There is this adage that gets passed around a lot that is not really taken serious by anyone (that I know of), but still gets distributed all over the internet. Basically it says that Millennials could stop being poor and all afford a home if they would just stop buying Starbucks every day, stopped going out to restaurants, bought generic groceries, and generally just saved up. It’s such an old-timey Boomerism that assumes inflation is distributed evenly across geography and economic sectors. It doesn’t capture the cruel truth that inflation has been accelerating faster in housing costs, education, and health care, or that we are in the middle of the third recession of our little Millennial lifetimes which makes 401ks and TradFi seem a little sus.
The other thing it fails to capture is the nature of human psychology. Humans cannot help but consume things. If you buy into Renee Girard’s mimetic theory it is our main driving force to want things that others have, and if you buy into Howard Moskowitz’s spaghetti sauce theory, we don’t even know what we want until we see that it is available. It is our nature to constantly be in a state of wanting. Why do you think it’s so hard to become enlightened?
Things weren’t so different in the 1950s, there just wasn’t the abundance and variation of things to want. At the same time, it was very easy to provide value in a job. The industrial, and then technological revolution changed all that, along with globalization. Factory jobs got shipped overseas, or automated away, every car company started releasing 17 new models every year, and we fell in love with the cheap tchotchkes from China. All this stuff being pumped out in droves, with marketing budgets (along with sophistication) increasing every year. I mean, with the ability to crank out all this stuff at a cheap price, someone had to figure out how to sell us all this shit we don’t need, right?
It’s much harder for the average worker to provide value these days. There are a million micro reasons why wages have been stagnant (or at least outpaced by inflation) over the past few decades but I think the biggest macro one is because the learning curve has increased with technology. Every day more and more tasks get automated away. Automate enough tasks and that’s a job. Automate enough jobs and that’s an industry. The people remaining are doing the things that a machine can’t do: decision making, which takes expertise, judgement, and the fundamental knowledge of how the machine works so that they can utilize it to it’s full potential. The centaurish relationship between man and machine creates a powerful synergy that is greater than the sum of its parts, but wielding that power in a complex, globalized society with all its sociological problems is quite a step up from the careers from a mere 20 years ago.
However, there are now more tools to leverage to create wealth now. Naval Ravikant talks about how historically there were 2 classic ways to become wealthy: labor and capital. Now, he says there are 4: labor, capital, computer code, and media. As hard as it is to provide value in a single job on average, it is much, much easier for an individual to acquire massive wealth today. This distribution curve of outcomes to some degree explains the extreme wealth gap that we see in today’s society.
I say all that to say this: wages on average have stagnated during a period in which the prices of the essentials have inflated around us, at the same time as an abundance of stuff has materialized around us, at the same time the upper bounds of ultra wealth is increasing, at the same time that we are all more connected now than ever. Insert Mimetic Theory and the Economic Ratchet Effect and the world becomes a deterministic place where each new beautiful invention that gets purchased by the wealthy (or at least the moderately well off) becomes the object of desire for everyone. Insert Marketing and now everyone is buying more shit than they were last year. Is this bad? I don't think so. This is why stonks go up! Does this refute my original thesis that we can’t save our way out of being poor? Again, I don’t think so, housing inflation may be outpacing wages, but technology is largely deflationary (microwaves used to cost $200). All the spending on tchotchkes and piddle paddle in their summation are not material when compared to how much you have to spend on education to get a job, and housing to live near said job.
So stop trying to rub two pennies together and embrace the fact that humans just inherently love to fucking consume.
We still need things. The notion that humans can just turn off that urge to consume and go full monk is unrealistic, and this unrealism gets perpetuated in all sorts of places that it doesn’t belong, such as the second sentence of this article. That hedonic treadmill we are all running on is real, trying to get to the next chapter of our lives without fully being grateful for what we have in the present. But also, if we stopped consuming goods altogether, there would be no economy and thus no goods to consume, a perpetual cycle. That’s an extreme example, but any measure of decreasing the consumption (or spending if you want to call it that), results in a reduction of things to consume. Sure, we would all be better off with huge a dose of mindfulness, but even if you achieve nirvana you still have to eat. Maybe we just haven’t had a thought leader majestic enough in today’s society to pull us off of the treadmill (..maybe if the Dalai Lama and Marianne Williamson had a baby together..), maybe we are just too far gone .. or maybe consumption is something we should lean into and not away from..
The “save your way out” adage pops up in other places as well, but it is most apparent in the sectors adjacent to climate change. Obviously, consumption is a huge driver in this: the gas that burns every time we need something delivered in 24 hours, the cardboard box, the plastic packaging, and all the recyclable material that gets thrown into the landfill. Reduce, reuse, recycle was the motto I learned in school literally 30 years ago. Nowhere is this more prominent than water in California. I started this article a few days ago and right on cue today, my SoCal Water Company texted me a reminder that I can only water my lawn once a day (among other restrictions) during the month of June. In a globe made up of 71% water, we are confined to just a few gallons a month. God forbid we procreate and have more people that need to use more water. Just as it is silly to say that Millennials can save their way into buying a home, it is silly to say that climate change can be saved by conservation of resources. It sounds almost blasphemous to say all of that, but too often the conventional wisdom of the day sets the temper of society, when it is really unconventional innovation that will deliver us from the edge of disaster.
(Side note - I am not suggesting we disobey the California water restrictions - we would be thusly fucked)
I’ll say the quiet part out loud: the path forward is not through less consumption, but innovation through new technology.
