1 Jacob Adjusted For Inflation (JAFI)

[chenda]

Adjusting for PPP may move the number up while still being moral.

@7 do you consider carbon offsetting to have any benefits, which conceivable could be done more easily when closer to 1 JAFI ?

[7Wannabe5]

@chenda:

My current thoughts on the matter, as somebody often more interested in math than morals, would be that it is better to first reduce personal consumption then take more personal responsibility for production then offset carbon locally. However, this assumes that "local" is highly associated with "where you have knowledge/influence/skin-in-the-game." Basically, just working on the assumption (which has been validated in studies) that, for instance, most people are more likely to feel crappy about dumping raw sewage from their business into the creek that runs behind their house as opposed to investing in a corporation that does the same thing elsewhere. I think fencing in the commons of the rain forest would be a great move environmentally, more efficient than buying vacant lots in Detroit to turn into micro-forest, but what happens to the humans who are currently dependent on those commons? Let's say the plan for moral carbon offsetting by fencing in the commons of the rain forest also includes providing the displaced humans with legal immigration help and bus/boat ticket to Detroit, "fantastic" new income of $15/hr from flipping burgers might actually result in higher burn than from previous lifestyle whacking down rain forest towards subsistence farming. Etc. etc. etc. IOW, the predicament is too complex for just about any set-and-forget solution, YET reverting to BAU is known catastrophic fail.

[zbigi]

Adjusting for PPP is against the priciple underlying spending under 1 Jacob though. The point is that, seven thousand dollars eventually leads to the same amount of resources exploitation and environment destruction, whether you spend it in Switerland or in rural Cambodia.

[7Wannabe5]

@zbigi:

PPP has to do with the cost of the same market basket of goods (resource usage) in different locales. IOW, it corrects for the transaction costs and trade barriers that, for instance, make the same Big Mac cost much more in Hong Kong than Detroit. So, if you don't adjust for PPP then you are in some abstract sense giving somebody in Guatemala the "right" to a bigger market basket of goods than you and/or more CO2 dumping space.

Another confusion that comes up every time I make this suggestion is based on the notion that because PPP is expressed in US dollars, no adjustment is necessary if spending in the US. This is not true. The marketbasket is more expensive in the U.S. than the world average. Approximating $3.50 for Big Mac in Guatemala (world average) vs. $5 for Big Mac in U.S. Ergo, $7000 X 5/3.5 = $10,000 is eco-Jacob adjusted by BigMac Index for spending in the U.S. for two individuals who spent all their consumer income on burgers.

[chenda]

@7wannabe5 - thanks, yes and as most of the off setting schemes are basically scams they may well do more harm than good like by reducing flygskam. Even reputable scheme of planting a giant redwood in Wales will take 250 years to offset a lifetimes carbon footprint which renders it basically useless for the foreseeable future. I'm probably better off promoting meat free Mondays and discouraging beef amongst family and friends. I think Jacob made the point that MMM probably thus far has had a bigger impact than ERE inasmuch encouraging those spending $100k a year to spend $20k a year is the equivalent of 8 people becoming 1JAFIs, and probably somewhat easier in persuasion terms.

[zbigi]

Yes, that person in Guatemala will be getting more goods for his $7k than a person in say USA. But, it doesn't matter what that single person gets; what matters is the total impact of the money being spent. And the total impact I believe is the same. For example in USA, the burger will cost say $20, and say $10 of that will go to labor costs - that's $10 that goes in someone else's pocket, and will be spent on things whch deplete/destroy environment. Whereas in Guatemala, the burger might be $2, and labor cost $1. So, if I eat like a king in Guatemala and regularly buy 10 burgers for a total of $20, that's still $10 going to the people who worked on the burgers, which they will spend on environmentally bad things. Same with taxes - developed countries have higher taxes, which raise prices of goods. But, that taxes are spent on stuff like asphalting the streets etc.
IOW, if you buy a burger in the US, you get a burger, but also a piece of asphalt on the street in the city you live, a piece of car payment on the second car of the worker who cooked your burger etc. That's all included in the price, which makes the burger expensive. Whereas, in Guatemala, your $2 funds much less stuff.

[7Wannabe5]

@zbigi:

In both your scenarios, whether Labor earns $10 in USA or only $1 in Guatemala, Labor can only afford 1/2 burger of resources.

Whether or not individuals should hold themselves responsible for some share of public spending on their behalf is an entirely different question, but I would note that if labor and asphalt are less expensive in Guatemala, then the Guatemalan gubbermint can afford to put down a lot more asphalt per dollar tax collected. Also, if $1 is returned as profit to a Hamburger Franchise Capitalist in Guatemala and $10 is returned in profit to a Hamburger Franchise Capitalist in USA, the capitalists can only afford 1/2 burger of resources.

