You’re the man Jacob (not to be confused with The Man)!

I like your concept of modern day tools being financial instruments and leaving the actual tools in the hands of experts. This allows us to maintain and even increase the level of quality of products and services while also allowing individuals the opportunity to live a life of meaning by engaging whole-heartedly in their craft.

Your example is very encouraging, Jacob. Much of what I’ve read on your site resonates well with me. I’m looking to finish my bachelor’s in June so I too will begin following something like your discipline. Many thanks for writing and leading by example.

Another briliant piece Jacob – count me in!
The price tag on the shoes might be $29.95 (I am assuming you are referring to a new pair, as opposed to used) but the question that begs to be asked, in my book, on any new product is: What is the true cost? I doubt it is the cost the consumer pays at the cash register. I choose to pay more $ for some items, such as organic, local produce – when I factor in the costs of industrialized food product, morally, I have to pay the true cost to the farmer (a profession which warrants tremendous respect, in my opinion).
You address that point later in your post re used Hummer vs. new Prius – it always amazes me (to put it mildly) that a Prius, in some people’s minds, is an ecologically healthy choice. Prius = Emperor Without Clothes.

Humans are not intended to be idle creatures, we consume! We consume food, we consume water, we consumer natural resources, we consume media, etc. I think this phenomena is deeper than a need to buy things, instead is it a natural drive to DO! The switch to a society where we consume less (of everything) seems great in practice but our leisure would still be based around consumption. It is a natural compulsion that can not be easily explained away.

My next quibble (actually it is a giant gaping hole in your theory) is that you advocate investing as a way to escape the rat race so to speak. But by definition, the work and consumption of others is what makes these passive investments generate returns. Someone must be making and selling widgets for you to profit by investing. There would be no GDP or economy or dividends or interest paid if there are not people making goods and consuming them. All economic progress is made based on labor of the worker bees (or exploitation of natural resources). Only so many people (the ones at the top) can survive on passive income; someone has to be working somewhere.

You talk about how using a machine work that once took days can now be done in hours (or minutes). What you failed to recognize is that this machine will need engineers to design it, factories to make it, people to maintain it, energy to run it, raw materials to feed to it, and CONSUMERS to buy its outputs! Machines (no matter how complex or simple) all adhere to this framework. The machine would never have been built if there were not enough demand for its outputs.

Social Security is a great example of what happens when people enmass decrease the amount of their lifespan they spend PRODUCING goods and services. As we now can spend 40% of our lives idle in retirement (four times the amount just 100 years ago), it is gradually bankrupting our economy. If everyone were to reduce consumption and drastically increase leisure it would put a massive burden on the workers to produce enough for all of the sloths. A work year is generally 2080 hours in the US and a career is roughly 40 years (age 25-65) + 10 years of employable work in conjunction with schooling (age 15-25). If this was reduced to a mere 15 years of work for all, it would directly reduce the productive work done by about 2/3.

What would be lost? I think it is much more than your article suggests. I think our standard of living would collapse, scientific discovery would flounder, and all around our world would be a worse place.

Sure YOU can lower your footprint but not everyone. There is a chicken and the egg scenario between consumption and production. Both are needed for any economy beyond subsistence existence. Sure you can value quality over quantity, reusable over disposable, and relationships over things. That is great but the rest of the mumbo-jumbo about saving the world by idling factories and having a 5 year career is utter silliness.

@ adfecto – It’s always hard to generalize human values. Some people prefer to work. Others prefer not to. Leaving the US it is not hard to find people who value idling or entertain themselves by other methods than eating, driving, or buying things. If energy use is used as a proxy one simply need to go to Europe to find people at the same technological level but with half the resource consumption.

Investing is simply a method that works for me. Another method is job hopping or temp work where a person spends a few months working and then slacks or volunteers for the rest of the year. Obviously we can’t all invest in each other and proceed not to work just as we can’t all get rich by cutting each others hair. Only a few can do any one specialized thing. I realize that.

