Economy

In the 'Star Wars' Economy, One Thing Doesn't Pay – Financial Post

Published

5 years ago

December 23, 2019

By Adam Minter

(Bloomberg Opinion) — Junk is surprisingly pervasive in “Star Wars,” playing an understated role in nearly every film in the series. In “The Phantom Menace,” we meet young Anakin Skywalker, the future Darth Vader, working at a small electronics scrap yard and repair shop. In “A New Hope,” Luke Skywalker’s uncle buys R2-D2 and C-3PO from a group of Jawas, a species that drive massive, sand-crawling junk trucks. The recently released “Rise of Skywalker” is largely a coming-of-age story for Rey, the last of the Jedi, who spent her youth scavenging electronic scrap on Jakku, a remote outer planet.As a third-generation descendent of earthbound scrap-metal recyclers, I’ve subjected myself to repeated “Star Wars” viewings (even of the bad films), partly just to spot all the junkyard tidbits. Over the years, I’ve developed a theory or two about the waste and recycling economy in the series, and enjoyed sharing it with (primarily) other junkyard descendants. But in 2018, I realized there might be a larger audience for these insights.That year, China — for decades the world’s biggest importer of recyclables — started imposing stringent restrictions on what recycled stuff it would still accept from overseas. In the aftermath, prices for recyclables dropped steeply, raising costs and reducing profits for businesses around the world.Alas, “Star Wars” doesn’t offer any advice on how to find new markets for used plastic detergent jugs. And no, Rey can’t conjure the Force to boost the price of used cardboard boxes. But if you watch the films carefully, they have a good story to tell about turning waste into something that people might want — and, even better, buy.The “Star Wars” universe generates tons of trash, much of it recyclable. Yet for all the scrap yards and scavengers, you see very little actual recycling. Mostly, the metal, plastic and paper seems to get tossed out with the trash. My favorite example occurs in “The Empire Strikes Back.” At a crucial moment, an Imperial star destroyer dumps stadium-sized chunks of metallic garbage into space before jumping to hyperspace (this, according to Han Solo, is Imperial protocol). From an earthbound perspective, this is commercial suicide: Metals are the world’s most recyclable materials, and even villains know there’s money to be made in selling them.But a similar pattern repeats throughout the series. In “The Force Awakens,” early scenes on Jakku are dominated by the wreckage of an immense star destroyer. It’s reminiscent of the huge seagoing vessels that are run onto the beaches of India, Bangladesh, and Pakistan, then disassembled by hand and recycled in a matter of months — down to the individual screws. Crash a star destroyer in Alang, India, one of the world’s hubs for beaching and recycling ships, and pieces of it will be on sale in local markets by lunchtime.The reason for this seemingly irrational behavior is that the “Star Wars” universe doesn’t suffer from a scarcity of resources. There are dozens of mining outposts mentioned in the series, and there always seems to be another planet waiting to be exploited. In a galaxy that enjoys such surpluses, recycling won’t save much money. And the Empire, with its massive spending on planet-destroying weapons like the Death Star, doesn’t seem overly concerned about the environment.So what, then, is the business model that supports so many junkyards and scavengers? Rey, the Jawas, and everyone else who scavenges in the series recognize that there’s more value in a working gadget or spare part than in the raw materials that constitute them. The value is in the energy, engineering and manufacturing required to make the stuff. So, for example, that crashed star destroyer on Jakku isn’t stripped for metal; instead, we see Rey risk her life to scavenge it for reusable components that she can sell. Characters from Chewbacca to Luke Skywalker later demand her recovered parts for the devices and ships that they’ve learned to repair on their own.That business model wouldn’t work for plastic recyclers here on Earth. But the so-called e-waste industry — a category that includes everything from used smartphones to server racks — is rapidly diversifying into business models that look very similar to those practiced by Rey and the Jawas. At a time when recycling markets are depressed, these businesses need a new revenue stream. So rather than trying to recover raw materials that aren’t financially attractive at the moment, they’re seeking out whole gadgets and the parts within them.Robin Ingenthron, the head of Good Point Recycling, tells me that his company was making about $60 a week selling gadgets for reuse out of its scrap pile in 2015. As commodity prices fell, he reoriented the business to extract parts from old televisions and better identify the reusable gadgets already on offer. Today, sales of reusable stuff account for more than $50,000 a month, and around a third of the company’s revenue. Sims Recycling Solutions Inc., one of the world’s biggest electronics recyclers, has steadily shifted away from its traditional shred-and-recycle model to incorporate more reuse and refurbishment in recent years. Others are going even deeper, recovering specific chips from motherboards for reuse.This might come as a surprise to earthly environmentalists. But in the “Star Wars” universe, it’s the way business has always been done. In this respect, at least, the series may offer a model that works just as well here as it does in a galaxy far, far away.

To contact the author of this story: Adam Minter at aminter@bloomberg.net

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Economy

B.C.’s debt and deficit forecast to rise as the provincial election nears

Published

2 days ago

September 10, 2024

Anne Joseph

VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.

Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.

Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”

The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.

Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.

“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”

Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.

Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.

Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.

B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.

The election is expected to be called on Sept. 21, with the vote set for Oct. 19.

“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”

Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.

Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.

The premier said that now is not the time to reduce supports and services for people.

Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.

Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.

This report by The Canadian Press was first published Sept. 10, 2024.

Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.

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Economy

Mark Carney mum on carbon-tax advice, future in politics at Liberal retreat

Published

2 days ago

September 10, 2024

Anne Joseph

NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.

But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.

He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.

Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.

Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.

Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.

This report by The Canadian Press was first published Sept. 10, 2024.

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Economy

Nova Scotia bill would kick-start offshore wind industry without approval from Ottawa

Published

2 days ago

September 10, 2024

Anne Joseph

HALIFAX – The Nova Scotia government has introduced a bill that would kick-start the province’s offshore wind industry without federal approval.

Natural Resources Minister Tory Rushton says amendments within a new omnibus bill introduced today will help ensure Nova Scotia meets its goal of launching a first call for offshore wind bids next year.

The province wants to offer project licences by 2030 to develop a total of five gigawatts of power from offshore wind.

Rushton says normally the province would wait for the federal government to adopt legislation establishing a wind industry off Canada’s East Coast, but that process has been “progressing slowly.”

Federal legislation that would enable the development of offshore wind farms in Nova Scotia and Newfoundland and Labrador has passed through the first and second reading in the Senate, and is currently under consideration in committee.

Rushton says the Nova Scotia bill mirrors the federal legislation and would prevent the province’s offshore wind industry from being held up in Ottawa.

This report by The Canadian Press was first published Sept. 10, 2024.

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