What Can You Learn From History's Biggest Fraud - The Luxury Trap

"History does not Repeat, but it does Rhyme"

The story of the luxury trap carries with it an important lesson.

70,000 years ago, there were no LV bags, SUPREME shirts, Adidas NMD Sneakers or 3D2N cruises to nowhere. However, what they had was something similar...

Wheat & Grains.

Cue the Agricultural Revolution

Humanity’s search for an easier, better life released immense forces of change that transformed the world in ways nobody envisioned or wanted.

Nobody plotted the Agricultural Revolution or sought human dependence on cereal cultivation.

A series of trivial decisions aimed mostly at filling a few stomachs and gaining a little security had the cumulative effect of forcing ancient foragers to spend their days carrying water buckets under a scorching sun.

TL;DR: Our ancestors wanted better lives, but ended up consuming more and falling into a luxury trap

• Our Ancestors were traditionally Nomadic Hunter & Gatherers

• This meant that they would often move from area to area to find new pastures

• As families started expanding, they needed to consume increasingly more resources

• Farming came along and people started settling down in one area

• They started working harder and harder to have an 'easier & better life'

• The pursuit of an easier life resulted in much hardship as they ploughed away to accumulate more for future generations

• And not for the last time. It happens to us today in the form of 'lifestyle creeps, and higher 'standard of living costs'

For the same reason that people throughout history have miscalculated. People were unable to fathom the full consequences of their decisions.

Whenever they decided to do a bit of extra work – say, to hoe the fields instead of scattering seeds on the surface, people thought...

‘Yes, we will have to work harder. But the harvest will be so bountiful! We won’t have to worry any more about lean years. Our children will never go to sleep hungry.’

It made sense. If you worked harder, you would have a better life. That was the plan.

The first part of the plan went smoothly. People indeed worked harder. But people did not foresee that the number of children would increase, meaning that the extra wheat would have to be shared between more children.

What went wrong?

1. Early farmers did not understand that feeding children with more porridge and less breast milk would weaken their immune system

2. And that permanent settlements would be hotbeds for infectious diseases

3. They did not foresee that by increasing their dependence on a single source of food, they were actually exposing themselves even more to the depredations of drought.

4. Nor did the farmers foresee that in good years their bulging granaries would tempt thieves and enemies, compelling them to start building walls and doing guard duty.

There was no going back. The trap snapped shut.

Then why didn’t humans abandon farming when the plan backfired?

Partly because it took generations for the small changes to accumulate and transform society and, by then, nobody remembered that they had ever lived differently.

And partly because population growth burned humanity’s boats. If the adoption of ploughing increased a village’s population from a 100 to 110, which ten people would have volunteered to starve so that the others could go back to the good old times?

Fast Forward to the 2020s.

The pursuit of an easier life resulted in much hardship, and not for the last time. It happens to us today.

How many young college graduates have taken demanding jobs in high-powered firms, vowing that they will work hard to earn money that will enable them to retire and pursue their real interests when they are thirty-five?

But by the time they reach that age, they have large mortgages, children to school, houses in the suburbs that necessitate at least two cars per family, and a sense that life is not worth living without really good wine and expensive holidays abroad.

What are they supposed to do, go back to digging up roots? No, they double their efforts and keep slaving away.

One of history’s few iron laws is that luxuries tend to become necessities and to spawn new obligations. Once people get used to a certain luxury, they take it for granted. Then they begin to count on it. Finally they reach a point where they can’t live without it.

Let’s take another familiar example from our own time. Over the last few decades, we have invented countless time-saving devices that are supposed to make life more relaxed:

• Washing machines,

• Vacuum cleaners,

• Dishwashers,

• Telephones,

• Mobile phones,

• Computers,

• Email

Previously it took a lot of work to write a letter, address and stamp an envelope, and take it to the mailbox. It took days or weeks, maybe even months, to get a reply.

Nowadays I can dash off an email, send it halfway around the globe, and (if my addressee is online) receive a reply a minute later. I’ve saved all that trouble and time, but do I live a more relaxed life?

Sadly not. Back in the snail-mail era, people usually only wrote letters when they had something important to relate. Rather than writing the first thing that came into their heads, they considered carefully what they wanted to say and how to phrase it.

They expected to receive a similarly considered answer. Most people wrote and received no more than a handful of letters a month and seldom felt compelled to reply immediately. Today I receive dozens of emails each day, all from people who expect a prompt reply. We thought we were saving time; instead we revved up the treadmill of life to ten times its former speed and made our days more anxious and agitated.

Here and there a Luddite holdout refuses to open an email account, just as thousands of years ago some human bands refused to take up farming and so escaped the luxury trap.

But the Agricultural Revolution didn’t need every band in a given region to join up. It only took one. Once one band settled down and started tilling, whether in the Middle East or Central America, agriculture was irresistible.

Since farming created the conditions for swift demographic growth, farmers could usually overcome foragers by sheer weight of numbers.

The foragers could either run away, abandoning their hunting grounds to field and pasture, or take up the ploughshare themselves. Either way, the old life was doomed.

Conclusion: There's no turning back time...

Humanity’s search for an easier life released immense forces of change that transformed the world in ways nobody envisioned or wanted.

The next time you open up your mobile, email or scroll through Facebook and Instagram, yearning for a better life. Spare a thought for the ancient days of why our ancestors started accumulating wealth for future generations, never really living in the present.

Does FIRE (financial independence, retire early) has its roots in the ancient days of not consuming more than you require in order to break out of the 'rat-race' or perpetual 'debt-cycle' that once consumed our ancestors?