What if the world retired early? (Tragedy of the Commons)13 min read

World Retire Early - Tragedy of the Commons - Cashflow Cop Police Financial Independence
(no. 043) – Image Credit: Noel Lopez

A Dystopian or Utopian Future?

There is this saying:  “too much of a good thing can be bad for you”

Adapting this to the idea of early retirement: “too many early retirees can be bad for everyone”.

Mr. Money Mustache indirectly tackled this in: What if Everyone Became Frugal?

Our Next Life looked at this more directly in: What If Everyone Wanted to Retire Early?

There is no point in me rehashing what they have said here again, but then I stumbled upon the article below.  It applied this thought experiment to something called “The Tragedy of the Commons”.

I’ve not come across this interesting concept before so thought I’d share it with you all.

Before I do so, what do I think?

I don’t think everyone can retire early for three main reasons:

  1. Lack of knowledge
  2. Lack of resources
  3. Lack of will

Income inequality, a culture of over-consumption, poor or non-existent financial education in schools , absent parents due to work (if parents are always working, children will do the same when older) and childcare costs amongst other things, only serve to exacerbate this. 

So no, I don’t think the world can retire early.  

But what if we all do as the title of this post implies?

What if we reach a point where we create an environment when it becomes inevitable for everyone to retire early even if it is not out of choice?

The rise in automation, worldwide increase in life expectancy, over-population and continued globalisation will ultimately result in fewer jobs.

Fast forward to the end of the century and what can you imagine?  

How will things like: super-advanced robotics, AI, virtual reality indistinguishable from reality itself, gene editing and so on impact ‘work’? 

There will always be some jobs which needs a human input; but it may well be not enough to go around.  People may be forced to retire early so that younger people can find work.

The result. 

Universal basic income perhaps?

This would require countries around the world to get rich enough to be able to support this.  But how will this be possible if those who do have a job spend less?  There will be less tax revenues from individuals and businesses.

Perhaps, as a reader of mine has suggested in an email to me, a tax on financial independence? 

It’s a catch 22.

I’m not an expert so I’m not even going to try and play out all the likely scenarios if everyone retired early.  Too many complex moving parts at play here.  The one thing I can be fairly confident about is that the old rule of simply exchanging human labour and time for money seems to be less relevant in such a world.  

Putting aside all the complexity and practicality of reaching a point where the world can retire early.  Let’s just assume it has happened. 

Utopia - Robert McCall - Cashflow Cop Police Financial Independence
Utopia – Image Credit: The Prologue and The Promise (detail) by Robert McCall

Will we be in utopia

Maybe we will end up in a world that is overall more happy.  People have more time to be with friends and family.  People start to stop and think about the impact of what they do on others and the environment.  That’s because their thoughts aren’t distracted with work. 

We might become a more reflective, less selfish and responsible species. 

A new chapter in human development.  

Dystopia - Cashflow Cop Police Financial Independence
Dystopia – Image Credit: Christopher Brown

Or, will we end up living in some sort of dystopian world rendering all this pursuit of FI somewhat pointless?  

Looking around and reading what some scientists say, it is difficult to not have a pessimistic view of the distant future.   Climate change, environmental destruction, unknown long-term damage to our DNA due to pollution, affects of GM food, chemicals and plastic within our food-chain and water systems, political instability, threats of war, continue exponential rate of plant and animal extinction…

So if all the dooms day predictions are true, retire early or not retire early makes no difference to what will happen to the world.  I might as well make the most of it and free up more time.  Reaching financial independence early will allow me to enjoy this world before we completely mess it up and have nothing else to enjoy!

Both scenarios are the extreme ends.  I’m venturing into something which sounds more like science fiction now.  But so much has happened in the last century, I cannot even begin to imagine what the future holds. 

No one does. 

Even if I did, I can’t control it. 

I can only control what I decide to do with my own life.  So I will just “keep calm and carry on” investing to towards our FI Plan.  I can only hope that things will work out in the end.  I expect that technology and education will have a big part to play in repairing the damage we have done and are doing to this planet.

For my part, I will pass on the knowledge and experience I have onto our children and grandchildren.  This will give them and us the flexibility to adapt for whatever comes our way.  We will be free to do our small bit to make a positive impact on this world.  

So how do you imagine a world where everyone has retired early? 

What will happen if everyone had the will, the resources and the knowledge to do this?


[The original version of this article was crafted by Thrifty Enough (blog cemetery).  The article was published by The Money Mix and is republished here with permission.]


The “Tragedy of the Commons” is an economic concept with origins in a 1968 academic article by an ecologist named Garrett Hardin published in Science. Without boring you too much with things like abstracts, charts, and in text citations, the meat of the article is about over-grazing commonly owned land.

