(published 1/11/00)
Drip-down theory and economics of greed
by Mischa Gelman

  In the 80s, we were bombarded with the idea of the trickle-down theory. 
This theory, which postulated that aid to the rich helps everyone in the
long run, has generally been rejected as false, more theory than reality.
One can create a similar-sounding theory though that does work and also
considers greed on the part of the rich - let's name it the drip-down
theory. This idea would say that greed on the part of rich companies drips
down in the long run, raining on the rest of us and building up with time
to become a bigger problem than each individual drip is. A fine example
comes straight from the drip tubes in hot water heaters. 
  You see, in the early 90s, hot water heater manufacturers started using
a plastic drip instead of a metal one. This saved a few pennies here and
there on costs, a wonderful deed in the eyes of those making the choice. 
Unfortunately, penny-pinching technocrats didn't consider the fact that
plastic could well break down. Now, after a mere five years or so of being
in place, the drip tubes have begun to degenerate. As a result, plastic is
entering peoples' water supplies. Sometimes it builds up, damaging pipes
in many households, clogging water faucets and pipes and creating problems
in ensuring and maintaining the presence of hot water, thus foiling the
purpose for the appliances in the first place. This is not just a
tremondous inconvenience (though it most certainly is that) as it also
incurs a high cost on numerous home-owners - all a result of short-sighted
greed on the part of big businesses too lazy to consider technological
fact when trying to save money. 
  Attempts to privatize the juvenile justice have caused similar troubles.
Jim Irving, a former prison administrator and an advocate of such changes,
admits, "You had people drawing up the staffing patterns, non-correctional
people who had no idea what needs are critical. It helped with the
pricing, but it killed us from an operational standpoint." Once again,
short-sighted greed-based decisions helped encourage problems in services
provided, resulting in a worse end result for everyone involved except the
companies raking in the dough.
  This is not a unique occurence in the marketplace. Rock salt provides us
with another example of the long-term costs when self-interest on the part
of business is allowed to dictate what happens. Rock salt is often used in
winter to clear out roads, an effective method that makes it easier for
vehicles to make their way through the streets. The runoff from rock salt,
though, leads to damage to car bodies, bridges, streets (being the primary
cause of potholes) and groundwater as well as killing plants, roadside
trees and making urban streets too salty for many fish and other marine
life to live in them. The more expensive alternative, called CMA, is more
expensive than salt but leads to increased savings in the long run, as it
doesn't lead to the extra expenses and problems caused by rock salt. Such
future costs are conveniently ignored by both capitalist and communist
theory, both of which are far too present-oriented to give us realistic
economic models.  If we simply go by the quarterly or annual bottom line
for industry, the long-term bottom line for society is dragged further
into the red. 
  These kinds of facts help erode the notion that consumer choice is
active in the marketplace. When the hot water heaters started using
plastic drips, people weren't given a choice nor were they told the
long-term effects - they simply were expected to comply with the whims of
industry. When Monsanto started peddling genetically engineered food, no
one was told - the products are still not labeled in America so as to
allow consumer choice. How often do products, other than pharmaceuticals,
list all the negative effects they may cause? How many let you know other
key details needed for an informed choice, such as how they treat their
employees or how their product effects the planet? If we aren't told the
whole nature of the things we buy, how can we make informed choices?
Theorists of the free market base their claims in large part on the issue
of such choices. Those choices obviously do not exist at the present time,
making a free market unrealistic in modern America - only when consumers
are informed, can we begin to consider its implementation. Taking into
account the drip-down theory helps destroy the ground needed for the
free-market theory.

  Mischa Gelman has no desire to be famous, but would be glad if his
theory spread.