True Price of Anything

manfred

Manfred Max-Neef is a Chilean economist and the author of a book titled “From the Outside Looking In: Experiences in Barefoot Economics”. He defines Barefoot Economics as  a metaphor for “the economics that an economist who dares to step into the mud must practice”.

I had come across an interview of his talking about “Why the US is becoming an underdeveloped nation”. My primary interest in this interview was not the vicarious and vain pleasure of witnessing a strong nation on its decline, but the curiosity to learn what sends once mighty nations and civilizations to their abyss.

The Price Not on the Sticker

The one immediate point I was struck by was the statement by Max-Neef on how economists don’t really know to calculate true cost of anything. The relevant quote is below

I live in the south of Chile, in the deep south. And that area is a fantastic area, you know, in milk products and what have you. Top. Technologically, like the maximum, you know? I was, a few months ago, in a hotel, and there in the south, for breakfast, and there are these little butter things, you know? I get one, and it’s butter from New Zealand. I mean, if that isn’t crazy, you know?

..the argument that it was cheaper, is a colossal stupidity, because they don’t take into consideration what is the impact of 20,000 kilometers of transport? What is the impact on the environment of that transportation, you know, and all those things?

A large majority of the stuff that is consumed comes from far away places in most developed economies- The cars that have travelled by ships to us; the apples from another continent; the cheese from a remote land, each has the perspirations of many hundred selves and more than a few footfalls on our dusty planet to have us be the destination of its journeys. The complexity and efficiency of this global supply-chain is fascinating and worthy of study, but it has to be seen for what it is, a monster and an abnormality.

Perhaps this is such a common place aberration that we take it to be the norm but for the first time the import of that statement reached inside.

In the algebra of acquiring something we only consider the variables of desired(or needed) and affordability. What is not seen and understood is how the sticker price on anything is not the measure of its value or an indicator of the cost of producing it.

True Price

In a globalized economy that cares about sustainable development more needs to be done to make transparent the true cost of producing something. Not just mentioning whether the materials are recyclable but what the environmental cost of creating, packaging, shipping and delivering it is and let the market decide whether such products are worthy of its support.

Health Label for Planet?

And if you think about it, its not a radical notion too. All processed food manufacturers are required by law to label their products with materials that have been used to produce it and what its health value is- what % constitutes which vitamins, how many calories etc. May be this got done because we care for our own bodies. Perhaps its time we cared about our impact on the planet and label things appropriately.

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  1. Mahesh CR says:

    New post – True Price of Anything. How we are blind to the price of what we consume. http://t.co/Fs4UVPH

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