Kantian morals and early retirement

by John Stapel

I have demonstrated, in theory and in practice, that it is possible to become financially independent in about half a decade if one so chooses. All it requires is a 75% savings rate and a median income job.

Now, for some reasons, which I can not really figure out, this idea is occasionally challenged by people who argue their case using what appears to be Kant’s categorical imperative. The categorical imperative is essentially a test of what would happen if everybody did it.

For example: Suppose I’d like to go around shooting people, the test is then is if I can accept this behavior to a universal status, that is, would I be okay with everybody else going around shooting people (including me) as well. If not, the universal principle says I can’t go around shooting people.

Similarly, the idea of early retirement is refuted because it is argued that society would break down if everybody retired early. Interestingly, a similar argument is not presented when it comes to the decision of whether it would be okay if everybody decided to become hair dressers.

I don’t know enough about philosophy to know if this has already been argued, but I think this principle of universality should exist in a weak form and a strong form. Specifically:

  • The strong form: What if everybody did it.
  • The weak form: What if everybody was allowed to do it.

The weak form solves the problem, because it is demonstrably true. We already have a society which allows financial independence and early retirement. See paragraph 1.

The way capitalism is set up also elegantly solves the problem. Clearly the transition must be continuous as financial independence necessitates the accumulation of resources. What, then, would happen if everybody started accumulating resources and saving instead of consuming.

First of all, I believe the world would be a better place. There would be far less waste. People would start thinking about the future instead of the present. It would end up with a more ecologically sound form of capitalism. Second, though, the interest rate would drop as demand for present resources would fall. This would require the accumulation of even more assets to become financial independence.

At some point, people would say screw it, I’m just going to work for money instead. It’s much easier than to accumulate a gazillion bucks just so I can live off the trickle.

Of course we already have such a situation today. Only a few people are willing to save and invest the necessary resources. The rest prefer to live in the moment. Therefore the world looks as it does now.

And interesting question would be to imagine a similar discussion in a future oriented society (with low interest rates and high savings) about what would happen is everybody just started spending their money: Oh no, it would never work. Where are we going to find jobs for all these people? What would they make? Where would the demand be? Does that mean we’d have to just pour our earnings down the toilet or should we tear our homes down just so we can work harder to build bigger ones or throw our stuff out so we can buy new stuff? Clearly, that can never work. What about the resulting pollution? What about the finite resources? How are the next generations going to live when we used them all up?

Originally posted 2010-05-28 00:06:17.