Yesterday I talked about the strange system we have for converting large quantities of natural resources into small quantities of amusement. Today, a solution!

OK, not really. I don’t think anyone has a solution, or rather I don’t think anyone knows they have a solution (using ‘know’ to indicate fact, rather than internal certainty). But as this is partially a result of the free market, it only seems fair to let the market have a crack at solving it. A good start would be a tax on pollution, which would affect extractive industries among others. Now I’d support this on general environmental grounds, but putting that argument aside there are real costs involved in pollution that are currently paid by society rather than by the people causing those costs.

So how does that solve the problem? Well it doesn’t, it just changes the problem. Assuming that China levies this tax directly, but lowers other taxes to compensate, it pushes manufacturers to save a little on raw materials, perhaps by employing more people to control waste. If China doesn’t enact the tax but the importing countries do (which I’d guess is less likely) then we have a direct incentive not to consume so much, and China is still pushed to use fewer resources. Either way the stupidity of the current system is tempered, without forcing a negative impact on the average worker.

In an earlier post I discussed the trade in trivialities that fills containers between China and the rest of the world. I noted that the natural reflex might be to stop buying such things, but to do so would abandon those people who depend on that trade for their living (indeed, their lives). Marty further pointed out that it’s an amazing ‘system’ that lets someone live from a trade that means almost nothing to us (Marty is, it should be noted, something of a fan of free markets).

And so to my final point, that it’s a depressingly inefficient system based on hidden costs. For the crappy helicopter I mentioned, the sequence goes like this, based on the world’s biggest producers for raw materials:

Iron ore for the body of the helicopter) retrieved from Australia (or, if we’re lucky, China).
Oil (for plastic rotor and paint) retrieved from Saudi Arabia.
Both shipped to China.
Toy produced in China.
Toy shipped to the West for sale.

That’s a total of 12,000 miles of shipping to China, and another 6,000 to the US or 12,000 to Europe. And that doesn’t include transport within countries, which could easily reach another 3,000 miles in the US. That’s a lot of miles, with a lot of pollution, just so that my son can have a cheap helicopter and a labourer can earn a fraction of a dollar.

Tomorrow: I try to think of an alternative.