Early Retirement Extreme Forums

Does financial independence only work if one class owns assets and other people own liabilities? Can a society of 100% financially independent people exist?

(This question is likely a moot point since the chance of every American suddenly taking to ERE/MMM are slim at the moment)

Yes - so no you can't have 100%, though it's an academic question.

Though hypothetically you could have an largely automated society with sufficiently abundant natural resources to make the demand for necessary labour minimal.

It's probably helpful to think of finance as a (re)distribution/organization/who-gets-what system similar to politics, culture, religion, ... rather than wealth.

Financial wealth is simply a claim on real economic wealth. Analogously, one may think of political wealth which in a democratic society is also known as corruption whereas it is the very definition of feudalism.

If financial independence is defined as the state where upon one has enough claims on economic wealth to render work unnecessary;---

Then it is only possible for everybody to be FI insofar that society does not run out of people that need to supply the necessary work.

For example, if like chenda points out, the real economy was operated entirely by robotics, everybody could be FI because nobody would need to supply work.

In short, what limits the number of FI people is the demand of everybody vs the supply of labour necessary to operate the capital assets. This limit is becoming apparent to people running the various nation's pension systems. Most economists still work under the erroneous that financial wealth is identically equal to economic wealth whereas in reality the former is merely a claim on the latter.

FI may be achieved in part by self-production. If there were a way to increase one's self-production to cover all of one's needs at no expense (a Fuller black box), then a society of people who minimized their needs/demands could achieve 100% self-production.

However there will always be scarce resources, so 100% self-production is unlikely.

@sky - Good point. We're close to that stage for most of the minor stuff. The majority of our recurring expenses can be classified as rent-seeking in the "King's sense" in that we must acquire cash dollars to pay the government (e.g. RE taxes that mostly go to pay pension liabilities taken on decades ago) or insure against incidences which government law/policy or institutional corruption makes prohibitively expensive (e.g. frivolous liability for lack of tort reform, drive-by-doctoring, private insurance rent-seeking...).

A lot of our financial means are simply there to restore the freedom by cancelling out the political lack there-of.

...or if everybody was polyamorous and had an average of 3 different partners with whom they could legally co-produce without tax on barter then it would be even easier, especially if blood relatives were included in the mix. For instance, perhaps I would like some cheddar cheese and Zalo's 3rd partner produces it and my second partner is Zalo's Great-Uncle and my youngest sister's first partner happens to be traveling from the town of Zalo's partner to my town this week.

7Wannabe5 wrote:...or if everybody was polyamorous and had an average of 3 different partners with whom they could legally co-produce without tax on barter then it would be even easier, especially if blood relatives were included in the mix. For instance, perhaps I would like some cheddar cheese and Zalo's 3rd partner produces it and my second partner is Zalo's Great-Uncle and my youngest sister's first partner happens to be traveling from the town of Zalo's partner to my town this week.

Excellent