Adam Smith once explained the merits of the market mechanism with the now famous line “It is not from the benevolence of the butcher, the brewer, the backer that we expect out dinner…but from their regard to their own self interest.”
We now know from practice that the market weeds out inefficient producers and few economists doubt that the market gets resources to the people that would want the resources the most using the price mechanism.
We definitely know Adam Smith was on to something was onto something when he wrote The Wealth of Nations. Unfortunately, today, too many people get their dinner not from benevolence or the self interest of the baker, the brewer and the butcher but from their back ally rubbish bins. Many of us when growing up were probably told that in the name of the poor we should not waste food. Ironically there are many desperate poor souls who must go shuffling through trash bins for a meal, and those same people actually hope food is “wasted.”
It sounds sad that people have to go to the trash to get food, but landfills and garbage bins are actually places where resources are allocated efficiently. If someone throws a product out then it is obvious they did not want it, but if someone goes and braves through old smelly coffee grinds, garbage water, sharp discarded razor blades, and the threat of disease to get that product there is no doubt they wanted it desperately.
There is a lot about the garbage system of resource allocation that is simply terrible but before we start calling names, lets take a moment to compare it to the system that made people need to get food from the garbage in the first place; the pricing system aka the free market. The pricing system uses money to measure how much people want something, the more people are willing to pay for a product more they must desire it after all it takes work to earn money.
The pricing system is not totally without merit it is after all good at getting an exact measurement of desire, but the garbage system proves that money is not totally accurate, as people will pay for things they do not want and throw them out , while others will not pay for things they do want and search the trash. In this way the pricing system allocates resources to people who do not want them and deprives them of people who do.
To an economist it sounds strange that someone would buy something he does not want and throw it away, yet tonnes of food is thrown away every year. Partially because large bureaucratic organizations like and college cafeterias buy more food than they could serve as it is hard to estimate how much people will eat and because there are benefits that come with buying in bulk. Other times food is wasted because people overestimate the amount of food they can can consume, and pile a few too many helpings onto their plates.
If you’re still not convinced that the garbage is not more efficient than the market then picture a purely capitalist system where the garbage just disappears and food thrown away really is wasted. The market would measure people’s demand inaccurately and the people who in our would search through the garbage would simply be left to starve to death, and knowing this it can be said that the garbage allocates resources more efficient and more mercifully than the market.
None of this is to say that the garbage is a good way to allocate resources and it is not to say we should help the poor by throwing more food away, rather it is to say that capitalism as we know is so seriously flawed and is in need of fixing. Actions should be taken to move resources from people who don’t want them to people who do. One very simple possibility is for the government to tax the sale of goods to the wasteful, and to subsidize food to the desperate, though that is something easier said than done.
One way to make sure only the desperate get government food is to make that food healthy, but also to make it taste awful, so only people who need it to live will come get it and to pay for this the government could tax garbage collection to make people think twice from about buying more than they want. While the government has a history of being even less efficient than the trash bin and even the market, with these sound policy decisions people can finally benefit from society’s benevolence.