I previously wrote about Boots theory, the idea that "the rich are so rich because they spend less money". My one-sentence take is: I'm pretty sure rich people spend more money than poor people, and an observation can't be explained by a falsehood.

The popular explanation of the theory comes from Sam Vimes, a resident of Ankh-Morpork on the Discworld (which is carried on the backs of four elephants, who themselves stand on a giant turtle swimming through space). I claim that Sam Vimes doesn't have a solid understanding of 21st Century Earth Anglosphere1 economics, but we can hardly hold that against him. Maybe he understands Ankh-Morpork economics?

To be clear, this is beside the point of my previous essay. I was talking about 21st Century Earth Anglosphere because that's what I know; and whenever I see someone bring up boots theory, they're talking about Earth (usually 21st Century Anglosphere) and not Ankh-Morpork. But multiple commentors brought it up.

Radmonger:

you need to understand Vimes as making a distinction not between the upper class and everyone else, but the middle class and the working class, between homeowners and renters.

This is completely wrong.

Ericf:

Vimes is thinking of the landed gentry when he is considering the "rich" - that would be the top 1%, not the tippy-top super-rich. Also, in a pseudo-medivial environment, the lifestyle inequality isn't as extreme as today's 50th % vs 1%.

This is closer, but still wrong.

WTFwhatthehell:

The quote in the book is about old money families vs the poor.

JC O:

It should be noted that Vimes was specifically thinking of real generational wealth in that area. He'd spent some time in the home of a Lady from oldest and wealthiest family in the city, and saw that everything was old there, solid, built to last forever. Generations of clothing tailored to the fit of the family members, and saved if it was still in good condition, and if it was not, the fabric would be reused to make something else. Even the garden tools were old. The family owned multiple homes in various cities and in the country, and they owned sizable portions of the real estate in the city.

These are basically right. (I'm not sure about all of JC O's specific details, and I'd strike "vs the poor".) Here's the extended quote (from Men at Arms):

She was, Vimes had been told, the richest woman in Ankh-Morpork. In fact she was richer than all the other women in Ankh-Morpork rolled, if that were possible, into one.

It was going to be a strange wedding, people said. Vimes treated his social superiors with barely concealed distaste, because the women made his head ache and the men made his fists itch. And Sybil Ramkin was the last survivor of one of the oldest families in Ankh. But they'd been thrown together like twigs in a whirlpool, and had yielded to the inevitable …

When he was a little boy, Sam Vimes had thought that the very rich ate off gold plates and lived in marble houses.

He'd learned something new: the very very rich could afford to be poor. Sybil Ramkin lived in the kind of poverty that was only available to the very rich, a poverty approached from the other side. Women who were merely well-off saved up and bought dresses made of silk edged with lace and pearls, but Lady Ramkin was so rich she could afford to stomp around the place in rubber boots and a tweed skirt that had belonged to her mother. She was so rich she could afford to live on biscuits and cheese sandwiches. She was so rich she lived in three rooms in a thirty-four-roomed mansion; the rest of them were full of very expensive and very old furniture, covered in dust sheets.

The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of okay for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

This was the Captain Samuel Vimes 'Boots' theory of socio-economic unfairness.

The point was that Sybil Ramkin hardly ever had to buy anything. The mansion was full of this big, solid furniture, bought by her ancestors. It never wore out. She had whole boxes full of jewellery which just seemed to have accumulated over the centuries. Vimes had seen a wine cellar that a regiment of speleologists could get so happily drunk in that they wouldn't mind that they'd got lost without trace.

Lady Sybil Ramkin lived quite comfortably from day to day by spending, Vimes estimated, about half as much as he did. But she spent a lot more on dragons.

So Vimes is specifically distinguishing between the tippy-top super-rich and the "merely well-off".

There's, um, a lot to unpack here. It's kind of fractally wrong.

Note that bits of this don't make sense when taken literally. "Lady Ramkin was so rich she could afford to stomp around the place in rubber boots and a tweed skirt that had belonged to her mother. She was so rich she could afford to live on biscuits and cheese sandwiches." These are not expensive things compared to the alternatives.

