Institutions require intake of resources from the outside.
Corporations require revenue. Governments require taxes. Philanthropies require donations.
Incentives can alter the degree of intake from the broader system. The greater the degree of intake the more extractive the relationship can become between inside and outside. Misaligned incentives lead to greater agency costs, which roughly communicate how extractive the relationship is. In subtle and overt ways this prevailing logic is applied to individual decision-making. Anecdotally among peers there’s a single-minded orientation towards maximizing income.
Is there a different way? A different attitude or orientation towards resource management?
On a personal and communal basis, minimizing costs is the inverse of intake. Every dollar that’s self-serviced by the individual or community remains within the system.
In an individual context, the FIRE (Financial Independence Retire Early) movement takes advantage of the reliability of the stock market to transform savings into compounding investments, which eventually cover costs. The point at which investment revenue exceeds costs is financial independence. The essential insight of FIRE is that savings rate is the key to financial independence, and acts irrespective of absolute income. A 80% savings rate of an 1 mil income translates into the same timeline to financial independence, because necessary assets are relative to what’s required to cover costs (see for yourself here: https://networthify.com/calculator/earlyretirement). Using this tool, assuming a 5% yearly return on investments, you can see how increasing savings rate by 10% from 50% to 60% leads to a timeline reduction from 16.6 years of work to 12.4 years, over 4 years. Shaving some unnecessary expenses can translate into years of additional financial freedom, and this kind of tool provides the ease and legibility to connect and motivate short-term discipline for long-term freedom.
This may seem too good to be true, and I suspect it has been for the last two decades, even while its main point still stands. The better the stock market and assets perform, the faster the compounding, and the sooner the “escape velocity” of returns on assets exceeding costs. I don’t think it’s a coincidence that FIRE has emerged in a period of massive stock market and asset appreciation, which further expedites the timeline to financial independence. Going back to the previous example, changing the annual return on investment from 5% to 10% reduces the timeline by another 2 years to 10.3 years. 80% savings rate at 10% annual ROI is 5 years to financial independence and freedom from wage slavery; who can say no to that?
This kind of individual cost minimization logic can seamlessly align and accelerate within a communal context. In a communal context, one major source of self-sourcing and savings comes from sharing. Sharing maximizes usage of goods, services, amenities to benefit more people, which minimizes redundancies and inefficiencies which would otherwise represent resources leaving the system. Sharing begets a “quality-and-maintain mindset”; high quality benefits many people, and cost of maintenance and good appliance hygiene is small compared to the cost of replacement. All these attitudes favor cost minimization.
Sharing is especially effective when there is a high ratio of marginal benefits to marginal costs. Lets look at cooking. When cooking, much of the costs are overhead of getting the ingredients and setting up. Once there, the cost of making an additional unit of food (the “marginal cost”) is small. At the same time, every additional unit of food could mean saving those overhead costs for another member of the community who would otherwise need to cook from themselves; the marginal benefit is high. Even if the cooking falls on one person in the community the marginal costs are low and they would need to incur the overhead to cook anyways. Once even a single person adopts this attitude, the positive spillovers create an environment of pragmatic generosity, which is infectious and a path of least resistance compared to the individualist norm. Once pragmatic generosity is broadly adopted it feels like pay it forward magic; I cannot express how many times in my 15-person coop I have been “saved” by great cooking when I’ve been sick or fatigued.
This high-ratio-of-marginal-benefits-to-marginal-costs dynamic applies to a variety of 1-to-many services and goods. When someone sings or plays the piano, there is large positive spillover. The marginal cost of one person investing in good systems can beget high marginal benefits of others using those systems. One tinkering-oriented person can set up a projector or workshop which now benefits the whole community. One gym-oriented person can set up weights which benefits the whole. In other words, this ratio heavily encourages prosocial behaviors and investments, especially once individual efforts jumpstarts a dynamic of pragmatic generosity. This represents a major “phase transition” in communal living. Once individuals feel safe to pay forward generosity, generosity begets generosity, creating a group field of goodwill, trust, abundance. In a future post I will discuss tactics for speedrunning this phase transition, which I believe is essential for mainstream re-communalization.
Another step increase in savings is a preventative mindset. An ounce of prevention equals a pound of cure. Prevention requires long-term thinking and crowdsourced knowledge, and appreciation for sudden unexpected costs. A quality-and-maintain mindset already begins adopting a long-term mindset which is adjacent to preventative thinking. I have sneaking intuition that there is a sequential ordering where the former creates the conditions to appreciate the latter, quality-and-maintain creates the attitudes and conditions needed to begin appreciating the benefits of hygiene and prevention, which in turn opens up opportunities in longer term forms of prevention.
