Can Most People Stay Really Financially Secure in a Bad Economy?

[Hardkill]

I have been thinking more about the argument that even in a terrible economy, people can still become financially successful if they work hard enough, educate themselves, stay disciplined, remain patient, experiment, learn from failures, and keep searching for opportunities.

I agree that this can be excellent advice for an individual.

What I am skeptical of is whether it scales to most people during a severe economic crisis.

And I am not even talking about everyone becoming rich or becoming a millionaire.

I mean something much more modest:

Could most people remain financially comfortable and secure?

Suppose nearly everyone during the Great Depression had done everything “right.”

They worked extremely hard.

They developed useful and marketable skills.

They studied business and personal finance.

They remained patient and disciplined.

They tried different jobs and businesses.

They experimented repeatedly and learned from failures.

They saved whenever possible.

They invested intelligently when they had money available.

They constantly searched for unmet needs and economic opportunities.

Would most Americans then have remained financially comfortable and secure?

I am very skeptical.

At the depths of the Great Depression, unemployment reached about 25% and U.S. output fell roughly 30%. The banking system was collapsing, deflation increased debt burdens, businesses and households went bankrupt, and consumer demand contracted dramatically.

That damage obviously extended far beyond the unemployed.

People who still had jobs could have their hours or wages cut.

Businesses could lose customers.

Families could lose savings when banks failed.

Asset values could collapse.

Credit could disappear.

Someone could make responsible decisions and still be financially devastated by forces far larger than their individual choices.

And we don't have to go all the way back to the Great Depression.

Look at 2008.

Between 2007 and 2010, median real family income fell about 7.7%, while median family net worth collapsed by 38.8%.

Again, were tens of millions of Americans simply not hardworking enough?

Were they all financially ignorant?

Did they all lack patience, discipline, creativity, or entrepreneurial thinking?

Obviously individual mistakes existed. But it seems implausible to explain a nationwide destruction of wealth on that scale primarily through individual psychology.

This is where 2020 becomes especially interesting.

COVID produced another massive economic shock. Millions of jobs disappeared almost immediately.

And yet household financial outcomes looked surprisingly different from 2008 or the Great Depression.

By the end of 2020, 75% of American adults said they were at least doing okay financially—40% said they were “doing okay” and 35% said they were actually “living comfortably.” That was essentially unchanged from the end of 2019.

Why?

It certainly wasn't because COVID somehow created an easier economy.

The Federal Reserve specifically noted that expanded unemployment benefits and direct stimulus payments appear to have blunted the pandemic's negative financial effects for many families. Financial well-being initially fell in April 2020, then rebounded substantially by July as people returned to work and government assistance reached households.

That comparison seems important.

1930s: catastrophic economic collapse + inadequate stabilization → widespread insecurity.

2008: severe financial crisis + major destruction of household wealth → years of financial strain.

2020: enormous economic shock + unusually aggressive income support and stabilization → most Americans still reported being at least financially okay by the end of the year.

That doesn't prove government can make everyone financially secure.

And it doesn't mean individual responsibility suddenly stopped mattering.

Nearly one-quarter of adults in late 2020 still reported being financially worse off than a year earlier, and the effects of the pandemic were highly unequal.

But it does suggest something important:

Whether ordinary people remain financially secure during a crisis depends on more than their personal work ethic, knowledge, creativity, and discipline.

The surrounding economic institutions matter too.

And this brings me back to the distinction I keep coming to.

There is a huge difference between:

“Even during a depression or severe recession, some highly resourceful individuals can find opportunities and become financially successful.”

and:

“Most people could remain financially comfortable and secure during those conditions if they were sufficiently hardworking, knowledgeable, disciplined, patient, and creative.”

I believe the first statement.

I am skeptical of the second.

Imagine everybody becomes entrepreneurial during a depression.

Everybody learns sales.

Everybody develops marketable skills.

Everybody searches for underserved niches.

Everybody becomes financially disciplined.

Everybody experiments constantly.

Everybody learns from failures.

Everybody aggressively searches for opportunities.

That would probably make the economy more adaptable and resilient.

