I recently finished reading Thomas Friedman’s Hot, Flat, and Crowded: Why We Need a Green Revolution and How It Can Empower America. It’s a very good book if you’re interested in the environment, but it’s also a good read if you ever wonder what a “green economy” might look like. He covers a lot of ground, but the part that struck me the most was his argument that in the future we (as in everyone, not just Americans) will have to pay the true cost of the goods we consume instead of the artificially low prices we’ve become accustomed to. And that means that life will get a lot more expensive.
We’ve become accustomed to buying cheap goods that don’t reflect the true costs of their production. The prices we currently pay don’t reflect the true costs of the labor, materials, natural resources, and fuel that go into the products. Not to mention the environmental costs of these goods. The prices we pay don’t begin to compensate for the resource depletion, waste production and disposal, and hazardous materials involved in production. As a result, we have a wide choice of cheap things that are easy to consume, dispose of, and buy again. Friedman argues that, in order to keep consumption at a sustainable level and to encourage responsible manufacturing and disposal processes, we will soon start having to pay the true costs of the items we consume. That’s going to get expensive, fast.
Think about something simple like a DVD. At a quick glance, the disc itself is composed of various plastics, resins, metals, and polycarbonates. Then there are some dyes for the label. The case is made of polypropylene and the artwork and inserts are paper with dyes and inks spread upon them. To make this DVD, the metals have to be extracted from the ground, processed, and made ready for the DVD application. Chemicals have to be mixed into plastics and the plastics have to be molded into cases and readied to become discs. The DVD itself requires a large amount of heat to seal all the layers together. The paper for the inserts is created from trees in a process that requires a tremendous amount of water and energy. The entire manufacturing process uses a lot of resources, energy, and labor. Now think about doing enough of all of that to make millions of one title. Then multiply that by the hundreds of thousands of titles on the market at any given time.
Yet for all the resources and labor required to make this DVD, you only pay around $15 per DVD (less if you shop on the bargain shelves). If you factor in all the resources and labor that are used to produce that DVD, the resource depletion, the cost to replenish the renewable resources, and the costs associated with the disposal or recycling of that DVD, the price should probably be closer to $100 per DVD. Yet we don’t pay that because we don’t currently have to. Manufacturers are allowed to gobble up resources without worrying about replenishing them or paying for the amount they use. They aren’t required to provide for the eventual disposal of the DVD. The manufacturer doesn’t have to pay to replace the resources they use. Heck, in some countries they don’t even have to pay the laborers anything approaching the true cost of their labor. As a result, manufacturers can charge way less for these items than they really cost to produce.
But if the “green economy” takes hold, manufacturers will probably be held accountable for at least some of these costs. They will likely have to pay the real cost of the resources they use and pay something toward renewing some of those resources. They will have to provide for the disposal of the item, either by taking it back for recycling or paying taxes that will go toward municipal waste improvements. They won’t be allowed to ship their waste overseas where it is cheaper to dispose of things. When that happens, they will have no choice but to increase the price of their products to cover their costs. Items that we take for granted as being cheap, such as electronics, DVD’s, CD’s, and appliances will become a lot more expensive. Things that we currently have in every home may become out of reach luxuries for the “average” citizen.
This is disturbing news for some. To tell them that a TV or Blu-Ray player may become unaffordable sends them into a spasm of fear. “What will I do?” they wonder. But remember: It wasn’t that long ago when items such as these were luxuries and only for the well-to-do. Not everyone had a TV or even a car. Most people did their laundry at the laundry mat because not every home had a washer and dryer. Things were just too expensive for everyone to own them.
Frugal people know this. Many frugal people have kept their consumption of cheap goods to a minimum. They may not have been doing it to be “green” or to make a statement about sustainable growth. They may have simply limited their consumption to save money or space in their lives. Regardless of why they have limited their consumption of cheap goods, frugal people will have the least amount of trouble adjusting to a new economy where we have to pay the true cost of our goods.
Frugal people aren’t dependent on a lot of cheap crap in their lives. They limit their gadget purchases to only what they really need, not what’s cool, and they save up the money to purchase those. They may have one TV, not five. They know how to live in a world where every material want cannot be easily satisfied. They can often repair what they already own so they don’t have to buy another. They know how to accomplish things the “old fashioned way” so they aren’t dependent on gadgets and gizmos. They know how to repurpose items to extend their lives. If the cheap crap evaporated tomorrow, chances are they could keep going for a while without a severe impact on their life.
Contrast this with the guy who has five TV’s in his house, is dependent on his GPS to get to work, and has to have a mobile phone so he can text his friends (and look cool with his bluetooth headset stuck to his head). He has to have his iPod on in order to work out and, rather than repair his washer when it breaks, he simply buys another. He also has to buy a new car every two years because he can’t be seen in anything older than that. Take away the cheap goods and this guy will probably have a nervous breakdown.
When we have to start paying the real cost of items, frugal people will suffer less. They know how to save up for big purchases, something that will probably become essential again and that people have forgotten how to do. They’ll be able to extend the lives of the items they already own while saving up for new ones. Since they aren’t dependent on these things for daily life, their lives will be less impacted. Since they know alternative ways to accomplish things, they won’t be the ones standing around scratching their heads at the thought of line drying clothes instead of using a dryer. Frugal people will be the ones wondering what all the fuss is about when people are crying about how expensive things are.
Yes, we’ve become accustomed to cheap goods. It’s become commonplace for people of almost any income level to be able to afford appliances and electronics. We’ve let the cheap crap take over the mundane tasks we used to know how to do like read a map, entertain ourselves, and write letters. We’ve been spoiled and haven’t had to think or do for ourselves for years. But should it have been that way? Probably not. Prosperity is good, but we let things become so cheap and ubiquitous that it’s going to be a hard adjustment when prices rise steeply. A lot of people are going to have to rethink their daily lives and their consumption patterns. What is now commonplace may become a luxury again, making for some uncomfortable times for some. But if you’re a frugal person, you’ll already be ahead of the game and be spared a lot of the pain that others will experience. There are a lot of skills people will need to relearn when the cheap goods are gone, but you already know some of them. You might even forge a career teaching people how to do and think for themselves again.