Much of our technology and machinery has been built for mass production. Its purposes is to churn out as many products as fast as possible. It would be possible to design a knitting machine (to stay with the topic) that only required 10 minutes of human interaction but ran to slow that it took a day or more to complete the job (a water powered loom?). If knitting is too arcane, consider the solar oven. It may take 3 hours to cook a meal but it requires little interaction and it is not necessary to build a propane stove along with LNG tankers and 4D seismic methods that brings forth the gas to run it. What’s the rush? Indeed some machines would not be made. For instance, if everybody lived next to their jobs and supermarkets like they used to, many cars would simply not be made. One pertinent question is why, despite all our technological advances, have no one come up with a car that is easier to maintain and require fewer and more standardized parts than the previous generation. Okay, there’s the Toyota Corolla, but it’s more the exception than the rule.

The problem with SS is that it’s a defined benefit program. Make it a defined contribution program and it would solve the demographic problem.

What would be lost? Many things would be lost. For one it would no longer be possible to choose between 2000 slightly different window air conditioners. Standard of living as measured by expenses or GDP would certainly collapse. However, comparing our household to a household that runs at 5 or even 10 times our expense level, I frankly do not see much difference other than “inventory turnover”. It’s our “10 year old top of the line stuff” against their “latest and greatest”. Another difference is size, but how many bathrooms can two people really fully utilize use before the law of diminishing returns set in? 1? 2? 3? 4? Does food taste better if it was made on a granite counter top rather than an aluminum countertop?

Would science be lost? That really depends on whether people are ready to devote resources to it. Currently research is a small part of practically any budget, so even halving the size of operations would not make it unaffordable. It is like the question of alternative energy research? Such research would be fairly cheap. The reason it is not being done very much is because people fundamentally prefer to use cheap oil and gas (even though they say they don’t).

Production drives either the creation of consumables or productive assets. I don’t believe consumption drives anything other than creating demand that will motivate some people to step up and deliver (or unleash pent up inventory from misaligned investments as would be the case for the upcoming stimulus package). Stepping up is not a given though, so it’s not a chicken and egg equilibrium.

The question of subsistence existence/footprint is a funny one. I live at the poverty level, something which I find greatly curious. People think poverty level and think of people that can’t afford to eat and go hungry and people that run their electric stoves to heat their apartment because the gas was turned off, etc. However, I also know that many poor people (not all but many) are greatly ineffective when it comes to handling their money. Enter their homes and you see new and huge (albeit poor quality) TV with a big stack of DVDs that mostly cost $19.95 and full cable subscription. The kitchen holds a stock of brand name cereal that was bought at 7-11, various brand name snacks, the weirdest plastic gadgets and various juice makers from TV Shop. Their car may barely run but it has a fancy stereo that goes with the fancy hub caps. This suggest to me that poverty in many cases is not measured by expense level but by budgeting and a failure in priorities.

@ dna – plugs are being pulled on individual companies all the time. I do not think it will be a big problem unless for instance people currently save up expecting to continue a high consumption lifestyle and producers suddenly switch to a low consumption lifestyle. What ultimately counts in the equity markets is not the size of the pie but the size of your slice (above a certain minimum level).

@ escapee

Great comment!

Creating takes resources too. To play music you need to first cut down trees to make a musical instrument. To write poetry or fiction you need paper and pens. To paint you need canvas, paint, or charcoal. To sculpt you need marble or granite slabs. If you want to do these activities after dark you need light from electricity or candles.

If you wish to share your creation with others you need theaters with seats and a stage or museums or libraries. Cars, planes, and boats allow us to share our culture with those beyond walking distance. Printing presses, radio, television, and DVD’s allow us to find a wide audience for our creations.

I’m sure you can follow where all of this is going. Creation is just another kind of consumption! It may be less rough around the edges but it is a consumption wrapped up in a pretty bow.

@ Jacob

I’ve been outside the US and yes other countries have a slower pace. Sure their culture is different but they still consume. You will never find any culture in the world that has a completely neutral impact on the environment. People just aren’t low impact, it isn’t a generalization of human values to say we consume; it is a fact!

In order to live each of us must put forth the effort to provide food, drink, and shelter. Why then did we all go beyond that subsistence to create the complex economic and cultural behemoth we are today?

How far back down the ladder of progress do you want to fall? Back to the Amish, the Sub-Saharan Africans, the rural Indians, or the Eastern Europeans, the Amazonian tribes? No society has gotten it right yet have they?

