Implications for the Housing Boom
I used to have a secretary-both in my medical and corporate careers. Now my computer does everything-spell check-pay bills online-travel reservations-formatting and archiving documents. Now with information flowing cheaply and rapidly I can be self –employed and work at home. I remember the advent of EDGAR in 1995 and beginning to dream about being an independent investment advisor and banker with no fixed costs to speak of and no geographic imperatives at least on a daily basis. It took about 5 more years for the stars to align themselves correctly but with the children at good transition ages we were able to leave New York and move to a small New England town approximately 100 miles away. Short enough to get in for an occasional meeting but far enough to maintain a rural character. Lets assume the total cost of that secretary is $75,000-=assume my fully allocated rent costs would have been $25,000 for my share of a New York office. That frees up $100,000 in resources not counting decreased commuting costs-dry cleaning etc.-Of course my revenues may go down some so my actual savings may be a bit less but the proportionality should be appropriate for many self employed individuals in the information economy.. What are the things I can do with these savings? Are these savings a zero-sum transfer in which income is transferred to me from the erstwhile secretary and the landlord or are there macro savings as well? Are there mechanisms for that former secretary to benefit also? -What if I choose to work less-my better life is not reflected in GDP accounts but is a real benefit anyway?
What can I do with the money? Obviously this is quite a matter of taste. I can get a massage once a week to assuage some of the stiffness from sitting at a terminal the extra hours.
Cost $90-Annual $4500
I can join a gym and go daily-this also meets some of the social needs which are not met working at home-Annual cost-$750
Broadband Internet for the home-Annual $500
Lunch out four times/week-Social needs as well Annual $3000
The total so far is $8750-that’s a long way to go and already my social needs are largely provided for.
What about home business expenses? -Don’t they have to be subtracted from the gains-Telephone $1200/yr
New computer every two years---------------------$1000/yr
Stationery etc------------------------------------------$ 250/yr
Extra travel to see clients etc------------------------$10,000/yr-cheaper because of travelocity etc
Health Insurance-family of 5 $12,000
Total $24,250
So $100,000-$24,250=$76,750 minus the $8750 for work social substitutes still results in $68,000 in savings-OK so $75,000 is a large fully loaded cost for even a New York based secretary/assistant-make it $55,000-that still leaves $48,000-
What is that former secretary doing? Maybe she owns one of the many breakfast and lunch shops proliferating in our area?
Maybe she's driving elderly people to doctors' appointments or shopping-or driving business people to the airport. - A wonderful business in which the passenger's car is driven avoiding insurance and regulatory issues?
Maybe she's working as a massage therapist-also a growing profession?
Or a personal trainer or a yoga instructor?
Maybe she's spending more time with her own family just like I do?
Is this a win-win-you bet?
Is it deflationary or at least disinflationary-Yes Indeed!
Does it create a new class with a finer appreciation of liberty –Yes again?
Is it bullish for housing? -There's still that $48,000 to spend-
Must Go –there's a series at the local
library-on baseball books and there's my 7-year-old playing town baseball first.
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