I am very lucky. When I joined a private practice cardiology group 4.5 years ago fresh out of fellowship I joined a good one.
I work with a great collection of doctors and practitioners of all different stripes. And I know that we do a very good job of taking care of our patients, and take our work very seriously.
As an example of the type of group we are. We always structured compensation so that practitioners were paid bonuses based on the amount of work they did, not the amount of money their work generated.
This meant that no one was incentivized not to take care of uninsured patients, which gave us each the individual freedom to provide care to our patients regardless of their ability to pay. (In my experience this sort of a structure is the exception not the rule.)
The point is that I work with a bunch of really good people who practice medicine for the right reasons.
And a couple of years ago because of changes to the way that cardiology procedures were being reimbursed, our private practice group was bought out by a large hospital group.
So now we are an employed physician group not a private practice group. (Which for me, at least, has been a net positive.)
But in the old days of private practice we would have business meetings.
And I learned a very important lesson on human nature from these meetings.
There were only two subjects that created friction; The call schedule and the way we divvied up the money.
In other words the amount we had to work and the amount we got paid for the work that we did.
And everyone would get into the fray. Liberals and conservatives, old and young, men and women, plumbers and electricians and imagers, everyone staked out their positions.
Which taught me a very important lesson:
Everyone (but no one) wanted to get paid more for working less.
Now there may be some exceptions here. But I’m certainly not one of them. And I haven’t met too many people who are.
But this is not so rational.
Especially when we take into account the marginal utility of wealth.
Although we all worked hard, surely the equitable thing to do would have been to split up the work as evenly as possible.
And we certainly all made more than enough money to satisfy our basic needs.
But the point, I think, is that we were all trapped in a zero-sum game. If one doctor worked less, another would have to work more. And if one doctor got paid more, another would have to be paid less.
And there was one commodity (work) that everyone wanted less of, and one commodity (pay) that everyone wanted more of.
And when we doctors were faced with limited resources or division of labor we all tended to lose sight of the big picture.
And I think this conflict caused each of us at least a small amount of unhappiness. It affected interpersonal relationships. It changed the way we felt about each other as human beings.
Because we had opposing goals, we were all invested in things that we could not control. So we all felt helpless and vulnerable in some small way.
(And all of these observations are in the context of a very good group of good people practicing good medicine in a non toxic environment.)
But what if there were a third way?
What if instead of focusing on that which we could not control, we had all focused on that which we could control?
Wouldn’t we have felt less powerless, more in control, more happy, and less in conflict?
Which is where early retirement theory comes into play.
Imagine a scenario.
I, an electrician, argue with my partner, a plumber, that I should be paid more for my work and he should be paid less.
And I win the argument.
My salary goes up by $20,000 a year as a result of this, and his salary goes down by the same amount.
So I’m the big winner right?
But what have I won?
After all FICA, state and local taxes taxes I will probably take home about $9000 extra a year or $750 a month.
And I can do anything I want with that $750/month.
I can lease a BMW.
I can invest in my retirement.
I can buy a new sofa.
But a couple of points.
I am making these purchases with a deflated currency that has been heavily taxed. (AKA value has been lost.)
And my friend, the plumber, feels like he’s lost $20,000. And he’s pissed about that.
In other words, his perceived loss is greater than my perceived gain. So it’s not even really a zero sum game anymore it is a net negative.
But what if we forgot about splitting up that pie for a second and just both focused on our own pieces of the pie.
What if we both made smarter decisions with our money. What if we chose not to make purchases that did not materially increase our own happiness. What if we took advantage of every tax advantaged savings opportunity available and maxed out our 403Bs, 457s, backdoor Roth IRAs, and stealth IRAs?
Wouldn’t we be creating much more wealth for ourselves than either one of us could ever hope to gain by changing the way that the pie was split up in the first place?
And what if we started to play the miles game? Assuming we found it fun (which I certainly do) wouldn’t we gain another $10-$20,000 of value a year tax-free? And isn’t this more value than we could ever hope to gain from siphoning off each other’s piece of the pie? (I.e. $10,000 is worth more than $9000 last I checked.)
But let me be explicit, here’s not what I’m arguing for: socialism.
I’m well aware of my own tendency to work harder when my work is tied to rewards.
And I’m not so naïve as to propose that by adopting an early retirement lifestyle, and by playing the miles game, interpersonal disputes will go away.
What I do think, though, is that by personally focusing on making smart financial decisions, and by choosing to place value on happiness over winning, we can each individually set ourselves up to come at conflicts from positions of strength and security. And that this focus can, in someway, help us each to defuse conflicts and treat each other with more empathy.
Put simply pursuing this lifestyle is a decision to pursue happiness. And this happiness is additive, it is not divisive.