Now to mass production. The thread that ties together specialization, commerce, trade, and mass production can not really be undone. Quantity and economies of scale may not always yield the perfect result. Even you must admit the mass produced goods today are of far better quality in nearly every way than the mass produced goods from 25 years ago. Mass production is not really about quantity, it is about efficiency! Bigger, better, faster, stronger, is in fact a pleasant side effect. If we were not hardwired to strive for incremental improvements in ourselves, our tools, and our environments why is it that it seems to be so universal?

I and nearly any economist worth anything would strongly disagree that demand (aka consumption) does not drive anything! Give a large enough demand someone always steps in to offer a product. Tyranny of the market is a real problem (buyers in the minority are left unserved by the marketplace) but it is improving by using technologies such as the internet and rapid prototype manufacturing.

It is also true that marketing is used to drive demand for products and their consumption. However, I dare you to make a product that consumers do not want and try to sell it. Even with a massive marketing budget the venture would ultimately fail. To to sum it up, demand and supply go to equilibrium, neither exists in an economy without the other.

You talk about the poverty line. It is a rather arbitrary number derived from the U.S. Department of Agriculture in 1963. It was set to be three times the average food budget for a family of four based on a study in 1955 that determined that food was roughly 1/3 of a family’s budget (or 3 x $1033 = $3100). This value was then indexed to inflation and otherwise largely unchanged over the years.

Now with that background, consumption patterns have changed. Food is no longer 1/3 of consumption but more like 1/6 due to technological innovation (like pesticides, fertilizers, petroleum fueled machinery, etc). For you to be truly living in poverty, try living on 3x your bare essential food budget. That would be a taste of what it would be like to go back only 45 years in our economic history.

The family of four making $20,444 can not meet their basic needs because of poor money skills; on that you are right. Same goes for a single making $10,488 (federal poverty line). This is only case because of the degree of specialization, mass production, and economies of scale that have been achieved from 1963 to the present. Without all of these things that you seem so opposed to, your quality of life would be at least 50% below what it is at present. You would have an outhouse instead of running water. You would have a fireplace instead of a gas furnace. You would have a donkey instead of a bicycle. I think you get my drift.

Very quickly about Social Security. It can never be a defined contribution plan because its purpose is to serve as an insurance plan in the case of market collapse. Insurance must be defined benefit.

Again I’ll say Jacob that it is great for you to live such a low impact life, but you need to realize that your grand philosophy is flawed. You have an interesting voice and ideas that inspire me to debate, but you are bad at economics and flawed in your reasoning. If everyone, or even a sizable number of people, followed your life philosophy it would drag down the standard of living for all of us. I hope that does not happen. Ever.

At least I noticed that time as a resource is really treated differently in different culture. One of the reason we get pretty busy and always want to achieve/own more is because we view time as a linear, finite resource. Because it’s not renewable and hence it equates to money, we try really hard to live more. In this all the marginally improvements, no matter how small they are, are worth the efforts, since we get only ONE chance.

In some ancient eastern culture, time is a cyclical and renewable resource. The world simply rolls back in a much slower pace than human beings could notice. If you get so many life to live, there doesn’t seem to be a reason to hurry down the path. If I know 9 months later I’ll have another winter, it probably doesn’t make sense to sacrifice everything in order to enjoy my last ski trip, ever.

@ adfecto – I don’t know how life as a hunter gatherer is. I do hope that I never have to convert. In all likelihood I never will. But foragers are the only sustainable societies that the world has ever seen. Perhaps people will figure out something else.

Metaphysically time is linear. I did not mean that things move in cycles in some kind of hocus pocus sense. What I meant is that few societies are sustainable. You can liken it the life cycle of a human being. The US is young, less than 200 years old. It is at its peak health (so far) and it has never been ridden by war. Thus it has much the same attitude as a 19 year old teenager e.g. knowing everything, bent on changing the world, ideas of immortality. Endless growth (hey, a 19 year old has been getting taller and stronger all his life so why should that change?) helped by immigration and a low population density. We’ve all been there. Consider the previous reigning power on the planet. Great Britain. Their empire lasted a little more than a hundred years. If you want to know how the US will look in 50 years, look at GB. The dominant empire before GB was France.
Going back further, the roman empire had indoor plumbing and their Rome reached a population that was not matched until the mid 18th century. The Greeks were one iota from inventing the steam engine 2000 years ago. What happened? Progress stopped and what we consider civilization went backwards for 1000 years.
Maybe that’s a two steps forward and one back, but it’s a huge one.
[One can argue that it’s a step side wards: While people exchanged democracy for monarchies and indoor plumbing for cob houses, there was a surge in smaller businesses and small scale technology. Not aqueducts but wheelbarrows and water mills.

