![]() ![]() An Externality is a cost or benefit experienced externally from the transaction and its parties. The word "externality" is important here. If the factory pollutes the water and the city raises property taxes to clean it up, town residents subsidized the textile production. In an unsubsidized scenario, local government should send the factory the cleanup bill, and the factory will pass the costs onto the buyer. Here's a crappy example I made up: Imagine if a local textile factory is polluting the land and water. But the untaxed externality model is a very useful idea in understanding why fast fashion is so popular: the fashion industry is subsidized Personally I don't think the whole uncorrected externality = subsidy model is necessarily very useful without expanding on, but that is getting out of scope of this discussion. I don't think there are comprehensive studies on the externalities of the clothing industry, but you can consult this (somewhat controversial paper) by the IMF that argues the energy industry receives implicit subsidies (through uncorrected externalities) of $4.9 trillion a year: Therefore, it could be argued that your cheap clothes is subsidized by other governments and private individuals. So the industry has created a lot of pollution that will have to be cleaned up in the future, but the cost of that cleanup was not charged to the textile plant today, and therefore the cost was not passed to the consumer.Ĭlothes are cheap because the externalities involved were not corrected. For instance, the textiles industry is often located in jurisdictions with lax wastewater treatment regulations. Now we know that the fashion industry has a number of negative externalities. For instance, if I hosted a ticker tape parade in my town, but the city government cleaned up my parade without having me pay for cleanup, they essentially subsidized the parade. It is generally agreed that an untaxed negative externality is essentially an subsidy. There is an opinion that the fashion industry (and I include the vast majority of brands, even non-fast fashion ones) is essentially subsidized. Clothing Care, Tailoring, and Maintenance. ![]() Search posts by flair by clicking the below
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