I think the subtext here is something like "Lady Ramkin is so rich she doesn't need to try to impress people". Looking back at Guards! Guards! (the first book featuring Vimes and Ramkin), that's spelled out more explicitly: "A couple of women were moving purposefully among the boxes. Ladies, rather. They were far too untidy to be mere women. No ordinary women would have dreamed of looking so scruffy; you needed the complete self-confidence that comes with knowing who your great-great-great-great-grandfather was before you could wear clothes like that."

I'm tempted to attribute this to personality (speculatively, "autism") rather than wealth. But I think it does rhyme with discussions of class that I've seen. (Roughly: rich people don't want you to mistake them for middle-class, so they visibly spend money. The people richer than them aren't in danger of being mistaken for middle-class, but they don't want you to think they're merely "rich", so they avoid visibly spending money.) Let's stipulate that the subtext is accurate, and move on.

The mention of wine is out of place. Rich people don't have access to durable wine that isn't depleted when drunk. If Sybil Ramkin has a lot of wine, it's not because someone made a relatively small up-front investment in wine and now there's no need to buy wine ever again. It's because someone spent a lot of money to buy a lot of wine, and it just hasn't all been drunk yet.

Next, note the contradiction here:

  • Sybil Ramkin is rich because she doesn't spend much money;
  • Sybil Ramkin doesn't spend much money except on dragons.

She does spend a lot of money! She spends it on dragons!2 So that can't be why she's rich! An observation can't be explained by a falsehood.

Could it be true, if it weren't for the dragons?

("It's wet here. Might that be from the sprinkler?" "There is no sprinkler, so no." "Okay. But if there were a sprinkler, might that be why it's wet?")

No: I'm pretty sure "Sybil Ramkin doesn't spend much money on things other than dragons" is also false. Here are some snippets from Guards! Guards!:

Vimes had completely forgotten the Watch House. "It must have been badly damaged," he ventured.

"Totally destroyed," said Lady Ramkin. "Just a patch of melted rock. So I'm letting you have a place in Pseudopolis Yard."

"Sorry?"

"Oh, my father had property all over the city," she said. "Quite useless to me, really. So I told my agent to give Sergeant Colon the keys to the old house in Pseudopolis Yard. It'll do it good to be aired."


Lady Ramkin's coach rattled into the plaza making a noise like a roulette wheel and pounded straight for Vimes, stopping in a skid that sent it juddering around in a semi-circle and forced the horses either to face the other way or plait their legs.


An effort had been made to spruce up the Ramkin mansion, he noticed. The encroaching shrubbery had been pitilessly hacked back. An elderly workman atop a ladder was nailing the stucco back on the walls while another, with a spade, was rather arbitrarily defining the line where the lawn ended and the old flower beds had begun.


To his amazement the door was eventually opened by a butler so elderly that he might have been resurrected by the knocking.


A terrible premonition took hold of Vimes at the same moment as a gust of Captivation, the most expensive perfume available anywhere in Ankh-Morpork blew past him.


Vimes was vaguely aware of a brilliant blue dress that sparkled in the candlelight, a mass of hair the colour of chestnuts, a slightly anxious face that suggested that a whole battalion of skilled painters and decorators had only just dismantled their scaffolding and gone home, and a faint creaking that said underneath it all mere corsetry was being subjected to the kind of tensions more usually found in the heart of large stars.


He must have eaten, because servants appeared out of nowhere with things stuffed with other things, and came back later and took the plates away. The butler reanimated occasionally to fill glass after glass with strange wines. The heat from the candles was enough to cook by.

Ignore that she gives away a building: that's a one-off. Stipulate that all those servants and the expensive make-up and perfume are just another one-off to seduce Vimes: that's at least partly supported in the text, she normally does her own cooking. Ignore for some reason the two workmen. Pretend that her clothes and furniture and property need no upkeep at all - including the fancy-rather-than-practical clothes she sometimes wears throughout the book. Assume she drives the coach herself: it's a little weird that that's not mentioned, but there's no explicit mention of a driver either.

