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George Stigler, I think, once quipped, "If you never missed a flight in your life, you've spent too much time in an airport." While there is much wisdom in this observation, I would recommend not taking it too seriously. We like to get to airports early so that we do not miss our flights. There is nothing irrational or unreasonable about being comfortably on time for your plane. We are always comparing the value of the time lost due to being in an airport with the added security of knowing a misstep in our travel plans won't cause us to miss a plane – which at times could have far more serious consequences to us than just wasting time in an airport.

I'd like you to ask your friends if they ever like to arrive early to sporting events, fireworks shows or for schedule planes. I am pretty sure many will say yes. In other words there is an "efficient" amount of "waste" that we all like to endure in our daily lives. Ambitious readers are encouraged to supply additional examples. 

But when we start talking about our solid waste stream — the physical materials that we discard after use — our thinking somehow gets all dazed and confused. Clearly producing zero waste would be a bad idea – for the simple reason that it is too costly to try to figure out how to do that right now. But there is a second and far more important reason why producing zero waste is a bad idea – and that while waste qua waste is not exactly desirable, it is very much a sign of a behavior that may very well have been valuable. (Note that we don't have to talk about packaging here). What do I mean?

Imagine we go back to a primitive world where economics as a concept does not exist – that of self-sufficiency. In this world, we must grow the food we need to eat and grow the fiber that turns into clothes, fuel and other important materials. While there is a romantic aspect to this, particularly getting your hands dirty, it is an extremely precarious way to live one's life. Any unseasonable weather, pest invasion, natural disaster, criminal activity or other misfortune will not only cause an inconvenience, but will very likely lead to your death. Why? Because everyone else is self-sufficient too and we are not widely trading with folks. Think about a fantastically good way to deal with this (in the old days we had all kinds of informal insurance schemes, like growing a portion of our own crops on others' lands and vice versa). If people stumble upon the idea of specializing and then exchanging in this world the way to survive is to grow more food than you can possibly eat yourself, so that you can trade it with someone who grows more cotton who can possibly weave it themselves and so on.

These surpluses can be traded widely for goods and services other folks specialize in. But remember, people's demands are fickle, and in a world where we specialize we depend on others to get the goods and services we need. If I specialize and you do not specialize, I am doomed. Also, if I specialize, but don't happen to produce enough stuff that others' want, I am doomed. So in this kind of a world, it makes sense to produce a comfortable surplus, or at least to try to. And if everyone is producing a comfortable surplus (possible of course because of the capital and knowledge you are able to apply to your single craft as opposed to being self-sufficient in a little bit of everything), then we are insuring ourselves against the kinds of misfortunes that would have ended us when we were self-sufficient and times got tough. In other words, if I grow more wheat than anyone can possibly eat or use (the chaff) as fertilizer or fuel, and then I "throw it away" that only looks like waste ex post, but ex ante it was a completely sensible economic decision. Why? The world is uncertain. And in a world where all kinds of uncertainty exists, there is simply no way to plan perfectly for yourself, even if you know your demands and desires and that of your neighbors, so producing "too much" stuff is a way to deal with this. By merely observing the act of tossing the (ultimately) extra stuff out and claiming it wasteful is missing the point entirely. It would be akin, I think, to looking at my daily bathroom activities and calling those wasteful. Remember that both producers and us as human bodies have a strong incentive to minimize waste , so if we regularly found ourselves throwing away the same thing, decade after decade after decade, there would be a strong incentive to learn to reduce this waste. Look at the amount of material that ends up in packaging today as compared to 30 years ago, or the heft of a soda can today versus 40 years ago for good illustrations of this point. 

Perhaps paradoxically, the act of trying not to produce waste or actually not producing any waste, is itself … wasteful. Finally, this incentive structure is strengthened when property rights to resources are better defined, and we had to face the true cost of dealing with our waste stream instead of paying low rates to throw stuff out or a flat rate regardless of how much stuff we ended up throwing out. But even then, we still have to deal with the accumulation of our own waste before someone takes it away, and that cost alone is a small incentive to keep the amount of "wasteful" waste to a minimum. 

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2 Responses to “Wasteful Waste vs. Productive Waste”

  1. Michael says:

    This was excellent; really starts to distinguish the implications of opportunity cost. 

  2. [...] we grant that these are legitimate concerns. And suppose we grant that the production of waste has no insurance aspects whatsoever. This still does take a pretty narrow view of the problem of food waste. Remember how [...]

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