1 Jacob Adjusted For Inflation (JAFI)

[oldbeyond]

@jacob: See viewtopic.php?t=10316&start=40

Lots of discussions on household size (as well as gossiping about MMM:s divorce…).

If we are dividing up the pie, that would affect the distribution between households of various sizes. If we have 75 households, 50 singles and 25 couples, 100 people total. The pie is 1 million, or 10k/person. 50x + 25x*sqrt(2) = 85,35x. x = 1000000/85,35 = 11700 (16570 for the couples). (Just a simple example to illustrate my point).

It’s interesting as @7wb5 says, in one sense living alone is a luxury and seems to correlate with affluence.

[chenda]

There was a wartime propaganda poster to promote fuel savings which went something like 'If you ride alone you ride with Hitler - join a car sharing scheme today!'

I think though heated floorspace per person might be a better measure than household number, inasmuch two people each living in a separate dwellings of 40 m2 have a significantly lower impact than 2 people sharing a 200 m2 dwelling.

[7Wannabe5]

I think though heated floorspace per person might be a better measure than household number, inasmuch two people each living in a separate dwellings of 40 m2 have a significantly lower impact than 2 people sharing a 200 m2 dwelling.

True, but when you are choosing to live alone, 40 m2 is about the smallest space you can acquire to legally occupy in first world urban setting, whereas a 75 m2 two bedroom space may be legally occupied by 5 people with only 15 m2 per occupant. My most amusing frugal Matryoshka doll experience was during my extreme minimalist phase when I occupied half the bed space in the small room occupied by my BF who had > 6 figure income in the very modest approximately 80 m2 house of his multi-multi-millionaire best friend. How much space anyone needs to occupy as an individual would be a function of S= How Much Stuff You Have and P= Your Need For Privacy. Also, D = Your Need/Skill for Dominance might come into play in terms of contract(s.) Privacy and Dominance are kind of the same thing, just adjusted for introversion vs. extroversion. Ergo, Minimalist Extroverted Submissive types will generally need to occupy the least space.

[chenda]

True, but when you are choosing to live alone, 40 m2 is about the smallest space you can acquire to legally occupy in first world urban setting, whereas a 75 m2 two bedroom space may be legally occupied by 5 people with only 15 m2 per occupant.

That's a very good point. As an introvert who can't abide sharing a bathroom living in a student hall of residence was surprisingly nice. I could share a kitchen and socialise when I wanted to and then retreat to my en suite room of about 12 m2.

[white belt]

True, but when you are choosing to live alone, 40 m2 is about the smallest space you can acquire to legally occupy in first world urban setting, whereas a 75 m2 two bedroom space may be legally occupied by 5 people with only 15 m2 per occupant. [...] How much space anyone needs to occupy as an individual would be a function of S= How Much Stuff You Have and P= Your Need For Privacy. Also, D = Your Need/Skill for Dominance might come into play in terms of contract(s.) Privacy and Dominance are kind of the same thing, just adjusted for introversion vs. extroversion.

My last apartment was a ~28 m2 studio inside a former single-family house that had been converted into 2 separate units (retrofitting FTW). For me, 25-30 m2 is as low as I could go without having multi-functional or storage furniture. Since I was also teleworking that year, I did everything in that cozy apartment and I was very content. I had space for cooking, dining, hobbies (to include worm composting and growing microgreens in the apartment), and could even have guests over without any issues. The apartment was well-designed in that it had a galley kitchen along one wall that was comparable in size and functionality to a typical kitchen in a larger apartment.

So I’d say that the minimum number is probably more like 30 m2 for legal occupation when living alone in the USA, although in dense urban cores you can sometimes go even lower. If I had some better designed furniture (murphy/couch bed, tables that swing out from wall, etc), I probably could have lived with a significant other and 1-2 cats in that space with both of us having adequate autonomy. That would’ve put me in the 15 m2 per occupant range. Unfortunately, one issue I have encountered is that outside of places like NYC, there isn’t much of a supply of micro-apartments that are functional for those with DIY skills (e.g. have adequate space for cooking and functional layouts). The minimalists want everything to be aesthetically pleasing (modern/expensive) and usually aren’t cooking their own meals or making/fixing their own belongings.

