by Dale Coberly


A morality tale

Leo Tolstoy tells a story about a Russian peasant who makes a deal with the Devil. The devil will give the man as much land as he can walk around in one day. But, the devil warns him (the devil always tells the objective truth) if he does not come back to the place where he started from by the time the sun sets, all the land will spill out of the gap and he will get nothing.

So the man starts out on his walk very early in the morning with modest intentions. But he sees a bit of nice land he’d like to add to his estate, and then another, and another, so he keeps walking just a little further than he intended. Suddenly he notices that the sun is going down, and he is nowhere near the place where he started. So he runs for it. And he runs. And he runs.

I won’t spoil the story for those who can’t see how it ends, but I believe Tolstoy called it “How Much Land Does A Man Need?”

I was thinking about this after a futile argument with some people who think they are friends of Social Security, while I was recalculating the “returns on investment” at a given percent with a constant input. I knew the answer was something like “you double your money in about 40 years at about 3%. and double it in about 30 years at about 4%. There is a reason for the “about.”

What I see people do is calculate the exact amount to the penny without regard for what they are actually doing. It seems to me that if you wait forty years to cash out, you have waited too long. And after about 30 years you would have about 86% as much money at 3% as you would have gotten at 4%. Aside from the problem of whether what you will want to buy when you are 60 or 70 is the same as, or “worth” the same as, what you want to buy when you are 30, there is the question of whether there is more safety in that 3% investment, and whether getting “only” 86% of what you “could have” gotten is going to be such a hardship.

It is easy for me to imagine a man working hard and saving harder and reaching the age of 65… or 67 is it now? and going to be 69 soon? you don’t say. Reaching this age with an extra million dollars in the bank and dying before he can enjoy it. Or realizing that he has already lost his life by working so hard so long and thinking only about money. Or reaching old age and having a million dollars squeezed out of the work of others. Or reaching the age when he would really like to quit, and seeing his millions disappear as the market changes.

I knew a man this happened to. He invested in a business that became obsolete. So all he was left with was his Social Security. And the old guy kept telling us that Social Security was a fraud and a theft. And “if only” he had kept his Social Security taxes he “could have” invested it in something that “would have” made him rich. Some people really do never learn.

Another way to look at this would be, suppose the Devil offers you a bet. You can have a thousand dollars a month to live on, or he can toss a coin. If it comes up heads you get a million dollars: if it comes up tails, you get nothing. Now the thing is, the devil can use an honest coin and still win the bet.

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