IMAGINE: The Elephant Party and the Donkey Party have split and broken up. The new Goat Party has won a landslide victory and I, its standard bearer, am installed in the White House. Following my speeches on Korea and the Mideast, I turned to domestic policy issues. After announcing a New American Spring, I took up the subject of income taxes. Before moving on to related issues, I was invited to give a guest keynote at the big consumer electronics show. Here is a transcript.
Some time ago I read an article about city kids who did not know that milk came from cows, or that apples grew on trees in the countryside. If they thought about it at all, they assumed that these things were made by machines.
We shake our heads at these examples of ignorance about where things come from. Yet all of us here live in a comparable state of darkness about many of the products we use every day. Do we have any idea how or where and by whom a common pencil is made? What about the shirt we’re wearing? The phone we use? The car we drive?
Economic theory since Adam Smith has rested on the assumption that market participants such as consumers have full information about the commodities that producers put on sale. Yet you’ve only to ask a few basic questions to realize that much of the time, maybe almost all the time, consumers haven’t a clue about where, how, and by whose effort the thing they are eyeballing came into existence. For all we can tell, the thing just dropped from the sky, as if the stork brought it.
In Adam Smith’s day, and until very recently, providing the consumer with anything like the full birth story of a commodity ran into insurmountable transaction costs. The origin story of a simple pencil would have required at least a pamphlet. Anything more complex might need a book, or a multi-volume encyclopedia. Luckily, that’s history. Wikipedia replaced volumes. Google gets us instant answers to questions that might take hours in a library. YouTube holds billions of videos. Facebook connects billions of people worldwide.
Yet very little of this immense capability is invested in providing transparency about the birth story of the items that crowd the marketplaces.
Here’s a proposal to fix that. Every product on a shelf or a sales floor will carry a new QR code. I, the consumer, hold my phone to the code, and up comes a page with videos and links that show how, where, when, and by whom the thing was put together. And I’m not talking here about a company promo.
- I want to see and listen to the actual voices of the men and women who made the thing, up and down the line. I want to see how they live.
- Hyperlinks will take me to related stories about the raw materials embodied in the product, and the people who dug them out and processed them.
- Other links take me to the machines used to make the product, and the pictures and voices of the men and women who built the machines, and the points of engineering and design that went into the machines, with the pictures and voices of the engineers and designers.
- Where sales and promotion are important to getting the product to market, videos will describe the sales and promotion effort, and show the faces and voices of the people who did that.
- Always included will be videos about the transportation chain, with images of the ships, planes, trains, trucks, warehouses, and the faces and voices of the people who did the work. .
- The narrative will have a page of links where I can email the various people who made the thing and have a conversation with them, if I should so desire.
- A separate track takes me to a spreadsheet that shows the costs in labor and materials at each stage of production, including the profits realized, if any, at a given final sales price.
If I want to know, for example, the origin of a toaster, up pops a Google Earth map with pins showing each location were the item and its parts were made and sourced, right down to the tungsten used in the heating elements and the petrochemicals used in the plastic handle. At each pin, a click brings up videos and spreadsheets showing who and how and how much.
As I follow the links and watch the videos, the vague notion that this item just dropped from the sky gives way to a vivid, three-dimensional understanding that people in many places made it for me. Well, they didn’t have me in mind, specifically, but they had a vague idea of somebody somewhere using it. And then I have the opportunity to email some of the makers, and replace their vague picture with a vivid image of a real person using the thing that they made. The Adam Smith ideal of producers and consumers connected by perfect mutual knowledge — the basic assumption of a free market economy — will finally come somewhere near to reality.
All of this is perfectly doable with today’s technology. There are scores of examples of documentary footage and literature that traces the origin of a commodity. For a very special product, the Steinway piano, there is a lengthy documentary where you meet the people who make the thing. For more ordinary industrial objects, the photographer Edward Burtynsky provided exemplary studies in his movie, Manufactured Landscapes. This film deserves credit also for attention to the other end of the product cycle, the end of its useful life and its disposition. Just as things don’t drop from the sky when we get them, they don’t “go away” when we discard them. There is a massive educational project remaining to be done on the death of commodities, as on their birth. .
We can do all of this. We have the technology. It isn’t being done now largely because the privately owned operations in every field prefer to run behind a veil of commercial privacy. The preservation of genuine trade secrets has a legitimate but very small part in this concealment. The larger motive is shame The captains of industry are convinced that the optics of their production, if revealed, would be bad PR. To the extent that is true, the case for product QR codes, and for the revelations to which they are a gateway, becomes more compelling.
It will be immediately obvious that implementing the new commodity QR code will require some changes. To begin with, we’ll need a small army of video reporters and editors. They’ll go into every place of work and interview everybody on video. There’ll have to be rules. Companies will have the right to make a case to protect trade secrets. Individual workers will have a right to opt out for privacy reasons. There’ll have to be a way to screen out self-serving company videos, to allow room for alternative statements, to prevent retaliation for critical comments, and other issues. Companies will get incentives for placing QR codes with compliant documentation chains on their products, and disincentives for failing to do so. All this will take time to work out. But it will be worth it.
There are greater benefits to a transparent industrial environment than the basic educational goal that kids should know that milk comes from cows and apples grow on trees. When we click on the QR code on the milk carton or on the bag of apples, we realize that we only knew half the story. Actually, milk comes from the people who work on dairy farms, and apples come from farmworkers. Seeing the faces and hearing the voices of the people who make the things we rely on brings us closer to them and helps us see them as distant friends we rely on.
Knowledge can also be a game changer. Sunlight is an effective cure for rotten working conditions. Fewer people will buy a product that is made by child labor, in a poisonous environment, for slave wages, or otherwise tainted by unacceptable practices. More people will buy products with a clean bill of manufacture. That’s how competition is supposed to benefit the better producer. That’s how a free market is supposed to work.