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Explore audio highlights, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.

READER COMMENTS

Lohit
Jan 13 2020 at 10:45am

Russ, we have already learnt word “shmata” in earlier episode😊. It got little dusting know.

Todd Kreider
Jan 14 2020 at 2:59pm

With respect to Japan, Adam Minter said:

As we all know in East Asia they are facing demographic crises, South Korea and Japan in particular. And so, as Japan ages, like the United States, there’s a question of where the stuff goes; but they have the added burden of, there’s less people who want it.

There really isn’t a demographic crisis in Japan as its per capita growth since 2000 has averaged 0.9% a year compared to 1.1% for the U.S., 0.7% for France and 1.2% for the U.K. and Germany. There is no reason that Japan won’t grow at about the same rate as other higher income countries in coming years.

In the U.K, 60% of the population are ages 20 to 64 – the age group that may want other people’s stuff; in France, 57% of the population is in that age group, and in Japan, 55% are in this age group – not too different.

Minter also said:

It really emerged as more of a household movement [in Japan] in the 1980s and particularly in 1990s when the economy stagnated and there was sort of this crisis of confidence in Japan and people started de-materializing a little bit. And Marie Kondo emerges from that.

When I first arrived in Japan in 1992, it wasn’t uncommon to see nice but old televisions on the curb on trash day. In the city of 400,000 where I lived there was a used store that I was told had recently opened but not sure what year. My understanding then was that Japanese didn’t like used items (books were an exception) but that had started to change even in the strong growth years of 1989, 1990 and 1991. 1994, 1995 and 1996 were also fairly strong growth years, so economic stagnation likely explains the increase in the popularity of used items in Japan from 1997, but I’m not sure it does before that – 1992 and 1993.

One other thing worth noting about Japan and getting rid of stuff is that houses and apartments are usually quite small compared to those in the U.S.

 

Trent
Jan 14 2020 at 8:36pm

An anecdote related to this episode: A well-known author once told me that he knew he’d ‘made it’ when he found copies of his book at the huge Half Price Books HQ store in Dallas. Well, it’s in a different location since that quote, but the HQ store is still going strong (and now it’s even larger).

Was there 2 weeks ago, and in the Economics section, there’s a copy of “The Invisible Heart” by Russ Roberts for sale.

John P.
Jan 15 2020 at 10:28am

This was a particularly entertaining episode.

Kindle and Google books “enabled” me to unload perhaps 80% of my library, and they keep down the number of new books entering the house.  As more and more material becomes available on the internet, I’m increasingly comfortable letting go of hardcopy resources that I used to think I would need for future reference.

Separately, why do we feel a need to believe that our cast-off possessions are going to a good home?

suzette
Jan 15 2020 at 6:47pm

I found the segment about “brown furniture” quite entertaining and yes, it’s very difficult to unload this stuff, especially in CA

When my grandparents passed on, my family hired a professional to stage an estate sale, thinking that the pristine condition and high quality of their furniture (lots of the dreaded oak) would entice buyers. We were a bit shocked at how low the estate person priced everything, considering how much my grandparents originally paid.

In the end, the only items that really brought in money were the expensive mattresses; the oak dining room and living room furniture were eventually donated to a women’s shelter.

Gregg
Jan 17 2020 at 3:37am

Great episode!

To share a personal story, 6yrs ago I got rid of all my stuff and lived out of a suitcase off my savings for 3 yrs. The experience of not being able to buy much as I had no where to keep it was interesting.

But, when I stopped that and got an apartment again I found I missed some of my mostly useless possessions. Like the coin collection in “Throw Mama from the Train” those books and toys and collectables and clothing items had memories associated with them. Even stuff that sat in the closet for 30 years like highschool team t-shirts I’d still see every few years and have a nice memory. I took pictures of a few things before I donated everything but not enough.

Tom Murin
Jan 19 2020 at 7:14am

I don’t think you can underestimate the “endowment effect.” I am aware of it – and still have a hard time getting rid of things at times. It’s hard to ignore the emotional “sunk costs” as well as the financial.

Otherwise, I found the discussion about rags to be very interesting. When I was in the Navy we used to get them by the bale. They were a standard stock item. The rags were usually used to wipe the oil from machinery – and a ship has a huge amount of it. The quality of the rags was usually pretty bad. They were not as absorbent as you would have liked. I recall a fair amount of denim in the bales. It would have been nice to have the 100 % cotton made from old tee shirts back then!

Andrea Mays
Jan 19 2020 at 5:14pm

Excellent podcast.  Fascinating topic!  I am happy to have learned the origin of the word “shoddy.”  Most interesting piece of information: collectors are (and we all fall somewhere) on the spectrum.  True!  Adam has done a great job on this interesting topic, one that will continue to be important as we try to figure out what to do with all the brown furniture our children do not want.

 

Tom Forth
Jan 21 2020 at 4:18pm

Fantastic episode! Fellow listeners may be interested to know that both shoddy and a related fabric called mungo originated in the early 1800s in the Heavy Woollen District of West Yorkshire (major towns being Dewsbury and Batley) where rag processing generated considerable prosperity locally. Preserved mills still dominate the skylines of both towns, the best of which is Machells, now converted into apartments.

A lengthy description of shoddy and mungo is available via designer Wayne Hemingway’s blog. He achieved much of his original by shipping clothes made from recycled wool to London and selling it as fashionable.

Smart Feller
Jan 25 2020 at 11:59am

That hoarding is a ‘spectrum disorder’ –that we all have it to some degree–is a good point. Who would like to live with only one roll of toilet paper in their home? Are you a hoarder because you bought one package of 4 rolls? Maybe they need to make all members of those wholesale clubs that do sell larger packages go through a psychological evaluation every year, complete with a visit from a licensed, trained psychologist. Or do the same for anyone who has a pattern of ordering from those TV shopping networks regularly. Since they have already made plastic straws and plastic bags a public crime, why not go further?

Comments are closed.


DELVE DEEPER

This week's guest:

This week's focus:

Additional ideas and people mentioned in this podcast episode:

A few more readings and background resources:

A few more EconTalk podcast episodes:


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AUDIO HIGHLIGHTS
TimePodcast Episode Highlights
0:33

Intro. [Recording date: November 18, 2019.]

Russ Roberts: Today is November 18th, 2019, and before introducing today's guest I want to encourage listeners to go to econtalk.org, econtalk-dot-O-R-G, and in the upper left-hand corner to find the link to our Annual Survey where you can vote for your favorite episodes of the year, tell us about yourself and your listening experience.

0:52

Russ Roberts: And now, for today's guest. My guest is journalist and author Adam Minter. His latest book and the subject of today's episode is Secondhand: Travels in the New Global Garage Sale. Adam, welcome to EconTalk.

Adam Minter: Thank you. It's such a pleasure to be here.

Russ Roberts: Your book is about the market for the extra stuff that we come to realize that we don't want, we can't store, we don't use, we might be able to sell, we feel guilty about having, and so on. And you open talking about people who make a living clearing out houses of old folks and dead folks, sadly. And, talk about that business and what they do with the stuff.

Adam Minter: Sure. Well, I think there's probably always been businesses like that, at least since the Industrial Revolution; but it's in the last 30 years in particular that it's become kind of professionalized. It really started becoming professionalized in the United States in the 1980s when we first saw a mass downsizing into retirement homes, and there was a need for people to come in and basically help seniors decide what to get rid of.

That's a hard process, because the real lesson in downsizing for retirement, for example is: your kids don't want your stuff. And I spent a lot of time on clean-outs, and the advice that everybody who does this in North America says, 'You're going to tell me I'm saving this for the kids, and I'm going to tell you, the kids don't want it.'

And so, they are not just people who come and clean out the house, but the best ones really serve in kind of a counseling role. And it's a business that has also expanded not just in North America as the baby boomers decline into retirement, but it's also very big in Japan. And I spent quite a bit of time with the Japanese clean-out industry and it's driven by slightly different demographic circumstances. As we all know in East Asia they are facing demographic crises, South Korea and Japan in particular. And so, as Japan ages, like the United States, there's a question of where the stuff goes; but they have the added burden of, there's less people who want it.

And so, the cleanup professionals in Japan are dealing with that sort of double whammy. It's great for business, but they've had to more aggressively develop sort of reverse supply chains and export markets. And so it's much more of a global business, which surprised me, than what one would tend to think when it's just a matter of, say, cleaning out grandma's back bedroom.