One of the best mental frameworks for working within is the concept of first principles. Originally posited by Aristotle and currently championed by anyone and everyone who is building something of value these days, it is a framework that strips all context away from a problem and leaves only the basic facts of the situation. In physics, that would be stripping everything down to the atomic or molecular level, in business it’s getting to the deepest root cause of an issue. If we start to look at problems in this framework, we can diagnose what is a symptom vs a cause, and maybe even see that something you thought was a bug is actually a feature.
Let’s apply first principles to the problem of a water shortage. It is posed as a problem that is not going away because it appears to be a symptom of climate change, a symptom of the fossil fuels we are burning that are changing our atmosphere and heating the planet, which appears to be a symptom of our lack of energy diversity. So how do we deal with it? We could roll back emissions, put in a carbon tax, make fossil fuels illegal or at least severely limit the profit that a corporation can get from them. But we are still left with a planet that has a temperate where it is at, and a lack of water. We’ve stopped the bleeding but haven’t solved the issue. We would still have to continue to ration consumption in order to make sure we have adequate resources for all.
Now that we’ve stripped away the context and we see that the water problem is really an energy problem, how do we fix it? We have all this water all around us, why can’t we use it? Because it’s ocean water, which contains salt. How to we get rid of the salt? Desalination. But that takes energy, the same energy that is causing the increase in temperature, and plus, the cost of said energy is too high to make it feasible. What’s a cheaper source of energy that goes almost completely untapped in America? Geothermal, wind, hydro, and solar are all good guesses, but it’s nuclear. One of the great ironies of today’s environmental groups is that they are anti-nuclear power. It’s an answer that has been staring us in the face for decades and as other nations build many, many nuclear facilities over the coming decades, future generations of Americans will pay (literally pay, $ to other countries, for cheaper energy), not for the state of the climate in what they did, but for the thing that they didn’t do: innovate.
Consumption isn’t going away, we need water to survive. We will never conserve our way out of a crisis, just as omitting the daily latte won’t buy you a house. We need innovative solutions to lean into consumption and attack it head on.
Which leads me to an interesting company that I want to talk about, called Cana. Cana is the world’s first molecular beverage printer. The concept behind it is that all beverages are 99% water, and what gives each drink its uniqueness is just the 1% additional molecules. They put all the molecules you would need to make any drink into a little cartridge, and allow you to “print” as many different types of drinks as you would like. You could make a duplicate of Pepsi, or you could tweak flavors until you craft your own unique beverage, and then you can even brand it and sell your recipe to other Cana subscribers.
The obvious benefit to a product like Cana is that it eliminates the waste of billions of bottles and cans and jugs and cartons that line our grocery stores and refrigerators and garbage cans and landfills. While environmentalists might have the correct motivation to tell us to recycle and use recycled bottles and apply pressure to corporations to use more recycled plastic, it is all paddling upstream against the enormous pressure of consumption. Cana sidesteps all of that and says,
“Hey, there’s a shit ton of waste out there in the beverage market. We know you love consuming amazing beverages so we’re not going to ask you to stop consuming them just so you can have some minute effect on a random landfill you’ll never see or smell. Not even Captain Planet cares enough about the environment to put down his glass Kombucha bottle that will inevitably get sorted into a garbage bin. So we went ahead and made all the drinks. Yeah, all of them. Every drink ever, even ones that don’t exist yet. And it’s in a tiny machine on your kitchen counter and all you do is push a button and now there are no more cans or packaging waste for the rest of forever. You’re welcome.”
(Cana - if you guys would like me to be a brand ambassador lmk..)
If this sounds far-fetched, its not. 3D printing is like so 10 years ago, but biological printing is just entering the forefront. Products like Cana are paving the way and showing what’s possible at the basic consumer level. The next evolution comes with things like AlphaFold, a Google/DeepMind company that is working to predict the unique folding structure of millions of proteins from the shape of amino acids. Much like Cana takes just a few molecules and spits out a Chardonnay, synthetic protein printers can have a little cartridge of amino acids, and (using AlphaFold’s AI generated protein structures) spit out literally any protein in the world. The potentialities for this kind of innovation are limitless, and affects every industry and human on the planet. What’s more is that it highlights the path towards being able to “print” literally anything, organic or not. Forget about nuclear powered desalination plants - what if you could just print H20? This gets even spacier when you think about the biological aspect of it.
To paraphrase David Friedberg (founder / scientist / VC / investor in Cana) on where this could all lead to:
“Imagine instead of the transporter from Star Trek, where you get beamed to a different location, you could just map your own biological structure in one location and make a 3D printed version of yourself in another, essentially transporting you and your consciousness to anywhere in the universe.”
Now that is a little far-fetched, but the fact that the technology is starting to exist to even make an insane idea like that sound plausible, is extremely exciting to me.
So back to the original topic of consumption: it is not going away. Start thinking about other industries with wasteful practices such as fast fashion. The fashion industry recognized the consumption demand for quickly developing trends and met it with a supply of insanely quickly manufactured goods. They sell a few tops, the trend dies, and the surplus hits the landfill. The solve for the is not to outlaw fashion, or even the Gen-Z solution of thrifting and buying vintage (which is cool but not sustainable as an overarching fix). The solution likely comes from some sort of technology that produces bespoke pieces on demand at scale. There are going to be more and more people consuming more and more things and the way to treat resources should not be in a zero sum manner. With a finite pie and increasing number of people, everyone gets a smaller slice. But if you stop paddling against the current, and take increasing consumption as an inevitability, then you can harness that current to build amazing technologies that leap frog to solutions that are so obvious they have been in every science fiction novel for the past 70 years.
Oh, and in case it wasn’t obvious, the answer to the question of how as a Millennial do you buy a home without lowering your consumption: acquire more skills, work more harder, make more money. Life is a positive sum game.
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