USEPA

It is commonly believed that markets enhance efficiency. Markets prioritize companies that make bigger profits and to keep your profits high, you have to keep your costs low. As wasted resources add to cost, but not to the value of the final product, a profit maximizing firm will minimize waste. Problems may occur when resources are not appropriately priced, but once these market distortions are priced in, firms will be properly incentivized again. Once properly incentivized, the market will reward the most efficient, waste minimizing firm.

As far as productive processes are concerned, this story may well hold up. Companies however have every incentive to maximize the waste produced by households. Every item that a household throws away has to be replaced and that is good for business. Thus, the smaller the life span of consumer products is, the bigger the potential sales volume. Companies have several techniques to enhance the production of household waste and boost their profits. Depending on their product, they can either limit the physical or technical life span or create hypes and fashions.

Physical life spans are typically actively limited in consumer products in which further innovation is incremental at best, such as light bulbs and washing machines. It is technically possible to make a light bulb that lasts a life-time. They aren’t produced, though. If they were, it would put all bulb manufacturers out of business. As every business is smart enough to understand this, they will not even go there. Similarly, washing machines lasting 25 years could easily be made. Yet, the ones on sale last no more than 15 at maximum. This almost doubles the sales of their producers. It also doubles household waste and the strain on the environment.

Food waste is also great news for business. Sometimes packaging will make it very hard to consume all of its contents. A more effective (and more frequently used) way to make people throw out perfectly good food, however, is manipulation of the expiration date. It is usually safe to consume eggs and canned foods well past their sell-by-date. Tea and coffee also do not stale as quickly as the packaging tells you. Yet, the sell-by date will entice many (and I am no exception) to throw such food away prematurely and replace it by ‘fresh’ new products.

The technical life span is limited when further innovation happens often and fast. The textbook example here is the mobile phone. When new innovations are possible, they are only incrementally integrated in the new phone. If a manufacturer can at some point enhance the phone’s processor speed, its camera and its memory, he is unlikely to implement these changes all at the same time. It is much more profitable to implement and market each change in turn. Thus, consumers buy a ‘new faster’ phone first. Next, a phone ‘with the speed you are used to but with a much better camera.’ A while later, the enhanced memory ‘allows you to store everything always.’ A consumer that wants to keep up with those innovations has now trashed two phones and bought three.

Fashion will also increase household waste and thus company sales. Personally, I do not have a gene for fashion (and people frequently tell me it shows). People that do, feel physically uncomfortable wearing something that is ‘soooo last season’ and they just ‘have to go shopping’ to get their ‘fix.’ The overtones of addiction in this last sentence are no coincidence. Fashion-sensitive people frequently describe themselves as shopaholics. Let’s face it: spreading addiction makes perfect business sense. An addict is a very loyal customer after all.

If spreading addiction is the goal, you will have to start at as young an age as is legally allowed. Toy producers know this. Classic toys, like wooden blocks and old-fashioned Lego, last a life-time and thus make poor business sense. Modern toys (and modern Lego is no exception) therefore usually perform some kind of trick, like repeating what you say to it. Or they showcase some fancy light and/or sound effect. These tricks and effects make the toy irresistible to kids so they will nag for it till their parents cave. After having seen the one trick their new toy is capable of thirty times, kids are bored with it and never look at the toy again. In a maximum of three months it will be relocated to a landfill. The next one-trick pony will be advertised and the cycle begins anew. Thus the pattern is trained in at an early age: happiness can be bought and if you get bored, it is time to go shopping for your next fix.

Firms using those techniques are not evil. They are not conspiring against our ability for true fulfillment or the environment. They are simply responding to incentives. Thomas Rau (in Tegenlicht and Room for Discussion) proposes a radical shift in thinking to change these incentives. Why, he wonders, do we try to solve our problems and run our businesses on the basis of buying and selling? What would happen if we focused on performing services for each other instead? This would radically transform the business model of most producers.

Imagine what would happen if instead of buying a washing machine, I rent the washing service. In that case, the washing-machine-manufacturer-turned-service-provider will have every incentive to keep his machine running at as small a unit cost as possible. That is, s/he will make a durable machine that takes little resources to produce and little energy and water to run. Similarly, fashion producers may revamp themselves into service providers that make you look sharp (sounds fancy? At least one company already does this). Toy producers could reinvent themselves as providers of fun and learning services instead of dealers in boredom and addiction.

The single most important obstacle is likely cultural: many people associate property with status. So, they will not want to hire their fashion. Instead they want to show people around in their walk-in closet. This problem may be real in fashion, but is unlikely to exist when it comes to washing or lighting services. In addition, not having to worry about the washing machine breaking down in the midst of financial troubles will be a huge advantage of renting services rather than owning a machine. Where cultural obstacles do persist, the government can always step in and simply forbid people to own e.g. toys. This sounds paternalistic, but it is quite likely that our kids will adjust quickly and feel more satisfied and less restless to boot. There is nothing wrong with a government taking measures to prevent addiction from spreading.