If I were you, at this point, I would be wondering what the relationship between grazing on common land personal finance might be. My eyes might also be glazing over right now. I might even be thinking about donuts or turkeys since grazing and glazing were both mentioned in this paragraph.

Anyway, back to the story…

The tragedy of the commons itself references a broader economic theory.

The “tragedy” is a situation where resources are finite and individual users of commonly available resources acting within their own self-interests behave in ways that are contrary to the common good.

When the behavior continues until all of the resources are depleted, the tragedy of the commons is realized.

As someone who studied the natural sciences in college, professors discussed this theory often. The context in their examples was usually about fishing.

Imagine a pond filled with fish and with no restrictions on fishing. How long do you suppose it would take for the pond to become overfished?

That’s the tragedy of the commons.


The Tragedy of the Commons Applied to Money

Only recently did I start to think about how the tragedy of the commons can also apply to money. My wife, Mrs. Thrifty, and I were headed home from a rare evening out without our girls.

I can’t over-emphasize enough that you should never leave young children unattended, or with bears, or even with responsible seeming raccoons. But if you have loving friends and family who you trust and who enjoy spending time with your little ones, I would encourage you to take them up on their offers to watch your kids for a few hours every now and then.

Anyway, Mrs. Thrifty and I were discussing how the downtown area we’d visited seemed to be flourishing. I told her the local economy had really picked up since I’d been there last.

Her response both surprised and challenged me.

My wife is pretty thrifty. Her name is Mrs. Thrifty, after all. And it’s not like we could make something like that up to write pseudonymously on the internet.

Even so, she’s not quite as enthusiastic about pursuing financial freedom as I am. That’s why her comment caught me off guard.

She said, “You know, I think it’s great the economy here is doing well. But everybody couldn’t be living the way we’re living and that still be true.

Just like virtually every other time, Mrs. Thrifty was right.


Could a Contagious FIRE Cause a Recession?

Mrs. Thrifty’s comment really caused me to think about our spending habits and the broader implications for the economy.

Like many folks in the financial independence community, we try to save north of 50% of our gross income. And some, like this righteous dude, saved 70% before he and his wife retired. Geez!

We invest in the stock market, so it’s not like all the money we have just sits in a bank account or is buried under a mattress or in jars in the back yard. Not all of it, at least (Note: copies of the map of the money buried in Mr. Thrifty’s back yard can be purchased for a nominal $500,000 fee. Just contact us for more details).

But we’re not very active consumers.

It may be surprising to some, but consumer spending (aka the money you and I spend on important, non-negotiable staple items like gasoline, food, mandolins, and Yahtzee games) accounts for around 70% of the gross domestic product in the United States. Seventy percent.

If everyone were striving to save half their income or more, there eventually might not be anywhere near as much money circulating through the economy to continue to generate income to go around.

I’m not articulate enough to explain exactly how it works, but consumer spending is a money multiplier.

If everyone were actively pursuing financial independence by not spending money, many of our incomes might eventually end up being much lower.

The tragedy of the commons, meet money.

Since those in the FIRE (Financial Independence, Retire Early) community are also pursuing early retirement, in addition to saving aggressively and curbing spending, the economy could also be impacted by mass adoption of an early retirement movement.

If we were all pursuing early retirement, and we were all successful, eventually there drastically less people in the workforce.

How long could an economy thrive when hardly anyone is spending money and hardly anyone is working?

I’ll leave the conclusion drawing to you, but I can tell you Mr. Thrifty isn’t investing in that economy.

Even if he is talking in third and second person…


Don’t Hit the Panic Button Just Yet

Unless you just like the way pressing buttons feels, and you have an actual panic button within reach, you can play it cool and stay in your chair for now. Or keep standing, if that’s what you’re into.

Anyway, the reality is we’re not all trying to become financially independent, and we’re definitely not all trying to retire early.

That’s certainly true within the broader generational population, and it’s even true within the personal finance community.

One of the best things about the tragedy of the commons is that it provides unique opportunities for those who are willing and able to go against the flow.


Go Against the Flow

Not everyone can do something that would be beneficial for one person or for some people. What’s good for the goose may not be good for the gander.

Not everyone could continually benefit from a finite amount of any good thing.

But anyone can.

Not everyone could choose to live below their means. Some people just aren’t interested in it, and even if they were, we’ve established that it might be bad for the economy if everyone did.

But anyone can. And because you can, you can probably find ways to reach your goals because of it.


How My Realtor Leverages The Tragedy of the Commons

There’s a guy in my town who sells real estate. There are actually quite a few folks in my town who sell real estate. But this story is about the guy.

