Choosing Your Long Game Wisely
You are receiving this post/email because you are a patron/subscriber to Of Two Minds / Charles Hugh Smith. This is Musings Report 2024-15.
I ended last week's Musings on the Long Game with this: choosing the right Long Game may matter more than how you play The Long Game. In other words, if we choose a risky Long Game that is nearly impossible to win, we might be better off choosing a different goal/game.
This week I want to discuss Choosing Your Long Game Wisely. Let's start with four articles that provide some anecdotal context for our decisions:
Why Are Americans So Unhappy? A silent revolution is having enormous social ramifications.
The AI Revolution and the Economy Have Killed My Highly-Skilled Job.
Older Floridians are going back to work as life gets less affordable.
‘I run out of money each month’: the Americans borrowing to cover daily expenses.
The first essay discusses the "silent revolution" in changing values that accompanied the economic trajectory from the Industrial Revolution forward, shifting from the passive acceptance of traditional values and limited agency / prospects to the embrace of individual empowerment / agency and a spectrum of prospects for improving one's social and financial status, and more recently, to a "post-materialist" focus on self-expression and identity.
These "post-materialist" values parallel the "post-industrial" / Information Economy foreseen by Peter Drucker and others three decades ago, a dramatic shift in value creation, capital and labor. In taking material prosperity (plenty of food, energy, manufactured goods and information/digital services) as a given, the "post-materialist" culture frees us to focus on our own development as individuals.
The second article explains how AI tools are replacing human workers but not equaling the quality of the humans' work: the AI tools generate lower quality results, but nobody cares because 1) they're cheaper, and the pressure to lower costs is unremitting everywhere and 2) since clients no longer see the humans' work, they don't even recognize the poor quality of the AI-produced version.
This is a powerful summary of how AI is accelerating the crapification of goods and services: quality decays and nobody even notices because they no longer have a high-quality product for comparison, and nobody cares because they're under ceaseless pressure to lower costs by any means available. This is crapification and the disruption of labor in a nutshell.
The next two articles provide evidence that our base assumption of abundant material prosperity might be misplaced, as the cost of essentials (food, shelter, healthcare, childcare, transportation and energy) and risk remediation (auto and home insurance, condo association fees, debt, etc.) are arguably on an upward trajectory that may well track the "Lost Decade" of the stagflationary 1970s while the Everything Bubble in assets is tracking the late 1920s when wealth inequality reached extremes and the asset bubbles popped, eventually losing 80% of their peak valuations.
What's different this time around is high inflation may restrain the Federal Reserve from printing additional trillions to "save the market" and soaring interest costs on the $34 trillion in federal debt may restrain additional federal borrow-and-spend programs.
Without centrally planned "saves," the economy and society will have to adjust on their own to radically different conditions: a shrinking class of workers, soaring populace of elderly, costlier resources, reversals of the deflationary trends of globalization, diminishing returns on financialization, heightened geopolitical tensions, shrinking discretionary incomes, declining local government budgets, a general decay in quality and economic activity, debt saturation (i.e. credit cards are already maxed out), higher costs imposed by reshoring and the energy transition, the generalized decline of institutional functionality, and the decay of stability and predictability as systems fray and unforeseen feedbacks unravel what was taken for granted.
My impression is that few Americans are mentally, physically or intellectually prepared for long-term hardship, instability and the failure of centralized "saves." The zeitgeist holds that the Covid pandemic and lockdown was the greatest trauma in decades. In economic terms, this seems to overlook the $11 trillion in centrally issued "saves" that were unleashed in response to the lockdown.
The 1973-74 and the 1981-82 recessions may be better templates for what lies ahead. In my view, the Covid lockdown was an exogenous shock and response, while the 1973-74 and the 1981-82 recessions were consequences of profound structural changes in the global and US economies: the first in energy costs and America's declining competitiveness and the second in the denouement of fiscal and monetary policies intended to stimulate a stagflationary economy: to end the self-reinforcing inflationary spiral, interest rates were pushed to levels that crushed borrowing and the industries that depend on credit: autos, housing, etc.
Today, that is basically every industry and every sector, including federal and local governments.
In this context, "planning for a secure retirement" via piling up financial wealth--a constantly promoted example of a Long Game goal--may fall into the category of Long Games that are increasingly unwinnable. The same can be said of any goal based on piling up financial wealth as the key to security.
Setting a Long Game goal of fostering well-being may be a wiser choice, as it broadens our goal to include everything relating to well-being rather than focusing on securing X wealth / income 20 years hence.
What is well-being? Our answers help shape our Long Game goals.
Let's start with the obvious material foundation of well-being: sufficient food, fresh water, shelter, energy, etc. to maintain a pleasant, secure life. In the conventional view, the way to reach this goal is to pile up financial wealth. For all the reasons noted above, this may become a path to disappointment and failure.
If we no longer trust the predictability of the financial systems we depend on, then the material foundation of well-being requires a different Long Game, one aimed at securing ownership and control of real-world essentials and income streams rather than piling up financial wealth entrusted to others.
In this Long Game, well-being requires not just material assets and income but agency and control of our time, for time, along with health, is our true wealth.
One alternative is to use frugality and unconventional lifestyle choices to secure ownership of essentials, our agency and control of our time. Needing less and figuring out how to fashion a low-cost way of life that we own and control is a far more predictable source of material security and agency than piling up money and trusting it will retain its value as the financial system becomes unpredictable.
Keep reading with a 7-day free trial
Subscribe to Charles Hugh Smith's Substack to keep reading this post and get 7 days of free access to the full post archives.