So why does global arbitrage work for early retired world travelers? Because they have time/space separated their earning and their spending. Really no different than how the Americans who were able to keep their jobs and credit cards during the late 20th century neoliberal globalization trade policy era were better able to burn more resources through the proliferation of cheap goods from Asia via Wal-Mart. Of course, those who were not able to keep their jobs, perhaps even seeing as much as a 50% wage drop, were less able to burn resources*, but, theoretically, if you average the effect out over 3 newly employed Chinese workers, 1 laid-off American worker, 2 bargain shopping American consumers, and Zero polar bears, happiness in the moment was increased.

Of course, markets are not uniformly efficient, so, for instance, somebody who flips burgers in San Francisco might not be able to afford any unit share of housing, so will tend towards greatly reducing resource burn by living in cardboard box under a bridge.

*Sometimes leading to long-term broken-window effects such as their grand-children facing barriers to achieving basic math literacy.

[zbigi]

Whether or not individuals should hold themselves responsible for some share of public spending on their behalf is an entirely different question,

I agree. "Holding yourself responsible" is a term from moral domain, while JAFI is just concerned with objective impact on one's spending (while moral assesments are by nature subjective).

but I would note that if labor and asphalt are less expensive in Guatemala, then the Guatemalan gubbermint can afford to put down a lot more asphalt per dollar tax collected.

Probably a lot more per dolar, but still a lot less in absolute terms - otherwise, Guatemala would have as amazing road and highway networks as the US has. The reason behind that of course is that the very expensive heavy machinery required for road construction costs the same everywhere in the world, and the same goes for a lot of oil-based inputs (asphalt, fuel for machines). So, ultimately, the $1 from Guatemalan burger is funding much less roads than $10 from US burger.

Also, if $1 is returned as profit to a Hamburger Franchise Capitalist in Guatemala and $10 is returned in profit to a Hamburger Franchise Capitalist in USA, the capitalists can only afford 1/2 burger of resources.

I was sceptical about your example of $10 in returned profits, so I did a quick check and OMG - McDonald's and KFC's (two companies I checked) net profit margins are around 30%! I'd suspect it's way worse, given how everyone is saying that restaurant business is very tough.
In any case, the people in Guatemala are probably eating some sort of street food and not in a global chain. In poor regions, the global fast food chains are too expensive for most people, and they don't have a lot of presence - at least that's what I saw in Eastern Europe after the fall of Communism.

[loutfard]

McDonald's and KFC's (two companies I checked) net profit margins are around 30%! I'd suspect it's way worse, given how everyone is saying that restaurant business is very tough.

Please allow me a very off-topic side track comment. It's often said McDonalds is in the real estate rather than the restaurant business.

P.S. I love the on-topic part of this discussion!

[7Wannabe5]

@loutfard:
The Guatemalan government only collects/spends around $650 per capita while the U.S. government collects/spends around $20,000 per capita, so even if PPP ratio was 10:1, Guatemalan government spending would be significantly less per capita. IOW, the difference is more reflective of the more impoverished tax base.

Anyways, if you live in first world country, and you feel morally accountable for your share of infrastructure/military/social spending, you will already have exceeded your "fair share" of global emissions before you spend a penny of your own money on personal consumption. That's why I said it is an entirely different question. That's also why I kind of think that ERE folk ought to devote some of their free time to community service if/when they are no longer paying income tax. I currently live in a part of the U.S. where the infrastructure is in terrible shape due to economic collapse, so kind of a preview of what may be coming.

[chenda]

That's also why I kind of think that ERE folk ought to devote some of their free time to community service if/when they are no longer paying income tax.

I agree. It would be interesting to try and come up with a rough sort of formula to calculate the ''offset'' in terms of community service hours.

[7Wannabe5]

@chenda:

Of course, evangelizing ERE could also be seen as a sort of global community service activity that might be more efficient than tutoring disadvantaged kids or cleaning up garbage from local watershed. Dunno. There's also a good deal of interdependency, because, for instance, the kids I am tutoring do not and may never understand/trust the math underlying the concept of financial independence. A polluted local watershed may damage fetal brain development, etc. etc. etc.

[loutfard]

@loutfard:
The Guatemalan government only collects/spends around $650 per capita while the U.S. government collects/spends around $20,000 per capita, so even if PPP ratio was 10:1, Guatemalan government spending would be significantly less per capita. IOW, the difference is more reflective of the more impoverished tax base.

I had never seen things from this interesting perspective. Living in a country with extremely high government involvement in the economy, this definitely rings a bell. Thank you for your comment.

I looked it up. Depending on the source, 54% to 61% of GDP is government spending, depending on how the IMF looks at it. Only Greece and France show higher percentages.

[chenda]

@7wannabe5:

Yes indeed. At the risk of stating the obvious low consumption is the easiest and most efficient way of resolving conundrums like whether imported mange tout has a lower carbon footprint than locally produced watercress. Community service is probably best served by doing what your good at e.g. boxing coach who had a tough upbringing is probably good working with young offenders. Fly fishing enthusiast is probably motivated at cleaning up local rivers etc. Teaching remedial numeracy definitely sounds worthwhile.