All entries for Friday 21 January 2005

January 21, 2005

Cheap goods & Waste

Writing about Waster from Syncspeed

If consumers demand the absolute minimum price for an item, manufacturers will seek to cut corners to produce their budget model. This breaks down after a year, or 6 months, but hey, it's cheaper to throw it away and buy a new one than get the old one repaired.

Consumers arenít ignorant; they demand value for money as opposed to rock bottom prices which bring no guarantee of quality or reliability. Neither are consumers homogeneous as regards the products demanded. Taste spans a large range and there will always be demand for relatively more expensive models with bring additional functionality and Ďstatusí. Thatís why there exists a market for £600 DVD players when one can be purchased for £20 at Argos. Thatís why people buy a jacket that costs £300 when Matalan stock items not too dissimilar for a tenth of that price.

Even if you could set up a multi-multi-million pound scheme to recycle all of the materials, you've still lost the resources consumed in producing the energy to manufacture the product in the first place.

Prices fall in the first place because the resources required to produce a given item have fallen. A firm uses units of a resource to produce an item, it pays the price commanded by those units and consumers pay a price which in turn compensates the firm. In such a situation, there is little problem given that prices adjust to reflect the scarcity of the resources used in the manufacturing process.

Household waste in the UK is growing faster than the economy; our recycling rates Ė around 12% of domestic waste Ė are about the lowest in Europe. Britain's landfill sites are literally filling up (some counties have very nearly no space left) and, as waste needs to be dumped further and further afield, more and more diesel is used in transporting it there.

How to dispose of waste is indeed an important issue and its increased proliferation will surely result in innovative means of handling the problem. Itís something I havenít read much on, but as you say, price falls may not be sustainable as institutions force firms to bear some of the burden of disposal. If progress were to have been dismissed as wholly negative each time there was a potential threat to the environment, we wouldnít be at the stage we are now. Waste canít be ignored. Still itís important to acknowledge the forces (e.g. technology and entrepreneurship) that have brought us this stage and have solved problems in the past, and to have some level of trust in their ability (with regulation & changing attitudes) to help resolve such issues effectively in the future.

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