4 words: People respond to incentives.
One of the best, most simple explanations I've ever heard for economics is from the book “The Armchair Economist,” by Steven Landsburg. He wrote that most of economics can be summarized in four words: “People respond to incentives.”
People respond to incentives.
Here in Portland, we've incentivized homelessness and lawlessness with our attitudes and legislation essentially encouraging our homeless friends to do drugs and commit whatever crime necessary to support their habit. All while letting people camp pretty much anywhere within the city limits.
I talk about this because much of the problem could have been prevented, but it makes us feel good to make it as easy as possible for people to engage in self-destructive behavior. And it makes us feel bad to incarcerate the less fortunate for committing crimes.
Also, I briefly talk about the concept of a "Geographic Plan B." This is basically the idea that if you can't afford to retire where you are, there are many options out there where you can live for MUCH less. It's worth having a Plan B in place, just in case your retirement plans change down the line.
And on the next episode I'm talking with a true expert in living abroad and all the things that go with it. He's Tim Leffel and I guarantee you're going to get a lot out of it.
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