It seems everyone is mad about something these days, and a lot of them are focusing that anger at Larry Summers.
So, it must be Larry’s fault that people have spent beyond their means for so long that they don’t know how to survive on a salary that most other people in the world would consider princely. I have commented on this issue before in that my costs as a college student in undergrad were absurdly low. If everyone could keep a damper on expectation inflation and hedonistic adaptation, we’d all be easier to please. After all, as I always say, “If everyone in the world lived like you, we’d need 11 planets”.
One way of doing that may be to encourage complex experience packages rather than just consuming goods. Experiences are a mixture of emotions that take longer for the body to adjust to and become habituated to. There’s also research that says that it’s better to take shorter vacations more frequently than a single long one, or as Tim Ferriss calls “a mini-retirement”.
In the pursuit of money, many investors have looked overseas. I remember earlier in the decade that China was the hottest place to park money. It had an emerging population that was growing in terms of demand for luxury products. However, state regulations have so far prevented many from controlling operations. In my opinion, this is unfair and capital flows should be reciprocal internationally. However, I can understand China’s perspective on this matter. It wants to avoid the situation of the Opium War days with foreigners coming in, living in special zones, and controlling all aspects of enterprise and commerce. Well, to all former imperialists, this is simply your unintended consequence.
If you can’t get rich by investing overseas, you may consider jumping to Wall Street as a financier or banker. I know that many young women (and men are surely no exception) have started out as scientists and engineers only to be lured by the dazzling lights of downtown Manhattan. Newsweek has a great commentary that basically says that we should lower salaries in finance to create less of an incentive for our brightest minds to go into relatively useless pursuits.
In a normal market, salaries in banking would come down normally as people flock there. However, this has not happened because bankers have built a moat around their profession. You need to be in the inner circle to get hired. Thus an arbitrary shortage is created.
For the grunt workers, there’s just the consolation of aburd title inflation.