Friday 2 February 2018

The Plastic Nightmare


Plastic is something we deal with at almost every moment of our lives. From our household goods, to our cars, computers, Amazon packages and more, plastic is a seldom-appreciated phenomenon of the modern human age. A miracle of modern chemistry, plastic is arguably the most versatile material out there.

However, our use of plastic in today's world exemplifies one of our greatest weaknesses, actually raised out of one of our greatest strengths: we can make the world and its resources bow to our needs, but we often fail to attend to the needs of the world. This behaviour has put a whole host of parties at risk- from the earth itself, to our co-habitants, to our very own future generations of humankind.

The most prominent example of such behaviour, and rightly so, is the phenomenon of pollution. Air pollution scars the lives of many inhabitants of today's sprawling metropoles of the world, while putting the very future of our entire Earth at risk.

Though a known concern for many years, the way we use plastic has come under the spotlight in recent months. The primary issue with plastic comes with its lack of biodegradability; meaning, left undealt with in landfill or in oceans as it is in many places today, it will not go away. Plastic waste will simply pile up.

And boy, has it been piling up.

We produce over 300 million tonnes of plastic each year; 8 million tonnes of which is dumped into the ocean, according to plasticoceans.org. At the current rate, it is estimated that by 2050 the plastic waste in our seas will outweigh all the fish.

Yes, an increasing amount of waste plastic is now being recycled; but still, a shocking 91% of plastic worldwide isn't recycled. This is usually due to one of two reasons; poor recycling infrastructure and organisation, or the lack of recyclability of many plastics, such as those used in most coffee cups, due to its waterproof nature. We may be encouraged to place our coffee cups in recycling bins, but in reality, just 1 in 400 coffee cups are actually recycled.

As one would expect, this massive influx of plastic waste has has profoundly negative effects on the environment and wildlife.

The Great Pacific Garbage Patch
The Great Pacific Garbage Patch (GPGP) is one gargantuan example of our failure to deal with our excess plastic. The GPGP is a massive collection of debris, the majority of which consists of plastic. While we tend to imagine this as a mass of plastic bottles and the like drifting in the sea (as pictured on the right), the majority of the GPGP is made of 'microplastics'.

While plastics do not biodegrade, they are broken into smaller and smaller pieces continuously. This results in a dust-like material that never disappears from the oceans.

Microplastics also come from everyday items we use. For example, it was very common for many skincare products and toothpastes to contain microbeads, that supposedly improved the feel of the product on the skin and visual appeal. However, research suggests that microbeads blocked digestive tracts of animals who consumed them- so these luxuries came at an exceedingly high price. On a positive note, more people are coming to realisation about this, as bans on the use of these materials come into play in many countries of the world.

This waste in the oceans wreaks havoc with wildlife. Unaware of the dangers and toxicity of many plastics, small pieces of plastic are often confused with food. A 2015 study found that as many as 9 out of 10 sea birds had plastic in their guts.

There are countless further tragic stories of animals falling victim to our plastic waste. From poisoning to asphyxiation, plastics are the causes of death for estimated millions of animals, both on land and in sea. Whether they are in the form of microbeads, plastic bags, packaging or something else, plastics pose a significant threat to biodiversity, and in the long term could threaten entire species if left undealt with.

Our success in making plastic serve so many of our needs is coming at the cost of our planet. As our land and seas become landfill sites for plastic waste that will never go away, millions of animals are dying, suffering from pains as simple as becoming entangled in plastic six-pack can packaging.

Plastic has indeed served the human race well- but it is time to move on.

So, how can we confront this massive problem of plastic, when we are so dependent on it? We'll discuss what governments, businesses, and we as individuals, are doing and can do to end this chaos in next week's article.

To see how you can influence and get involved in the fight against plastic, join the community at A Plastic Planet.


Monday 1 January 2018

How Businesses Can Make Money Out Of Your Misery

Apple recently admitted to reducing performance on older devices- leading to understandable discontent with the firm. But such practice is in fact more common than you'd first think. 





















