Imagining a Better Future

Seeing how we are writing here about the Depression - which may last a very long time and turn out to be a dramatic economic collapse - we feel it important to state once again we are confident that the future can actually improve for anyone who is prepared for it.

The most important preparation is to be optimistic in the sense we mean it: making the best out of every situation. At its most trite: when life hands you lemons, make lemonade. Loss can be liberating if you find new fields in which to apply yourself.

Of course it is also important to avoid certain traps that will stifle your ability to survive and prosper in the coming years. The biggest trap is the notion that things will go back the way they were. This even applies to a lot of notions of 'prosperity', 'growth' and so forth. More specifically it applies to notions people have about what is worth investing in: a career, real estate, the stock market. Most of the systems that have worked to make people better off in the past are breaking down, and will not deliver the goods going forward.

So what do you invest in? Try to invest as much as possible in yourself, your skills, your tools, things you have control over which will help you produce income or reduce expenditures. You must take full responsibility for your income, and for living within your means.

The biggest shock the world is facing is that the era of an ever-growing stream of material goods and services is coming to an end, and will become an shrinking stream for quite some time. Happily, your quality of life is not measured by how much stuff you can buy. But you have to focus with ruthless efficiency on managing your income and expenses or you will find yourself a Depression victim.

To have a better future, you must also avoid having a worse future. However, for many with debts, children, or other substantial obligations the future may be unavoidably worse before it gets better. In any case, try to identify your weaknesses with some cold honesty, and shore them up.

The route to prosperity is simple in theory: live within your means (no matter how meagre) and profitably invest the surplus. In practice this can be extremely challenging, but it is achievable.

Income Replacement

Because the 2007 Depression will entail income loss for just about everyone, we would like to discuss some ways of replacing your lost income.

Passive Investors are currently faced with income losses from (among other things): lower interest rates; cut dividends; and loss of capital. The solution to this lies in either taking greater risks, or rebuilding capital by reinvesting more income.

Self-Employed Persons are seeing business drying up right and left. The solution here, as ever, is to dynamically be on the look-out for income opportunities. At present, opportunities are fewer than before, but they are still there.

Many Employees are presently experiencing cuts in pay and hours, as well as the ever increasing layoffs. We believe that many, if not most, of the currently employed will become formerly employed. The approach of collecting unemployment until the economic situation improves may not work out as it has in the past. Furthermore, reemployment will likely come at vastly lower wages. One solution here will be to become entrepreneurial, which only promises hard work and uncertain income.

The Industrial system has historically been neo-feudal: in exchange for 'knowing one's place', employees would be both offered the security of steady income and relief from the burden of figuring out where the business was coming from. As globalism progresses, workers in OECD nations will find increasing downward pressure on their remuneration. We suspect that most workers will opt for the security of the paycheque, even at lower wages.

The relentless downward pressure on wages and its effects on the economy as living standards decline have been recently discussed elsewhere in Worse than the Great Depression. It is not a happy prognosis for the world's top quintile of income receivers. For most, income will decline and not be replaced.

You, Reader, can make an exception of this for yourself through creativity and Peasant Virtues.
Good luck!