Why We Waste

What are the economic principles that enable the creation of so much waste

It's difficult to grasp just how much waste our country produces every year; which in 2018 was 292.4 million tons (up from 268.7 million in 2017). That’s from consumers in the United States alone; it doesn’t include hazardous waste, construction & demo from the US or anything from the 7 billion people that live in other countries). 292.4 million tons is 585 billion pounds. EPA

For a little context...

  • The average car weighs about 3000 pounds

  • A passenger airplane weighs around 150,000 pounds

  • A fully grown blue whale weighs 300,000 pounds

  • The average size single family house weighs around 500,000 pounds

  • The Empire State Building weighs 365,000 tons ESB fact sheet

That means we throw away the equivalent of 1.2 million houses, or more than 800 Empire State Buildings every year! Picture yourself standing at the foot of the massive Empire State Building, then try to envision 800 more of those on top of each other. That's what 262 million tons looks like, that's how much the US consumers alone waste every year.

How did we get here? It starts with our economic system.

Do you find it surprising that such a wide variety of complex products that were designed, built & assembled with labor and material from multiple countries are readily available to us at prices that fall within most budgets? If you’re not, you should be. The ease at which we can get the things we need to live a modern, comfortable lifestyle is a testament to what we’re capable of achieving as a species. Our access to these products and the technology behind them, some of which was unfathomable just decades ago, is the result of a tightly woven economic system.

Take a cell phone for example, a cornerstone of modern life. Despite your displeasure of paying as much as a $1000 for something that is so common, think of what went into getting that phone into your hands. The technology, the development, the design, the product testing, the market analysis and more. How many people command professional salaries in developed countries just to develop a prototype? Then consider the manufacturing costs: the production system that needs to be developed to assemble the various components of a cell phone, the sourcing of these components from lower level manufactures, the cost of the raw materials used to build the components, the capital cost of the machines used to fabricate the products and the human capital needed to operate those machines. Then of course are the logistical considerations, a cell phone doesn’t magically end up at your local Best Buy. It’s likely shipped in an enormous sea faring vessel that crosses the planet, then transported from the docks to a warehouse where it’s packaged and labeled, before it’s ultimately distributed to a local retailer or drop shipping facility. And of course, there’s the expense of actually selling the product to the consumer. Think of the costs associated with the construction of a Walmart or a Home Depot or a shopping mall, and the salaries of the people that work there, the maintenance, the heating/AC, electricity, water, taxes and everything else. Or the cost of creating and maintaining a website like Amazon and shipping individual products across the planet. There is an enormous amount of hidden costs that lie behind the sticker price we see when browsing the aisles or pages, and the fact that we are able to acquire the products we want at prices we can afford, is something that should not be taken for granted.

There are several principles of economics that make this possible, but one in particular is fundamental to affordability – volume. A manufacturer cannot design a product and devise a production system but then manufacture the product only when it’s ordered by a customer. To create the economies of scale required to be competitive in a marketplace largely dominated by price, companies need to manufacture their products in large batches. This reduces overall production costs, which in turn reduces the price at which individual units can be sold; making products affordable to their target markets. For example, consider a line of action figures after the next iteration of Toy Story is released. Whether or not there is demand for 4 million Buzz Lightyear Action Figures, 4 million of them are made so that the price of the individual units are low enough for Toy Story fans to buy them. If successful, the costs of production will be covered in the initial surge of demand for the new product; and whatever is left from the production batch can be sold at reduced prices because at this point, its just icing on the cake. After the product has made its way to the bargain bin, version 2.0 is developed, and the cycle starts over. For example the iPhone; you can buy a brand new iPhone 8 for around $500, while the iPhone 11 (the newest version relative to this publication of this article) will set you back almost $1100.

This is a relatively simple take on a very complex system, but the general principle holds true for everything from automobiles to clothing to appliances to furniture and everything in between. Whether goods are bought on a regular basis, like deodorant or dish soap; or they're purchased less frequently, like TV's and shoes - the vast majority of them are manufactured at the volume necessary to create the economies of scale required to make them affordable.

This why we have places like Costco where you can shop with a forklift instead of a shopping cart; and stores like Walmart where you can do your grocery shopping, get tires installed on your car and buy a new TV at the same time; and supermarkets that advertise croutons as 10 for $10 instead of $1 each. Companies need us to consume, and then consume some more and then continue to consume until we can’t consume anything else because they have to create the volume necessary to keep their prices competitive. These economies of scale were established as ways for companies to be more profitable, but they have developed into something more than that. As consumers we need these companies to provide us with the commodities we use in daily life at a reasonable cost. Our infrastructure, our education, our culture, our lifestyles and everything else we have come to recognize as normal have been cultivated around the innovations that economies of scale allow us to have. While we may not need the newest version of Pixar’s latest action figure, we do need things like baby formula, textbooks, vehicles, food and other parts of our daily existence to be available to us at prices we can afford. We have reached a point where the economic systems that provide us with essential components of a comfortable existence are reliant upon our ability to consume the products they create. Consumption based economics.

If we lived in a world where resources were unlimited and trash could be evaporated with the snap of a finger, there would be no downside to this system; but we don’t live in this fairy tale. We are beholden to our economic system, but we cannot let it destroy our planet and consume all of our resources. We can't get rid of it, so we need to change it; more specifically we need to change how we cycle our resources through it. While there are several modern day tycoons of retail that have mastered this system and gained more from it than anyone else that want to squander their fortunes building spaceships instead of doing something about the problems they helped to create, I believe we need to focus our efforts on the more practical goal of fixing the system (and planet) we already have.