“I think everybody should get rich and famous and do everything they ever dreamed of so they can see that it’s not the answer.” — Jim Carrey
Inequality in the distribution of wealth is obviously not a new phenomenon, but it may never have had as much airtime as it does today, and rightly so. The exponential growth of some technology companies, among other things, has recently demonstrated the extent of the hyperbolic disequilibrium. In the mean time, the pressure caused by the imminence of climate change has highlighted for its part the other side of the coin, namely the vulnerability of the most disadvantaged. Together, the expanding technocracy and the environmental crisis have highlighted the imminent need to rethink certain mechanisms for regulating and distributing wealth.
That being said, the imbalance is not abnormal. In fact, the historical trends show that it is rather the norm. It follows a solidly established distribution law applicable to all creative production: the Pareto principle. (I leave Jordan Peterson here to make a concise explanation.)
But roughly speaking, it is predictable that a ripple effect will encourage a minority to own the majority of the resources in the long run. So far in history, the only factors that have leveled everyone from an economic point of view are simple, but far from ideal: war or catastrophe.
If the economic system favors hyperbolic accumulation, whether we like it or not, it is easier to accept it. This is certainly a disadvantage, but a disadvantage in a system that, simultaneously, returns the best global conditions in history, at all levels.
It therefore seems logical to look elsewhere. To look at another area of leverage within our reach. I dare to think that in our current situation, there may be another approach: redefining our ideal.
Ideas like minimalism have already begun to make considerable strides in the West. The idea that you can have less and be just as happy, or even happier. A way of talking about deprivation without preaching harsh sacrifice.
This idea must now be brought up in a very particular context: the annual income. Should we be minimalist about our salary? Is there any way to deprive ourselves while being happier in the end? This is what the current reflections are all about. If it is impossible to cap accumulation without destroying the nature of our economic system, is it possible to popularize the idea of voluntary privatization?
What is the impact of money?
For me, the reflection begins while listening to a podcast: How I Built This with Guy Raz, produced by NPR. In that precise episode, Raz receives Stewart Butterfield, C.E.O. of Slack Entreprises. You probably know this, but Slack is now the fastest growing technology platform in history, and Butterfield is emerging with a personal worth that now exceeds a billion dollars. It is in relation to this rapid growth that the interviewer asks him how money has transformed his life recently. Without too much hesitation, Butterfield replied that he clearly felt 3 levels of wealth, but that since reaching the 3rd level, money no longer makes a major difference.
The 3 levels mentioned are:
Level 1. I’m not stressed out about debt
Level 2. I don’t care what stuff costs in restaurants
Level 3. I don’t care what a vacation costs
What seems to me to be the most striking feature of the 3 levels is that they are far from being impossible to achieve. We all probably know someone who sits at the top of that scale. This vision put things in perspective for me. What seemed like an infinite race suddenly became much more achievable.
It was in this spirit that a few days later, I came across The Happiness Lab, a podcast led by Dr. Laurie Santos, Professor of Psychology and Cognitive Sciences at Yale University. More precisely in an episode entitled The Unhappy Millionaire. In this episode, Santos talks, among other things, about unexpected problems caused by wealth. She talks about people who ended up committing suicide after a major lottery win, about a psychologist who specializes in treating the problems of wealthy clients and about our great difficulty in understanding all the problems caused by money. Our vision of a future of abundance being focused on the positive aspects, we seem unable to project the inevitable issues associated with it accurately.
I came out with 2 things in mind:
1. No matter how extravagant our standard of living may be, we are still getting used to what is becoming our daily life. Called hedonic adaptation, this principle demonstrates our infinite desire for growth. The idea that life would always be so much easier with an X% higher annual salary.
2. We are unable to accurately predict the complexities associated with greater wealth: strained interpersonal relationships, stressful financial decisions, associated workload and lack of time, etc. So while it is easy to imagine the ideal home, it is obviously impossible to visualize the loss of quality of life caused by the overtime required to pay for it.
And then the episode continued with the question I was strongly beginning to ask myself: is there an ideal salary?
It seems the answer is yes.
A major study published in Nature Human Behavior used data from the Gallup World Poll, a survey of more than 1.7 million people in 164 countries, to estimate optimal emotional well-being: between $60,000 and $75,000 per year, a result consistent with previous research on the subject, which found that people are happier when they earn about $75,000 per year.
Purdue University researchers have also found that it is possible to earn too much money for happiness. They observed a decline in emotional well-being and life satisfaction after the $95,000 mark, perhaps because being rich — beyond the point required for daily comfort and purchasing power, at least — can lead to unhealthy social comparisons and unsatisfactory material activities.