Though Apple refused the accusations, its recent apology for the 'misunderstanding' regarding how it treats devices with older batteries only reassured what many cynics suspected- that Apple had been slowing down older devices, in order to push users of these devices to upgrade. There is no way of knowing 100% that this is was Apple's intention- but, if this suspicion were to be true, Apple would not be alone in such a practice.

This is a strategy known as 'planned obsolescence', and it dates back as far as 1932. At this time, America was in the pits of its economic depression- and Bernard London, a real-estate broker, asserted in his paper 'Ending the Depression through Planned Obsolescence' that businesses should "chart the obsolescence of capital and consumption goods at the time of their production". Essentially, he wanted businesses to plan for the goods they sell to become obsolete, and thus demand for the goods to be reinvigorated. So because goods would become obsolete, people would buy essential items more often, providing a boost to the economy.

Planned obsolescence is all around us in today's world. Some argue that shaving razor companies, for example, deliberately do not select the most durable materials for their razors, as they want users to continue to replace their razors regularly. Even something like a 'best before' date on food and drink could be argued to accommodate planned obsolescence- many people throw away milk that is perfectly fine, just because it has passed the best before date by one day. Of course, they then buy more milk to replace it.

The problem is that it is usually difficult to identify where it is happening, as it is not a practice most businesses would be happy to admit to. 'Best before' dates may be deliberately early to protect the consumer from any possibility of spoilt food (or protect the seller from legal action). Razor companies may not use the most durable material for their razors because it might not be profitable to do so. Going back to the Apple example- one cannot be certain that the company practiced planned obsolescence for revenues' sake, as we have no fully reliable insight into the company's intentions when it decided to reduce performance on older devices.

Given that the world of business, however, is not always the most ethical, it is almost certain that many businesses engage in planned obsolescence with the primary intention of squeezing more money out of the customer, with little care for the disruption caused to them.

Another practice that is closely related to, and perhaps overlapping with, planned obsolescence, and is arguably easier to detect, is what Tim Wu of The New Yorker calls 'calculated misery'. In his very insightful piece, Wu explores what he sees as calculated misery being dished out by American airline firms to its customers, to accommodate its fees system. "Basic service, without fees, must be sufficiently degraded in order to make people want to pay to escape it", Wu says- and when you think about it, this is true indeed.

Many of the airlines practicing calculated misery tactics have contributed to flying being generally known today as a miserable experience, at least for those not able to shell out on business or first class seats.

The emergence of premium economy is a classic example of this. Premium economy has recently emerged as a mid-way point between economy and business class, typically for middle-class passengers with a little more money to spend, but not enough for business class. They enjoy features like longer legroom, maybe some extra food, and other amenities.

To accommodate the extra space needed for these seats, some airlines have had to redesign their plane layouts- and of course, they would not make any changes that would come at the cost of the highest paying passengers up front. Rather, some airlines have made subtle changes to economy class- whether it is bunching together more cramped seats in a row, or more commonly, pushing together seats and reducing legroom. The phenomenon of falling legroom has been so common that investigations have been ordered into it by courts in the USA. Not only does this change allow more room for the greater profiting premium economy seats, but it also dishes out calculated misery to those in economy- squeezing them (quite literally) and incentivising them to pay the extra sum for premium economy.

Another recent example of calculated misery being dished out is evident in British Airways' recent plans to board passengers in order of how much they paid for their ticket. Even within classes- those paying the least are made to board last. Despite the fact that this is a less than optimal strategy for boarding, it again incentivises passengers to pay more for their ticket.

So, to summarise: some businesses, whether through planned obsolescence or calculated misery tactics, are squeezing more money from consumers, despite and in fact because, they are providing a worse customer experience.

But how are businesses getting away with it? The fact is, that the lack of competition between them is allowing them to do whatever they want. If one airline charges extra to jump ahead of the boarding queue, it won't suffer- if the rest of the industry does the same. As consumers, we are often held to ransom by collusion between businesses in an industry, as businesses are allowed to prioritise profits over customer experience.

There is some action that can be taken, however; it is our duty as consumers to show our discontent, both with our words and our pockets, where possible. Government must also intervene to prevent such collusion between businesses, and to ensure healthy competition in the marketplace. Only then will the relationship between business and consumers be mutually beneficial and profitable.

