(This article is intended to be an addition to the August 25 article "Investing in Human Capital")
Economic collapse brings radical changes to the lives of ordinary citizens in a very short period of time. Everything is OK one day and a week later, nothing is OK. If a person has not prepared well in advance, there is little hope of adapting as it happens.
Experience in other nations that have collapsed economically indicates the first over-riding priority is personal security quickly followed by finding clean water, food, medical care and other basic necessities. Argentina is some ten years past economic collapse but the same priorities that existed on day one still persist. You can get some idea about the problems following economic collapse by reading Fernando Aguirre's Blog entry "What Kills You After An Economic Collapse".
Contrary to popular fear, mobs and riots are not the number one security concern following economic collapse, common crime against person and property is. Burglaries, muggings and robberies increase in both frequency and violence. What kind of skills and knowledge (Human Capital) are necessary to survive this personal security threat? Here are some ideas:
- Develop "Situational Awareness" skills. This requires no money investment but does require some study and a major change in habits. Basically it means being consciously aware of everyone and everything around you at all times. The best guide I have found is "States of Awareness - The Cooper Color Codes" by Tom Givens. Practice until Condition White (oblivious) is no longer a part of your life and Condition Yellow (relaxed awareness) is your normal state of mind. Being especially aware when entering or leaving your car, home or other building is a good place to start because that is when you are most vulnerable.
- Learn to defend yourself and have a plan to do it. Awareness helps avoid security risks, but some cannot be avoided. The purpose of defense is survival. Possible defensive survival plans range from meek surrender to rapid retreat to aggressive counter-attack with infinite variation of means and methods. Some options require extensive training (martial arts for example) and/or special equipment (firearms for example).
The common denominator for all self-defense is mental and physical conditioning to avoid shock or panic when attacked.
After personal security, the next thing vital to surviving an economic collapse is basic necessities. What are "basic necessities"? Here is a tentative list:
- Medical Care
You can adjust the list to reflect your own personal situation, but I think that, over time, these things are necessary for survival. Their importance is more or less in the order listed. The personal skills and knowledge necessary to obtain these things is not clear cut. It will vary from person to person and place to place.
Have a plan in place and have a buffer supply on hand that will last for several months at least. Here are some things you will need to know how to do:
- purify water for safe drinking
- safely store food without refrigeration
- prepare food without utilities
- repair clothing and shelter
- avoid and treat infection, either in wounds or from disease
- maintain personal hygiene without utilities (including sewage disposal)
- work productively and peacefully with other people whether you like them or not (build Social Capital)
- maintain a cheerful attitude under severe stress and fatigue
- produce at least some food for yourself by being able to grow a garden and/or raise poultry or livestock
- locate and get to places where the things you need are available
The list could go on forever. I would suggest two resources for acquiring the skills and knowledge you will need to survive following an economic collapse. They are 1) LDS Preparedness Manual and, 2) Frugal's Forums.
Jobs, Work, Compensation and Value
The absence of payroll jobs does not mean that there is no work to be done. It just means that productive work will be compensated differently.
If a productive person is not compensated with a paycheck, how can he receive fair value for his labor? That will require developing a set of skills long forgotten in modern society. We are so accustomed to trading labor for money and money for goods and services that we have forgotten how to determine true value.
For example, if you have the tools, supplies and knowledge necessary to fix a flat tire and have always done it for say $15, would you do it for two nice plump dressed chickens if the guy with the flat didn't have any money? How about a pair of cheap shoes or a couple of packs of cigarettes or two hours of chopping down the weeds behind your shop? What are the relative values of these goods and services?
Answering those questions accurately is a skill vital to surviving in a post-collapse economy. It doesn't matter if money is simply unavailable or it is inflated into worthlessness, the $15 yardstick for fixing a flat is no longer useful. In one case, the customer doesn't have $15 and in the other $15 is just so much paper, so 15 ones is worth 7.5 times as much as a ten and a five.
What determines real value? I think it is some combination of scarcity, need and difficulty of production. But that is so ambiguous as to be meaningless.
Note that those who have experienced economic collapse say that black or gray markets sprang up almost instantly. They must, because it is in the market place that value is determined.
Determining value is probably the most important single skill anyone can have after an economic collapse. Those who can do it accurately will be prosperous merchants and traders. Producers and laborers will also know what goods and services they can provide more efficiently than other people and direct their efforts in that direction.
To develop this skill, start pricing things in something other than money. For example, you might convert every price into hours of work at minimum wage. Or ounces of silver at today's market price. Or gallons of gasoline at today's local pump price. Once you become accustomed to noticing that a pound of quality steak is worth about two gallons of regular gas which is worth about an hour of minimum wage labor, you will be much better prepared to deal with post-collapse markets.