Packaging, Garbage, Recycling and Regulation

The other day on Twitter I was chatting with my friend Arnold.  We were chatting about packaging.  Both of us are concerned about all the plastic in the ocean and in the environment.  Now that China isn’t buying America’s garbage, the problem is becoming more noticeable.

There are different ways to approach and deal with the problem.  Arnie prefers government regulation.  In Chicago, Alderman Waguespack recently proposed a city ordinance banning styrofoam and limiting plastic knives and forks for carry out at restaurants.   Scott is a super liberal guy.  Very left.  The heavy-handed centralized approach will only layer on costs and grumbling from restauranteurs, and they will pass on the costs to already heavily taxed citizens.

Also, whether you know it or not China used to buy a lot of our “recycling”.  Not anymore.  Recycling programs are mostly worthless.  metal, maybe glass can be recycled and the economics work.  Other stuff, not so much.  Recycling is mostly a feel good thing that solves no problems.

I prefer a free-market approach to solve the problem.  I’d leave it to peer pressure and entrepreneurs.

Arnold mentioned that All Birds has created some incredible packaging for their shoes that is easy on the environment.  The way they manufacture their shoes is also easy on the environment.  I think that is great and it’s a selling point for someone that wants to buy All Birds.  I don’t know how many pairs Arnold has but he loves them.  I have one pair and as long as I am not standing all day or having to walk around all day they are great.

It’s worth mentioning that All Birds created a brand from the ground up and is leading an industry. They are not me too.  As their popularity has increased, major shoe manufacturers like Nike, Adidas and Under Armor are coming out with me too products.  They prove that if you are enterprising and innovative, you can create a brand and build a business despite gargantuan entrenched competitors.

That’s one example, but I think as a society we need to do more.  How do we do that with a more free market approach rather than the Big Brother Approach?

Incentives.  Businesses and people respond to incentives.  There are costs and opportunity costs.

First up, transparency and peer pressure.  Take an honest look at how things are packaged.  Not a sensational look.  Why are they packaged that way?  Mostly, it’s weight and safety.  Plastic containers weigh less than glass or metal.  Cheaper to ship.  When they fall on the ground, they don’t break.

Is there an innovative solution in the market that we could switch to today?  If so, what’s the cost difference?

For example, we all are familiar with the plastic rings that hold cans in six packs.  Those wind up killing some animals on land and in the sea when they get disposed of.  Since 1994, the EPA has mandated that those rings are degradable. The problem is as the plastic breaks down, animals might consume smaller pieces of plastic.  Sort of a solve, but not a total solve.

Hey, what are entrepreneurial companies that are building new consumer brands doing?

In 2016, the beer company Salt Water Brewery announced all their six-packs of Screamin’ Reels IPA would be packaged with a compostable holder termed E6PR (Eco Six Pack Ring). The container is designed to be completely compostable when thrown away and edible if it enters marine animal habitats. It’s made with some of the byproducts produced from brewing beer, like spent wheat and barley.

Hmmm, and now Carlsberg Beer is re-engineering their packaging.  With a little peer pressure, it wouldn’t be long before other major beer companies did similar.

The other way government could create an incentive is via public policy that is not punitative, but creates a reason for a company to innovate and become more environmentally friendly.

This would be via a subsidy that has a sunset on it.  Perhaps it’s a ten year subsidy.  That way, it ends, but it gives entire supply chains the time they need to adjust and innovate.  It sends a signal to entrepreneurs to innovate too.  At some point the subsidy goes away so companies will want to keep the cost of the new packaging low so their margins stay the same.

Hey, I’d be for ending all the subsidies and requirements for Ethanol.  The stuff is no good, not energy efficient, not great for the environment and just a big boondoggle.  Take all the money spent on Ethanol and redirect it to a subsidy for supply chains and eco-packaging.  No dent in government budgets and better for us all.

As we go forward, we need to confront our problems with free markets and entrepreneurs.  NOT Regulation and penalties.  We are living in the most innovative time in human history.  We need to enable people to utilize tech to solve problems rather than punish them.  Regulations create barriers to innovation, and are something to work around.  It’s a last resort, not a first resort.