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Tuesday 15 October 2013
So you want to get rich and become a millionaire? Perhaps this book will tell you how.

The approach taken has been to sample or survey a lot of millionaires and ask them about their lifestyles and wealth levels. The book majors a lot on a frugal lifestyle, and that millionaires are surprisingly hidden from view(and hence may be living next door).

It is filled with anecdotes about how much they spend on items like clothes, holidays, cars, etc the data is all from the USA and seems to be drawn from the 1980s and 1990s. But there is a problem in that the sample may not be unbiased and you have to assume that they are reporting the truth. The millionaires tend to be blue-collar workers who have established their own business that have done rather well. They have generally saved hard and reinvested this money over decades.

The problem is that this might not be the best way forwards for a young potential millionaire. For every millionaire dry-cleaner there are probably  tens of very poor dry-cleaners. Much depends on luck as to when and where a business is established. Careers that require higher education; teachers, accountants, lawyers, doctors may not have so many very high wealth individuals but will have fewer with none. To be fair the book does mention this, but the focus is on very wealthy rather than very comfortable people.

There is something too the idea that controlling spending is a key to wealth. It is always fascinating that many high earners seem to end up bankrupt or poor. It might say something about me that this is a book that I would prefer to read(How to Blow a Million in Five Years!) I guess that it is because they spend up to their income, and this income then disappears.
 
For me this book felt quite dated with the fairly obvious advise that you need to earn a lot and spend little if you want to be wealthy. It is better than a get rich quick kind of book, it is more of a get rich slowly affair really. As a read it felt quite dull with pages of statistics that didn't translate well into British 2013 prices and a quite US centric feel. Perhaps because in the UK we don't really believe that anyone can rich in quite the same way. The takeaway is that you should look to spend less than you earn makes sense. 

Thursday 10 October 2013
Jilted Generation is a book that argues that the young people today are a jilted generation. They have three problems compared to their parents
  • House prices have risen and it now takes much longer to be able to save for a deposit
  • Wages have not increase much over the past few years and jobs are less stable
  • University education is no longer free and the costs have moved from comparable to credit card debt(a few hundred or thousand) to mortgage level debt(tens of thousands)
  • Government debts that will need to be repaid
 This book does contain some facts and figures but mostly it is a sort of glorified political pamphlet, albeit a well written one. It reminds me very much of Chav by Owen Wilson, although the Jilted Generation are perhaps more middle class as they aspire to homes and degrees.

The root cause is the most powerful generations are older. They tend to have accumulated more wealth and are more likely to vote and be in positions of power. This leads to a tendency for institutions to encourage outcomes that benefit the older generations. For example pensions rise whilst working age benefits and university support are cut as pensions are a powerful lobby. Likewise high house prices benefit older home owners as the expense of less powerful younger, renters.

There is undoubtedly truth in all of this, although I suspect that every generation has had its challenges(fighting the world wars was probably no picnic). The previous generation had less chance of going to university - it may have been cheaper but fewer people went for example. Government debt has risen but the cost of servicing the debt payments has fallen as interest rates have collapsed(much has been inflated away).  And whilst jobs are less stable people have more choice in terms of careers options than their parents faced.

I enjoyed this book as it is well-written with great style. The actual economic analysis is not so strong, and the authors fail to really address how they would deal with the problems they raise. They are probably aiming at shifting the terms of political debate so inter-generation rights are considered.

There is a similiar book by David Willett's called The Pinch, which looks at Baby Boomers and how they have advantages over their children's generation. David Willetts is a conservative rather than a radical and so it is a more right wing critique of the same problem, the relationship between generations. I think the two books can probably be read together.