Even granting all that, she still needs to feed at least two horses! Horses, I am led to believe, are expensive. (And need a certain amount of time and attention, and do you think Sybil Ramkin spends her time taking care of horses when there are dragons to take care of?)

Do we further assume she just rents the horses every time she needs to use her coach? She walks, herself, down to someone else's stables. Then brings two horses back to her house, where she hooks them up to her coach. (Could she keep the coach at the stables? Not for free.) She drives her coach around herself, and when her business is concluded, she drops the coach back at her house, returns the horses, and walks home.

And why does she do this? If she was struggling, she might do it to save money. But she's not. She has property worth about seven million dollars a year.

I'm not willing to credit that she does this. But even if I was, how much does it cost to rent two horses for a few hours? It can't be cheap, and she does that multiple times in the book.

Plus, even when she's not explicitly trying to seduce him, she feeds Vimes bacon, fried potatoes, eggs, cake and bread pudding. Does Vimes get to eat these things often? ("Vimes thought about the meals at his lodgings. Somehow the meat was always gray, with mysterious tubes in it."3)

This is not a person who lives on less money than Sam Vimes, and it's hard to believe Sam Vimes - a policeman, someone for whom "noticing things" is part of the job description, who is engaged to this woman - is ignorant of the fact.

That's based on Guards! Guards! What if we completely ignore that book, and just look at Men at Arms?

Then he dried himself off as best he could and looked at the suit on the bed.

It had been made for him by the finest tailor in the city. Sybil Ramkin had a generous heart. She was a woman out for all she could give.

The suit was blue and deep purple, with lace on the wrists and at the throat. It was the height of fashion, he had been told.


Willikins had also laid out a dressing gown with brocade on the sleeves. He put it on, and wandered into his dressing room.

That was another new thing. The rich even had rooms for dressing in, and clothes to wear while you went into the dressing rooms to get dressed.

(Hardly "rubber boots and a tweed skirt that had belonged to her mother", or "three rooms in a thirty-four-roomed mansion".)

"His lordship … that is, her ladyship's father … he required to have his back scrubbed," said Willikins.

(i.e. the butler seems to be a regular fixture.)

And this wasn't one of the old hip bath, drag-it-in-front-of-the-fire jobs, no. The Ramkin mansion collected water off the roof into a big cistern, after straining out the pigeons, and then it was heated by an ancient geyser [footnote: "Who stoked the boiler."]

(i.e. that's another person who needs to be paid.)

Lady Sybil was devoting to her wedding all the directness of thought she'd normally apply to breeding out a tendency towards floppy ears in swamp dragons. Half a dozen cooks had been busy in the kitchens for three days. They were roasting a whole ox and doing amazing stuff with rare fruit.

(Sybil Ramkin is so rich she can afford to live on biscuits and cheese sandwiches. But sometimes she likes to slum it, and spend money as if she was merely well-off.)

Also, I didn't find a convenient quote for this, but she hosts a dinner for a bunch of other rich people and somehow I doubt she asks them to pay for it.

I can offer two defenses of Vimes here. One is that all of this is from from after the quote about boots theory, so - again, as long as we're pretending Guards! Guards! never happened - maybe he didn't know all this at the time, and then he'd still be embarrassingly wrong but a bit less embarrassingly wrong. Like, he'd be making up shit that defies common sense, and it's weird he knows so little about his fiancée, but he wouldn't be making up shit that contradicts what he's seen himself.

The stronger one is that it's revealed he gives away $14/month to the widows and orphans of coppers. That increases the apparent spending power of his $38/month. So when he thinks Sybil spends less than he does, she has more margin to do that in.4

But still. C'mon.

Might Vimes have been right in general, but wrong about Sybil Ramkin?

I don't think we see much else of the very very rich. We're told Vimes doesn't either. (Men at Arms: "He hadn't had much experience with the rich and powerful.") If there's any reason for Vimes to think "the rich spend less money than the poor" is true in any sense in Ankh-Morpork, I don't know it.

