Hi All,
First post the Forum. I was introduced to Mustachianism for approximately 6 months ago, and I since then I have changed quite a few things in my life for the better while boosting up my savings rate. In addition to the freedom that FI will eventually give, an equally important aspect of the journey, for me, is the environmental side of it (reduced emission and waste by consuming less).
Before I start writing about the topic that I have in mind today, I must say that most of the upcoming reasoning is based on Tim Jackson’s “
Prosperity without growth”, that I have read for approximately two years ago. I don’t have it at my hand right now so most of this is based on my memory, so sorry for the inevitable mistakes, but hopefully the main idea is right. If my memory serves me right, I think that that the book shares a lot of the same philosophies with Mustachianism.
Living a FI life relies on economic growth (living off of passive income) and the size of the economy in turn is almost directly proportional to the use of nature’s resources. In my mind, this leads to a problem; despite all other actions taken to save the planet, the demand for ever increasing economy will eventually lead to doom (because of the strong coupling between resources and economy). The reason that this has become a real concern for me just recently, is the latest IPCC climate report. Before that, even though I have acknowledged that there is a problem, I guess I have just been pushing the subject to the side out of sheer laziness and ignorance. I don’t follow politics very much, but based on what I see, I feel like we will lose the game against climate change if all decisions are left to the politics. Actions on a level of individual persons are required. So, here comes my question to the Mustachian Community. It is divided to four parts:
1)
I don’t want to ask that
will the economy perpetually keep on growing but
should it continue to do so? The question of will it keep growing has been discussed at least here:
•
https://forum.mrmoneymustache.com/ask-a-mustachian/being-frugal-while-trying-to-rely-on-market-returns-driven-by-consumption/msg2036365/#msg2036365•
https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/What kind of a world do You see in a scenario where the economy doesn’t grow? This obviously (?) would be best for the environment, but how would using money change? How would passive income work (I guess for example real estate investing would somehow work, but what would happen to your stock portfolio?)? As it was written in “
Prosperity without growth” (found it from this summary, but I think it was in the book as well
http://appli6.hec.fr/amo/Public/Files/Docs/170_en.pdf):
“
Growth is unsustainable but de-growth is unstable”
2)
Do You see a way that the de-coupling could be done in the future and the economy could be allowed to keep on growing? The way I see it is that the economy is coupled to nature’s resources via energy usage (and of course raw materials, but with enough clean energy, recycling becomes a very viable option for almost everything) and thus the only way to allow for the economy to grow without consuming an ever increasing amount of nature’s resources would be to have an abundant source of sustainable energy (road to Kardashev type I civilization ;) ). Scaling of wind/solar/water energy to replace fossil fuels seems like a daunting task (
http://4thgeneration.energy/how-much-energy-is-enough/) and since we are in a bit of a rush (IPCC report again..), I feel that nuclear is the way to go. Fission for now and fusion after it has been commercialized. I will blame the politics again, but because of the uncertainties and long time-scales of fusion research, governments are not willing to put in enough money to it despite the huge reward that commercially functional fusion would provide (based on some e-mails I’ve exchanged with people in this industry). And based on my brief research, the companies researching this subject are not willing to take the money of individual small investors. (As a side note, one of my post FI dreams is to be able help fusion research in some way, even though I don’t understand anything about nuclear physics (I’m currently working as a structural analysis engineer, so I could maybe work with the reactor structures)).
3)
In both scenarios (stagnant or growing economy), it is important to invest “greenly” (capital running away from “bad” companies would force them to change their habits to be more sustainable). The Mustachian way to go seems to be to invest in Vanguard passive index funds. The problem (in my mind) with that is that, for example VT has 6.3 % of its holdings in oil&gas (
https://advisors.vanguard.com/web/c1/fas-investmentproducts/VT/portfolio), which I am quite sure is not a green investment. What kind of a greener alternatives for that would You recommend that really would make a positive climate impact?
4)
What other actions do You think everyone should take to tackle this huge climate problem we have (in addition to frugality)? Related to financial world or in general.
Disclaimer:
I understand that a typical Mustachian is already probably using much less of nature’s resources than an average citizen and is also better equipped to adapt to any given situation, and I am not attempting to attack against that. I guess I am hoping that You would provide me with a peace of mind by poking holes to my (and Tim Jackson's) reasoning and saying that everything will be fine :)