Two cafés. One serves in mugs they have to wash, the other in disposable cups. The first needs a person to wash the dishes, a dish washing machine, and to pay for the real estate and maintenance. The second doesn’t have to pay those costs.
The disposable café can charge less or profit more. The extra money motivates it to expand. It can keep expanding. The first café may go out of business. It may emulate the other and move to disposable.
One could see the pattern as good business, but the local picture doesn’t account for all costs and business requires effective accounting. The disposable café’s costs don’t end with the sanitation department accounting. Regarding the mugs, when the reusing café washes one, they can put it in circulation. When the disposable one throws theirs out, it degrades someone else’s environment. Since that person suffers or has to clean his or her world, he or she pays part of the cost of the café.
Beyond one or two cafés, the story replays in many industries. A business that can externalize costs will win compared to one that doesn’t, all else equal, even though with proper accounting it might not even be profitable.
Growth without accountability
Externalizing costs didn’t start with cafés, but the details of how the practice started don’t matter as much as a similar type of pattern in many industries. The long-term result? Look outside your window or the front page of any newspaper: businesses profiting from hurting others’ environment. We’re using more resources than the planet can sustain and people are profiting from it.
We don’t have to organize society this way.
Read my weekly newsletter
On initiative, leadership, the environment, and burpees