To start off the evening, here is a lighthearted post written by Dave Eriqat telling us the fable of Sam and Ming:
Once upon a time there lived a man named Sam. Sam had worked hard his whole life and was getting a little long in the tooth. Thanks to his hard work, during the course of his life Sam built up quite a fortune and lived a life that many people could only dream of. But, alas, hubris got the better of him and he squandered his fortune on showy, noisy toys, unsound investments and unsavory companions.
Now weary, in the twilight of his years and toiling away in an old factory, Sam had an epiphany: Why should he continue working so hard when his coworkers at the factory were willing to work harder? So Sam asked one of his coworkers, Ming, to take some of his hours. Ming, dreaming of the good life Sam once enjoyed, eagerly accepted the extra work, and Sam was delighted to work less. The only problem was that Sam' s reduced income meant that he had to pinch pennies, which embarrassed him and made him feel poor, not to mention that Sam could no longer partake of the trappings of the good life.
So the next day at work Sam went to Ming and asked him for a loan. Ming, now richer thanks to the extra hours he was working and seeing an opportunity to earn some interest, agreed and lent Sam the money. Sam went home early that day with a huge grin on his face, thinking, “This is great! I am working less but I have just as much money as before.” The next week Sam went to Ming and offered him a few more of his hours, provided Ming would lend Sam some of his extra earnings on a regular basis. Ming thought Sam was a fool to borrow money when he could simply earn it, but the lure of that interest was irresistible, so Ming agreed to Sam' s proposal.
After a few more weeks Sam couldn' t believe how well this new arrangement was working out. Ming was working his little tush off and giving Sam money, while Sam got to sit at home and watch ball games on TV. Sure, the debt Sam owed Ming kept growing but Ming didn' t seem to mind. He certainly wasn' t asking for his money back. So Sam put it out of his mind and patted himself on the back for his cleverness in thinking up the scheme. Sam was no economist, but he thought if his scheme were applied to the macro economy it might be nicknamed the “service economy.”
A few weeks later Sam went back to Ming and said, “Ming, buddy, this arrangement is working out so well, don' t you think? How would you like a few more of my hours?” Ming hesitated because he was getting a little concerned about how Sam was going to pay back all the money he had already borrowed. But then again, Sam had never defaulted on a debt and he was still working a few hours at the factory, so he was earning some money. Ming thought, “Something will work out and Sam will be able to repay me.” Besides, Ming and his family had moved into a nicer house, purchased their first car, had better food to eat and Ming was able to afford an education for his kids, all thanks to Sam' s hours. Ming didn' t want to upset this handsome apple cart of his and certainly could use the extra money, so he agreed to take more of Sam' s hours.
While Ming toiled away, Sam turned into a accomplished couch potato. He spent most of his time prone in a recliner, his half open eyes glued to some ball game on the TV, a beer in one hand, a cigarette in the other, a box of cold pizza splayed open on the coffee table. Every few days Sam would drag his bloated belly and corpulent behind to the factory to work a couple of hours, never neglecting to see Ming — who could always be found at the factory these days — and collect his regular loan before heading home.
Both Sam and Ming were having grave doubts about Sam' s ability to repay his debts to Ming, but both were stuck in a seemingly inescapable relationship. Sam needed Ming' s loans to pay his bills, and Ming needed to keep lending Sam money lest he declare bankruptcy. Sam briefly entertained asking Ming for some of his hours back, but he didn' t really want to work harder and he knew Ming' s new higher standard of living depended on those hours, so Ming would probably not give them up anyway. So both suppressed their concerns and kept the relationship going.
Then one day — one of the few that Sam was actually at the factory — the factory manager assembled all the workers to hear an announcement. A recession was brewing and factory orders were declining, so everyone was to have their hours reduced. Sam, since he was barely working anyway, was to be laid off. It immediately dawned on both Sam and Ming that Ming' s shoebox full of IOU slips from Sam could not now be paid back. Ming had been counting on that money to pay for his retirement and now it was likely lost. Worse, Ming' s reduced hours meant that he could no longer afford the nicer lifestyle he was providing for his family. They were going to have to scale back, but at least they' d muddle through. Sam was the worst off. Not only did Sam lose his meager income from the factory, but Ming no longer had the means or willingness to continue subsidizing Sam. Sam suddenly had no income whatsoever and conceded that it was only a matter of time before he was homeless and living on the street.
My reaction: The moral of this fun fable is that you cannot dispatch your wealth-creating means and expect to maintain your standard of living.