Holmgren talks a lot about the need for privacy/dominance but I think he used the term autonomy. Basically his conclusion was that autonomy is easier with a larger space, but can also be provided for in smaller spaces through intelligent design. Noise insulation and nooks where one can feel like they are sheltered/cozy/private in a larger space were recommendations. I do agree that there is a spectrum when it comes to individual need for autonomy. When living together, DGF and I accomplish that by establishing our own “zones” that we individually have full autonomy over within the larger shared space, even if it’s just a desk or a corner of a room.

That's a very good point. As an introvert who can't abide sharing a bathroom living in a student hall of residence was surprisingly nice. I could share a kitchen and socialise when I wanted to and then retreat to my en suite room of about 12 m2.

My current living situation is in a single-family house similar to what you describe, although I’d guesstimate my bedroom/bathroom is closer to 20m2. I live in a house with 3 other roommates sharing a kitchen and living/dining room space. They share a bathroom on the bottom floor. The landlord lives in a converted basement unit with his own bathroom and kitchen. Probably around 50m2 per person due in part to the relatively large shared common areas.

My roommates are in their late 20s and 30s with graduate student and public sector worker as the most common occupations. As 7W5 pointed out when talking about the demise of boarding houses, it seems like this sort of housing situation and lifestyle becomes much less culturally acceptable for individuals in their 40s and 50s. Maybe the future will result in many more single-family houses from yesteryear being converted into such living situations due to the decline in fertility rates.

[Western Red Cedar]

I'm hoping to spark (or reignite) a little discussion about the downstream effects of what we do with the money we don't spend. I regularly see discussion and assumptions on the forum that spending at 1 JAFI is the ecologically responsible choice. This premise is partially based on the notion that spending higher amounts, even on locally produced products that aren't part of the traditional industrial economy, filters back into the economy where it is used to purchase typical consumer goods.

I'm struggling to see how an approach that invests unspent funds in traditional financial instruments (stocks, bonds, cds, loans, etc.) doesn't result in those funds filtering back into the economy and perpetuating the consumption cycle. Aren't banks and companies using that money to promote growth?

I recognize that the JAFI is just a rule of thumb and want to highlight this caveat @Jacob provided earlier in the thread:

But guys, it's just a rule of thumb that gets you to an actionable number as opposed to a bunch of feel-good handwaving about buying EVs and solar panels. Some things to consider for the sustainably oriented...

• It doesn't account for purchasing power parity or which country you spend it in although you clearly "burn" more in some countries than others.
• It doesn't account for what the money is spent on (e.g. organic), but spent money quickly makes it into the rest of the economy where it's likely spent on "the average basket of goods".

So the main point is to get within the ballpark && "not spend evil". E.g. if you spend $6750 on nothing else but burning diesel fuel in barrels, you're part of the problem. And if you're promoting sustainable practices while at the same time you're spending $15000 or $30000 per year, you'd have to make a much stronger argument for your spending practices (e.g. "I'm building post-collapse infrastructure to be used by future generations"). But if you have normal consumer patterns (the same as those the global overshoot number is based on ...) and stay around $6750, you're on the high road.

Nonetheless, the traditional approach to investing has always resulted in some cognitive dissonance. What am I missing here? How do others square this in your personal approach to living a low-impact lifestyle?

[jacob]

Aren't banks and companies using that money to promote growth?

Only very indirectly in setting the CAPM rate. When you buy stocks in the secondary market, your money is going to the seller, not to banks or companies. The only time when companies get investor money is when they IPO, sell shares (only REITs tend to do that), or issue new bonds.

Whether companies continue to exist as going concerns depend on whether they have revenue and positive earnings and that depends on whether people consumer their products and services.

It could be argued that it is hypocritical to own something that produces something you don't believe in. The counter argument is to "render unto Caesar". Most people who try very hard not to by putting their monies in "alternative investments" end up destroying value through bankruptcies. If getting rid of money is the desired outcome, it seems better to just give it away.

[Western Red Cedar]

@Jacob - what about money stored in high-yield savings accounts or cds? Isn't that money used by banks and more directly filtered back out to the economy through loans? My thoughts on this topic reemerged recently as a result of rising interest rates, and my shift to a slightly more conservative allocation with large chunks of money in HYSA or cds.

It could be argued that it is hypocritical to own something that produces something you don't believe in. The counter argument is to "render unto Caesar". Most people who try very hard not to by putting their monies in "alternative investments" end up destroying value through bankruptcies. If getting rid of money is the desired outcome, it seems better to just give it away.