Russ Roberts: So, they come to your house, they help you--it might be the children--

Adam Minter: Might be the children.

Russ Roberts: after the parents are gone, help you go through the house. What do they do with the stuff?

Adam Minter: It all depends. There's a few different kinds of these. You may have, in the United States, the 1-800 Junk trucks, where they'll just take a quick look at it, and if there's something that doesn't strike them right away as valuable they're off to the dump. Then there are the businesses like Gentle Transitions which I describe in the Twin Cities, which might be the very first incorporated clean out business in the United States. Hard to figure that out, for sure, but they were very early into it. And they will, first of all, help you pack up the stuff that you're going to take to your retirement community, your smaller home. And they actually told me, I was really surprised, they say, 'We've moved people five, six times between different retirement communities, and it's amazing how they accumulate more stuff that then needs to be downsized again.'

So, they'll do that kind of thing and at the end of it they may call somebody like a 1-800 Junk truck. But sort of the new generation is a company such like Empty the Nest, which is a Minneapolis-based company, where they will help you downsize, that they will make sure that the stuff gets to where you want it to go, but then they're going to actively look to market that stuff into the secondhand market. And so, Empty the Nest has its own thrift store in Minneapolis. So, they'll clean things out and what they think is marketable they'll take to their own thrift store. What they think may be marketable by somebody else like the Salvation Army, which has, say, a lower price point, they'll bring it there. They'll take some of it to recyclers. And this is really important to Boomers, in particular, who, at least, the clean-out professionals tell me and from what I witnessed, they want to know where things go. There is a real question of reverse provenance, if you will.

Russ Roberts: What do they charge?

Adam Minter: It all depends. Everyone has a different price point. So--

Russ Roberts: Roughly. Give me a range.

Adam Minter: I think you're talking, for some of the better ones, anywhere from the range of two to three thousand dollars, plus the cost of the truck, the logistics of moving stuff.

Russ Roberts: And if they sell the stuff, do you get any of that money?

Adam Minter: Depends who it is. Like Empty the Nest actually, their fee is very much based upon what they think they can recoup. So, if you have enough good stuff--and most people don't--your cost may end up being close to zero.

5:29

Russ Roberts: So, in thinking about my own life which your book made me, of course, contemplate--and I want to let listeners know we're going to talk a little bit about this then we're going to talk about Goodwill, which turns out to be fascinating, and then something even more fascinating which doesn't seem fascinating at all, which is rags. But I'm going to start with this clean-out stuff problem.

In my case, I have thousands of books, and of my children. Some of them love to read, some of them like to read, and I always assumed they would love to have my books. I'm not so sure. Some of them will, maybe, but they're not going to have room at many points in their life for the number of books I have, and I'm going to have to probably get rid of them. My father has many more books than I do, has thousands of books, and most of us don't want them. And it breaks my heart, actually. It's incredibly sad because he did collect them for himself, but part of it was this idea that he'd pass them on.

And then we have my dining room table, which is this beautiful oak antique table my wife and I bought 30 years ago, that we cherish. Is it possible our kids aren't going to want that table? And your book suggests they might not.

Adam Minter: Yeah, that oak table, in particular is--

Russ Roberts: There's tons of them, you suggested, floating[?] around.

Adam Minter: Yeah. If you to thrift stores, particularly in the Midwest where that kind of furniture was extremely popular for many, many years, they are overflowing with oak tables that nobody wants. And it comes down to a matter of taste. People want a cleaner look right now. It's something sort of influenced by mid-century modernism. Also, just the way homes are designed with the big windows now, giant oak tables don't go well. And people move around more than they used. And with home ownership rates declining a little bit and you think you're going to be renting for a while, you don't want to keep moving those heavy oak tables. So it's really put this downward pressure on the price of this, what they call in the trade, the 'brown furniture.'

Russ Roberts: The brown furniture. Yeah, we love oak. And we lived in St. Louis when we first got married and there was a huge amount of available oak there and some very talented refinishers, and they made it beautiful.

One of the other things you, of course, talk about along the way, is storage places. So, one of the temptations you have, is, 'Well, we can't have room for everything. I'll just put it in a storage place.' And you have this statistic in here: There are 54,000 mini storage facilities--I don't know why they call it mini: I guess because it's not a warehouse. Mini storage facilities. It ranges anywhere from a cubicle to a garage or a largish garage. Right?

Adam Minter: Yeah. It's this metastasizing industry in the United States that's really out there responding to the fact that people are buying themselves out of their homes.

I mean, one of most fascinating statistics that I came across while doing this book was the amount of garage space in Los Angeles that can no longer be used for cars, residential garage space. This was a statistic from the 1990s, but it was well over 75%. But people don't want to get rid of the stuff. They're very attached to their stuff, so what do they do? They go and get a mini storage unit. And in some municipalities in the United States, the cost of those mini storage units, the rent, is higher per square foot than many residential areas. We're actually spending more storing our stuff than we are storing ourselves.

Russ Roberts: And it was--it's troubling. As you get older, you start to think about these questions; and I like the idea of not liking my stuff. But that's only an idea. I really like my stuff. I like my cutting board, and I like my dishes, and I like my artwork, and I like my framed photographs, and I like that furniture. I've got a, I think it's a six-foot, I've got two six-foot high bookcases. They were old, school--meaning, from a high school and probably in the 1930s or 1940s with the paned windows, glass doors. I love those. I'd be sad to see them go. And when I'm out of town in the summer, I love that I don't have anything. I'm free. But, I like this back home. And it's just a weird thing to confront the fact how much of your identity and your sense of self is the stuff you've accumulated.

Adam Minter: Yeah, that's exactly it. And as traditional social bonds have broken down in Western societies in particular, we build up our identities, the sense of ourselves, on the basis of what we buy, this accumulation of objects.

Russ Roberts: It's pitiful, Adam, but it's true.

Adam Minter: It's true. And in a sense, nobody knows it better in a way than Google and Facebook because they are constantly taking data on what we like to acquire, what brands we like, and then they try and sell it back to us. So, in that sense, they have that complete picture of us based upon our brands and our relationships. But it's why it becomes--one reason why I believe it becomes so hard to let go. Because, in letting go of our stuff, we are breaking a part of our identity. And I've been at clean outs where people do that, and it's painful to watch somebody let go of, say, their wedding china.

Russ Roberts: Yeah. And, of course, there's our clothing, which we're going to spend some time on. I like to think I'm not into clothes. And I think anyone who's hung out with me for any length of time would say that's a true statement based on the way I dress. And yet, the number of shoes that I have, many of which I don't ever wear, the number of shirts that I own that I don't ever wear, the number of T-shirts that I just love that I don't ever wear, and I like having them, and occasionally I go through that drawer and I think, 'Yeah, just keep it.' And it's hard.

Adam Minter: It is. And I face the same issue. I mean I have T-shirts that I never wear and my wife will sometimes go through the linens and say, 'Do you really need this T-shirt?' Then I remember where it was given to me, or--I just can't let go of it. And it's an emotional reaction: it's certainly not a rational reaction because all it does is take up space. But, it's a memory and it's a piece of who I was at some particular point in time, and you just don't like to let go of that stuff.

Russ Roberts: So, there was a moment in my life when I actually thought I'd get organized. It didn't last very long. But I hired someone to help me clean up my office at work. And one of her themes was, 'All that junk in your closet, all that junk here, all the books you don't read'--and footnote, I have to say: Most of the books that I don't read, I've eventually come to read or was glad to have them share with my children even though I didn't read them for 20 or 30 years. So, books, I feel, are in a different category; and they do decorate a room. I'm a big fan of books. But, her theme was, and I love this, was, 'You can let someone else enjoy them.'

And that really did work for me for a while, and I think it's a great idea. It is hard to give it up. It's hard to walk away from some of your emotional connected stuff. At the same, the idea that it has a home somewhere else, and that's important, and you write about that in the book quite a few times, you want it to have a home somewhere. You can give it up if you know that someone else at least is going to enjoy it.

Adam Minter: Right. And it's almost primal. I mean, that was--

Russ Roberts: I think it is primal.

