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The Steady-State Initiative

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What is our lifetime net worth?

In our current economic model, where monetary evaluation plays a vital role, what is the purpose of all of this? We are so obsessed with numerical evaluation that it verges on bean counting.

What is a person's lifetime net worth? From the time of conception, we begin life as the merging of two human cells. When we are born, we enter this world with nothing on our backs. A few of us are born into ready made wealth, an inheritance of family riches. When we die we may leave behind material wealth or we may leave behind huge debt for others to assume.

During our lifetime, what have we contributed to earn us the good life and material things that we possess? We may own a piece of land with a home on it, a car, big toys and numerous material things. How do we evaluate what all of this is worth? What price do we put on a piece of land? How do we adjust for currency exchange, cost of living increases, inflation, time value of money, etc.?

Let us assume, for example, that we begin working at age 25 and retire at age 65. Let us assume that on the average we work a 40-hour week, 45 weeks each year. That brings the total hours worked to 72,000 hours, or 9,000 days, or 1800 weeks or 40 years. If on the average our wage is $10 per hour, our total lifetime earnings would be $720,000.

Let us ignore the value of the land our home sits on and forget about the numerous expenditures on material things, luxuries, vacations, etc. Let us focus on our home, family, and provision of food and shelter for our family. Can we say that this amounted to the $720,000 that we earned?

$720,000 represents an average of $18,000 per annum over 40 years. This may appear rather low by today's standards. But it isn't when you factor in inflation over the years.

Of course, if we change our wage from $10 to $20 per hour we get quite a different picture. If we tried to include all the variables such as wage, time, taxes, deductions, cost of living and inflation, we can easily see that accurate evaluation would be very complicated and difficult, if not impossible.

The point is that we should be able to get a rough idea as to whether our lifetime earnings come close to our lifetime expenditures and our current assets. If you find yourself in a better financial position now than what your earnings reflect, then you either got lucky or you are benefitting at someone else's expense. On the other hand, if you think you are behind in the assets and benefits department, then either you were unlucky or you got short changed.

The point of this exercise is that it indicates that we could not have achieved what we have on our own efforts. When we use leverage, division of labour, and pooling of our collective efforts as a society, we can achieve more than if we were to go it alone.

When we stop the bean counting and get on with the task of helping each other, we make this world a better place for all to live in.


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