I don't think getting rid of money is the desired outcome, but rather not contributing to the larger problem. Do well by doing good as one of my mentors used to say. I've lived with the "render unto Caesar" mentality and slowly grew to accept it after a more idealistic period in my twenties. I justified it as the cost of freedom.

I've never been a fan of real estate and don't own any myself, but I am attracted to the argument that investing directly in one's community either through rentals or a business is more aligned with sustainability and ERE ethos. Investing in land and engaging in a productive endeavor on that land, such as renewable forestry or agriculture, might be another. These are both hands-on, lifestyle choices though.

[zbigi]

Only very indirectly in setting the CAPM rate. When you buy stocks in the secondary market, your money is going to the seller, not to banks or companies.

The money goes to the seller though. They may either reinvest it, or spend it on consumer trinkets (e.g. if the stocks were in someone's retirement account, and he/she is now in retirement), thus contributing to overshoot.

[7Wannabe5]

Diogenes replied "If you'd learned to make do with lentils, you wouldn't have to crawl before the king!" However, Diogenes also lived in a barrel, so didn't have to cough up property tax payment either.

Also, there is the sad reality that if one were to transfer excess income above 1eco-jacob/year to another human (approximately half global population)who currently exists on less than 1 eco-Jacob (PPP)/year, overall resource consumption towards CO2 burn would immediately increase, although global birth rate might go down even faster towards equilibrium than it is currently. Since I derive some neurochemical based pleasure from directly helping other humans, I choose to tutor disadvantaged children in basic math skills for approximately $9/hr less than I earn by tutoring the children of affluent parents in more advanced topics.

[jacob]

@Jacob - what about money stored in high-yield savings accounts or cds? Isn't that money used by banks and more directly filtered back out to the economy through loans? My thoughts on this topic reemerged recently as a result of rising interest rates, and my shift to a slightly more conservative allocation with large chunks of money in HYSA or cds.

You're getting into reserve banking territory, which is fairly complicated. Banks such money out of the economy (via interest rates) and central banks suck money out of the banking system (when the central banks receive interest payments, that money is destroyed.)

In practice, banks can lend whatever they want. Most banking loans are not actually subject to reserve requirements.

I've never been a fan of real estate and don't own any myself, but I am attracted to the argument that investing directly in one's community either through rentals or a business is more aligned with sustainability and ERE ethos. Investing in land and engaging in a productive endeavor on that land, such as renewable forestry or agriculture, might be another. These are both hands-on, lifestyle choices though.

I don't see the moral difference between investing in one's own community vis-a-vis investing in someone else's and perhaps someone else investing in the one you live in. Arguments can be made that investments are done more responsibly when they're local, but it's not that hard to be as hands-off locally as it is to be hands-on remotely.

The money goes to the seller though. They may either reinvest it, or spend it on consumer trinkets (e.g. if the stocks were in someone's retirement account, and he/she is now in retirement), thus contributing to overshoot.

Yes, but then it is spent under their moral account. Insofar they also stay under 1 JAFI, there's no problem with overshoot. To the degree that they don't you have to decide whether you're morally impugned by giving them the money to (over)spend. IOW, to which degree you feel responsible for enabling (what you consider) immoral behavior of other adults.

[AxelHeyst]

(The following isn't an attempt to directly answer your question, WRC, but to create a structure for thinking through the answers to your question. I found it helpful to break it down like this.)

Dimensions:
Spending amount (CoL).
Spending ethics (local organic fair trade cooperatively owned mom n pop etc)
Quantity saved (Stash)
Ethics of the vehicle the savings is in (a personal loan to a friend down the street who is starting a permaculture market farm on a remediated brownsite, owning Chevron stock, ...)

Stash / CoL ~= Freedom-from-working (a derived dimension).

Freedom-from working might bear on the ethical calculus and personal situation. "It's difficult to convince a man of something that his paycheck depends on him not" for one thing, and also some people may find it difficult to secure work that checks their ethical boxes.

For example, its difficult to find a job where you aren't directly contributing your labor to 'growth' or the production of widgets you think shouldn't actually exist, etc. (This was part of my ethical dilemma at the end of my career -- I wasn't convinced that the buildings we were building should be built. All else being equal, it might be more ethical for me to sit at home rather than the work I was doing. Buckminster Fuller made similar arguments.)

So 'Freedom-from-working' is also a dimension circumstantially relevant to the ethics of this. This is in degrees, not absolute. You can have to work only a little, which gives you more freedom to pick and choose what work you accept based on ethical principles.

