Friday, December 26, 2014

A Yuletide Meditation - The Miracle of Markets

At this season of “Peace on Earth, goodwill towards men” it is fitting to reflect upon the most effective engine for peaceful cooperation, learning, discovery, innovation, material progress and social toleration known to mankind.  That is the voluntary and unhampered exchange of goods and services; the free market. 

The axiom that "When goods don't cross borders, armies will," says it all. 

But rather than rehash the pronouncements of deceased economists, I want to share a real life example that I am living through today.  As my friends and blog followers know, I am at a career crossroads exploring alternate paths.  These paths include seeking another job in my existing career discipline, opening a marketing /media consultancy and evaluating business opportunities outside of my field.

One of these opportunities involves a technology that has the potential to make the world a better place while delivering a handsome payout to its inventor and those who successfully market it.  If the rest of this blog seems a bit much like a commercial, so be it.  I’m not ashamed to shill for something that produces social good while making a buck or two for me.

The product is called RD Fresh. It is a mixture of 100% natural and harmless minerals.  While not a very new product, it is still obscure has been under marketed.  It was created by a chef not marketing and sales types.   I have joined with some entrepreneurs to grow market penetration.  

When placed in a refrigerator, RD Fresh does two simple things:

1.       It absorbs moisture thereby:
a.       Reducing spoilage, keeping stored foods fresher for longer
b.      Enabling refrigeration units to run more efficiently, cutting back energy consumption and equipment wear out
2.       Eliminates refrigerator odors making food taste better

Let’s focus on items 1a and 1b.  At present, RD Fresh is intended for the professional food service market although a home use version (Veggie Fresh) exists.  Let’s consider what happens when restaurants reduce food spoilage and energy costs.

The USDA and other independent sources estimate that 25%-30% of food in the U.S. gets wasted and thrown away due to spoilage.  The University of Arizona calculates that the dollar value of wasted food in grocery and restaurant channels exceeds $30 billion dollars annually.

Therefore, for a small restaurant, a $25 monthly investment can the save the business a couple of hundred dollars on spoiled food costs.  This adds up to $2,000 to $3,000 net savings per year.  Here is where economic calculation kicks in.

The owners of that restaurant can choose among three things to do with the savings:

1.       Increase their own take home pay – spend it on themselves and increase their personal satisfaction
2.       Reinvest in the business and create a better, more competitive restaurant
3.       Invest the savings in outside opportunities

In all three instances, this savings on prevented waste spurs additional economic activity, which helps to create jobs and incomes for others.

Similarly, the improvement in refrigerator performance will reduce energy costs.  The reinvestment options on energy savings are the same as above and are additive to them.

Now multiply this by a thousand or a million restaurants, food stores, hospital, school and military cafeterias.  The result is millions of new investments and consumer spending money flowing back into the economy.   This crates new jobs and new opportunities.

Reducing food waste and lowering energy consumption has another important benefit.   This can reduce the aggregated demand for both food and energy thereby making each more affordable for the disadvantaged and most vulnerable members of society.

All of this would accomplished without one single arm being twisted, shot fired, bill passed, tax levied or subsidy granted by government.  Certainly, RD Fresh is not the miracle cure that will suddenly transform Earth back into Eden.  However, there are countless RD Fresh type stories out there.  Inventors, innovators, entrepreneurs and investors, each making life a smidge better if given the chance.  And if they fail’ so be it.  Their idea wasn’t as good as they thought it was.  The market decides.

All major faith traditions encourage charity and almsgiving.  There will always be people who legitimately cannot help themselves, who cannot compete in the marketplace.  It is good for our culture and our souls to voluntarily help those in real need.

However the role of business in a free market is to make the world a little better at a time with each and every transaction between buyer and seller.

Apple’s founder, Steve Jobs, was chided for his lack of conspicuous philanthropy.  Yet for over 30 years he made the world a better place.  He made it possible for people access powerful computers in their homes.  In 2011, Dan Pallotta wrote in the Harvard Business Review:

“Without Steve Jobs we’d be years away from a user-friendly mechanism for getting digital music without stealing it, which means we’d still be producing hundreds of millions of CDs with plastic cases.

We’d still be waiting for a cell phone on which we could actually read e-mail and surf the web. “We” includes students, doctors, nurses, aid workers, charity leaders, social workers, and so on. It helps the blind read text and identify currency. It helps physicians improve their performance and surgeons improve their practice. It even helps charities raise money.

We’d be a decade or more away from the iPad, which has ushered in an era of reading electronically that promises to save a Sherwood Forest worth of trees and all of the energy associated with trucking them around. That’s just the beginning. Doctors are using the iPad to improve healthcare. It’s being used to lessen the symptoms of autism, to improve kids’ creativity, and to revolutionize medical training.

We would be without video conferencing for the masses that actually works. Computers that don’t keep crashing. Who can estimate the value of the wasted time that didn’t get wasted?

We would be without the 34,000 full-time jobs Apple has created, just within Apple, not to mention all of the manufacturing jobs it has created for those who would otherwise live in poverty.
We would be without the wealth it has created for millions of Americans who have invested in the company.”
And that’s the miracle of the market.  Peace on Earth, goodwill towards men.

Those interested representing RD Fresh or using in their kitchen can reach me at: .

Related Posts:

Donald, Adam, Milton and Will
Capitalism for B Students


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"Half the people are stoned and the other half are waiting for the next election.
Half the people are drowned and the other half are swimming in the wrong direction." 
- Paul Simon