Adam Minter: and it was so interesting to me, both in Japan watching cleanouts and in the United States, very different cultures and yet, in both cases, I would see cleanup professionals say to the people, their clients, saying, 'I can take this somewhere. Don't worry.' And you'd see the tension come out of the shoulders and they'd feel better and they could let go of it. You know, there is just that primal need to feel like, 'The stuff that was valuable to me, it's going to be valuable to somebody else.'

Now, there were times, I know, that was a white lie, and they just need to move it on. They've been hired by children to move things on and they have to market the moving, if you will, to the people they're doing it with. But that reassurance is so important.

Russ Roberts: Yeah, it's crazy.

13:18

Russ Roberts: Let's talk about Goodwill, which I confess I didn't think much about until I read your book. We have a Goodwill about, I don't know, two or three miles from us, and I do go there often. I wish I could there more often to dump off stuff and give stuff away, but I will show up there with a garbage bag or two of clothes that my wife and I aren't wearing anymore. There's a bookstore nearby that collects books for a library, to raise money for a library that they sell the used books, and I dump off books there every once in a while that I feel I can live without. It's hard, but I can do it. And I give them away. I feel good when I drive off. And I've never thought much about what happens next.

I do have some--'unease' would be too strong a word--curiosity, about the things I've put in the bag. There are things I would not put in the bag, right, that I would say, 'Oh, this is too beat up. I'll throw this away.' But in general what I put in the bag is a mixture of worn clothing and other things. But you went deeply into what happens to that stuff. So, talk about that.

Adam Minter: Sure. Well, it was one of the reasons why I wanted to do the book. I always think of Goodwill as kind of the Kleenex of the thrift industry. You know, it's, 'I'm taking things to Goodwill,' and people think of the Salvation Army. So I wanted to know what happened beyond the donation door.

What I found was an incredibly sophisticated business. It's a nonprofit and they use the money they earn to do some really great things with job training in their community. But to generate that money they have to be incredibly sophisticated about how they sort these things and how they price these things. And these things are everything.

There was this great moment when I was reporting in the book, and one of the retail managers at the Goodwill, Southern Arizona, he said to me, he said, 'It's a little bit like, if you're working at a Walmart and you get a call, and your inventory truck is coming in, and by the way, we don't know what's in it, and it's going to be totally different than everything that was in it the last time, and it's up to you to sort it and to price it, and, oh, by the way, make a profit.' And yet, that's what Goodwill does.

It's far more sophisticated than a Walmart, and some of the most enjoyable reporting I've ever done is just to sit with the clothing sorters and talk to them about, 'Why are you putting that piece, that garment, in the $3.99 bin? Why are you putting that one in the $7.99 bin? Why is this one going to Goodwill's boutique?'

And they explain to you, on the basis of feeling the fabric, on the basis of the brand, and their goal is to make money from it. It's completely profit oriented. They want to maximize the values of these donations, which is very reassuring to me. Because I think we all wondered--I wondered before this book: Are they really being careful with it? But they have every incentive to be careful with it because otherwise they have to pay to dispose of it.

Russ Roberts: Yeah, in my mind, they just throw most of it out. Some, though, of course, does get thrown out, but as you point out, they are very sophisticated in how they price it. So, give me a feel for that feel that that sorter was telling you. What kind of issues or determining where stuff goes?

Adam Minter: Sure. Well, if you just talk about clothing, they'll have on the wall--at least this is the Goodwill Southern Arizona store where I spent time--they'll have a list of dozens of brands with numbers on them, what the value is. And some of these brands, especially if they're coming from mass retailers like a Walmart or a Target, there just isn't a secondhand market for them, and they are not going to put them on the floor.

Russ Roberts: Is that because they could buy the new one across the street cheaply, or is it also because they're not made to last very long? I understand it's both, yeah.

Adam Minter: Both. Both. That's fascinating. The Goodwill sorters will tell you, over the last three years they've really seen a decline in the quality of the clothes and that's within specific brands. And they're absolutely sure of it, and I believe them. I mean, they're handling these things on a minute-by-minute basis.

But the other problem is, is that Goodwill is very much in competition with the new goods sector. The store in Southern Arizona that I spent time with off of Houghton Road is across the street from a Walmart, and the manager of that store, of the Goodwill store, is very conscious at all times of what Walmart is charging for new goods.

So, even though, in her opinion, the Walmart goods may not be as good a quality as some of the stuff that's hitting the floor in the Goodwill, you give most people the choice, they want that shiny new thing even though they could be buying a more durable product that's probably going to last longer. So she has to be conscious of that, and her prices have to move down to account for that Walmart price, because given the choice between the two at the same price point, people are going to opt for that new Walmart garment.

17:39

Russ Roberts: Now, one of the issues in your book--we'll come to it maybe at the end--is the fact that most things in our world don't last very long. Clothing in particular. And I am less critical of that than I would say you are in the book. I think most people like it for the same reason. I'll give you a version of the conversation I had with my son--who is a minimalist, by name. I think it's a--I'm not sure what the counterpart is to being a minimalist by name. You know, if you're not careful, minimalism is just an excuse to buy different stuff to carry your minimalist goods with and in[?]. But, he is something of a minimalist: let's just leave it at that.

And he was talking about how Apple AirPods wear out after about two years. The battery can't be saved. It'll just not be rechargeable after about two years, and he was saying how horrible that is.

And I thought, 'Well, it's a little horrible, but it's also the fact that probably in two years there's going to be a much better model coming along and I would probably like to upgrade. So I'm probably going to want a cheaper version now that I know won't last very long.' You might say, 'Well, $150 isn't cheap.' But I want a cheaper version now that won't last very long because I want to upgrade. And I think that's true of fashion a lot.

We're very rich. It's a sign of our wealth that much of the stuff that we have wears out. It's not just that we'd like to get a good price. We'd like to pay a good price because we want to reserve the right to get a better item in the near future.

Adam Minter: Well, I totally agree with you; and I think what's been really remarkable over the last 40 years in particular is, is not just--our society, say the United States, has grown incredibly affluent over that period--but at the same time, China in particular, but East Asia in general has become incredibly proficient to manufacturing to certain price points. And I've had the experience--I reported in China and Chinese factories for many years, and it was one of the most amazing things I ever encountered was going into an apparel factory and actually heard the factory manager say, 'Well, you like this design that was being made for an expensive brand in the United States. Well, we can make this at your price point. Same garment. No problem.'

And I encountered that a few years later with suitcase designs. Very nice suitcase for a well-known brand; and I was with someone from an American purchasing firm, and they said, 'We like that but we can't pay that price for it.' And they said, 'No problem. We can make a few changes here and there, won't be as durable, but we will be able to manufacture that price point.'

So I think those are the two phenomenon together have combined for better or for worse to create this confluence of stuff that's piling up in our homes.

Russ Roberts: And by the way, you said in passing that we've become so affluent over the last 40 years. I'm in a long-running argument with most of my profession because I think we have become quite affluent over the last 40 years, whereas it's become--I was going to say fashionable; it's not nice. It's become--many economists today believe that only a small portion of the economy has done well.

As I was reading your book, I was wondering if there's some data one could get at about waste, about garbage, about throwing stuff out that shows how widespread that affluence is. The magnitude of these--people throwing away and recycling things is so large it's kind of hard to argue that it's just a small slice of the American economy.

Adam Minter: Right. Well, I've been covering the waste and recycling trade for a good chunk of my professional life, and there's a few things that are axiomatic in waste and recycling. And that is: The more affluent a society is, the more it throws away. And, I mean, the data is really clear on that, and it's really no accident that, for example, China's waste and recycling numbers have just skyrocketed in recent years. And they're not to the per capita point of the United States yet, but they are, sheer volume, the world's largest generator of waste right now. And that isn't just people at the very top in Beijing. I mean it's people across the income spectrum.

Russ Roberts: Yeah. And I assume--you don't, of course, just use per capita because it could be that the top 10% represents doing all the throwing out, but I think it's a little wider than that.

21:46

Russ Roberts: One of the shocking numbers in your book is the revenue of Goodwill, which, if I remember, is a little over--I'll let listeners think about what that might be, but the number is over five billion dollars--

Adam Minter: Correct.

Russ Roberts: of a 17 billion dollar registry of thrift. That's a stunning number. It blew me away.

Adam Minter: It absolutely is. And they are just a part of it; and the best we calculate is, in terms of the volume of stuff, waste stuff moving around the United States, they're only about 3% of it. But in terms of the revenues, it's somewhere around one third. So it's an extraordinary large business.

