Though ostensibly a general, open-ended question, we all know this is code for “if you want to be a parent and an income earner, prepare to fail, lady!” And the pat answer is that “no, you can’t have it all … balance … tradeoffs … choices … etcetera”.

This is not untrue but let’s just stop a moment and remind ourselves that every human being has 24 hours in the day, 7 days in the week, 365 1/4 days in the year. And so forth. Angela Merkel, Bill Gates, Michael Burry, no matter, the sun stops for no one. The difference between men and women, female parents and male parents is how they choose to spend those 24 hours, not that one class of them has more hours than the other. (Though actually, since women live longer on average than men do, they actually do have more time in the long-run.)

Let’s say you sleep 8 hours (generous, eh!) and you work 12 hours (hopefully less) and get 4 hours for life stuff each day during the week plus a full weekend of no work. That means you are spending a little over 1/3 of your life working, 1/3 of your life sleeping and 1/3 of your life doing life stuff, in an average week. So if by “it all” you mean things that cannot be fit into that remaining 1/3 of your life – that’s right, you cannot have it all. And if the working bit needs 80 hours a week but you can’t do only 32 hours of “life stuff” (not much time really), you cannot have it all. But for most reasonable people (not investment bankers or management consultants), 52 hours a week for life stuff pretty much covers it. What matters is what you want, not who you are.

And I would caution all female parents to be sure they are considering what they genuinely want, not what they think they should want.

(And if you are the partner “doing it all” in the partnership, man or woman, stop. Now. Just stop. I still agree with my original point here.)

1. Debt is essentially pre-spending, and
2. Debt is spending on behalf of someone else.

Remember: this is only possible if someone reduces her own consumption by at least the equivalent of your “over-consumption”. If no one wants to do such a thing, you can’t incur debt. Period. Just not possible.

In a world with zero interest rates (you get wagon in period “today” and you return a wagon plus a wheel in period “tomorrow”), 3 scenarios:

1. Your Income Today and Tomorrow is the Same: You have just shifted the timing of your consumption. You consume more than you produce now and you consume exactly that much less tomorrow. Good for the impatient types.
2. Your Income is Higher Tomorrow: You won’t need to reduce consumption by as much. In fact, if growth is strong enough you might not need to reduce consumption at all. Yippee!
3. Your Income is Lower Tomorrow: Repayment hurts. Bah humbug.

If spending more than you can afford now means you have more income tomorrow (education, medical care, shelter, etc.), debt can be a great thing. Otherwise, it’s not.

Furthermore, in a zero interest rate world potential savers have no good reason to let you spend on their behalf unless they simply don’t mind helping you smooth your consumption and they feel pretty damn confident you’re going to make good in the end. Even if the borrower is using the funds for all sort of admirable self-investment, the debtor gets no material benefit out of the arrangement and still bears the risk that they may never recoup their foregone consumption. This is especially pertinent if odds are that the borrower will be in a constant or shrinking income world during repayment time.

In a world where interest rates are greater than zero:

1. Constant income: You are worse off since now have to come up with the extra wheel to repay in addition to the original wagon that you borrowed.
2. Growing income: Unless your income grows by at least the equivalent of a wheel you are worse off.
3. Shrinking income: You are definitely worse off.

Now there is a material incentive for a saver to let you spend on their behalf but again the interest rate must make up for the risk that you won’t make good on your obligation.

So what does it all mean? (aside from being the world’s most boring blog post ever?)

• Debt for non-productivity enhancing activities is dubious. (That may even include housing, the American holy dream – more on that later.)
• Debt for productivity enhancing activities must be proportionate. (Absurdly expensive educations are of dubious value – for-profit colleges, certain private colleges, etc. More on that later.)
• No savers = no debtors. It’s a symbiotic relationship and the saver has to get something out of the arrangement.
• Interest rates matter! Savers gain only if there are enough debtors out there who are doing useful things that make them willing/able to repay debt + interest and/or who don’t mind forsaking equivalent or greater consumption in the future to pay for extra Gucci shoes now. Otherwise, savers get no or negative returns for their sacrifice. THERE IS NO REASON SAVERS SHOULD COUNT ON POSITIVE RETURNS OF ANY PARTICULAR LEVEL. EVER. It matters what that borrower is doing with your savings.

