By Patrick Barron<\/p>\n\n\n\n Retirement is seen almost as a right by most people in the West, especially America and Europe. Make it to your sixties and most people expect to retire from the daily grind of earning a living. Yet, especially in America, the average retirement nest egg<\/a> is pathetically low at sixty-five thousand dollars. One in four Americans have no retirement savings. Forty percent of retirees rely solely on Social Security<\/a> for retirement income. This is another example of how fiat money, combined with welfare, have blurred the reality of what is actually required to allow someone to retire from the workforce.<\/p>\n\n\n\n Once again, the Robinson Crusoe thought experiment will help us gain a clearer picture of reality, because it is based upon the Austrian concept of methodological individualism. In other words, we peel the scales of macroeconomics from our eyes in order to see the world clearly. Assume that Robinson Crusoe is stranded on an unpopulated but bountiful island. There are fish, fruits, and vegetables for relatively easy harvesting. Each day, Crusoe spends several hours harvesting this bounty in order to sustain himself. Now, Crusoe is aware that, eventually, he will grow old and find it more and more difficult to harvest the island\u2019s bounty. Yet, he wants to \u201cretire\u201d from his daily toil. What can he do?<\/p>\n\n\n\n He must do one or both of two things. He must spend part of his day\u2014while he is still fit and healthy\u2014either to build a subsistence fund to sustain him for his expected lifespan or he must build capital goods that make harvesting the island\u2019s bounty much easier. Of course, he can do both.<\/p>\n\n\n\n On the one hand, he can spend more time each day catching fish and drying them to last a long time. He can do the same with some fruits and vegetables via dehydration in the sun. These tasks may require him to spend longer days at work or he can put himself on a diet, similar to what we today would do by foregoing some desired extravagance. Or, on the other hand, he can spend more time each day building fish traps and ways to irrigate a garden for easier access to the island\u2019s fruits and vegetables. All this takes time out of his day, too, which requires some sort of sacrifice to his leisure and consumption.<\/p>\n\n\n\n So, we see that there is no way for Crusoe simply to \u201cretire\u201d after reaching a certain age, unless he has saved to create a subsistence fund or invested in capital goods or both.<\/p>\n\n\n\n There is one other alternative that may open for Crusoe. While exploring the island, he comes upon Friday, who joins him for companionship. Now let us assume that Crusoe decides to retire and asks Friday to take care of him\u2014feed him, etc., in the way he used to do for himself. What would Friday do? If he agreed, he would have to work twice as long each day, for he has not only himself to feed, he now has Crusoe to feed.<\/p>\n\n\n\n This is not a good deal for Friday, so he rejects Crusoe\u2019s request. This should settle the matter. Crusoe and Friday have to take care of themselves, not only while they are fit and healthy, but also by preparing for their respective retirement days. But Crusoe has something that will change Friday\u2019s mind. Crusoe has a gun that he salvaged from his sinking ship. He threatens Friday with violence unless Friday does his bidding.<\/p>\n\n\n\n We now see that Crusoe has created government and has invested its powers in himself. Friday must pay his \u201ctaxes,\u201d in the form of dried fish and vegetables, or else! Sound familiar? Friday must pay his taxes to the state of Crusoe. This might be the end of our thought experiment, but let\u2019s take it one step further. Let\u2019s assume that Friday discovers a young man or woman living on the island. Friday teaches the young person how to fish, harvest fruits and vegetables from the land, build fish traps and irrigated gardens. Now, when Crusoe dies, Friday takes the gun and becomes the new government of the island. This becomes a rudimentary Ponzi scheme. Each successive generation must labor to provide for the older generation in order to work themselves to the top of the pyramid. Of course, the Ponzi scheme will fail when no new generation appears.<\/p>\n\n\n\n![\"\"](\"https:\/\/jasonsblog.ddns.net\/wp-content\/uploads\/2025\/04\/image-27.png\")
<\/figure>\n\n\n\nThe Robinson Crusoe Thought Experiment<\/strong><\/h4>\n\n\n\n
Crusoe\u2019s Two Options<\/strong><\/h4>\n\n\n\n
A Third Option for Crusoe\u2014Coercion<\/strong><\/h4>\n\n\n\n