So why does Vimes think those thoughts? I don't have a Watsonian explanation. One possible Doylist explanation is that Pratchett put it in the book because he wanted to comment on 20th Century Earth Anglosphere economics, and didn't notice or didn't care that it didn't make sense in context.

…but as someone who thinks it also doesn't make sense for 20th Century Earth Anglosphere economics, I think there's a slightly different explanation.

I think boots theory is a very foolish thing for Sam to believe of Ankh-Morpork, or for Pratchett to believe of Earth. But for whatever reason, lots of people do seem to believe it of Earth.

Or more accurately, lots of people interpret the description of boots theory as pointing at something they believe. I think they're wrong about some combination of "what those words mean" and "what is true" (and different people are wrong in different ways), but the point right now is that this is a thing lots of people do.

And if lots of people make a certain mistake about Earth, then it's also plausible that Pratchett made the same mistake about Ankh-Morpork, and inserted that mistake into Vimes' head. Or that Pratchett didn't make that mistake, but knew that lots of other people do, and deliberately inserted it into Vimes' head knowing it was a mistake.

So some possible theories are:

  • Pratchett, wanting to comment on Earth, had Vimes think thoughts about Earth but substituted in Ankh-Morpork. Pratchett didn't notice or didn't care that those thoughts were false when thought about Ankh-Morpork.

  • Pratchett had Vimes think untrue thoughts about Ankh-Morpork, that Pratchett thought were true about Ankh-Morpork. He thought that for the same reason that lots of people think the same thoughts would be true of Earth.

  • Pratchett had Vimes think untrue thoughts about Ankh-Morpork, that Pratchett knew were false about Ankh-Morpork; but Pratchett thought it was a believable mistake for Vimes to make, because Pratchett had seen people making the same mistake about Earth.

But ultimately I'll probably never know, and it doesn't really matter.

  1. I'm using "Anglosphere" to vaguely mean "the bits of Earth where I think I can talk kinda sensibly about people's economic circumstances". 

  2. Pedantic aside. The last clause could tenuously be read as "she spent a lot more on dragons than Vimes spent on dragons". So we could perhaps suggest she spends about half as much as Vimes on general life, and about half that again on dragons - much more than Vimes, who spends approximately nothing on dragons. She still spends less than Vimes in total. If you really want to split hairs, that's not definitively contradicted by what I quoted here. But I'm pretty sure it's not the intended meaning and I'm pretty sure a dragon sanctuary costs more than a policeman's salary. 

  3. Admittedly the watchmen get a raise at the end of that book, so he might not still be eating mysterious tubes now that he's earning $38/month. The amount of his raise is unclear - in Guards! Guards he's said to earn $9/month above the others' $30/month before the raise, but now in Men at Arms he earns $38/month - but maybe he's eating better now? Not so much better though: "Hitherto Sam Vimes' idea of a good meal was liver without tubes. Haute cuisine had been bits of cheese on sticks stuck into half a grapefruit." 

  4. That is: I've been assuming that his $38/month was enough for one person to live a sort of lower-middle-class lifestyle with tubes in his liver. But he only lives on $24/month. So if Sybil spends less than him, she's not spending "less than the cost of a single person's lower-middle-class lifestyle". She's actually spending "less than the cost of one and a half people's lower-middle-class lifestyles". Of course, this only works if we count Vimes' charitable givings as part of his expenditures, but not Sybil's. 

New to LessWrong?

New Comment
17 comments, sorted by Click to highlight new comments since:

Invert your thesis, from "the rich are so rich because they spend less money" to "the poor are so poor because they spend more money", and it becomes much more defensible. Boots theory captures the "being poor is expensive" element that's true in Ankh-Morkpork and also true on Earth -- look at the markups on any household item when it's sold individually rather than in bulk, and then consider what happens to people who don't have what it takes to plan ahead and make bulk purchases.