Friday 8 December 2017

How Will Autonomous Cars Change Our Economy?

Self-driving cars are about to become widespread; the advantages these vehicles have over traditional cars are obvious. One question then is how will this automation impact the economy? Mark Slater investigates...
image: pursuitist.com
Mark Slater
AutoMax, North Carolina

Self-driving cars navigating themselves by computer are becoming an actuality in the 21st century. In fact, it is projected that by 2030 over 50% of the cars on the streets will be driverless
. It’s time to carefully examine the effects this will have on our economy and to what extent.
Automated vehicles do have some incredible benefits. It is believed that accidents will be reduced by a considerable amount, mostly because it is estimated that 93% of all vehicular accidents are caused by human error. This is probably one of the best features these cars will bring to the table, but since the roads will be safer when you look at it from the perspective of an insurer or injury lawyer you see the loss of revenue as a direct result of these vehicles. Accidents cost the USA US$900 billion every year in repairs and administration costs- which will also be greatly reduced by the advent of autonomous cars. This could have a massive impact on the economy.
Still, car dealership mechanics need not necessarily fret, as even though there will be a reduction in accidents and the repair work mechanics perform there may actually be an increase in their workload due to a higher need for maintenance as a direct result of an increase in daily automotive use from convenience and vehicle sharing. Mechanics would certainly have to become accustomed with the innovative technology and get themselves through the necessary training. If they invest in these skills they could actually see a substantial increase in revenue over the next few decades.
Morgan Stanley believes US governments could lose US$1.3 billion from more esoteric revenue sources such as parking fees. This is mostly because automated cars can be on the road much more. Here is an example: imagine a parent going to work in the morning and directing the car to go back home and take his daughter to university before directing it to come back to pick him up. The vehicle will have much less need for a constant place to park all day.

Similarly, there will be a widespread reduction in the number of parking garages and parking spaces needed, which will allow for more apartment and office space development. Consumers, and not government, will benefit from this more. There is also a projected reduction of vehicle ownership from an average of 2.1 non-automated vehicles per household to 1.2 driverless vehicles per household, and this would reduce government revenue from vehicle registration fees.

Car ownership could even cease to exist by 2030. A Columbia University study suggested Uber would need just 9,000 autonomous vehicles to completely wipe out all taxis in New York City, with consumers only having to wait 36 seconds on average for a ride.

When these vehicles start to show up more, people will naturally be skeptical of how safe they are. This will be the response until these cars start to gain more recognition for safety. When this happens, the travel industry could also be heavily impacted. Why would anyone book a domestic flight or a hotel when they can have their car drive them somewhere overnight while they sleep safely in the vehicle? Why would anyone go through the trouble of reserving a room or even spending any money on a room when their car could drive them the whole way in privacy and luxury? Highway motel operators will take a big hit when these cars become more common.

It is estimated that trucking companies could save up to US $500 billion dollars annually by 2025. This would, however, cause many truck drivers to become unemployed. Indeed, there are many other drivers that will be affected such as taxi drivers, bus drivers, and even shuttle drivers. This level of job loss could put a real strain on the economy through unemployment.

On the other side of things, however, IT workers and analyst will see a positive impact as they will be more important in the age of automation. Disabled people will also benefit from these vehicles as their mobility, freedom, and income are expected to increase.

Despite the shifting tides, driverless cars could add as much as $7 trillion to the global economy. There will be winners and losers as with anything, but these vehicles will make our lives more efficient, safer, and convenient.


Tuesday 19 September 2017

Why Is The iPhone X So Expensive?

The iPhone X was revealed with much fanfare in Apple's new Cupertino HQ last week- but it wasn't just the personalised poop emojis, the wireless charging or the new display that stole the headlines...



The all-new iPhone X was proudly revealed by Apple CEO Tim Cook as the "biggest leap forward since the original iPhone". The device, which marks the 10-year anniversary of the iconic smartphone, features an all-new bezel-less OLED display, 'Face ID'- the most advanced facial recognition technology on a smartphone- and other new updates such as wireless charging.