This guy sells more real estate than anyone else in town. And he owns more rental properties.

Anyone could do what he does, but not everyone can. There are only so many houses out there to sell and to find buyers for, and there are lots of realtors in the market. It’s the tragedy of the commons.

To be honest with you, I’m not even sure exactly what he does different, other than that he seems to have an undeterred sense of perseverance about him.

The guy has figured out a way to do things that no one else here has. He’s not that old, and I imagine he could walk away from what he does today without having to work another day in his life.

The tragedy of the commons isn’t something to lament. It’s something to understand and leverage to your benefit.


Find Ways to Differentiate Yourself

The tragedy of the commons allows you, allows anyone (but not everyone), to differentiate yourself.

How could you benefit from the tragedy of the commons?

Find something (ethical) no one else is doing, can do, or is willing to do. Or find something you can do better than anyone else.

Whatever your niche may be, that’s where you can find an opportunity others may not see. I’m not sure whether or not everyone could achieve financial independence. But in the right circumstances, anyone can.

Don’t let the tragedy of the commons and what other people are doing limit you.

Maybe you could fish in another pond that wasn’t so crowded or sell fishing poles instead of fishing. In the Gold Rush of 1849, far more outfitters found economic prosperity than prospectors did.


Look For Opportunities

The tragedy of the commons provides opportunities if you can see them.  For example, if the stock market were to drop 10% next week, how would you respond?

I would see an opportunity, at least to the extent that I didn’t immediately need the money I already had invested in the market.

Unless stocks were grossly overvalued, which they sometimes are, stocks are now on sale at 10% off in this scenario. That could be a good time to buy more.

Anyone can, but not everyone could…the tragedy of the commons.

If you can see the same set of circumstances differently than most others, you will find ways to accelerate your journey on whichever of life’s paths you might be pursuing.

What’s something you can do better than anyone else?

What’s something you are willing to do that many aren’t?

What’s something (ethical) no one else is willing to do?

How can you leverage the tragedy of the commons to your benefit?


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5 thoughts on “What if the world retired early? (Tragedy of the Commons)

  1. weenie Reply

    For it all to work, the FIRE folks need the other folk to continue consuming and working.

    So it’s probably a good job, in a way, that FIRE is always likely to remain niche, achieved only by the relative few.

    However, imagine if FIRE was mainstream, eg everyone was frugal, aimed to retire early.

    What if in that scenario, a small groiup of people might want to go against the flow and an alt-universe MMM could start a cult of YOLO, spending etc.

    Interesting read in any case, the tragedy of the commons – Anyone can FIRE but not everyone can.

    • Cashflow Cop Post author

      Judging by some of the conversations I’ve listened to and comments I’ve read online, FIRE will remain niche for the foreseeable future, even if the issues surrounding resources and knowledge is overcome.

      Still, I enjoyed thinking about this. It will make an interesting read for me in 50 years time to see where the hell the world ends up.

      What if in that scenario, a small group of people might want to go against the flow and an alt-universe MMM could start a cult of YOLO, spending etc.

      What an intriguing thought…

  2. Ms FireMum @ A Family on FIRE Reply

    Very interesting and thought provoking stuff.

    As much as I think FIRE should be the endgame for everyone, I don’t think everyone will achieve it, at least not in our generation. Maybe in two generations, financial literacy levels may grow to make FIRE more of a mainstream topic.

    But as a thought exercise, a world where everyone retired early would stagnate, to the point that some people would have to go back to work. Part of the economic cycle requires productivity funded by work, which in turn requires some form of manpower. Perhaps in a world where everyone is retired, passive investment returns would stagnate and reduce to the point where it would be more profitable for people to go back to work. Supply and demand and all that.

    • Cashflow Cop Post author

      I see your point about economic cycle requiring productivity. But I am not sure it needs to be funded by work done by humans. With automation and AI, so many jobs are at risk over the next few decades. With the global population growing and people living longer, there will only so many jobs available that need human input.

      I agree, people need to spend, so it is in the interest of the capitalist system we currently live in for governments and businesses to somehow provide money (earned or unearned) so that spending can continue. There are even talks about multi-generational mortgages. A mortgage that will pass onto your children and grandchildren. Why not take it a step further – multi-generational credit card? Countries carry debt for centuries; passing it on from one administration to another. It’s not much of leap to apply the same principle to individuals. That way, people can continue to spend and let future generations worry about the consequences. It’s a very similar attitude towards the environment and climate.

  3. juststartinvesting Reply

    Great think piece CFC! Well written.

    I often think the same thing about “what if everyone invested in index funds”… might need to think that one through a little more as I never truly have, only read what others have thought through…

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