If we're being particularly literal about things, Ankh-Morpork canonically lacked fiat currency until the events of Making Money, so we might want to consider the other ways in which their economics functions differently from our own. They also have magic, and the deities who implement their laws of nature sometimes pop round for a cup of tea. So I wouldn't rule out that Vimes's use of boots theory as a full explanation for economics could be less descriptive than prescriptive -- he lives in a world where enough people believing anything hard enough makes it real.

Boots theory captures the “being poor is expensive” element that’s true in Ankh-Morkpork and also true on Earth

It certainly is not true on Earth.

As I have written:

It sounds so wise and worldly! And it’s also complete bullshit.

Because let’s say that I want a pair of sneakers (i.e., shoes that are comfortable and won’t hurt my feet) that won’t wear out in a couple of years, so that I can buy them once and wear them for ten years. Why, I’d have to pay five times the price of an ordinary pair of sneakers! But then I’d have my ten-year shoes. Right?

WRONG.

Oh, sure, I can buy a pair of sneakers that costs five times what normal sneakers cost. And they’ll last for just about as long—at best!

And it’s the same with cookware, it’s the same with computer hardware, it’s the same with a whole lot of things.

The reason why people mistakenly come to believe this “boots theory” is not that more expensive stuff lasts longer, out of proportion to the price difference—but rather, that stuff purchased in the past, whose inflation-adjusted price was substantially higher than the current price of the current cheap goods, lasts longer. But this is not because of the price difference.

It’s because they don’t make ’em like they used to.

There is still a real phenomenon where people spend a lot to buy things that are poor quality instead of longer lasting higher quality things. At the extreme, this is paying rent instead of buying and building equity, or buying consumable goods instead of investments, or working jobs instead of building passive income - and those are things that use money instead of building up generational wealth.

paying rent instead of buying and building equity

It’s interesting that you should mention this. I currently rent an apartment. At one point, some years ago, I realized that my financial situation was such that, if I wanted to, I could buy a condo or co-op. I recalled the received wisdom that owning is better than renting, and looked into my options. After doing the math, I concluded that, on a time horizon of 10, 20, 30, or 40 years[1], renting unambiguously came out ahead—and not just slightly ahead, but way ahead. Buying an apartment would have amounted to setting a big pile of money on fire for no reason whatsoever. The received wisdom was diametrically wrong.

(One can make all sorts of objections to this, along the lines of “but isn’t this just because of the crazy real estate market in NYC”, or “but isn’t this just because of historically-unusual economic situation X which currently obtains”, etc. But what is the use of that? The reality is what it is.)

buying consumable goods instead of investments

Investing is certainly useful, if you can do it. But what in the world does that have to do with “boots theory”, or with the “phenomenon where people spend a lot to buy things that are poor quality instead of longer lasting higher quality things”?

Your “instead of” in the “consumable goods instead of investments” clause is fallacious, I think. Poor people spend some amount of money on consumable goods, have no money left over, and thus do not invest. Rich people spend more money on consumable goods than poor people, still have money left over after spending more, and invest the remainder. This is unambiguously not consistent with “boots theory”.

working jobs instead of building passive income

This, too, seems like a non sequitur. You can only be “building passive income” if you already have a lot of money. You can’t get there by spending less money. What’s more, if you do have a lot of money (which you can invest, thus securing a source of passive income), nothing prevents you from also working a job, and earning additional money. Indeed, plenty of people do just that. Many don’t, of course—but this is not because it would somehow end up costing them more money than not working! Rather, it’s because they (quite reasonably) don’t want to work if they don’t have to.

There is still a real phenomenon where people spend a lot to buy things that are poor quality instead of longer lasting higher quality things.

Well, I should like to see some examples. So far, our tally of actual examples of this alleged phenomenon seems to still be zero. All the examples proffered thus far… aren’t.


  1. Or longer, really—but “longer” is likely to be a moot point, for various reasons. ↩︎

Well, I should like to see some examples. So far, our tally of actual examples of this alleged phenomenon seems to still be zero. All the examples proffered thus far… aren’t.