Another major source of cost minimization is differentiating “perceived” vs “real” needs. Wants and addictions are infinite, needs are finite. Delineating the two allows a baseline of needs to be established and met, and surplus to accrue. Conflation of the two leads to continual lifestyle creep and consumption maximization. While this may appear to be an individual endeavor, I believe it has a profound relationship with community, which I will get to shortly.
What is the key difference between the two? Perceived needs, wants, addictions have a masturbatory or mirage quality to them which is decoupled from satiation. When a need is met, it is satiated, at least until it naturally arises again. When a want is met, satisfaction is brief, fleeting, empty. They are a kind of misdiagnosis of an underlying need.
Need vs Want vs Addiction
flowchart TD subgraph W ["Addiction / Want Feedback Loop"] A(Addiction / Want) --> B(Achieved) -->|Brief Satiation, Emptiness| D(Frustration) --> E(Double-Down) --> A A --> I(Not Achieved) -->|Longing, Craving| D end subgraph N ["Need Feedback Loop"] F(Unmet Need) J(Meet Need) --> K(Satiation) -->|Time Passes| O(Natural Hunger) --> F --> J end subgraph S ["Self Awareness"] M(Misdiagnose Need) --> A D --> G(Reground) --> H(Diagnose Underlying Need) G --> M end A -.-> F H --> JHypothetical example: a successful business man may want a big home, they work hard to get the big home, and when they do, it feels shallow and empty, and they’re left feeling confused and frustrated. In fact, the “big house” may represent an underlying need for being worthwhile, and being worthwhile is grounded in a need for social belonging and safety. If he doesn’t reground and recognize the pattern, he may change his goal post, and try to get an even bigger home or something analogous.
Addictions have an “unmet need” that they wind up destabilizing. An alcoholic may drink to induce relaxation, but the alcohol may make their sleep worse, which in turn increases the need for relaxation. Cycle.
This destabilizing relationship can be more subtle. Fast food is high calorie low nutrition. While consuming fast food may feel good in the short run, they ultimately lack the nutrition needed for fuller sense of satiation. In some sense, human taste and satiation signaling could be co-opted to drive consumption.
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Consumerism is incentivized towards promoting wants and addictions because they increase consumption. These same incentives encourage consumption-based institutions from obscuring root needs, both in overt sociopathic ways (e.g. marketers likely know what they are doing but don’t care enough to stop) and subtle implicit ways (e.g. long-term incentives shape the “social landscape” in ways that make root needs harder to see and address, such a formation of the nuclear family). Put differently, targeting needs reduces consumption to its bare minimum, which is an existential threat to these institutions (something I discuss in The Principal Agent Problem as the Rootiest Root of the Polycrisis).
One major class of wants and addictions co-opt the signaling of satiation to appear as if they are meeting needs. In the aforementioned examples, in the short-run alcohol may appear to offer relaxation while actually reducing it in the long-run. Fast food co-opts taste while lacking nutrition. In these examples, I suspect the combination of meeting the underlying need and going “cold turkey” is necessary. Going “cold turkey” is necessary to reground the satiation signaling system. Actually addressing the need allows it to remain grounded, and prevents reversion to old patterns.
What are the unmet needs beneath wants and addictions?
One major class are subjective, illegible needs. Love. Gratitude. Care. Emotional and nervous system co-regulation. Belonging. Purpose and meaning. Safety. From a more reductive functional standpoint, these illegible needs have a powerful relationship with the parasympathetic nervous system; safety is required for the body to re-integrate, maintain, and heal itself.
This is where I believe there is profound relationship between meeting individual needs and community; meeting these illegible needs may be an essential purpose of community. In meeting these needs, wants and addictions can fade away, simply because the root is now being addressed. For this reason, I do not think a cost minimization mindset can be fully realized in an individual context. Community is essential for providing the right context for circular win-wins, and to meet spiritual needs that are often at the root of costly and unnecessary wants and addictions.
Institutions require the logic of intake and extraction to survive. Community requires the logic of cost minimization and circular self-servicing to thrive. I do not see these attitude as substitutes, but as complements that exist in parallel and require the right balance to achieve best prosocial and individual outcomes.
What I do believe is undeniable is that the balance is way off at the moment, and its time for a pendulum swing towards community, and with it, cost minimization rather than revenue maximization.