Now, there are dozens of what I call Goodwill federations across the United States. So there is an international Goodwill headquarters that's actually located just outside of D.C., but the federations operate independently, and yet they're all part of this bigger Goodwill haul[?].

Russ Roberts: But is that five billion nationally in America or worldwide?

Adam Minter: Worldwide.

Russ Roberts: Worldwide.

Adam Minter: Yeah, but I mean, the majority of it comes in North America, yeah.

Russ Roberts: So, the part that I also didn't--so, that's revenue. They have cost. They have employees to do the sorting; they have employees who run the cash registers, and so on. Do we know what their profit is? Roughly?

Adam Minter: You know, actually, I don't, here. I wish I did.

Russ Roberts: Okay. But they make a reasonably large amount of money, and the part that I never thought about was: they actually do something with it. So talk about that.

Adam Minter: Yeah. Well, Goodwill goes back 100 years, and from the beginning they have been what they call mission-oriented. And their mission is job training, and they are interested from the beginning and basically making people more productive members of society through employment. And that's what they do.

So, in Southern Arizona where I spent a lot of time, they spent huge amounts of money on the most difficult-to-employ cases. So, like people coming out of the juvenile justice system. They will not only help them get their GEDs [General Education Diplomas], they will even subsidize their salaries and first employers, they will have classes in soft skills for them. It's really extraordinary.

One thing that's kind of a misconception out there about Goodwills: they do not hire these people who they help. And they are very clear that's a conflict of interest for them. The mission-oriented work really is about pushing people out into the community where they can work and be gainful members of society.

Russ Roberts: So who's in that mission? The people who are sorting, they're not volunteers. They're employees, I assume.

Adam Minter: Right.

Russ Roberts: Who cares? Who's caring about this?

Adam Minter: Sure. There's dozens of--just talking about the Goodwill of Southern Arizona where I spent the time--it's dozens of employees who are devoted 100% of their time to working with, oftentimes, these juveniles on a full-time basis. And they open up community centers, and there's people there to counsel these kids, to help them study. So it's really a big part of the infrastructure. The Goodwill Southern Arizona actually has co-CEOs [Chief Executive Officers]. One is devoted to the retail operations. The other is devoted to the social service mission.

Russ Roberts: So cool. One of the things that surprised me, I didn't know, is that they sometimes sell new stuff, not just donated used stuff.

Adam Minter: Absolutely, and it's a marketing device. So, as Cathy Zack[? 00:24:50], who is the manager of the store on Houghton Avenue across from a Walmart, said to me, she says, 'Look, people are going to come in here buying clothes for their kids. They're also going to want to buy toothbrushes. They're going to want to buy toothpaste and soap. Why shouldn't we sell that stuff, too? Why shouldn't we be a destination for all of those things?' It's not something Goodwill likes to talk about a lot because their brand kind of is a secondhand. But if you think of them as competing with the new economy, it's a really smart and savvy move.

25:16

Russ Roberts: Let's talk about the trend in junk and stuff. 'Junk' is not the right word, but stuff. So, you talk about the fact that it's growing, that we have a lot more stuff. Now, part of it is our wealth, part of it is our population, part of it is the cultural zeitgeist of minimalism and decluttering and the Marie Kondo phenomena. Talk about Marie Kondo and whether you think those things are anything more than just little blips on the landscape or whether it's--if they're important.

Adam Minter: Well, one of the interesting things I found in reporting this book is that Marie Kondo, in Japan, which is where she's from, is nothing new or particularly special. This sort of home-thrift movement almost dates back to the Taylorite Movements of the 1920s in Japan which revolutionized manufacturing, and some of the stuff was applied to the household. It really emerged as more of a household movement in the 1980s and particularly in 1990s when the economy stagnated and there was sort of this crisis of confidence in Japan and people started de-materializing a little bit. And Marie Kondo emerges from that. But one of the interesting--

Russ Roberts: Talk about who she is, because there might be two or three people listening who don't know.

Adam Minter: Sure. Well, she's an international phenomenon and celebrity, and she has written a book that became a television series called "The Japanese Art of Decluttering." And, the idea is you need to spark joy in yourself by letting go of your things. And her method, the KonMari method, is, you pick up something, look at it, if it sparks joy in your heart or wherever it would be, you keep it. If it doesn't, it goes out the door.

It's sometimes misinterpreted as an environmental movement. And actually, to Marie Kondo's credit, because she could certainly really ride that environmental side of it, she's been quite clear that, no, it's not. It's about personal consumption and just sort of clearing your headspace. But it's much bigger in the United States, Marie Kondo herself, than it is in Japan.

Russ Roberts: So, do you think it's an important phenomenon or is it just a cultural shtick? I mean, that idea--it's a variant on the one we mentioned before--that, if someone enjoyed this more maybe than you are, you're not getting much joy from it.

Adam Minter: Yeah.

Russ Roberts: It's a very hard standard, by the way. Very few of my physical items spark joy. It's easy to make a little bit of fun of. But do you think it's had any imaginably measurable impact on the river of stuff that's getting given away and reused?

Adam Minter: So, yeah, when the television show first hit really big in January and she was all over every news outlet, and I actually called up some thrift stores and asked, 'Are you seeing a spike in stuff?' And they said, 'Yes, we are, because of that.' But it's dropped off. There was this moment. It's hard to pinpoint. But in Japan, she is part of an important movement there; but she's not the most prominent one. And there's been a lot of thought along her lines, and people decluttering in Japan for a long time. And it was really after the Fukushima disaster that, if you talked to people in the secondhand industry, things really changed, and there was more selling of stuff into the secondhand market, and that's persisted.

And even BookOff, which is a corporation, for-profit corporation, they have around 800 outlets in Japan. I talked to managers there and they said, 'We felt something change in the overall secondhand market after that.' It wasn't just a surge of stuff, but the nature of the stuff coming in changed a little bit, too, stuff that people would have held on to longer.

26:57

Russ Roberts: So, we're talking about our affluence adding to this river of stuff, but there's another side to this that's a little quirkier which we haven't talked about, which is hoarding and collecting.

So, there are people who don't just buy lots of stuff because they like to shop. They like to have, like a former guest on the program, lots of sneakers, or lots of figurines. And you talk in the book about one of the challenges--emotionally especially--where we don't mind giving up just everyday items, but people's collection of x which used to be worthwhile, now it's totally valueless.

Adam Minter: Mm-hmm. Yeah, like the Hummel figurines. I mean, if you go into an antique store anywhere in the United States and you ask about their Hummel figures which are these--they started making them I think in the 1950s in Germany, and they became a really hot collectors' item, really back in the 1970s. Now the price has completely collapsed because the generation that loved them isn't there any more.

One of the more interesting comments that was given to me in the course of reporting this book, and it's in the book, was made by Jill Freeman, who, I consider her sort of a master clean-out specialist in Minneapolis. I mean, she is the counsellor to the hardest cases and she's very good at valuing the stuff, and she said to me in a coffee shop, she said, 'Hoarding is a spectrum disorder, and it's just a question of where we all land on it.'

And that really gave me pause, and it sent me back to watch some episodes of "Hoarders." And I wouldn't say I'm a hoarder, but I think she has a point. And I think there is something very human in wanting to acquire, to order, and to collect. I think there are plenty of anthropologists who would probably agree with me on that. I don't know where that comes from, but I was very careful not to go too far into the hoarders but not to separate everybody from it, because I think we're all, to some degree, there.

Russ Roberts: Yeah. It's a form of security.

Adam Minter: Yeah.

Russ Roberts: And I think a better way to say it, an issue I'm increasingly interested in psychologically and hope to have some episodes on down the road, is our need for control. So, hoarding is a really primitive way of exerting control over my environment. And, it's a source of comfort. I can look at that collection and feel good about it. Of course, some people, it's a constant taunt. It's like, you don't have the next one, you didn't--you should have more, and so on. But I do think it's a psychologically adaptive activity.

Adam Minter: Definitely. There's also a social side to all of this. I heard from many clean-out specialists, Home Shopping Network [HSN] is a real problem, and they hate it because--they hate it--

Russ Roberts: Why?

Adam Minter: because you have lonely people who call it up, and that becomes their outlet. They call up and they talk to the operators and they order things. I was given many stories of walking into houses with hundreds of Home Shopping Network boxes just piled up, and that was the social interaction.

