Economists’ Little Secret

One of the first courses I took in my MBA studies was economy 101. This course lightly dabs into the realm of Micro-Economics and Macro-Economics. A great part of the course dealt with the supply and demand curves, which looks something like this:

Most of you with scientific backgrounds scratch your heads. Isn’t the quantity sold is a function of price? When prices go down, demand goes up. More items are sold. When prices go up, more manufactures want to produce. More items are created. The axis are backwards!

Only they aren’t. In China, there are factories producing as fast as they can, so quantity goes up, which forces the price to go down, which drives quality down but pushes demands up. Quality of life has risen in the past fifty years as never before, because we can get more for our money. Many families have two cars. Many of us have more than one computer at home. And a laptop. And a smart phone. HDTV in our living rooms. And in the bedroom. And in the bathroom. Heck, we even have high speed internet connections on airplanes and buses now. Life is good, and we take it for granted.

Louis CK WIth Conan Oct 2, 2008

Quality of life as a function of work hours

Here’s the thing nobody tells you: you don’t need all this stuff. You may want it, so you won’t have to fight with your kids over the remote, or so you could complain about when it breaks, or to brag to your friends about how much it costs. But you don’t need two cars. You can manage with one. You don’t need three TVs. You can manage with one. Who knows, it might force you to spend more time with your family. That’s not too bad, is it?

We are missing out on life, because we need to pay for things we don’t need, but think we want. Don’t have time to deal with the kids fighting? Buy another car, buy another TV, just keep them quiet because you are busy making money. Or you could not buy anything, and make more time by having less bills.

The more money we make, the harder we work and the more we spend.

It’s a capitalistic misconception. If you get paid $3 an hour, and you miss an hour, what happens? Nothing much. Motivation to work many hours is basically non existent, because the change in quality of life is non existent. OK, but what if it was $50 an hour? Now that’s a tasty burger. Just a couple more hours would get you the new PS3 game you’ve been dying for. Motivation went up, hours went up, productivity went up. Time to play PS3 went down. Now, what if you’ve earned $1000 an hour? How many hours would you work each week?

I might be able to pull 10 hours a week. Maybe less. The rest of the time, I’d be too busy playing my X-Box 360, going to the beach or spending time with my friends. I’d do things I want to do. I’d probably still be coding, but for me. Not for you.

Who’d hire you for that job?

Only one comes to mind. You.

Build a business, make money, control your income and work hours. You don’t have to be rich and famous. You can do just fine with being happy. Also, you get the advantage of setting your own clock, and working on things you find interesting.

Don’t think it is possible? Here‘s an example by Darla, a chef who wanted to have time for her family:

I took active steps to limit the growth of the business. Advertising and press releases stopped. Order capacity was capped—we began to sell out each week rather than grow revenue. Menus became more limited, the delivery area severely restricted. Some customers were (understandably) pissed off.

I started to take plenty of breaks, completely closing the business at times to travel with Jason. I took very long Thanksgiving and Christmas vacations, with plenty of time to visit my family in another state. Fork In The Road was the definition of a lifestyle business—small and based on values other than just making the most money. I had attained my goal of having time for fun and family and kept making a very nice profit, even though there was no growth.

It may not be as easy to get there, but it is your only life. Stop wasting it on work.