David R. Henderson  

How to Make Money: Go Where Others Don't Want to and Save

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Here's a great story about Ken Ilgunas, a young man who dug himself out of two years of undergrad student debt. How did he do it? By moving to Alaska, getting a job, and not spending. In two years, he had paid down his whole $32,000 student debt.

The moral of the story: if you want to make a lot of money quickly, go to work somewhere where labor is in high demand and others don't want to go. Alaska: check. Then don't spend.

It reminds me of my less dramatic story about how I followed the same principles at an earlier age. I've posted about it here and here.

I wasn't in debt when I decided to work in a nickel mine in northern Canada. My net worth was about $20. But my goal was not to get into debt and to make enough money in 3 months to pay for my whole last year of college: tuition, room and board, and books.

I've told most of the story in the above-noted posts but one part I didn't tell much about was on the spending side. I was in a mining camp 40 miles south of Thompson, Manitoba with 300 men. Single guys who spent money spent it on three main things: cigarettes, booze, and prostitutes. I did none of those. Out of about $2,000 I made that summer (in 1969 dollars), I definitely spent under $100.

Oh, and I made my goal. In fact I quit on August 15 with an extra $350 that I used to fly down to Chicago, attend an Intercollegiate Studies Institute conference at Rockford College, and then travel across eastern United States and tour Philadelphia and New York.

HT to Tom G. Palmer.


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CATEGORIES: Labor Market



COMMENTS (11 to date)
NZ writes:

Reminds me of this exchange from the King of the Hill episode "Hillenium":

CHAPPY: I live in a shack, I poop in an outhouse, I eat what I kill. Let the grid go down, Lord, I don't need it.

HANK: Uh... there isn't a Mrs. Chappy, is there, Chappy?

Anyway, Ilgunas didn't just up and move to Alaska: he'd already lived in a remote part of Alaska before and had connections there, thus how he landed a job so quickly. (Those hardcore Alaskans probably got a kick out of the scrappy kid from New York, and weren't likely to forget him.) Then Ilgunas was able land a second job as a park ranger, probably because he'd already lived hard in Alaska for a year (not something most people have on their resume). And then when he went back to grad school he lived in a van (singledom confirmed!).

The biggest moral of the story that stands out to me is "Don't burn your bridges".

Ilgunas basically made himself un-dateable until he was...what, 26? 27? Aside from that being a very unattractive option to most guys, it also means he probably won't be able to get married and have kids until he's in his 30s. As we all know, it's better to have more kids, which means it's also better to get started earlier. How would Bryan Caplan feel about Ilgunas's choice?

Wouldn't it be nice if you didn't have to move to Alaska or live in a van to quickly get a job and enjoy a low cost of living so you could start having lots of kids in your 20s? Oh well. Better import a couple million more job competitors.

NZ writes:

PS. Coldfoot, Alaska, where Ilgunas lived, has a population of 10.

Methinks writes:

@NZ

Your entire comment can be summed up thusly: "life is full of trade-offs". Yes, it would be very nice if life were easy and free from the sacrifices necessary to obtain the things you value, but you have to live life as it is and not as you wish it to be.

In real life, you have to make difficult personal choices to achieve your goals. Scapegoating immigrants won't change that. C'est la vie.

8 writes:

When you have to make difficult personal choices in order to achieve the goal of a lower middle class lifestyle without debt, then you live in a Third World country.

Mark Brophy writes:

I suspect living hard for few yesrs was common in the 50's and 60's even though it is rare today. Here's Bob Dylan singing about it in 1974:

I had a job in the great north woods
Working as a cook for a spell
But I never did like it all that much
And one day the ax just fell
So I drifted down to New Orleans
Where I happened to be employed
Working for a while on a fishing boat
Right outside of Delacroix
But all the while I was alone
The past was close behind
I seen a lot of women
But she never escaped my mind and I just grew
Tangled up in blue.

NZ writes:

@Methinks:

"Scapegoating" usually means that 1) you blame a group of people for 2) something they have nothing to do with.

Your accusation of scapegoating is thus false on both counts:

1) My sardonic comment was aimed at the ones importing millions of immigrants, not the immigrants themselves. (Immigrants to the US are following their rational self-interest in most cases, as are immigrants to Coldfoot, Alaska.)

