FIRE and the dream of a world without work
By Financial Independence Retire Early (FIRE) is a social movement/Internet meme which has been gaining increasing attention over the past few years, after getting its start in the early 1990s. The idea is to save a lot of money early in life so that you can stop working, or at least stop working for income, at a young or youngish age.
This NYT article explores the phenomenon in an anecdotal way, and I learned from it that FIRE, which I had heard of but never really paid attention to, comes in various flavors. Wikipedia lists the most common:
LeanFIRE: LeanFIRE is about achieving financial independence earlier by living exceedingly frugally. With very low expenses, a smaller investment portfolio is needed to achieve financial independence.[11]
FatFIRE: FatFIRE is a strategy for achieving financial freedom and early retirement with a larger budget than traditional retirement planning. Unlike other FIRE methods that may focus on minimalism and reducing expenses, Fat FIRE allows for a more luxurious lifestyle in retirement. This approach requires saving and investing a significant portion of income to build a substantial nest egg, enabling individuals to retire earlier than conventional retirement age while maintaining a higher standard of living.[11]
CoastFIRE: CoastFIRE has at least two stages. In the first, an investor aggressively saves and builds their investment portfolio. This continues until the investor is satisfied that their portfolio will grow sufficiently through the power of compound interest alone. In the second stage, the investor can stop or reduce their investing, and enjoy a measure of freedom without being fully financially independent.[12]
BaristaFIRE: BaristaFIRE allows people to partially retire before they are fully financially independent. It involves switching to a less-demanding (usually part-time) job that provides some income, and perhaps benefits such as health insurance.[13] (The term is a reference to part-time jobs at Starbucks, which provide health insurance.)[14] With this approach, a person covers their living expenses with income as well as modest withdrawals from an investment portfolio.[15] During this period, the investment portfolio should continue to grow.
I thought of FIRE as just being the first definition — kind of a minimalist anti-materialism — but the NYT piece focuses much of its attention on a guy named Allen Wong, who represents FatFIRE in that he made what appears to be an eight-figure fortune by 25 and then just stopped focusing on making any more money, since he had enough to fully indulge his incredibly bad taste more or less in perpetuity. Making $10 million + by the time you’re 25 so you can buy a wearable Iron Man suit that shoots lasers doesn’t strike me as a pragmatic model for a broad-based social movement; on the other hand the more traditional version of FIRE, LeanFIRE, may actually be pointing to something worth pursuing more generally, i.e., anti-materialism in the service of liberation from drudgery.
All of this touches on something I’ve been thinking about a lot, which is the distinction between what economists define as labor — what you have to do in order to be able to afford to do what you want to do, aka leisure — and work, which is a much broader category, that includes labor, but also much more.
A world without labor is desirable by definition; a world without work — without purposive striving toward some more or less difficult achievement — strikes me as a complete nightmare. Here I refer back to one of the most important things ever written by an economist, J.M. Keynes’s “Economic Possibilities For Our Grandchildren” (1930).
This essay looks 100 years into the future — where we are now in other words — and imagines a world of vast abundance, which ought to require far less labor, given the declining marginal utility of income (this prediction of course turned out to be completely wrong, which is extremely interesting in and of itself). What, Keynes asks, are people going to do when what he calls “the economic problem” will have been mostly if not wholly solved?
Yet there is no country and no people, I think, who can look forward to the age of leisure and of
abundance without a dread. For we have been trained too long to strive and not to enjoy. It is a
fearful problem for the ordinary person, with no special talents, to occupy himself, especially if
he no longer has roots in the soil or in custom or in the beloved conventions of a traditional
society. To judge from the behaviour and the achievements of the wealthy classes today in any
quarter of the world, the outlook is very depressing! For these are, so to speak, our advance
guard-those who are spying out the promised land for the rest of us and pitching their camp
there. For they have most of them failed disastrously, so it seems to me-those who have an independent income but no associations or duties or ties-to solve the problem which has been set them.
This, it seems to me, is a question that the FIRE movement largely elides or ignores. Labor is bad; work is good. Understanding that this statement involves no contradiction is, in contemporary America, much more difficult than it ought to be.