“We conclude that lack of money brings both emotional misery and low life evaluation; similar results were found for anger,” write the authors in the report. “Beyond $75,000 in the contemporary United States, however, higher income is neither the road to experienced happiness nor the road to the relief of unhappiness or stress, although higher income continues to improve individuals’ life evaluations.” — Money.com
Now, for the sake of the exercise, let’s go ahead with an average annual salary of $85,000.
What does that mean in hindsight?
First of all, where would a salary of about $85,000 put you? It would make you more well-paid than 87% of Americans. On a global scale, it would place you in the top 0.15%. (Here, if you want to test.)
But despite everything, according to the latest studies, you still wouldn’t find it enough. In fact, the majority of Americans who have earned this amount still think they are not rich. Why?
Three factors often come up through different sources on the subject:
1. You have chosen to settle in an environment where this salary is indeed limited in relation to the cost of living.
2. You continue to compare yourself to people with higher salaries and make unrealistic expenses in your context.
3. You earn more but still do not have an appropriate financial strategy.
…Is it possible that the impression of insufficiency is rather created by poor management to begin with?
Accumulation vs. optimization
In his book Outliers, Malcolm Gladwell discusses the importance of a people’s agricultural heritage in understanding some of its fundamental traits. He compares, among other things, the reality of Western agriculture with Asian agriculture to explain this.
Because of the abundance of land, the improvement of Western agricultural culture would historically have been synonymous of accumulation. More land and more resources and machinery to cultivate it. Since the harvest has only one cycle per year, growth involves setting up the largest possible harvest annually.
The situation is very different in Asia, mainly in the case of the most crucial resource: rice. With a much higher concentration of farmers, it was often impossible for a family to acquire more land. It therefore had to constantly seek to make better use of its possession. In addition, rice cultivation benefits from as many harvests as possible in the same year. It therefore becomes advantageous to optimize your practice to the utmost in order to be able to yield 2 or 3 additional harvests per year.
Many generations confronted with these realities therefore leave us with almost hereditary behaviors. The ideal of accumulation and conquest vs. the ideal of optimization and rigour. There is no need to list examples of these mentalities in our current societies. They probably already come to mind. And this legacy is certainly part of our problem. The first response to possible financial problems often involves more an idea of additional accumulation than an idea of optimization.
We must take pride in the idea of optimization and keep in mind that the accumulation solution is ultimately not one. It simply postpones the same problems to a later point, in an even more damaging context where each decision becomes more critical and stressful.
Relative quality of life
There is, in weightlifting, the notion of relative strength. Rather than simply trying to lift the largest possible loads, the idea is to consider the loads raised in relation to body weight. What is interesting is the concept that the maximum weight is, in itself, a possibly misleading fact. Lifting 200 pounds is worth mentioning for someone who weighs 150 pounds, but a little less for a weightlifter who weighs 300. Here is our notion of optimization. The desire to do more with a finite amount of resources.
Now, how about applying this idea to income?
Earning $100,000 annually is impressive, unless it requires 3 simultaneous jobs, toxic relationships and constant anxiety. However, it is worth mentioning if you reach it in a job that satisfies you, in 4 days of work per week, within a solid and healthy family.
To value the idea of relative quality of life, more attention must be paid to the other elements of the overall portrait. It is essential to put the salary in perspective.
New definition of career progression
You are now in a job with a salary of about $85,000. Your annual renegotiation is approaching. What are the potential avenues for optimization?
Am I happy with the tasks that are required to achieve this situation? Can I take this opportunity to review my tasks and focus on what I like most?
Am I in the right place? Is it possible to achieve the same condition in another, more positive work environment?
Can I keep the same salary, but take an extra half day a week or more vacation?
Is it possible to work more often from home?
Can I have access to employer contributions to my savings or allowances to reduce my expenses?
Should I take my new earnings to support a cause that is important to me (and enjoy the tax benefit at the same time)?
You get the idea.
How can you improve your quality of life without necessarily going for the additional accumulation that will inevitably increase your stress level?
We must develop the notion that at some point in a career, advancement should perhaps no longer be reflected in salary growth, but by the increase in the quality of life that can be enjoyed while earning the same salary.
“Wealth is not about having a lot of money; it’s about having a lot of options.” — Chris Rock
Get back to balance
It may seem paradoxical to write about the problems of such a privileged way of life in a text that opens up on the extreme imbalance of wealth, but it seems only logical to tackle the problem by first offering a new ideal to those who have the privilege of accumulating such a wealth. We are quick to demonize the system as a whole, but once again, it is too easy to miss a significant part of the picture.
That being said, If the pride no longer came from the bottom line at the end of the year, but from the quality of life we have achieved in this context, I have a feeling that excess resources would more easily find their way to those who will never have a chance to ask these questions.
“A fool can earn money; but it takes a wise man to save and dispose of it to his own advantage.” — Brigham Young
Photo credits : behance.net/williamdaigneault