Wastage is important for economic growth!

Ninad Parab
3 min readApr 1, 2024

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Note: I am not an economist and there could be some previous research done on the same topic. But here are some thoughts based on my basic (and perhaps inadequate) understanding. This post was started during pandemic and finally finishing it.

Photo by Markus Spiske on Unsplash

Economic growth across the world was stalled in 2020 because of pandemic and ensuing lockdowns. It can be argued that it was because people don’t have opportunities to spend the money on goods and services. Or can we put it as people don’t have opportunities to waste resources? Let me explain how.

Economists often talk about ‘Opportunity Cost’, which is defined as “the value of the best alternative forgone where, given limited resources” as per Wikipedia. While there is opportunity cost for people using the resources, isn’t there an opportunity cost for the resource remaining unused?. In most of these cases, there are multiple resource not consumed because I have decided to use some other resources. Consider these examples.

When I don’t want to cook and order from the restaurant, then I am not using the utensils and cooking appliances at home and in a way I am ‘wasting’ them. More the number of appliances in my kitchen, higher the ‘wastage’. Whenever we travel to some other city and stay in a hotel, we are not using our house and it is remaining unused and ‘wasted’. More you travel, more is the ‘wastage’ of your house. Each time your kitchen or house is not used, there is an ‘opportunity cost’ of it being used by someone.

The modern consumerist world is all about buying multiple things and getting new experiences. Because time is the ultimate constraint, one can consume only one of these things at a time and all others are ‘wasted’. But this wastage actually drives economy. Buying many things but not actually consuming them results in purchases driving economy. Similarly, paying for services without using them drives economy.

What happened during the pandemic was people lacked opportunity for this ‘wastage’. People could not travel, go to restaurants and were forced to increase the utilization of the resources they had. What drove economy after start of economy was home improvement tools and cooking appliances for home cooking. One pandemic ended, the use of these newly bought things went down and wastage increased.

Does this mean that the developed countries have higher GDPs because each individual spends more on wasting things? In other words, if everyone purchased only the things which they can consume with high utilization, the economy will be stagnant? Or as I had posted in my old blog, do services such as Uber, which reduces wastage due to unused car and increase efficiencies, are GDP destructive?

But overall, it looks like the growth is equivalent to wasting more and more resources. And to be honest, I am not averse to that as it results in more comfort in lives which everyone strives for. What needs to stop is being hypocritical about this wastage as something damaging. Higher wastage also makes systems more robust and withstand shocks which were observed in supply chains during pandemic. So on the lines of ‘Daag Acche Hai’, I would say ‘Wastage is Good’.

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Ninad Parab
Ninad Parab

Written by Ninad Parab

Data Scientist- Banker- Anorak- Football fan- Language/Culture Enthusiast

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