The flip side of that is, Goodwill, many people at Donation Doors told me, the workers at Donation Doors told me that they will have regulars come in every day, older people, bringing in just little things, because it's their excuse to interact with somebody. And so, the consumption and reverse consumption becomes a very important social activity.

Russ Roberts: Yeah. I thought you were going to talk about flea markets and running into the people who, like you, are competitors but also you share this obsession potentially with them; and there's a certain, I think, tribal social aspect to it.

Adam Minter: Absolutely. Well, shopping is a social activity. I mean, one of the biggest, fastest growing phenomenon in online shopping is combining social media with shopping, and you see Facebook doing it with its Marketplace. It's even bigger in Asia. WeChat, the all powerful Chinese chat program actively integrates commerce into the chat interactions, so that your friends, you see what they're buying and you can buy it. They can recommend things. So the shopping experience is very much wrapped up in your social network.

Russ Roberts: Mao is probably turning in his grave, but he's a man who deserves to turn in his grave, in my view, perhaps. That's unfair, but--

33:10

Russ Roberts: Let's turn to my favorite part of the book, which is rags. I hadn't thought much about rags. It is a chance for me to use a Yiddish word which I think has never been mentioned on this program, which is 'shmata'. A shmata is Yiddish for rag. And of course shmata means more than just a literal rag. It really means the industry of textiles, of clothing, and when someone would say, in the--typically in America in the 1930s or 1940s, 'Oh, he's in the shmata business,' it means, he was involved in some aspect of either literally rags, but also textiles. It's also a derogatory word for a piece of clothing that's not up to one's standards. 'Would you like to buy this?' 'No, that's a shmata.'

So, now, linguistic episode over. What is amazing to me is that there is an enormous industry around rags. I wouldn't have guessed it. We have rags in our house. There are T-shirts that wore out, finally, that we tore--we didn't tear them. We probably used a pair of scissors and cut them into two or three pieces, and those are--we have some rags.

People buy them? People make them? Talk about it.

Adam Minter: Yeah. I mean, it's basically the industrialization of what you do at home, what we do at home, what my mother did at home and grandmother, which is, the clothes get old and you cut them up and you make them into rags. But, the industrialization is very interesting. It dates back 200 years, but for right now, it basically accounts for--one-third of the clothing sent for recycling in the United States, goes into rag-making enterprises. And what they do is they buy the rags, and it's--

Russ Roberts: Where are they getting those?

Adam Minter: So, it could be--

Russ Roberts: [inaudible 00:34:54]

Adam Minter: Sure. Sure. It could be from Goodwills, these are clothes that maybe Goodwill judges can't be sold. It could be from hospitals. It could be from hotels--the sheets, the linens--because these also go through rag-making enterprises. Any business that's generating large amounts of fabric, new or old, that should go to waste, it's going to end up more likely than not, at some point, with the rag maker.

At the rag maker, they're cut up to certain specs. The company that I write about in Secondhand called Star Wipers in Newark, Ohio, outside of Columbus, they're very proud that they do 10 rags to the pound and say, 'Other companies do six rags to the pound. Our rags our better.' Who buys them?

Russ Roberts: You'd think their rags were smaller, but I think it's the accuracy with which they cut, right?

Adam Minter: Well, and smaller is--as Todd Wilson, he was very interesting. We went through, I spent a lot of time with him seeing what a good rag should look like. And he pulled out rags from other companies, and he kept talking about angel wings. So, somebody would take a T-shirt, slice it down the middle and throw it into a pack as a rag, and he says, 'We don't do that. We don't do that.' That's how Todd will talk to you. He says, 'We cut a proper rag that you can use to wipe off your dipstick, to wipe down a table. Not an angel wing like a T-shirt that's just been split in half.'

Russ Roberts: But before you go on, because I want to get into a little more detail in that process, because you describe it really beautifully. It's hard to say that, but it's true. It's beautifully described--rags. Who needs rags? Who would buy them? I mean, I've never bought a rag.

Adam Minter: Right. Well, if you owned an auto garage and you needed a rag to wipe off a dipstick or to wipe off a leak on the floor. If you operate an oil pipeline and you have leaks and you have people doing maintenance and you need to wipe those up, you need rags. If you are a hotel and you have a housekeeping staff and that housekeeping staff is wiping down furniture, and wiping down the bathrooms, they need rags. If you have a bar and you're drying cups and glasses, you need rags. I mean, the sky is the limit.

Painters, believe it or not, somebody who paints houses for a living, or paints hotel rooms for a living, you need rags to wipe brushes, to wipe corners. And you would never think, it never had occurred to me, to this day, that it's such an extraordinarily large business and there is such huge demand for these kinds of material, this kind of product, but it's out there. And in total, for the economy, it can swallow up one-third of that used clothing.

Russ Roberts: And it's--if I think the right metric is, billions of rags--

Adam Minter: Billions. Easily.

Russ Roberts: Billions, which is mind blowing. After I read your book I went onto Amazon. You can buy rags there. I don't know where they come from. They're made of different qualities. You can have 100% cotton rags, or at least that's the theory; we'll talk about whether that's true or not. You can have microfiber rags. But the interesting thing about your buddy Todd Wilson in that business, is that his--you say they need rags. Now, there is competition, obviously, Star Wipers has other rag makers, but rags themselves compete with--

Adam Minter: Paper towels, for example, and synthetic rags. And more and more. And the marketing is really interesting. I mention in the book in a footnote, Kimberly-Clark actually actively advertises its new synthetic wipes as being sort of cleaner and more respectable than a used rag, and they have this one ad where they show a very respectable-looking guy who obviously represents synthetic rags next to a sort of sweaty mechanic, all greasy, and he's the secondhand rag. And it's an amazing advertisement that tells us something really interesting about the economy of cleaning, which most people never think about.

Russ Roberts: But a third of that clothing is going to get turned into these rags. So this is sweatshirts, T-shirts, flannel shirts, I don't know what else--sheets.

Adam Minter: Flannels--yeah, flannel sheets.

Russ Roberts: And the first--let's talk about the process in a little more detail. So, first thing that happens--I guess, first let's talk about the different kinds and the different qualities that people care about. A rag is not a rag.

Adam Minter: No, it's not. As Todd will tell you, it's a tool; and you need a tool to match the need of the industry.

And, so, really, the classic example is, you would not want to give a polyester rag to an oil and gas company to wipe down a pipeline, because polyester can accumulate static electricity, and that's a really bad thing to have around an oil and gas pipeline. It might explode. So, they're not going to buy a polyester rag. They're not going to buy a rag that's a polyester cut-and-blend rag, which is a real problem. They want a straight cotton rag. And so, to supply that straight guarantee, that straight cotton rag, Todd, actually, his company actually goes from farm to rag cutter so they can guarantee that it's 100% cotton, and they grew the cotton. But--

Russ Roberts: They make new rags. Those are not recycled.

Adam Minter: Right. And they call them the STB, the Simply The Best, for people who really want that 100% cotton rag.

But so many other industries are okay having that rag that might be a poly-cotton blend of some kind; or it's probably not a straight polyester rag because it's not going to absorb very much, but they want something that absorbs. And that's the other interesting thing about this industry that just threw me when I was with Todd: Most people who aren't in the rag industry will think of a good quality piece of clothing as a new piece of clothing. It's completely the reverse in rags. They want that T-shirt that's been washed and washed and washed because it's more absorbent.

Adam Minter: And so, one of the things that Star Wipers does so it can prepare these garments is, they will actually buy cuttings and newly-manufactured clothes that have been rejected, for example, from manufacturers. So I believe it's every--

Russ Roberts: Irregulars or whatever. The same. Yeah.

Yeah. Every couple of weeks they'll get a shipment coming in from Bangladesh, manufacturers there. But it's new cloth. So they have an amazing laundry--it looks like a giant caterpillar there--in which they wash this stuff to simulate it having been through a washer many times. And the reason they do that is it makes it softer and more absorbent. So there's a manufacturing process to this. It's not just a matter of cutting up the rag.

Russ Roberts: So, I assume everything is going to get washed in some manner.

Adam Minter: Sure.

Russ Roberts: Right. So, in very hot water? I don't--I assume?

Adam Minter: Very hot water, and just, yeah, you know, basically, make it--

Russ Roberts: They're kind of gross, right?