Not only was iPhone X arguably the biggest leap in technology since the original iPhone, but it was in fact the greatest leap in price- at $999 dollars, it became the most expensive mass-market smartphone ever, $230 up from the iPhone 7 Plus. This significant price increase, and the landmark of the iPhone X becoming the first ever thousand-dollar smartphone, remains a significant talking point of the new device- and most of the coverage around the price has been negative. So, why exactly have Apple made the iPhone X so expensive?

The most obvious contributor to the increase in sale price is the increase in the cost of production. According to GSM Arena, the X costs $412.75 to produce- compared to the $220 production cost of the iPhone 7. This drastic increase in cost is the result of a significantly larger, OLED display, a new glass material, and also a larger standard storage of 64GB for the base iPhone X.

Interestingly, the only place Apple could source the new OLED display was from its smartphone rivals Samsung- no doubt, the Korean firm will have exercised this monopoly power to try to reduce the margins of its competitor.

The new design and technologies of the iPhone X has also limited production capacity. This is rumoured to be one of the reasons why there have only two colours offered at launch, as well as why the actual sale date is in November, despite the announcement coming in early September. As basic economics dictates, a lower supply is likely to induce higher prices, as people clamour to not miss out on this latest iPhone.

While this price increase is rather drastic, people often forget that it's not the first time Apple have introduced devices at a high price. Apple believe that the iPhone X is a whole new device- an iPad Pro to the iPad that is the iPhone 8, or a MacBook Pro to the iPhone 8's MacBook. This is especially evident when you see that the prices of the iPhone 8 and 8 Plus have actually increased from the iPhone 7 and 7 Plus.

The first MacBook Air (top) was succeeded by a
more successful and affordable generation.
Source: Engadget
Historically, new Apple products as revolutionary as the iPhone X have provoked controversy due to their costs- the first generation MacBook Air, the 2015 MacBook and the Apple Watch are just three such devices. Experiences from these products have arguably given Apple the confidence to set a high price for the new iPhone. Where successful, Apple have been able to sell high volumes at high prices- and in slightly less successful cases, such as the launch of the first MacBook Air, Apple reduced prices over time as the new technology introduced became standardised in its line-up.

Apple knows that many people unwilling to pay $999 for the iPhone X will opt for the cheaper iPhone 8 instead- and this doesn't necessarily present a financial loss to Apple, given the lower production cost of the latter device.

And Apple also knows people will still buy the iPhone X. The massive marketing buzz around the product, and the sheer difference it represents from the usual iPhone lineup means that the device is undoubtedly going to sell in high volumes. It's likely, in fact, that the higher $999 price will be attractive to many customers. At a sub-conscious level, the round pricing of $999, essentially a thousand dollars, the idea of having a thousand dollar device will appeal to people who may want to own the device as a status symbol as well as a phone.

This type of product is known as a Veblen good- a product for which demand increases with price, in contrast to standard economics. At a sub-conscious level, the round pricing of $999, essentially a thousand dollars, the idea of having a thousand dollar device will appeal to people who may want to own the device as a status symbol as well as a phone.

A high pricing brings other potential smaller benefits for Apple. For example, when people spend as much as $999, the smaller purchases seem even smaller, and thus more appealing, to the buyer. For example, spending $100 on Apple's new AirPower wireless charging station seems less of an expense when you've spent $999 on an iPhone X than when you've spent $500 on a previous generation iPhone.

So while the increased production costs have introduced a necessity for Apple to raise the sale price of the iPhone for the new iPhone X, the decision to increase the price to as high as $999 is likely to prove a shrewd business decision for Apple, especially given the release of an updated iPhone 8 at a cheaper price. What remains to be seen, however, is whether Apple will eventually reduce the price of future generations of the iPhone X, as its technology becomes standardised in the iPhone range, or whether Apple is preparing the market for a shift to a new level of price for smartphones.

Monday 21 August 2017

Should You Get Free Lunch In The Office?

By providing free meals, are offices providing gratuitous nourishment to their staff, or just locking them down in the office?