2) Mass immigration does indeed affect the demand for labor. (Imagine if David Henderson had arrived at that nickel mine in northern Canada to discover thousands of his classmates there. Would he have been hired so quickly?)

Himanshu Sanguri writes:

I am reading "Thinking fast and slow" by Daniel Kahneman after I finished "The Black Swan" by Naseem Nicholas Taleb. The most prominent learning I have now is the importance of thinking and presence of intellect in it. I don't know whom to blame, but my education, primary and under graduate, had been a complete nonsense in terms of my intellect growth. I only leaned to get a job, a descent one, in terms of wages. But, now reading the master pieces of great authors of different realms have offered me a window to introspect the role of education in my life. The thought "I was just intellectually starved when I recognized that I wasn't speaking as clearly and my writing wasn't as good" has really pushed me hard to come of this great illusion of being educated. How can I miss through out the quarter of my life, so much of precious work done across the globe and readily accessible in today's internet era?

I think, reading and writing should be my weapons to hone my intellect, rationality and cognitive behavior and skills in all my present and future endeavors.

Tracy W writes:

The remote Australian mines are apparently like that, split between people working 2-5 years and saving their max versus people working their whole lives and blowing it on gambling trips to South East Asia.

Anyway NZ - how do you make it 30s before having kids even by your age count? Assuming that's an urgent life goal, that is (Bryan's argument is that you should have more kids than you originally preferred, not that everyone should have lots of kids). Plenty of people get married to someone they've only known a year or two. And yes, mass immigration does affect the demand for labour, more people mean more jobs catering for those people. Think of a ski town in season.

NZ writes:

@Tracy W:

Sure, Ilgunas could still get married and start a family in the next couple years, but the odds are against him. My guess is that he won't. If you go to college, it's notoriously difficult to meet potential mates after you graduate--especially if your full time job is writing, as Ilgunas's seems to be. Add to this the fact that Ilgunas's M.O. is apparently living frugally, which tends to turn off women his age.

If you are persuaded to have more kids than you originally preferred, it's still helpful to get persuaded earlier rather than later. The clock's ticking.

more people mean more jobs catering for those people. Think of a ski town in season.
This is false. First, the analogy itself is backwards: in a ski town, it's the skiiers who consume the good (skiing) whereas in immigration, it's the destination country that consumes the good (labor). Second, in a ski town the supply of the good is quite flexible: the addition of more skiiers doesn't necessarily mean that existing skiiers will have nowhere to ski. Third, plain observation (and basic economics) shows that where supply of labor increases, demand for it decreases. That's why there was a huge demand for labor in Coldfoot, Alaska (population: 10).

Tracy W writes:

If you want to get married and have kids, you can find someone to get married and have kids with.
And who cares if Ilguana's living frugally tends to turn off the women his age, polygamy is illegal. He's going to marry an individual, not a statistical average. What he needs to do is find a woman who likes living below her income, there are plenty of us around (though I am disqualified on other grounds).

Third, plain observation (and basic economics) shows that where supply of labor increases, demand for it decreases.

Thus explaining why the unemployment rate has risen so drastically since the 19th century, given the massive rise in people. In 1850, there were 23 million people in the USA, now there's some 300 million, and of course the US unemployment rate now is over 90%. Similarly for every single other country in the world.

The difference between labour and any other good is that every worker not only increases the supply of labour, but increases the demand for labour.

NZ writes:

Tracy W:

In the second half of the 19th century the influx of immigrants (mainly from Germany, Ireland, and Italy) created massive waves in the labor market, and a lot of stress for workers already here. It took a surge of westward expansion into vast stretches of undeveloped, resource-rich land to smooth them out. The big years for the Oregon Trail, for example, were between 1846 and 1870. And of course there was the California Gold Rush around that time as well.

Fortunately, in the US we still have vast stretches of undeveloped resource-rich land, like in Alaska for example!

Oh yeah, and in the second half of the 19th century we also had a Civil War, which created its own demand for labor. But, that probably isn't something most of us would care to repeat.

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