Adam Minter: Yeah. But even--this is new fabric coming in from Bangladesh.

Russ Roberts: But some of it is not--a lot of it is not new, in this American factory, right?

Adam Minter: Sure. And when you think about--Todd's company does a lot of business with healthcare textiles--you know, sheets. So, that stuff isn't even washed at Todd's place. That's going to be washed before it ever hits his facility. He doesn't want something that's been in a hospital coming into th factory like that, so that's a real issue. Sure.

Russ Roberts: So, let's just take a T-shirt that a bad rag cutter would cut in half down the middle. Star Wipers is not going to do that.

Adam Minter: Right.

Russ Roberts: How are they going do it? They've got some kind of automated--and it's not done with scissors.

Adam Minter: Well no[?], it's people are doing it. That's the--

Russ Roberts: But it's not--

Adam Minter: It's not.

Russ Roberts: But it's a blade.

Adam Minter: Oh, yeah. It's a very interesting machine where you have this waist-level blade. It's a spinning razor inside of a guard. And the workers will then take the garment and slide it through that, and it makes a very clean cut. And the Star Wipers cut, and I probably cannot do it justice, especially the way Todd does it, but--

Russ Roberts: Not a podcast [? inaudible 00:42:16]

Adam Minter: Yeah.

Russ Roberts: But we do have--there's an article on Bloomberg that you wrote that has some video of that.

Adam Minter: Right.

Russ Roberts: We'll put that up. Go ahead.

Adam Minter: Yeah. I mean, they start cutting under the armpit. And one of the goals you have is, if there's anything hard, anything sharp--a zipper, a sparkly print or something like that--that's got to be cut away. And if it can't be cut away, then it's actually bound for the landfill.

The other interesting thing that I didn't describe in the book or in Bloomberg, is there's also a lot of clothing goes through a magnet system to make sure that there's no metal attached to that garment. So there is a really interesting magnet system and the garments go through it. If a magnet detects something this escape hatch opens and ejects--

Russ Roberts: Whooop, whooop, whooop. [alarm sound effects]

Adam Minter: Yeah. Because you don't want a sharp metal something on that sweatshirt you're going to--

Russ Roberts: At the car wash.

Adam Minter: Yeah. Exactly.

Russ Roberts: Or a car comes off the assembly line or there's a lot of polishing--

Adam Minter: Disaster.

Russ Roberts: Yeah. Disaster. So, it gets cut up. And now what?

Adam Minter: And from there it's packaged. And Todd's company, Star Wipers does not sell directly to consumers. They sell to distributors who are asking for various kinds of rags for various uses. So, the painters might be okay with a rag that has more polyester in it. It just all depends what people are requesting. Sweatshirts are in very high demand because it's a very absorbent material, so car washes like those. It just depends who his customers are, but they do the sort to make sure that it goes to the right kind of customer.

Russ Roberts: And do they give them names or grades, other than STB, Simply The Best, which is the name I want to kind of hold on to for a while? I like that name, STB.

Adam Minter: Sure.

Russ Roberts: Simply The Best. That's the top. But do they have, like, 'Not quite the best,' and then, like, 'Eh'--and then they have--or how do they describe--

Adam Minter: Sure. You might see in a white sweatshirt, would be a way of--it's basically described as what it is, you know, 'Colored T-shirt.' And that's very important: Color versus white. If you're going to be wiping down a table, you probably don't want a color T-shirt to do it. You don't want something that's going to bleed. You probably want white.

And so, in this business, white obviously is going to fetch a premium, especially a white sweatshirt, it's going to fetch a premium over, say, colored T-shirt. And, again, it's a tool.

44:32

Russ Roberts: But if I'm that business and I've got--a truck pulls up. Well, I don't even know what pulls up. You tell me. So, a bunch of stuff pulls up--I don't know what's it's in. It's in a bale, in a box, in a--it's thousands of T-shirts, thousands of sweatshirts: they're not all the same. It's a big--

Adam Minter: Right. And they--

Russ Roberts: blob.

Adam Minter: Right. And they sort it. And they have very--I mean, that's again, it's very similar to secondhand, and one of the amazing things about the secondhand industry as a whole is the level of sophistication and knowledge, inherent in sorting our used stuff that we may not think of anything: we just throw it into a bag and take it to Goodwill. But you have people in these factories, employees who have been doing this for years and have this incredible canny sense, on sight, on feel, to be able to sort different grades of T-shirts, even, into the correct pile so that they can be sold to the right people.

Russ Roberts: But if I'm that individual in this facility doing the cutting, I'm going to be cutting maybe a T-shirt, and then a sweatshirt, and then a--how does it get organized after that to create a bale of, say, white T-shirts? I'm not going to just be cutting white T-shirts, right?

Adam Minter: Sure. Well, a lot of it is sorted ahead of time.

Russ Roberts: Okay. Yeah.

Adam Minter: Yeah. I think that's what you're getting at. A lot of it is sorted ahead of time. And the people who are selling to Star Wipers have an incentive to sort that stuff ahead of time. If they send Star Wipers a big bale of white T-shirts, they're going to get paid a lot more than if it's white mixed with red and yellow and green, because then Todd is going to have to devote labor to sorting that out. It's going to hit his cost. So a lot of the sorting--I see where you're getting at now--is actually done even before it hits the factory.

Russ Roberts: And if I remember correctly, there's some unease about the deterioration of quality in the raw materials that they work with. It's part of the reason they're growing their own and--

Adam Minter: Right.

Russ Roberts: You say it's totally integrated? They've got a cotton--pick their own cotton?

Adam Minter: Yeah. Yeah. They grow their own cotton and they have their own knitting mill, and I believe they cut at the knitting mill, as well. No, actually, no, I think they cut in Newark, I think I saw some cutting there.

Russ Roberts: But he was complaining, I think, that the quality is off: the 100% cotton isn't 100% cotton anymore. They mix in some polyester to keep the costs down--

Adam Minter: Right. And that's why they're doing it. Because, for decades, you know, as long as we've been making clothes, somebody said 100% cotton it meant 100% cotton. But in the 1980s, it started to change a little bit. As the margins on manufacturing textiles got tighter and tighter and tighter, people started integrating more polyester into the cotton blends.

And you are supposed to, by law, actually accurately label this thing, this garment, and say what's in it. In reality a lot of people, especially outside of the United States, are not labeling correctly and we know that because Todd knows it--because he has to be very careful he's not selling, as we said earlier, polyester-blend T-shirts to oil and gas pipelines.

Russ Roberts: So, his customers care more than the average T-shirt wearer, obviously.

Adam Minter: Absolutely. Absolutely. It's a question of safety, and so that's why they had to start offering new rags, new cotton rags. And it's an interesting example of how deterioration in quality can, at least in this sector, drive the manufacture of new.

Russ Roberts: The number I have here is that they sell, it's hard to believe, 15 million pounds of rags per year. Are they the largest in the United States, do you know?

Adam Minter: They are probably the largest cutting on its own in the United States. There's also a huge off-shore trade in manufacture of rags. Which makes a lot of sense because it's a very labor-intensive industry, and that's the kind of business you would expect to more off shore. So you have quite a few rag companies in the United States that actually import their rags and then wholesale them. But Todd is cutting his own.

48:14

Russ Roberts: The other part of this business that surprised you and surprised me is that, in my mind, Americans buy lots of T-shirts that say maybe a university name on them or a rock band or whatever it is, or just a plain T-shirt; and then they get tired of them and they get sent overseas to a poor country and they're sold there secondhand. Then I can imagine they wear out and they come back here and we make rags out of them, but it's a lot more complicated than that. There's a lot more stuff going on.

Adam Minter: Oh, yeah, I mean, the supply chain, or the reverse supply chain, is incredibly complex. I went to India to get some sense of how it's happening. In fact, the world's biggest sorting center is actually a free port in India called Kandla which is on the West Coast of India. And, India doesn't allow the import of secondhand clothes, but it allows--

Russ Roberts: Legally.

Adam Minter: Legally, because there's lots of secondhand clothes going all over India, which we see. But Kandla is allowed to import clothes, process them--that could mean sort them for re-use as clothes in Africa--or you actually have large cutting operations there now. And so, the clothes go out from Kandla into Africa, into Southeast Asia.

