I’ve said it before: modern economic theory needs an update, badly. And so does our attitude that tolerates — glorifies, even — companies growing their bottom line whilst pumping out garbage into the environment without giving a damn.
It gets worse every day. And more expensive.
In the US, the estimate cost for recycling one single-use plastic bag is 17 US cents. You can be sure it’s more expensive elsewhere. Estimates for cleaning out plastic from the oceans rage between 13 Billion/ year to several hundred billions. These costs will multiply in the future, while famously, by 2050 we’ll have more plastic in the oceans than fish.
The Sad State of Plastic Economics
Part of the problems is that plastic in this economic environment is really, really cheap. And you know why it is so cheap? Because all of us are subsidizing this particular industry. Indeed, the industry that produces plastic is one of those shitty industries where all profits are privatized and most costs are socialized. In fact, more than 90% of these plastic cleanup costs are covered by taxpayer’s money and a few other percentages come from volunteers and individual donations. The 3%-4% of the cleanup costs that are paid by the industry themselves, are just small marketing expenses to them, nothing more. To add insult to injury, large plastic producers receive generous cash subsidies from governments world wide, to the tune of $5.3tn in 2015, or 10 million USD every minute.
That’s messed up.
You broke it, you fix it
Now the common sense idea that polluters should pay the cost of cleaning up is not controversial (duh!). However, things get complicated in practice: How to go about attributing pollution & costs to which company? How do we know who produced that plastic bag in the ocean? What combination of policy, technology and economics can we put together to make this work at scale?
Alas, it’s the same with all externalities in traditional economics. Seeing that it has been traditionally hard to estimate externalities, economic policies articulated more than a century ago, simply defaulted to focus on profits and not worry about anything else. Profits are easy to measure and it is quite convenient to rationalize that profitable companies pay taxes which will then be used to clean up.
Given the way we’ve been messing up the environment during these years, it’s safe to assume that assumption has never been true. Yet, in this sad era of ours, plagued by special interests, tax breaks for the rich, poor-hating, climate-change denying global “leadership”, not much is being done.
We owe it to ourselves — and the next generations — to challenge this theory and make sure that costs get attributed to polluters. That will make the whole plastic industry fairer, and, perhaps, drive entrepreneurs — and governments — to look for more sustainable alternatives to criminally cheap plastic.
Solution: Track all plastic
I think all plastic produced should be marked with a nano-tech solution that would work just as a DNA. Each plastic batch produced would be required to carry a unique hash that would be stored on a public ledger (“tokenized”, as it were).
This marking would be heat and tamper resistant and it would bind with plastic at molecular level. The technology exists and, with the right market opportunity would probably become more efficient and more affordable.
This would allow any government, as well as communities affected, to examine plastic — down to the smallest particles — found in public spaces to determine who produced it and simply charge that company for the cleanup.
A global consensus could emerge that would operationalize this and smart contracts on the blockchain would make the logistics on the backend & the accounting fairly straight forward.
This could force plastic producers worldwide to sort out their supply chains and put frameworks in place that minimize pollution, reduce waste and unlock further innovation, more aligned with the values and sensibilities of this and future generations.
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