A reporter from Bloomberg joins the PGP, only to discover that he carries a rare and potentially pathogenic acquired mutation, found in people with blood disorders. He doesn’t know how to deal with it, and neither do the doctors, really. Which is half of what this study is all about. What do we need to learn as a society to deal with knowing our sequences? A lot, I’m guessing.
After spending a number of afternoons and evenings with friends and family over the last few months reviewing their retirement planning and investments, I’ve gone and done something a little bit crazy: I suggested to the GSC at Caltech that maybe I could give a talk on retirement investing to the grad student/postdoc population. Incredibly, they thought this sounded like a good idea, and so now I’m scheduled to give a talk in a couple of weeks. I’m going to try and write it up here in prose form first, to get it organized. It’s gotten to be a bit long… so I’m going to break it up.
- Taking responsibility for funding your own retirement is arguably more important now than it has been for a couple of generations. 100 years ago we had much more in the way of traditional (family, community) support in old age, and the systems that we put in place after the Depression (corporate pensions demanded by organized labor, social security) show few signs of being fixed any time soon. Generally today you do not even have the option of signing up for a “defined benefit” plan. It’s a 401(k) or the highway.
- Investment returns are for all practical purposes random, unpredictable events, and because of this there’s really no such thing as an “expert investor” in the sense that most people selling their investment management services try and imply. Nobody can reliably beat the broad markets, but you can do a perfectly good job of managing your own retirement funds if you’re willing to spend about 4 hours per year on it, say the other half of the day you spend doing your taxes.
- To maximize your chances of success, you must habituate yourself to spending less than you earn, making investing as automatic as possible, starting early and aggressively, and continuing throughout your entire career, regardless of what life and the markets throw at you. Because returns are exponential and not linear, the difference between starting to save at age 23 and age 32, assuming roughly an 8% rate of return, can be on the order of a factor of two in the final value of your retirement funds. Being comfortable living well below your apparent means makes it possible not only to save money now, but also reduces the amount of money you need in order to have “enough” in retirement, where “enough” means about 25 times your expected annual withdrawals, as you can take about 4% of your money out each year indefinitely.
- Maximizing the returns on your investments largely comes down to managing investment costs: how much you pay the people doing the actual investing (i.e. the mutual fund companies), and how much you pay in taxes. The difference between paying 0.2% and 2% in fees and taxes each year might not seem huge, but over the course of 35 years of investing, it makes roughly a factor of two difference in the amount of money you end up with.
- The two most important tools you have in managing investment risk are diversification and asset allocation. Diversification reduces the overall impact of many kinds of unpredictable events (high oil prices, the demise of the newspaper industry, war between India and Pakistan, collapse of the Icelandic currency… etc.) reducing the overall volatility of your portfolio. Asset allocation (mainly the split between stocks and bonds) allows you to choose what kind of financial risk you are exposed to, and to shift it over time as you get closer to actually needing to live off your investments. With stocks, you get the potential for future growth, at the expense of having to put up with wild fluctuations in their value. With bonds, you get less price fluctuation and less potential for growth, but the ability to draw a reliable income stream. With cash you get little to no price fluctuation, but essentially zero potential for real (inflation adjusted) growth.
I’ve realized recently that it is becoming difficult for us to continue marginally increasing the sustainability of our household.
Pasadena has a relatively enlightened “pay as you throw” garbage collection service. You can choose one of three different sized garbage cans depending on how much trash you generate, and the smaller ones cost less. Both the front house and the back house have the smallest size (32 gallons). Last week when I wheeled the garbage out to the street for pickup one of the two containers was empty, and the other was only half full. The previous week there had been no garbage whatsoever in the bins. In two weeks, between two houses, we’d managed to half fill one container, and it was already the smallest size the City could imagine one house filling on a weekly basis, meaning we generated something like 1/8th as much garbage as we were “supposed to”. Instead most of our refuse ends up either getting composted or recycled. If only we could cancel the garbage service for one of the houses, or have them come only once a month. Thankfully Pasadena does actually have a stated goal of zero waste-to-landfill and incinerators (by the year 2040), as does San Francisco (by 2020) and Vancouver (no firm date for zero yet… but a 40% reduction from their current, already low, levels by 2020). Last year we “diverted” 66% of our solid waste as a city, and both the total amount of waste landfilled, and the per capita amount have decreased over the last several years (as reported in the 2009 Green City Indicators report), though as I’ve noted before “diversion” means some strange things in this context. The city currently considers it likely that we will achieve this 2040 goal. I wonder if the economic downturn has meant less purchasing and discarding of disposable crap. It’s almost certainly responsible for much of the recent reduction in vehicle miles traveled. I’m not sure what additional waste-reduction incentives have been put in place (but then, I’m clearly not the target audience… so maybe I just haven’t noticed).
Another similar strange experience recently was realizing that our natural gas usage, which goes exclusively to heat domestic hot water (we refuse to turn on the furnace in this fine Mediterranean climate…) hardly varies at all with our water usage. The difference in our gas bill between both of us being here and neither of us being here is less than 10%. About $1 out of $15 goes to heat in the water we actually use. $14 out of $15 goes to heat that escapes from the water heater into the air in the crawlspace under the house. Sadly, it was replaced two years ago (after the bottom of the old tank rusted out… that replacement dropped our monthly bill by 2/3, as leaking hot air is a lot better than leaking hot water!) and it could have been replaced with a European style tankless water heater like we had over winter break in the Earthships in Taos, where it’s just a backup for the solar hot water heater on the roof which would also work wonderfully here in SoCal.