Knowing that you’re an engineer gives me an idea of where you’re coming from. I’ll venture that you’re not a power plant, nuclear, oil, environmental engineer or in other words directly responsible for providing a resource base. Just guessing here. I don’t want to make it personal so let me instead talk about computer scientists. CSs deeply believe that human ingenuity is the sole limiting resource. This is because that is their strongest limit. Their other limits are simply not seen and thus ignored and forgotten. The computer lab is always on. They never have to go outside and pedal for 60 minutes to power a computer for 30 minutes. Software developers never worry were the electricity comes from, how tantalum is mined, or the level of industrial expertise required to cut silicon wafers. This is similar to how economist think that we will never run out of oil. This is true economically speaking, but physically we would be paying $5000 or a month’s labor for a gallon – similar to gold. In the same vein politicians think they can fix problems by making laws. And so on. Specialists are deeply formed by their culture. The world is a nail to their hammer.

Jacob,

I sooooooooooo love your philosophy. I wish you were gay so I could ask you out 🙂

@Ryan T – The hybrid/electric concept is a techno-fix to something that could be done much cheaper. If you want a 100MPG+ car, use a chain drive, reduce speeds to 40mph, reduce weight be a factor 4 by taking some of all the metal out and replacing it with lightweight materials. Of course these cars wouldn’t survive on today’s streets which are populated with powerful cars, so that’s why the tech-fix seems to be the only option. It won’t work in the long run. A much better solution, which is also the superior financial solution, is simply to not live more than 5 miles away from where one works and buys one’s food.

@Adfecto: I know this is an old post and your comments might be just as old, but I have to react and reply to them anyway. You state many things but they all boil down to the dogma of Progress, namely 1) the we Humans are indeed Progressing (rather than merely changing); that 2) that Progress is Good, indeed so good that 3) it sucked, relatively speaking, to live previously in history; and, finally, 4) Progress must continue!

All of this is almost completely a set of beliefs that many, mostly Americans, adhere to blindly and somewhat vehemently. That doesn’t make them true however!

For instance, you write: “Life as a hunter / gatherer is hard.”

This is plain wrong. Hunter/gatherers worked about 3-4 hours per day and had plenty of leisure time. We trapped ourselves into living through agriculture. This new lifestyle was far inferior to that of the hunter/gatherer but was necessary in order to increase population levels beyond about 20 people/km^2. This increase is not inevitable – you can happily have a steady state of few people – but once it starts, then it’s hard to stop, as we are all too aware of today. We hope that our populations and impact will flatten out and even decrease but that is wishing full thinking and we don’t know whether that will happen.
An example of how undesirable the new living is compared to hunter/gatherer living, the hunter-gatherers living in Denmark had to be coerced by carrot and by stick for 500 years(!) by their agricultural neighbours to the south, before caving in and adopting the new ways. There are still people around the world who have the opportunity to live as hunter-gatherers and who actively choose to do so. Not many, because we are too many, but a lucky few. Hmm… if they also have modern perks like health insurance, then they would have it made! Unless they want that new 50″ TV.

“Frankly, it flat out sucks. I’m not about to live like that, are you?”

Well, we can’t because we’ve trapped ourselves in a corner. Luckily, there are some nice outcomes from our new lifestyle, like longer life and better health security (but not necessarily better health and probably not increased happiness), but we are all assuming or hoping that we can eventually create enough traps that they will transcend our self-created problems and we will live in a happy, sustainable future. Described like this, it sounds like madness; replace “trap” by “technology” and it’s just what most of us believe. I too hope that technology will save us; unfortunately, new solutions often come with new problems, and increased efficiency often just leads to more waste/consumtion. If you can make cheap 50″ TVs easily, then people won’t make do with 40″ ones.