From https://siderea.dreamwidth.org/1477942.html:

"These boots," I said gesturing at what I was trying on, on my feet, "cost $200. Given that I typically buy a pair for $20 every year, that means these boots have to last 10 years to recoup the initial investment."

That was on January 17, 2005. They died earlier this month – that is in the first week of December, 2018. So: almost but not quite 14 years.

So, purely as an investment, they returned a bit under $80, which is a 40% ROI.

But... if we're talking about this just as an investment, we need to compare to other investments. Let's say the S&P 500 returns 7% consistently (I think that's pessimistic - note, not adjusting for inflation because the $20 boots haven't changed with inflation either).

  • In one world, Siderea buys $200 boots and invests $80. After 14 years, she has  and no boots.
  • In another world, Siderea buys $20 boots and invests $260. A year later she withdraws $20 and buys boots, and so on. After 14 years, she has... finite geometric series, , I think she has $483 and no boots.

So if we think of this as a purely financial investment, I guess it was a bad one?

(This is also often missing when people talk about buying versus renting. Yes, the mortgage is often lower than rent, and house value is likely higher at the end, but you gave up investing your deposit. How do those effects compare? Probably depends on time and place.)

In another world, Siderea buys $20 boots and invests $260. …

I think that your calculation is a bit off. After a year, she’ll have $258.20 (i.e., ($260 * 1.07) − $20). After two years, $256.27 (i.e., ($258.20 * 1.07) − $20). And so on. After 14 years, she’ll have $219.41.

Still better than buying the expensive boots—in purely financial terms.

(Inflation-adjustment is another important point, of course. That $200 in 2005 would be $265 in 2018 dollars.)

In short, yes, this is indeed a very poor example—ironic, as it’s a real-life version of the original example!

(This is also often missing when people talk about buying versus renting. Yes, the mortgage is often lower than rent, and house value is likely higher at the end, but you gave up investing your deposit. How do those effects compare? Probably depends on time and place.)

This is precisely what made renting come out far ahead, in my aforementioned calculation. (And this is without even considering the time value of money.)

Huh, thanks for the correction.

Smaller correction - I think you've had her buy an extra pair of boots. At $260 she's already bought one pair, so we apply  thirteen times, then multiply by 1.07 again for the final year's interest, and she ends with no boots, so that's $239.41. (Or start with $280 and apply  fourteen times.)

Not sure why my own result is wrong. Part of it is that I forgot to subtract the money actually spent on boots - I did "the $20 she spends after the first year gets one year's interest, so that's $21.40; the $20 she spends after the second year gets two years' interest, so that's $22.90..." but actually it's only $1.40, $2.90 and so on. But even accounting for that, I get $222.58. So let's see...

Suppose she only needs to buy two pairs of boots. According to your method she goes $40 → $21.40 → $1.50. (Or, $40 and no boots → $20 and boots → $21.40 and no boots a year later → $1.40 and boots → $1.50 and no boots a year later.) According to mine, of her original $40, $20 of it earns no interest and $20 of it earns a years' interest. But that assumes the interest she earns in that year is withdrawn, she gets to keep it but it doesn't keep earning interest. So that's why I got the wrong answer.

I think you’ve had her buy an extra pair of boots.

Ah, true. So, $239.41, at the end.

(Of course, this all assumes that the cheap boots don’t get more expensive over the course of 14 years. Siderea does say that she spends $20 each year on boots, but that’s hard to take seriously over a decade-plus period…)

You interpreted this as defending boots theory, which wasn't my intent. I said that there was a real phenomena, not that boots theory is correct.

And sure, rent can come out ahead for some cases, that doesn't imply it's always better, or that upper middle class people generally actually come out ahead - because even where you could end up ahead renting, in fact, the money saved is often spent instead of invested.

Also, I think the claimed non-sequitur isn't one - lots of passive income routes don't require much financial investment, and many that do, like starting a company, can be financed with loans. The point is that people choose to invest their limited time and money in ways that do not build wealth. (Which isn't a criticism - there are plenty of other, better, goals in life.)