And there's a few of these hubs globally. There's one in Mississauga, Ontario. Another one is actually Kuala Lumpur, Port Klang. And they are sort of the global hubs of this trade, and they both export but also import. And they are sources of rags, say, for Todd, and Todd has actually gone to Kandla and trained people in Kandla how to cut for Star Wipers's cuts, the way he wants them cut. Not the 'angel cut,' as I call it--I don't think Todd would call it that, but we'll call it the 'angel cut'--but the way he wants it cut.

Russ Roberts: The angel cut is STW--Simply The Worst.

Adam Minter: 'Simply the worst.' Yeah.

Russ Roberts: But the--in the ban, a lot of countries have bans on importing and use of secondhand clothing because they want to protect their domestic textile manufacturers and domestic clothing manufacturers, of course. That's a mixed bag for the people that would like to maybe wear cheaper clothes.

Adam Minter: Absolutely. And we see that in Rwanda right now where they've effectively banned it. They've raised the taxes substantially on secondhand clothes moving in, with the idea that that will encourage manufacture of new clothes. And you have several Chinese companies that have moved into Rwanda--not Rwandan companies, but Chinese companies--are making new, but meanwhile the predictable has happened, and there is a vast trade of smuggling secondhand into Rwanda right now, because people can't afford the new clothes.

Russ Roberts: And smuggling is costly, so that means you have to compensate the smugglers for their time like any other business even though it's under the table.

50:52

Russ Roberts: Now we're going to turn to one of my favorite things in the book, which I don't think you made enough out of, Adam. I think it's really one of the incredibly cool things--which is the recycling of sweaters. So, one of the aspects of the underlying phenomena in your book is that a lot of the wealthier nations live in colder climates. The things they wear to keep them warm when it's cold are not of much interest to people who live in warmer climates, so there's a question of what to do with sweaters. They don't have the market that a T-shirt might have in the secondhand market. What happens to them? And we're going to get to why I love this in a second.

Adam Minter: Sure. Well, a very small number flow in Eastern Europe. But the vast majority of wool sweaters are going to flow to a place called Panipat, which is a town about an hour-and-a-half drive north of Delhi in India. And Panipat, really since about the mid-1970s, has been the heart of the wool recycling trade in the world. And this trade dates back to the earliest days of the Industrial Revolution when people were trying to figure out what to do with wool after it couldn't be worn anymore.

Russ Roberts: It's easy. You just take an end and just start pulling until you get a really long piece of yarn, and you're done. You get a new piece of yarn. That isn't what they do.

Adam Minter: It isn't what they do.

Russ Roberts: That's what I'd do.

Adam Minter: Right. What they do is, they take these sweaters and other wool garments, it's not just sweaters, but wool in general, and it's essentially chopped up. They have these big machines that rip these garments apart into their individual fibers and then re-roll them into a fabric called 'shoddy'.

Russ Roberts: That's my favorite thing. Shoddy. That's not--it's not called 'shoddy' because they're shoddy. I think--I think stuff is shoddy because it's this.

Adam Minter: It's this. Wool shoddy jacket, Jan. 2020, New York City

Russ Roberts: Is that correct? It's the origin of the word 'shoddy.'

Adam Minter: And it goes back to the early 19th century. It was invented in early 19th century in the United Kingdom, and for years the United Kingdom was the heart of the shoddy trade. Then it moved to Prato, Italy, and then it moved eventually to Panipat, and Panipat became the heart of this trade.

And what's fascinating about what Panipat did is, it cornered the market in what's called 'relief blankets.' So, relief blankets are--well, people don't know what they are. I didn't know what they were until I got to Panipat. Relief blankets are, if you see the Red Cross go in for some kind of relief operation, a hurricane, or an earthquake, and they're bringing blankets, those blankets until quite recently were made of shoddy, which is this fabric that's made in Panipat. It's a very--

Russ Roberts: Recycled wool.

Adam Minter: Recycled wool. It's rough, it doesn't feel great on the skin. It's not very nice colors and it tends to smell musty, but it's cheap and it will keep you warm. So, it's great for relief blankets and in India it was long called--it was also sold retail--it was considered the poor man's blanket. That's what it was in India.

Russ Roberts: Now, is it something like pressed board? Like taking shavings of wood and mashing them? I don't know if that's the right word, pressed board, pressed wood, the--

Adam Minter: I know what you mean.

Russ Roberts: It sort of the second, lower-quality wood. It's not really wood. It's been fused, essentially. So, actually, the verb used in the book for shoddy is it gets shredded. So you take a bunch of sweaters, you shred them. So, now you've got what? Little pieces of fabric?

Adam Minter: Yeah. And I think that that--

Russ Roberts: And then what do you do with--I don't--do you understand the process?

Adam Minter: Yeah. I mean, you turn it into a low quality yarn. So, the thread count is very low compared to, say, a new wool yarn, but it's the only way to do it. You've got to tear the stuff apart to make it new again. And so that's one of the reasons it's shoddy. If something is shoddy, it's low quality. And the thread count in this yarn is very, very low as compared to, say, a new wool yarn. It's just not very good.

Russ Roberts: So, now, you talk about the fact that the shoddy relief blankets--do you have any idea of how many get produced per year?

Adam Minter: No. I mean, but--millions at the peak of the trade.

Russ Roberts: Right. And is it only used for relief?

Adam Minter: Well, like I said, it's also--

Russ Roberts: For crises?

Adam Minter: Yeah. I mean, it's also a 'poor man's blanket,' as they call it.

Russ Roberts: Okay.

Adam Minter: And there was some export to South America and some to Africa, but not in any significance.

Russ Roberts: So, their new competitor, though, is a synthetic.

Adam Minter: Yeah, it's polar fleece.

Russ Roberts: Yeah.

Adam Minter: And polar fleece--

Russ Roberts: What is polar fleece?

Adam Minter: It's polyester, essentially.

Russ Roberts: It's not a sheep?

Adam Minter: No.

Russ Roberts: Comes from a cold climate?

Adam Minter: Yeah. Polar fleece is a great, great branding for--it's unbelievable. But, yeah, polar fleece. So, polar fleece has been around for a few decades, but like many things, Chinese factories really mastered the way to make it cheap. And pretty soon they realized that they could almost be Panipat for a relief blanket. They could make a polar fleece relief blanket almost at the price point that Panipat was making its shoddy blanket. But they could do a couple of things better. One, they could make more, more quickly because it's coming off, basically, a factory line. They just come flying off the line. And so, if somebody in Geneva calls up China and says, 'I need 500,000 polar fleece blankets for this disaster,' they can do it really quickly.

But if you talk to the folks in Panipat, they say, 'That's a real risk to us. It will take us months to do, and we could build up the inventory, but what if they change the specs on the blanket?' So, as a result, over the last few years, China has really cornered the market on relief blankets and they've become polar fleece.

Russ Roberts: Incredible.

56:27

Russ Roberts: Let's talk about the policy implications of this. One of the things you don't talk about that's always in the back of my mind is the cost of landfill which, obviously, we can price it in various ways to encourage recycling, reuse. We've talked a lot in this program about recycling and composting. And I think we're at a point in America right now--I like to use this example and when I'm out in Palo Alto in the summer, my garbage can's about this size of a small backpack. It basically--you can throw out a couple of tissues and maybe a package of something, but otherwise you've got to recycle it or you have to compost it. Which I find vile; and I've confessed on a program, I've started to do a little--I've been a little easier about composting recently. But it still kind of--there are things I don't like about it, and I think there's some costs to it that are often ignored.

But the impression I have is that the recycling market has collapsed and that a lot of what is recycled today in America--which is often mandatory, by law, by legislation--is getting thrown away anyway. Is that true?

Adam Minter: You know, there are a lot of recycling programs that have failed over the last couple of years, but surprisingly, many also have remained resilient. And, part of the reason they've been resilient is they've raised the fees associated with them. And so they've been able to subsidize the trips to the landfill, or subsidize trips shipping to places where perhaps the margins wouldn't have been as good but they can swallow some of the cost of doing that, and the things will get recycled.

You know, there's no question that recycling of certain products, especially plastics, have declined precipitously in recent years, and a lot of that's moving to incinerators a lot.

Russ Roberts: Do you know why?