We've all heard (and, admit it, envied) those offices in which lies the promise of free food for all staff. Breakfast, lunch, and even dinner in some companies, is offered to employees, without a single penny leaving their pockets. These meals are not only free, but they are known generally to be higher quality than paid meals in other offices. 

But, like they say, there is no such thing as a free lunch. Free food at work has a variety of effects on a workers' life- from obvious things like their weight, their time spent at the office, to the more subtle things, like how staff interact with each other and how the food can affect worker performance.

The most obvious benefit of this particular perk is that it makes the office a more welcoming place for employees, both increasing the satisfaction of current employees and making a job at that company more appealing for potential recruits. 

Similarly, the most obvious cost of free meals at work, from an employers' perspective, is the cost of giving away food to employees. This cost has multiple layers: firstly, the employer must give up the cost of the staff, the facilities, and ingredients to make the meals themselves. Secondly, the employer gives up the potential for a small profit to be made by selling meals to employees at more than their cost price. And thirdly, the employer runs the risk of abuse of the system, which can lead to unexpected additional costs.

Despite this, massively successful companies such as Google are well-known to incorporate this practice into their offices. So the question is- why?

Perhaps even more significant than the direct benefits mentioned earlier, is the ability of a free meal in the office to win the employers more of its staff time. This starts with breakfast: providing the most important meal of the day for free increases the probability that staff will come to work sooner, reducing the level of tardiness. When it comes to lunch, employees are able to stay in the office, rather than head out to the shop to buy a meal deal. Removing this travel time, and keeping employees in the office, means lunch breaks are likely to be shorter when lunch is provided in the office.

Some companies like Google take the food offer further- even offering free dinner on-site. This increases the likelihood of late working nights- especially, in the case of Google, because many employees will be young and no doubt become dependent on meals provided by the office.

The numbers can prove that providing office meals genuinely brings greater benefits than cost*. Assume that, given the costs of ingredients, cooking facilities, staff, an economy of scale whatnot, the average cost of producing a meal is £6. Furthermore, reasonably assume lunch provided in the office increases an employee's working time by 15 minutes every day.

An example of the fine food on offer at Google
(Credit: Michael Krehan, Quora)
Google's average salary in the UK is reportedly £160,000- though it's highly likely that this figure is skewed by the number of staff being paid 7 figure salaries, so assume a lower average salary of £120,000. This means roughly £2300 a week- £640 per working day, and thus, given a 9 hour working day, £71 an hour. By offering free meals, Google increases each employee's working time by 15 minutes- bringing an extra £17.75 of value, according to the £71 an hour pay estimation. The cost of this, according to our assumption, is £6- bringing a net benefit of £11.25. So, the cost of providing the free food is more than paid for by the additional productivity!

According to the above assumptions, a minimum average wage of £56,160 is required for a business to breakeven in their offer of free lunch. For most large businesses, this is not an unreasonable level.

From an employee perspective however, free hot meals can have negative effects, if not executed properly. A heavy meal can negatively impact worker performance, and in the long run, can lead to weight gain. Furthermore, some argue the shorter lunch breaks caused by on-site meals can negatively impact employee wellbeing over time.

Free lunch also brings intangible benefits. We emphasised in a previous article the significance of community spirit in any office. By offering lunch in a single place, employees are more likely to eat with each other, rather than head their own separate ways, increasing the likelihood of relationships across the country developing.

So we have (loosely) proven that free lunch can bring net benefits to a successful business like Google. But does free lunch work for all businesses? No.

Massive businesses, hiring thousands of employees on a single site, may enjoy a larger economy of scale, but equally they may find it harder to monitor and control the free food. Smaller businesses are the least likely to offer free meals. Though it may be an emerging trend, particularly with Silicon Valley startups, most small businesses may not be able to invest in the facilities and staff for free office meals. Such businesses may instead decide to invest in something similar, like free snacks.

Free lunch works for most businesses that demand a lot from workers. Some businesses take the investment in such perks even further- for example, Google offers free laundry services in many offices for its employees. Such perks are luxuries- but through increasing employee satisfaction, and minimising time wasted by employees, investment in these things can provide significant benefits for the firm.

*warning- an avalanche of assumptions is imminent...