I'd also point out that we seem to be looking at this through mostly a 'minimize harm' lens. For a full analysis we'd also consider 'do good' lens, and we'd also have to ponder what amount of 'doing good' cancels out 'harm' (e.g. sustainability professionals who 'cancel out' Co2e from business related travel and even personal travel due to the impact of their work), but that's going to get complicated very quickly.

With these dimensions we can assemble some theoretical positions.
SubJAFI CoL, FI level stash, don't have to work. The ethics of the investments are the only thing to worry about, since CoL and work related ethical decisions have been minimized. Also the stash is of modest size, so the overall amount of potential harm done with invested dollars is small.

subJAFI CoL, 2-10yr buffer, have to work but only a little. Impact of investment stash is even smaller, and due to the buffer this person can be very picky with what kind of work they say yes to.

subJAFI COL, <1yr buffer, don't have to work a lot (parttime at minimum wage will suffice) but can't be as choosey as the previous person.

2-5+xJAFI CoL, FI stash, don't have to work. Must consider ethics of consumption (since COL isn't minimized) and must consider ethics of investments more, since the stash is bigger. Don't have to worry about ethics of labor.

2-5+xJAFI COL, 2-10yr buffer, have to earn money efficiently but has some flexibility/ability to say no. Can probably find ethical income sources, but it's more difficult the higher their COL.

etc.

I suspect if you plotted this you'd quickly see that as COL goes up the ethical weight of decisions goes up, no matter if you've got FI stash or doing semiERE work.

Another dimension is uncertainty wrt ethics of certain consumer and investment decisions. Let's leave aside scams and greenwashing and assume everyone involved in the 'ethical' investment vehicles are acting in good faith and reasonably educated. Plenty of good-faith reasonably educated people have used money to do good things that wound up having unforeseen negative side effects. The greater the amount of money being either spent or invested, the higher the negative impact of potential unforeseen negative side effects.

Uncertainty, aka the inability to know for certain what the ethical impact of money spent or invested will be, plays a big role in how I think about this stuff. There are more knowable facts about this issue than I myself know, and I ought to educate myself further in them, but at some point there does exist for all of us a threshold of uncertainty beyond which we simply can't know anything further about the ethical implications of our actions. At some point there is a strategy that takes this uncertainty into account... and maybe from a philosophical perspective it is important to keep in mind the existence of this threshold, and to not pretend that these are choices that we can possess full knowledge about.

ETA: At the threshold of uncertainty, the maximum possible harm done is the volume of the tetrahedron described by X,Y,Z, which roughly is uncertainty-adjusted COL, Invested Stash size, and hrs w*rked for The Man.

[grundomatic]

Ah, @WRC, glad to see this brought out for further discussion. After continuous thinking about it, both from when this thread was being created and from the activity surrounding the subject in my journal, it seems to me that the beauty of focusing on spending 1J is the absolute control one has over it. The only way to get there is to not buy things I don't need and learn to take care of the things I do have. If I focus on where my money is spent or how it's invested, I lose agency pretty quickly. I have to wishfully hope that the ESG company isn't greenwashing and that the organic farmer is being as efficient with their free cash flow as I am.

I also used to dream about having my FI stash invested in a local business or real estate operation. Well, it was two separate dreams. One was a business that catered to high spenders, with the game being to see how much money I could separate them from using ridiculous tactics, as in “how much can I get people to spend on this stuff?”, but it turns out there are established companies already doing this, and they are for sale on the stock market right now, so I can just buy those and that’s way less hassle.

The second dream was more along the lines of building future infrastructure or doing well by doing good, in that I would purchase rental units and outfit them to be more green, new windows, better insulation, solar panels, water harvesting, or whatever. I also thought there would be a market for it, that renters that care about that stuff were an underserved market and one could probably charge a premium or at the very least attract better tenants. By the time I had enough money accumulated to start to think about this, I had changed my mind. The local RE market changed, I ran the numbers and started to change my opinion on solar, troubles with an existing rental showed me the dangers of concentration in a single asset, and I also realized I don’t really have any value to add to such an operation.

I think there are useful and good things that can be done with our FI stashes, but I think you nailed it with this:

These are both hands-on, lifestyle choices though.

Maybe once I've got my spending down, hit FI, and taken a while to recover, I'll have the capacity to invent, run, find, and/or finance these undertakings.

