Usually an afterthought for most, trash is big business in the United States. According to NPR’s “Planet Money” the recycling business in the U.S. is a one hundred billion dollar industry annually.When scrolling through the different podcast topics, I saw the one on trash and instantly became interested. I had this interest because my grandfather previously had a business in recycling and I can remember him navigating through many of the same problems that recycling businesses face today. Although the industry is often up and down, lately many recycling companies face shrinking profit margins as the value of different materials fall.

(Picture of the sign at my grandfather’s recycling facility)

The recycling business is failing for several reasons. One of them being the big idea of business, state, and society. China usually accounts for fifty percent of the worlds paper and plastic recycling, but recently that number is going down. This is due to the National Sword Policy implemented by the Chinese government that prohibits importing papers and plastics. Most recycling companies used to ship their materials to China, but they are now forced to find a new market. The new markets are in places like Southeast Asia and domestically, but they pay far less for recycled materials. This has caused paper to have a negative value. It is cheaper for businesses to pay someone to take their paper from them rather than dump it in a landfill.

The national policy created by China aligns with another big idea. The bid idea of unacknowledged assumptions. China has few natural resources to support its large population, so many companies believed they would likely always have a need for international materials. Unfortunately China is attempting to develop its own recycling capacity which means businesses have to find a new place to send their materials. The combination of state intervention causing an unacknowledged assumption has created a large hole in the market that used to be profitable.

The fluctuating price of oil is another unacknowledged assumption.One may not think about oil prices affecting plastic recycling, but it has a large affect on the market. This is true because plastic is made from petroleum. At the time of the podcast the price of oil had been declining. This makes it cheaper to manufacture plastic bags than complete the difficult process of recycling them. The drop in oil has caused several companies, including the trash giant Waste Management, to give up on recycling plastic bags. Recycling plastic bags also incorporates one attribute of capitalism. Currently, the technology involved in the process is slow and difficult, so some businesses are trying to come up with new technological ways to solve the problem.

Values of currency is another unacknowledged assumption made by some companies. When the dollar was weak, recycling was much more profitable. This is true among many industries that have business internationally. Other countries are looking to buy at the lowest price possible, so when the dollar is stronger compared to other currencies, the buyer will buy will choose the lesser currency. China used to buy most of recycled paper and and plastic from the U.S., but since the Euro has dropped there has been a shift towards buying from European countries. Now businesses are struggling to find places that will buy their product, and those that are buying are far less.

While the business continues to decline, companies must find new buyers that will purchase the materials at at decent rate.

Link to podcast: https://www.npr.org/sections/money/2018/08/15/638929347/episode-613-trash