Good point.

I think there are still two different topics, although with some overlap: how to budget and how to get rich. Good budgeting is good, whether you are poor or rich. If you are poor, it can help avoid losing everything. If you are rich, it can help avoid wasting all your money and becoming non-rich.

But the (implied) idea that budgeting can make poor people rich, or that it is the main force that keeps poor and rich apart... that does not automatically follow, and actually many people doubt it. Hypothetically they may be wrong, but this needs to be checked separately.

Basically, budgeting can never save more money than "your income, minus the minimum necessary expenses". If your income is e.g. $300 a month, there is no way you could save more than $300 a month. Realistically, you probably can't even save $50 a month.

Even if you every month put $50 into passively managed index funds (which already seems like an unrealistic best case scenario for someone who makes $300 a month), this will not make you rich. It will help you save $600 a year, $6000 a decade, so maybe $300 000 during a lifetime, generating a passive income of $12000 a year, that is $1000 a month by the time you are old and retired, under the most optimistic scenario. And I am sure that most rich people spend more than $1000 a month.

So what you need is a combination of decent income + good budgeting + good investing, and then keep doing that for decades. Which means that even assuming that it can make you rich, it will only make you rich in a distant future, not now. In other words, if you started poor, even if you are doing everything right, you can still be poor, because the expected wealth is still a few decades in the future, not here and now.

EDIT: And meanwhile, a rich person has inherited a trust fund from their parents, spends as much money as the fund gives them every month, and doesn't have to worry about anything. The only budgeting skill needed is something like "make sure your monthly expenses do not exceed $20000 this month".

I mostly agree with you... but:
1. You created a false dichotomy where budgeting excludes investing, then said you can't ever make money with budgeting, because by definition anything that is in your budget cannot make money - but spending on a house instead of rent, for example, clearly violates that assumption.
2. Budgeting can include time, in addition to money, and among other things, that matters because income isn't a fixed quantity over time. Things that people can do to use time to drastically change income include starting businesses, or taking night classes to get a more lucrative job.
3. The last point is conflating questions, because yes, inheriting or a trust fund is already being rich (but inheritances and trust funds are not the same thing!) However, most second and third generation nouveau riche folks do, in fact, spend down and waste the inherited fortune, once they are old enough to actually inherit instead of living on a managed trust fund.

It certainly is not true on Earth.

Where is it cheaper per item to buy the same food or household good singly rather than in bulk?

Where can you get a single roll of the same toilet paper for less per roll than getting it in a bigger pack? Ok, now what if you need TP and the cash at your disposal at that moment is less than the cost of the bulk pack but more than the cost of the single roll?

When is it cheaper (time + money) to cook one meal at a time versus meal prep for the whole week? OK, now what if you can't afford the whole week's worth of food at once?

We might be talking about poverty at different orders of magnitude, and you might be writing off a lot of failures to purchase efficiently as "skill issue"... but being poor in skills and the capacity to hone them is, itself, a form of poverty.

We might be talking about poverty at different orders of magnitude, and you might be writing off a lot of failures to purchase efficiently as “skill issue”… but being poor in skills and the capacity to hone them is, itself, a form of poverty.

Once we’ve redefined “poverty” to mean something other than poverty, we can obviously make all sorts of claims about it. Being “poor in skills and the capacity to hone them” can be the cause of poverty. Notice how this is a different cause from the one that “boots theory” posits.

As I’ve written, I have personally experienced my family being quite poor. Buying a roll of toilet paper instead of a whole package, or buying just one meal’s worth of food instead of a week’s worth, is definitely a “skill issue”.

Being poor is unpleasant in many ways. It being “expensive” is not one of them.

Other examples include buying poor quality food and then having to pay for medical care, buying a cheap car that costs more in repairs, payday loans, ect.

buying poor quality food and then having to pay for medical care

I have seen this sort of thing mentioned, but I don’t think that it works.