Adam Minter: Because the market's dried up. Not dried up. I mean, one: China decided that it was no longer going to import most recyclables. And they were the number one customer globally for it. And there were a lot of reasons that China did that. I think the number one reason they did it is they wanted to develop their own domestic recycling industry, and American plastics, in particular, were considered better quality, and they simply couldn't compete with it.

So, when you lose that, when you lose your biggest customer, suddenly it's supply and demand. You've got this massive supply, the price collapses, and there's nowhere for it to go. It's a funny situation in the global recycling industry right now, because I grew up in the recycling industry and when the price of a commodity--

Russ Roberts: Meaning?

Adam Minter: Meaning my family was in the scrap metal industry. And, you know, in the past, if the price of copper went down or if the price of aluminum went down, you would adjust. Maybe you would buy a little less--you wouldn't hold on. But you would operate a good business. But the problem we have now is that these municipal recycling programs aren't really economically based: They're environmentally based. And so even as the biggest customer stopped buying, you still had campaigns in American cities saying, 'Let's boost our recycling rate.' And it's completely backwards.

And for me as somebody who grew up in the industry, I think the proper way to look at recycling is an economic activity. And it can be a very profitable one and a very beneficial one.

But if you just start looking at it as an environmental activity, that's when you get into problems, and you find municipalities scrambling to figure out what to do with the stuff.

Russ Roberts: Yeah, the way I would phrase it is: if you see it as a religious activity, which--something that is morally exemplary--you're going to have costs that you might ignore if you're not careful.

Adam Minter: Sure.

Russ Roberts: But one of the things you talk about, which I think is interesting although I don't agree with it, and you don't agree with it either, but you talk about it--at least I don't think you agree with it--is that this idea of obsolescence, the idea that a lot of the stuff that we consume--which is a bad word because it implies it gets used up. It doesn't. It's the stuff we buy, and then it lingers in our houses. That, a lot of it is made to wear out quickly.

And you could make an argument that that has costs of different kinds, landfills. You could argue--I'm not going to do that too vehemently--but you could argue that landfill is underpriced. And so there's a distortion in the market of: people have an incentive to throw stuff out sooner than they otherwise would. And maybe it would be a good idea to have legislation that would require manufacturers to make stuff that lasted longer rather than that was shoddy, say--lower quality. So, you raise that possibility and then you pretty much reject it. Why?

Adam Minter: Well, I mean, France has a law prohibiting planned obsolescence, which is a very ambitious law when you think about it. And they don't--so far as I know, they've never had the guts to actually prosecute a company for doing it, and it would be, I think, judicial suicide to do it. How do you even define the crime? But, you know, their imperative is just what you said. I don't think outlawing planned obsolescence is a good idea. I think we are a society that still depends upon innovation, and if you want innovation then you can't start constraining people, putting up parameters on how long a product should last, what a product should be. Let people innovate in the way they will.

I do think there is something to be said for a certain level of transparency, and manufacturers revealing to consumers how long they expect their products to last. That doesn't need to be burdensome. That doesn't even need to be a law. I just think that there's certain industries that collectively would benefit if they got together and said, 'Let's come up with some standards so that we can tell consumers the plan is to support this product with software for five years,' or, 'The motors in our washing machines are designed to last 10 years.' And to give consumers--I'm a big believer in consumer choice, I think that's good for everybody in making good choices--if you give that kind of transparency that might actually improve durability because consumer surveys show, at least in theory, consumers want to buy longer-lasting products, longer-lasting washing machines. So, make it easier for them to do it.

Russ Roberts: Yeah, I think it's really important distinguishing between a washing machine, which is real pain in the neck to replace and to shop for, and it's not really--I don't get any--there's not much romance, the way there is, say, about shopping for a new car or other--even a new phone or stereo or anything. Whatever a stereo is. It's the wrong phrase, because we don't have stereos anymore. We just listen to music on our phones.

But, I do think there's an interesting issue here. And you have a sentence that would only bother me; I think, probably would be the only person who was bothered by it in your book. You say,

In 1924, the world's largest lighting manufacturers formed a cartel that agreed to reduce the lifespan of light bulbs as a means of boosting sales.

Now, I used to teach microeconomics every year, taught it for 30 years. There's a classic fallacy that students come in with when they--not just students, but people have in general which is: Manufacturers want stuff to wear out so that they can sell you more.

It's the same idea that the toothpaste--the reason you can't get the last little bit out is because that way you'll buy another tube. That is, in my experience of life, is not how people compete, which means you have to have an explanation of why toothpaste is hard to get out of the last part. And I have a theory about that; won't go into it now, to challenge listeners to think about what that might be.

But I do think it's a really interesting issue in that, in my worldview in general, competition prevents manufacturers from exploiting people by making crummy stuff, when people would prefer a longer lasting item. And light bulbs, the classic example--there's a number of Hollywood examples--the best one is The Man in the White Suit, Alec Guinness. Alec Guinness plays a chemist who develops a material that lasts forever. He's hounded and destroyed, or they try to destroy him, because, 'If it lasted for ever then we'd never sell another suit.' No, you'd sell that first suit for an enormous amount of money, though. So, that would be a plus, not a minus. And then, of course, you could still sell some more suits because the cut would change and the fashion would change. And it's just a misunderstanding, I think, of how business works and how profits work and how competition works.

And in my lifetime, of course--one more example: Stocking manufacturers could make stockings that don't run, but then they wouldn't sell any more so they've all decided not to. But of course, the real reason is that stockings that don't run are really thick and uncomfortable and women don't like them. There are such stockings. People hate them.

But my presumption when I look at light bulbs, light bulbs just get longer and longer--now they last forever. Which is beautiful because changing a light bulb is annoying. There's no romance, like, 'Oh, I want to make sure I get the latest one.' I just want one that makes light. There's some new variations and how hot they are and how much energy they use. It's not irrelevant. But in general, manufacturers compete by how long their light bulbs last, not how quickly they burn out. So, if there was a cartel in 1924, I guess it didn't last long.

Adam Minter: It didn't last very long. No, that's correct.

Right, and you know one of the interesting phenomena in recent years is, I think there is now, as the price of smartphones goes up, there is an incentive for the manufacturers to actually ensure that these things last longer. And we're starting to see that because in interesting ways I think it's very fascinating that Apple, for example, are starting to act like a car dealership. They will take trade-ins on your phone, they will refurbish them, and then they have--it's hard to find on their site, but they have their certified refurbished store. And you can buy a used Apple iPhone at a discount. And it's sort of the car dealership model. And I think what's interesting about that is that it means that people are starting to think in terms of resale value on their smartphones.

Russ Roberts: Interesting. Yeah.

Adam Minter: And it makes sense, because they're quite expensive.

Russ Roberts: Yeah. And they don't really wear out. The battery does wear out, but the rest of the components are pretty immortal. And as you pointed out at one point in the book, most of them aren't recyclable. A lot of the pieces inside are not recyclable. It's hard to--and it's expensive to get them out.

Adam Minter: Yeah. It just isn't there.

1:06:25

Russ Roberts: So let's close. I'm going to read a paragraph from the book. We talked about this before. I'm going to let you muse on this as we--as, we can let you take it home. You say,

Though I've never been much of a shopper, the experience of reporting this book--days spent in thrift shops and attending home cleanouts--made me reassess my own consumption and hoarding. The things that I value, I quickly realized, generally aren't valuable to anyone but me. Once I had that understanding, I started letting go and curtailing what I was buying in the first place.

Adam Minter: That's precisely what happened. It was a journey for both my wife and I. I'd come home with stories of warehouses in Japan filled with used books--and that BookOff is the company. And this was a real turning point for us. I'm an author; and being in a warehouse full of books that the company is assessing very quickly and doing a triage on with the majority triaged into baskets headed for the paper mill, was quite shocking.

And really--upsetting in a certain way. And we both stopped buying books at that point. My wife did something funny. She became a bit of a boutique used-book dealer, and I describe that a little bit in the book. She realized she didn't need so many books. She tried giving them away, and she found she actually got rid of more of them if she sold them than if she gave them away. But for both of us, it really made us think about what the long-term implications are for acquiring so much stuff. Not so much from an environmental perspective, but just from a social perspective.

We have a son. Do we really want to leave a big, full house of stuff for him to figure out how to clean out? Not really. And so, it changed us.

Russ Roberts: My guest today has been Adam Minter. His book is Secondhand. Adam, thanks for being part of EconTalk.

Adam Minter: Thank you so much.


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