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Wasteful Lifestyles of the Rich and Famous January 6, 2007

Posted by federalist in Energy, Human Markets.

Many wealthy pundits and celebrities chastise Joe Sixpack for driving an uncessarily big automobile, or consuming insufficiently recycled/renewable products.

I suspect that some of these same scolds are among the elites that would spend $5000/hour to hold a party on a private “plane to nowhere”.  Or to send out 75,000 Christmas cards and pay for them to be mailed back for recycling.  These expenditures aren’t just lavish: they represent significant consumption of real commodities — e.g., fossil fuels, productive time of many paid employees — that have a real opportunity cost.

All spending represents some combination of resource-consumption and luxury-rent (which is the premium you pay just to keep something scarce and exclusive).  For example, with low-margin goods like lumber or gasoline the price you pay includes the labor and raw materials costs of finding, pumping, harvesting, refining, and transporting the finished product to a retailer, and then the retailer’s costs.  Luxury spending can be broken down into demand-based rents (e.g., there is a fixed supply of something, like original fine art or vintage wine, and therefore the luxury premium is based entirely on competing demand for a limited supply) and brand-based rents (e.g., a clothing designer produces handbags for $100 but sells them for $1000, and people pay that difference as a signal that they can, or something…).

Therefore, behind all non-luxury consumption is a share of our resources — people and energy.  At present the energy is largely backed by fossil fuels, so if you don’t favor consuming those then you shouldn’t feel good engaging in non-luxury consumption (again, meaning the purchase of anything except luxury rents).  People are also a limited resource, and though I’m not sure what the opportunity cost of service consumption is, I would note that the people you’ve tied up mowing your lawn or tending your yacht can’t spend their time finding a cure for cancer.



1. federalist - July 22, 2007

Another great example of wasteful luxury consumption is in bottled water: Many “green” Americans are willing to pay to send a plastic bottle to Fiji, have it filled with groundwater, and then shipped back to the United States even though there is no discernible difference from local bottled water.

[M]ore than half the people in Fiji do not have safe, reliable drinking water. Which means it is easier for the typical American in Beverly Hills or Baltimore to get a drink of safe, pure, refreshing Fiji water than it is for most people in Fiji.

That is from Charles Fishman’s meandering article on bottled water in the current Fast Company.

The label on a bottle of Fiji Water says “from the islands of Fiji.” Journey to the source of that water, and you realize just how extraordinary that promise is. From New York, for instance, it is an 18-hour plane ride west and south (via Los Angeles) almost to Australia, and then a four-hour drive along Fiji’s two-lane King’s Highway.

Every bottle of Fiji Water goes on its own version of this trip, in reverse, although by truck and ship. In fact, since the plastic for the bottles is shipped to Fiji first, the bottles’ journey is even longer. Half the wholesale cost of Fiji Water is transportation–which is to say, it costs as much to ship Fiji Water across the oceans and truck it to warehouses in the United States than it does to extract the water and bottle it.

That is not the only environmental cost embedded in each bottle of Fiji Water. The Fiji Water plant is a state-of-the-art facility that runs 24 hours a day. That means it requires an uninterrupted supply of electricity–something the local utility structure cannot support. So the factory supplies its own electricity, with three big generators running on diesel fuel. The water may come from “one of the last pristine ecosystems on earth,” as some of the labels say, but out back of the bottling plant is a less pristine ecosystem veiled with a diesel haze.

Each water bottler has its own version of this oxymoron: that something as pure and clean as water leaves a contrail.

2. federalist - August 9, 2007

A great post showing how counterintuitive energy tradeoffs can be is David Foster’s post “Tangerines per Gallon“.

3. Beverly Hills Real Estate Agents - December 5, 2009

thanks were a beverly hills real estate blog that caters to blog readers in cheviot hills and <a href="http://www.urlspider.com/

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