Economics tends to get boiled down to supply and demand curves. Which tend to be taken as given and knowable. These curves are vastly complicated and not easily knowable. But more on them later.

The most important economic relationship is:*

PRODUCTION = CONSUMPTION

In a simple, barter-based economy this is very obvious. If you want a wagon, you either make it yourself or produce something of equivalent value to trade with a wagon maker.

With a fiat currency, this is slightly less obvious, but it still is easy to see that there can only be as many wagons “consumed” in the world as have have been wagons produced. Not even the cleverest 21st century investment banker can lever or hedge his way out of that reality.

This rule must only hold true in the aggregate. It can be violated at the individual level. That is, I can consume a wagon without having produced the equivalent if I:

1. Steal one from the wagon producer or a wagon consumer, or
2. Receive one as a gift from either a wagon producer who has decided to forego receiving something of value in return or from a third party who has decided to forego some consumption for herself and gives the wagon producer something of value on my behalf, or
3. Promise to produce something of value in the future in return for the wagon now

The first case is illegal. The second case is likely rare … for most. And the third case is what you would call “credit” or “debt”. The third case can be very useful, or very dangerous, depending on the circumstances (but more on that later) but it doesn’t create wagons. Only people can create wagons. And only wagons that have been produced can be consumed.

*Or more specifically Production >= Consumption. As not everything that is produced need be consumed/utilized. Also, I am ignoring the investment/consumption distinction for the moment. The basic point is that in the aggregate, consumption cannot exceed production but it can at the individual level.

I loved many things about my Economics courses in college, but most of all was the great sense of relief I felt as a short lifetime of worries about the environment, social welfare, gender parity, the woes of small business, etcetera was replaced by a belief in an infinitely bountiful, self-regulating world. Yes, market failures abounded but we knew where to beware and generally the population could be left to fend for itself. I was happy to worry less.

I had come from a “nothing ventured, nothing lost” world where wealth, it seemed, came only at someone else’s expense. I was eager for proof of fast money gained at no one’s expense so it took a second crash, worst than the first, for me to finally come to terms with reality.

The defining lesson of the last decade for me is that there is no magic. Progress comes inchingly slowly at best, never at worst. Growth is fickle and driven only by human ingenuity and laborious effort, not financial engineering.

My feeling is that that last couple decades (perhaps not coincidentally when the U.S. turned from a surplus nation to a debtor nation) were a mirage. We are now returning to normalcy and my expectations are extremely moderate.

More on that soon …

People who bang on about innate differences should remember that variation within subgroups in the population is usually bigger than the variation between subgroups. Even if it can be established that, on average, women have a higher “emotional-intelligence quotient” than men, that says little about any specific woman. Judging people as individuals rather than as representatives of groups is both morally right and good for business.

Which echoes my own thoughts on the matter of gender, as penned last June (see the footnote):

I take the somewhat radical position that there is just as much intra-gender as there is inter-gender variation therefore one cannot make meaningful predictions about intelligence, behavior and career prospects based on gender alone. Do men and women have real biological differences that impact behavior? Yes. But in a civilized society where intelligence is more critical than brute force for professional success, I’m not convinced that it matters.

But most importantly the briefing hit home on the fact that if we really want to make progress, we need real changes in the support systems for working parents. This is not a matter of changing norms and attitudes any more, it’s about being practical in the logistics of working and raising children. What I find odd as a new parent is the way in which bearing children seems to be seen as a sort of hobby. A side occupation which one should keep to herself unless in the company of like minded folk. Among the over-population crowd (of which I am too familiar! but more on that later) children = selfishness. Oh, the irony. That we benefit broadly as a society from successive generations (who else is going to pay off all this debt!!) but expect parents alone to bear the costs, is a huge market failure.

Choosing a theme and title was challenging and I still feel dissatisfied with the end result. The back story is that once upon a time I believed that life was a sum zero game (before I knew the term) and was delighted to decide at some point that it was not so. But lately my thought is that it tends toward sum zero, impeded only with some effort on our part. It’s the effort on our part that I’m interested in.