[7Wannabe5]

There may also be ethics attached to not working, not investing, or not spending money. Given the current state of affairs, it would be tough to come up with an example involving not spending money, but classic extreme dysfunctional miser example of having a million stashed away, but not providing your own child with basic medical care might serve. An example with "not working" relevant to my own situation is that there are not enough qualified humans willing to work for $18/hr. tutoring basic math to the kids who were left behind during the lockdown. If I left my job, it would not be filled, and the 18 kids I tutor would be less likely to ever learn enough math to even achieve the most basic financial literacy. Most of them can't even make change. None of them can (yet) comprehend anything as complex as simple interest.

[AxelHeyst]

Right, that's the 'doing good'/'causing harm passively via inaction' angle, and forces us to answer questions about what we're responsible for / what our moral duties include.

Do not, via your actions, cause harm. (Fine, yep.)

Do not, via your inactions, allow harm to be done. (Story checks out, gets difficult at scale and across large distances, but most would go along with this.)

Do not, via your inactions, leave good left undone. (whoa. now we have to bring in context. There's moral opportunity cost, responsibility, etc issues to consider. It's good that you are teaching those kids. Would it be on *your* moral account if you didn't teach them? Does your awareness of their circumstance factor?)

Utilitarianism falls apart quickly.

[grundomatic]

If I left my job, it would not be filled, and the 18 kids I tutor would be less likely to ever learn enough math to even achieve the most basic financial literacy.

Would it be on *your* moral account if you didn't teach them?

Utilitarianism falls apart quickly.

I found I fell apart quickly with the weight of the world on my shoulders like that.

[AxelHeyst]

Yeah, well put. And when you fall apart you can't do more good. So if you hew closely to utilitarianism, you undo your ability to follow moral action according to its calculus which is in itself (arguably) Not Good. Utilitarianism fails its own test. (or, the only way to possibly follow utilitarianism is to not follow utilitarianism. Yeah. Enough of that.)

[7Wannabe5]

I think the 21st century calls for some creative utilitarian piece-wise functions. For instance, do I think it's okay to mooch off (do minor financial harm unto) a grouchy old capitalist, so that I can better afford to be under-paid for tutoring the disadvantaged kids or invest in a permaculture project? Absolutely!

I found I fell apart quickly with the weight of the world on my shoulders like that.

No doubt. I'd be a drooling zombie if I did it full time.

[loutfard]

The main things I've taken away from this discussion so far:

- Spending less means spending ethically. It's that simple. I can have an immediate positive impact on both myself and others this way, have agency. No cognitive overload of ethical dilemmas. Simple, effective and obvious.

- Investment ethics is tricky:
- Local super nice projects often are financially bad investments: in terms of return, diversification and more. Even if they are good ones, the question remains if a more remote investment might not be more in line with/efficient fulfilling one's ethical goals and turning a profit.
- Investment ethics often are very personal in a way. Possibly provocative example: I'd rather own shares in a company producing weapons for use by the Ukrainian army than in Oracle.
- Traditional ESG/SRI investments are tricky. No personal touch possible (yet?).
- Investing with the goal of shrinking negative externalities seems super difficult to pull off. If the project itself doesn't create additional negative externalities (CO2, ...), the profits might encourage consumption.

This brings me to two questions!

- How do I identify investments that can thrive in a degrowth scenario? Are there any tools for that? Do they take https://en.wikipedia.org/wiki/Jevons_paradox into account? If we can positively identify that kind of investments, we might be able to avoid difficult ethical investing dilemmas alltogether.

- How can I deal with my inheritance efficiently as an EREmite? Because as an EREmite, I risk increasing consumption a lot after my death! Chances are my accumulated surpluses will be much more consumption oriented by whoever gets hold of them. If I don't arrange for proper inheritance, that is.

(Moderator, I do realise I'm hijacking this thread a bit. Do split this off into a separate topic if you feel that is more appropriate.)

[7Wannabe5]

It could also be argued that if/when you retire from your job, the position will simply be filled by somebody else who will earn/consume at a new higher level while performing the tasks less efficiently. However, this process would clearly break down completely prior to the juncture at which one of the kids I am tutoring in math fills a $150,000/year software engineering position with Oracle. So, eventually might be more likely that the salary that a human would likely blow on consumption will instead go to energy demands of AI system, until the Unemployed Long Haul Truckers Division of The Ohio Valley Militia goes old school on the server farm in the Battle Against the Drones circa 2047.