“We built this system because it is better. This is such a “no duh” type issue that I’m having trouble coming up with a good analogy. Sorry but it just is.”

Hehe; this sounds like the dogma that’s left when arguments have run out. This system was not built to be better at all, and it is isn’t (check US health, wealth, and living standard stats since 1950s)! Everyone has different motives, and neither GE, say, nor the US government doesn’t care about making your life better; they have their own interests at heart and often actively persue them at your expense. Turning citizens into consumers (or war-loving “patroits”, say) and creating a suitable philosophy to match can easily be compared to the Soviet methods of oppression and matching dogma. Our system is also governed by random events and, more particularly, by what happens when things are motion. We hardly have any control over history and mostly just have to live with it, perhaps by calling it all Progress or “World’s Greatest Country” or other morale-raising things. History can sometimes be changed with great effort, and the UN is a good example that we are getting more civilised on the big scale (though getting less civilised on smaller scales), but in general, you can only really hope to improve your own life, and even then only marginally. Even ERE is just a slight variant of our common way of living, though it seems like a big step away from what we are used to; this is just due to our narrow way of looking at things.

Nice post and very well put together..all i can say is PLEASE keep up the great work.. and to everyone else who is reducing mindless consumption and engaging with Life.. Keep it up..
its sad that we have human beings like adfecto(above) ranting on and on.. but we must have compassion for them.. they are threatened gretly by what this site talks about.. and have a need to be RIGHT.. the system they try to defend is frankly insane..but for them to admit this would lead to fear and panic.
this is a finite planet.. human beings are consuming this finite planet at an increasing rate.
the system is collapsing already.

2 quick points: Permaculture is the system we probably need to evolve to. I haven’t seen any others that address everything but Jacob you better start planting trees right away.

Second point–Your bonds and stock dividends come from companies mostly, correct? What if these companies are destroying the Amazon, polluting massively in China or obliterating species around the globe to pay you those good steady dividends so you can have a nice small footprint??? See the problem? Love your blog and the replies are great too.

Fantastic post, Jacob!

@Jacob. Toward the end of the post you say: “Since people with no longer be running around trying to fill their growing houses with cheap trinkets, people would have much more time for friends and family or tinkering with projects or doing research into how the world could be turned into an even better place.”

Drawing a parallel between economic/industrial circumstances on one hand and internal and social values and practices on the other, is at best hopeful speculation.

If people were “no longer…running around trying to fill their growing houses with cheap trinkets” they would indeed have more time and energy on their hands, but how that time and energy would be used is far from predictable. And knowledge of either history or human nature suggests that it’s just as likely for people to turn their (now unengaged) ambitions towards controlling their fellow man…or even conquering or destroying him. Indeed, on a more subtle scale, boredom and cabin fever are destructive forces, and result when people have too much time on their hands. More time and opportunity for more interaction do not necessarily result in positive outcomes.

We all know that for the great majority of good practices we say we want more of–more physical exercise, more quality reading, more learning of exciting skills, more family time, more helping others and “saving the world”–time isn’t the problem; values and priorities are the problem. “If you want something done, give it to a busy person to do.” And those of us who don’t manage our time and energies well now, are not to be relied upon to manage it much better in a hypothetical new economy/consumer arrangement. There has never been (to my knowledge) a large society with a population comprising primarily altruistic, gratification-delaying, innovation-oriented people.

So why not be a bit more modest in expectations and projections? Your ideas are excellent for someone with the kind of long-range thinking and self-control you possess. These ideas may not be generalizable to an entire economy (for economic reasons, as others have suggested), nor may they be generlizable to an entire population for psychological (temperament and character) reasons.

But that still leaves many for whom your teachings and example are very valuable.

I tend to think that ERE, as proposed by Jacob,if it caught on, would lead not to a downsizing of the economy, but rather to a re-allocation of ressources towards the production of higher quality or more permanent, or altogether different goods, and that would be a good thing.

One should not forget that in this context, efficiency means producing what the consumer wants using the least ressources possible, be they money, ore, time etc… After the current binge of consumption (fueled, might I say by governmental policies equating possession of a quantity of goods to wealth), I see production reverting to a more sustainable rate, in part owing to the ever increasing price of ressources (if we can let the market operate). I must point out, though, that I am no economist, and am just starting reading up in Austrian school theory.

