, because total economic value goes to zero when all the workers kick up their feet and decide they want to post on Instagram for likes from Aruba once they hit 35.
I don't think that's true. Sure, at some point you stop producing economic value, but we don't mind people retiring at 65. What's so magical about that age?
If you contribute enough productive value (as determined by the free market, paid in some asset), why does it matter when you retire? I'm sure there is some endgame where we stop funding our consumption economy to the same degree we are now, but is that a reason to work until you can't anymore?
You can only kick up your feet if you've done enough "economic output" in the previous years, it's not a free lunch. This is coupled with the fact that most retired persons do invest and contribute capital. It's not at the same level as Mark Cuban, but does it really matter if you only invest a million vs 700 million+?
Nothing magical, because when people age they become less healthy and able to work/contribute - it is only ethical to offer them the last ~10-20 years of their lives as reward for their hard work. The average age of death in the US is 78
And who pays for the benefits the elderly (or as a matter of fact, the whole society) enjoys? Amenities, welfare, health insurance, etc. - taxpayers, exactly the demographic (before 65 - healthy & able-bodied) FIRE is encouraging to stop working, thus avoid paying income taxes.
>because economic value goes to zero when all the workers kick up their feet
That will never happen, as I explained in a sibling post:
>there would be an imbalance of labor demand compared to supply. This will cause prices to go up, which will make it less attractive to stay "retired" and more attractive to start working again.
Society is like a cargo net. Every knot that bails out makes it collectively less capable of bearing a total burden. I'm fine if these FIRE dreamers want to use their free time to invest into social and charitable causes, but the ones that just want to perma-vacation on society's economic margin are what annoy me. But I don't personally believe in retirement either.
>Society is like a cargo net. Every knot that bails out makes it collectively less capable of bearing a total burden.
I'm not sure what you're alluding to with this, but if it's "well if everybody goes FIRE society will collapse", then you're wrong because it will never occur (due to the economic mechanisms discussed earlier).
>but the ones that just want to perma-vacation on society's economic margin are what annoy me
Sounds like you're annoyed if people aren't being productive when they can be. After all, what's the difference between being 100% productive for only 50% of your working years (ie. FIRE), and being 50% productive for 100% of your working years? What's your opinion on people engaging in non-productive activities (eg. watching TV, playing sports, reading books), taking time off, or taking a "easy" profession? Are you against them as well? Or are they fine because they put in a token amount of work?
Maybe I am misinformed, the investing part makes sense, but not paying taxes on capital gains while willingly "unemployed" in your productive years to "enjoy life" and "freedom" sounds the same as the crypto miners trying to avoid taxes.
Contrary to popular belief, taxes are supposed to benefit society (at least that is the intent & purpose). I agree this is not the case for corrupt countries, but if everyone just retired early or sat at home mining coins, where will society end up?
...that haven't been realized yet. As you draw on your reserves, you'll be forced to realize those gains and pay taxes on them, making this a non-issue.
>willingly "unemployed" in your productive years to "enjoy life" and "freedom"
Ah yes, because the goal of life isn't to enjoy it, it's to be as productive as possible! Freedom is overrated anyways!
>as the crypto miners trying to avoid taxes.
Are miners known to be tax dodgers or something?
>but if everyone just retired early or sat at home mining coins, where will society end up?
"retired early": there would be an imbalance of labor demand compared to supply. This will cause prices to go up, which will make it less attractive to stay "retired" and more attractive to start working again.
"sat at home mining": same thing that would happen if everyone decided to gold mine. eventually there would be a saturation of miners and it won't be profitable anymore, causing people to exit.
That sounds like an epic tax dodge if true: take a sabbatical, realize your gains with zero tax. The only thing I can think of that could go wrong is dividends taking you over the 40k limit. Assuming your portfolio has 2% dividend yield you would start running into trouble once your portfolio approaches $2M in value. Anyways, will be calling my accountant tomorrow to discuss this ;)
Capital gains are part of your income, so realizing the gains themselves will take you over the limit unless total profit including gains and dividends is < $40k-ish.
You might be able to take out small amounts strategically to avoid the 40k threshold.
I may be mistaken, but isn't FIRE telling people to live off 4% of their investments forever? If the goal is 1 million, that is exactly 40k.
The math works out perfectly to leech on society - and
(this is just a hypothesis) possibly causing S&P 500 ETFs to inflate as these FIRE "retirees" promote their methods online, creating a feedback loop and illusion of ever-increasing stock market boom for the last 10 years
