A term often heard but not always understood is true costing or true cost accounting. These are all the actual costs of a product that have not been calculated and included.

Cheap is expensive

A much quoted example is the €1.99 fast food hamburger. The actual price varies from €15 to €30, depending on the calculation method. You buy the burger at a low price because a number of things are not taken into account. This could be the environmental damage caused to the area where the cows graze in South America. The amount of water needed for 100 grams of beef is astronomical; over 1500 litres. Scientist Vaclav Smil has calculated that 25 kg of feed is needed for 1 kg of beef. Moreover, rainforest has to make way for soya fields. These are all clear and telling examples. And we have not even mentioned the CO2 emissions during production and transport.

The real costs

A similar calculation can be made for almost all other products where the price race to the bottom plays a major role. Competing on price is not so difficult if the real costs are not included. These costs are passed on to people and the environment in a distant country. Legislation there is often not as strict as in Europe. And cheap labour in production countries is the only way to survive and to supply us in the West as cheaply as possible.

In the furniture board industry, for example, these hidden costs may be the pollution of the environment where the products are made. Or the working conditions under which the employees work. Pensions often do not exist there and in case of illness, an employee can stay at home. Dismissal is not necessary because there are often no employment contracts, let alone sick leave arrangements.

 These kinds of negative externalities are hardly ever included in economic comparisons between products on the Dutch market. If poisonous chipboard made in China has to be transported to the Netherlands, the CO2 tax is not included in the costs incurred. Because of globalisation it is very difficult to judge what the good and bad effects are if we do not take the real costs into account.

Made in Holland

A simple way to take responsibility is to choose products made in the Netherlands. A major advantage is that the entire production can be monitored and ethical, ecological and social factors can be assessed. This makes the actual costs transparent. This then shows that the (cost) price of a Dutch product is lower than what has to come from far away and may have been manufactured under dubious conditions.

The price race to the bottom is not a sustainable policy. Not for the producer and not for the consumer either. In the end, the latter pays the bill. Opinion is shifting. We are becoming increasingly aware of the importance of sustainability, ecology and social responsibility. So preferably made in Holland. Also for the next generation.