Let’s set aside for the moment the somewhat tenuous and indirect connection between the food you eat today, and the medical care you will require, some years down the line. (If you end up with heart disease in ten years because you’ve been eating poorly, surely this can’t be any part of the reason why you’re poor today—that would require some sort of anti-temporal causation!)

And let’s also set aside this business of “having to pay for medical care”. (Even in the United States—famously the land of medical bills—the poorest people are also the ones who are eligible for Medicaid. You’re more likely to have to pay for medical care if you’re sufficiently well-off to eat well than if you’re very poor!)

Let’s instead consider just this notion that there’s a causal connection between being poor and eating poor quality food—and specifically, the sort of food that contributes to poor health outcomes—because you can’t afford healthy food.

There was a time when my own family was very poor. (We’d just arrived in the United States as brand-new immigrants, with little more than the proverbial clothes on our backs; my mother had to work two, or sometimes three, jobs just to pay the rent; even my grandfather, then already of retirement age, got a job delivering newspapers.) As I would routinely help my grandmother with grocery shopping, I was very well acquainted with how much it cost to feed a family on a very tight budget, what sorts of purchasing decisions needed to be made, etc.

And what I can tell you is that the sort of food we ate was not cheap-but-unhealthy. Rather, it was cheap-but-healthy. What was missing was luxuries and varietynot nutrition! You can, in fact, have a healthy (and even tasty) diet on a tight budget. I have extensive personal experience with this.

The difference between my family and the poor people who buy junk food is much more cultural than anything else. Specifically, the missing ingredient is cultural transmission of knowledge of, and expertise in, preparation of nutritious, satisfying food under severe financial constraints. My family’s cultural background contains a tremendous amount of accumulated wisdom on this topic. Someone who, for whatever reason, lacks access to such cultural metis, will be severely disadvantaged in this regard. But this has nothing to do with poverty as such.

buying a cheap car that costs more in repairs

This, too, is a dubious example. The key word here is “more”. More than what?

Do you mean:

(1) “Car A (which costs less), over a period of N years, requires repairs of cost totaling X; car B (which costs more), over the same period of N years, requires repairs of cost totaling Y; X > Y”

If so, then notice that this does not support “boots theory”! But perhaps you instead mean:

(2) “Car A (which costs less), over a period of N years, requires repairs of cost totaling X; car B (which costs more), over the same period of N years, requires repairs of cost totaling Y; (cost[A] + X) > (cost[B] + Y)”

This might support “boots theory”. But is it plausible?

The car I currently drive was bought used, at a cost of ~$13,000, in 2016. Since then I have spent ~$2,000 on repairs (not counting inspections and oil changes, which will apply to everyone equally), for a total of ~$15,000.

In 2016, I could instead have purchased a much cheaper used car, for ~$3,000. Suppose that this had been all I could afford. For this to have turned out to be a “boots theory”-supporting example, I’d then have to spend ~$12,000, in the 9-year period since, on repairs.

Seems improbable. Indeed, at that point, I could just buy another car. I could buy a new car four times! (And notice that this scenario would then still not support “boots theory”.)

payday loans

This is a complicated topic, and I am not qualified to opine confidently on it. I will say only that it seems like a highly non-central example of the alleged phenomenon.

I think a lot of this boils down to the fact that Sam Vimes is a copper, and sees poverty lead to precarity, and precarity lead to Bad Things Happening In Bad Neighborhoods.  The most salient fact about Lady Sybil is that she never has to worry, never is on the rattling edge; she's always got more stuff, new stuff, old stuff, good stuff.  Vimes (at that point in the Discworld series) isn't especially financially sophisticated, so he narrows it down to the piece he understands best, and builds a theory off of that.

Sam Vimes is a copper, and sees poverty lead to precarity, and precarity lead to Bad Things Happening In Bad Neighborhoods.

Hm, does he? It's certainly a reasonable guess, but offhand I don't remember it coming up in the books, and the Thieves and Assassins guilds will change the dynamic compared to what we'd expect on Earth.

More from philh
Curated and popular this week