But it would not automatically restore purchasing power, repair failed banks, loosen frozen credit markets, restore collapsed investment, or create enough profitable opportunities for everyone simultaneously.

At some point, the bottleneck stops being mindset.

The bottleneck becomes the economic environment itself.

This is also why I don't think saying, “The economy is enormous and trillions of dollars are constantly flowing through it,” completely answers the issue.

Of course enormous amounts of wealth are flowing through the economy.

But:

Money existing somewhere in an enormous economy is not the same thing as most people having realistic access to enough of it to remain financially secure.

Likewise, if someone successfully built a business during 2008, that proves something important:

Success was possible.

It does not prove:

Most people could have done the same thing if they had simply tried hard enough.

Those are two very different claims.

And none of this means people should give up during bad economic times.

Quite the opposite.

If I were living through a depression or severe recession, I would still want to work hard, develop valuable skills, remain financially disciplined, be entrepreneurial, experiment repeatedly, learn from failure, and constantly search for opportunities.

Those behaviors could dramatically improve my personal odds.

But I don't think we should confuse:

improving your individual odds

with

making systemic economic constraints disappear.

And maybe 2020 illustrates this especially well.

Individual resilience mattered.

But institutional resilience mattered too.

The strongest formula seems to be neither:

“The system determines everything.”

nor:

“Your personal agency determines everything.”

It seems much closer to:

Personal agency determines how effectively you respond to the opportunities and constraints in front of you.

Economic institutions determine, in significant part, what those opportunities and constraints actually are.

So yes:

Personal agency can make you much more resilient in a terrible economy.

It can sometimes even make you wealthy during a terrible economy.

But I remain skeptical that personal agency by itself can keep most people financially comfortable and secure during a genuinely severe economic collapse.

At some point, individual resilience needs a functioning economic system to plug into.

I'm curious where people here draw that line.

Edited 8 hours ago by Hardkill

[Leo Gura]

Success doesn't scale, period. Ever.

That's why elites kill each other to climb to the top.

You live in a pyramid scheme. Claw your way to the top to live with the psychopaths, or live down below with the rubes.

You can claw your way to the top at any time. Even in the Holocaust. But you better claw hard and claw fast.

Edited 8 hours ago by Leo Gura

[aurum]

16 minutes ago, Hardkill said:

What I am skeptical of is whether it scales to most people during a severe economic crisis

By definition, obviously it does not.

A severe economic crisis means most people will be financially hurting.

[pablo_aka_god]

4 hours ago, Leo Gura said:

You can claw your way to the top at any time. Even in the Holocaust. But you better claw hard and claw fast.

why claw fast? can't claw hard but slow?

[Leo Gura]

25 minutes ago, pablo_aka_god said:

why claw fast? can't claw hard but slow?

No! Fast is crucial.

If you are slow, others will beat you to the punch.

https://www.instagram.com/reel/Dbecq4yASw6/

[Olaf]

@Leo Gura I don't always understand why fast matters? For example, yes I can see with an instagram trend, like the ai influencers or whatever that you have to hop on quick. But I don't see in what other scenario's that would matter?

[Lyubov]

I don't like hypotheticals, just speaking from raw experience and the people I know. You listed a lot of useful things to cultivate like skills. Obviously your timing and time management plays a role. Yes it is true that people can still become financially successful in a tough economy. There are also people who came on hard times during good times as well. I would look out the window and get a feel for what the weather is and what is rolling in. Business is always tricky because things are always changing and you got to be really engaged with it, AI is the big thing now. You have a tone of people toiling away at that and only a certain % of them will be sucessful at it. You need to constantly be keeping your ear to the ground. Once you get a bunch of properties and can rent them to people you can usually sorta relax but most people need to build up to a critical level of wealth before they don't have to think about money anymore. 

[Leo Gura]

21 minutes ago, Olaf said:

I don't always understand why fast matters?

Then being at the top is not for you.

[Olaf]

@Leo Gura well I have to think about speed maybe for a few days, because I don't understand it and it is preached allot.

[Leo Gura]

32 minutes ago, Olaf said:

I have to think about speed maybe for a few days

That's too slow.

[Olaf]

@Leo Gura hahaha shit, few seconds then