Despite living in the most technologically advanced times, able to do many tasks on our phones, and free of disease and war, western society is facing an anxiety and depression epidemic. People, especially affluent ones, are afflicted with chronic depression and other social anxiety disorders, medicating themselves more than ever. Moreover, labor productivity has hardly budged despite all the “disruption” and innovation.

How were people, 60 years before, using pencils and paper, able to achieve so much more than people today with smartphones and Macs. In the late 60’s and early 70’s, they built the original 747 and F-15 fighter which was more robust for their time than the modern variants (The Dreamliner and F-35). In 1931, the US government started the Hoover Dam project before the technology was even available, inventing as they went. Today we see governments struggling move a mouse and type on a keyboard, putting up websites.

Moreover, life appears to have gotten harder rather than easier. The rule of thumb for buying a home, just a generation ago, was to put 20% down (Egenkapital in Norwegian) and never pay more than two times gross annual earnings. Although we have become more efficient, driving down costs, on food production and automating manufacturing, somehow housing prices have taken off. Building and maintaining a house is easier than ever before. Despite hammers, replaced with nail guns, and hand manipulated wood and stone work, substituted with mass produced building materials, new and existing housing prices continue to climb.

Most will argue population growth and location. However, much of the beforementioned is due to artificially low-interest rates distorting the allocation of capital. People, instead of spreading expenses over many areas, are increasingly putting everything into housing: all their eggs in one basket.

Source: The Economist

House Debt & Consumer Debt vs. Retain Sector: Consumer debt and flat prices are rising, but retail sales remained relatively flat during the same period. Recently, they even started to decline. Hence, housing is clearly talking from other parts of the economy. People are spending more to cover rent or the mortgage. Since 2002 people went from spending ca. 4x their income on a flat to 6x, further exacerbating the debt situation.

All the while, real salaries have taken a dive, making it more difficult for Norwegians to afford imports.

Norwegian Salaries Holding Steady in NOK and Falling off in USD

How Debt Affects Psychology: Debt correlates with high anxiety, stress, and physical health issues. Moreover, studies show that debt contributes to rising clinical depression levels and often precludes suicide. Chronic debtors often have short time horizons, making them susceptible to predatory lending (short term loans at a high interest rate). This behavior normally starts at college. Idealistic students, averse to debt and obligation to others, come to realize that the only way to get the keys to the kingdom is by taking a loan. They reason to themselves that, after graduation and landing the first job, they will live modestly, keeping expenses low to pay off the loan right away, before embarking on any new ventures. However, that all goes out the window when the girl of their dreams asks them about their living accommodations and what kind of car they drive. Talking to older colleagues, already buried in debt but appearing to live ok, it starts to become an acceptable option. I experienced that if you do not own an apartment in Oslo, you could become a social outcast.

In the workplace, I witnessed the change in personality with individuals who just bought a place, after making their first payment. Before buying the flat,