What I am, though, is an historian. And I think the “Golden days of yore” theory has to stop. Hunter Gatherer societies must have been a lot of fun, for the 25 years of so that they let you survive. Or right up until the point where your 12th child died as an infant. The Middle Ages were not much better. Sure, people must have had fun too, with all the elves and dwarves, and dragons around (pun intended), and sure, the landscape must have looked a lot better, but you might have to work for two whole weeks to be able to wear wooden shoes in winter instead of rags, most of your products went to a bearded guy in a castle who called himself lord, juste because him and other bearded guys had more weapons than you did and offered to “protect” you.

I see “Progress”, without it’s metaphysical meaning (that of going on towards the perfection of the human race or something), as being just another word for saying that survival, and attaining the goal of any living organism, requires less and less resources. The natural will for any living organism is to transmit genes, that is to survive a harsh world, and to procreate. The current society is the one that lets us do precisely this with the less expenditure, letting us dedicate resources to other enterprises, be they material, artistic, sportive etc.

Not that I do not support your actions, Jacob, I try to implement as many as possible in my life, but I reckon that the current production system is what makes it possible for me to do so, and that progress is what has let me and my ancestors survive so that I could get there.

FYI:
Can the Earth support an ever-growing economy? Can we shift to ‘green growth’ for a healthier environment and economy? What would it look like?

Four of the world’s top economic experts debate one of the critical questions of our time. CBC Radio’s Paul Kennedy, host of Ideas, moderated a live debate at the University of Ottawa on January 20th, 2011. CBC Radio One will broadcast the episode on February 2, 2011 at 9:00 pm.

http://www.sustainableprosperity.ca/debate

I think I am on the auto-delete list, but I don’t really care just now. What a relief to think that any crappy stuff I write now will soon be gone.

My mind is drawn to explore what the world would look like IF everyone or even 5% of Americans voluntarily contracted their consunption. (And I want to put in that I too am an environmentally minded person and that I believe and do alot of what you say.)

Here in 2012 I think we have been seeing the consequences of the contraction of comsumption… lots of unemployment…the too-big-to-fail guys being bailed out. The consequences fail on the people whose only purpose in the system is to work. There are zero consequences for those who run the system.

Could it be that the problem with the system isn’t fundementally that it overconsumes? That while that is a problem, it is also a symptom rather than a cause. Could it be that on a more fundemental level the problem is that people (who are not the 1%ers) have only one purpose in capitalism as we know it today — to work — AND that work is NOT for the benefit of the 99%, but for the benefit of the 1%?

To really change the system seems to require changing the story of how people are valued. If they aren’t any longer going to be valued for what they can be paid for their work, what is that new story by which they should be valued?

Am I just spitting out meaningless words here?

[…] this topic (btw ever heard of the broken window fallacy?). See other interesting articles such as ecological capitalism and consumer capitalism (btw, ever taken your ecological footprint […]

I don’t understand why people are concerned about market contractions and shake-ups if we were all to focus on sustaining ourselves instead of consuming / economic growth and expansion.

The consequences of shifting our economy towards surviving not another 10 years, but another 10,000 years, would be much less dire than driving our planet past the ecological point-of-no-return.

It’s either an uncomfortable shift or complete eco-cide and civilization collapse.

It seems most people prefer the latter.

I like the idea of buying more used stuff. Perhaps if people considered used goods more often, companies would be enticed to create new products that present real improvements.

I must admit to have bought a new car (to replace a 12 years old one, which is a long time in this canadian climate), because of low interest rates and peace of mind (ive never been able to find mechanics I could trust; modern cars take less fuel, I can carry music around on usb, etc.). The lowinterest rates were a big motivation because by financing the car and keeping its cost invested, I figured that I was statiscally likely to spend less money than by having an older cars bought at full cost (rates of interest much higehr) and requiring to pay for repairs.

Despite a brand new (modest) car (unshared) and a nice apartment shared with my partner, travelling abroad every year, brand new financed appliances, my annual budget is still under $20000. Amazes me how people spend a lot more than that.

I’m no way an early retirement extremist, but I’ll achieve FI eventually. My biggest mistake was doing a PhD in a STEM field with low employment rates.