I think there are about 6 big things you can do on your own, if you’re at all serious about sustainability:
- Have fewer than 2 offspring.
- Eat a vegan diet, or close to it.
- Don’t own a car, and dramatically reduce the number of miles you drive.
- Avoid flying.
- Live in a small, durable, energy efficient dwelling.
- Stop buying things that will eventually be sent to a landfill or incinerated.
If you’re not doing any of them, I don’t really see how you can say you care about sustainability with a straight face. But what if you’re doing all of them? And also volunteering for organizations that try to promote these behaviors in general? And donating money to others, in a similar vein? And writing your elected officials about the things you care about?
I’m not trying to go off on some holier-than-thou trip here: I haven’t really committed to stop flying (it’s just an idea at this point, one that Amtrak might well talk me out of), and I certainly enjoy eating an omnivorous diet (with the animal products coming as much as possible from discarded food). I’m just saying that I’m starting to feel a little limited. To go much further than the above list, infrastructure and society itself have to start changing, in North America anyway, and that’s an entirely different kind of problem. An interpersonal problem, with which I’m much less comfortable.
I’m a little bit of an information pack rat. I started blogging before there were blogs, from UGCS. It seemed mildly neurotic and self involved and exhibitionist at the time. I mostly did it for my mom as a way to keep in touch without having to e-mail all the time. I’ve lost information here and there, even digital information (which seems kind of unforgivable), but analog too. Actually, I think more I just didn’t create much analog information. Five intense months of life, bicycling across Europe in 1994. Maybe 2 rolls of film total? Almost no photos from my summer in Russia. Both my parents were avid photographers. My dad professionally (though eventually he tired of the weddings and quinceañeras, and retreated to a steady stream of passport and similar photos… para las micas rosas, y para amnestia…) and my mom (so far as I can tell) more personally. Family pictures, documentarian style, wildflowers, and some prizes in the Fresno County Fair. But I never got into it, until I got a digital camera in 1999. My first piece of digital film was a 64 MB compact-flash card (incredibly, several times larger than the 20 MB hard disk in my first computer, which I got in 1993). It cost about $100. The camera was a Nikon Coolpix 700, with 2.1 MP sensor and no zoom. I bought it in an online auction (at Yahoo!) for $425, but had the seller leave me feedback at eBay (you could leave anyone feedback for anything back then). I mailed the check, and he mailed the camera, simultaneously, trusting each other. I still have our e-mails. The pictures could go directly to the web… via the web server I had running in my bedroom in Santa Cruz. I still have those pictures. No developing. No cost-per-click of the shutter. Kayaking through Southeast Alaska with Becky in the summer of 2000 I had to limit the resolution to 640 x 480 to avoid running out of space over 3 months, and I couldn’t use the LCD lest I run out of batteries, but at least I took the pictures, and kept them.
Why are labels so attractive? One word shortcuts for frugal thinkers. Am I a freegan? What would that mean exactly? Who curates the definitions of our cultural -isms?
Reading through the Wikipedia article on Freeganism (which is as close to a cultural consensus on anything as I think we get these days), it seems like I’m close. Except that I’m not fundamentally opposed to eating meat (it’s the environmental degradation, antibiotics resistance, health detriments, and massive resource consumption involved in meat production that get to me… but a little free meat from the dumpster? Tasty!). I also have a soft spot for shiny new laptops and other information technologies, and I believe in the greed based toolkit of money, markets, and open competition as a way to foster innovation. But I also love composting, and creative re-use, and free non-materialist forms of entertainment and recreation like reading, and writing, and cooking from scratch, and I believe that unmitigated greed, and thus so-called laissez-faire (or perhaps in many cases more accurately crony) capitalism, left unchecked, are in the end destructive forces. Greed and self-interest are kind of like dynamite: the right amount in the right place is a wonderful tool. Too much, or even small amounts in bad places, and you’ve got a mess. So how do I respond to an e-mail like this:
Dear (Prospective Employer),
Thank you for your monetarily very generous offer of employment! Honestly, it’s not obvious to me how I could spend $X a year, as I am currently living quite comfortably on about one Nth of that amount. Actually, that’s not entirely true; I’m sure I could spend it all if I got a mortgage on a big house out in the suburbs, bought a fancy car with which to commute to work, ate out frequently, and had a few kids I planned to put through college. However, I prefer to live simply in a small home, cook my own meals, bus or bike to work, and I may very well choose not to reproduce. I also prefer, in my all too limited time on Earth, to experience the wilderness that still remains in the world, and the myriad human cultures, cuisines, and languages that have emerged in the last 50,000 years. Those experiences will not come easily sitting in front of a computer in an office park, and they often cannot be had on weekends or whirlwind tours. Thus, I am concerned about the following potential scenario with your offer of employment as it currently stands.
Just pulled a week’s worth of food out of a Trader Joe’s dumpster. Eggs, blueberries, apricots, chocolate cake, frozen ribs, chicken thighs, lettuce, bagels, breads of every description. We kept a bunch of it. Sorted the fruit into compost vs. smoothie quality, froze the latter. Sent what we couldn’t eat to a homeless shelter with another volunteer. I feel like the more I look at the margin of our society, the more I have to wonder, what the fuck are we doing? How did we get to this place, to this way of being? How can we think that this is okay? One hundred gallons of water for every ounce of beef; ten fossil calories burned for every one we produce as food, and then a third of that food sent to the landfill, while people, only a couple of miles away, are hungry? While whole neighborhoods in South Central LA have no grocery stores, only liquor stores and fast food junk?
Maybe more importantly at this point, where are we going with this? It’s a long way down from here.