The Circular Economy of "e-waste" Parts: Opening Our Eyes to Value Added

The European theory of the "circular economy" focuses on the final value of metals, minerals, and petrochemicals. Today I'll try to explain, as succinctly as possible, why this "Ptolemy" circle (stuff revolves around us) wasn't recognized in Emerging Markets.

While researching the CRT Recycling Infrastructure for the Massachusetts DEP's first-in-the-nation statewide e-waste disposal program in 1999, I was told about Dr. Yuzo Takahashi (by Panasonic rep and Japan history buff David Thompson). Dr. Takahashi had published a brief book titled "A Network of Tinkerers: The Advent of the Radio and Television Receiver Industry in Japan."

As a "cross culture" professional (hired by Peace Corps to train incoming Americans in 1986), I found Dr. Takahashi's brief history lesson to make complete sense. Japan's electronics economy - and its imitators to be in Taiwan, South Korea, Singapore, Malaysia, and eventually mainland China - was in one special way COMPLETELY different from USA and Europe. It was a cultural difference.

... and reading about how Asians traded parts and components (readily visible on Alibaba, Exporters.com, RecycleINME, and Recycle.net back in those days) are seen by Asians starts in the Japanese living room.

When a society is building it's devices from components, the value added of the parts is far more important than the scrap value. Most USA and Europeans buy a pre-assembled electronic device sealed in a box and sold under warrantee. That blinded us to the parts and components trade, which is FAR more valuable than raw materials. Like aftermarket car parts, 20% of a scrap device is worth 80% of the money.

Takahashi explains that no self-respecting Japanese father bought a TV or radio pre-assembled in a cardboard box at a retail store. In the 1960s, virtually every radio or TV was purchased based on name-brand parts and components, and assembled at the home. The parts that wore out were replaced. And the parts that lasted longest - like Cathode Ray Tubes that last 25 years (depending on hours of electron gun use, the electron gun's usually the part that wears out creating a fuzzy image) had the most aftermarket value.

Massachusetts reuse 2001

After DEP, one of my first consulting gigs was for Electronicycle of Gardner, Massachusetts, where 30 year TV repair pro Dick Peloquin was moving to recycling. He was able to underbid traditional "universal waste" recyclers like Veolia based on parts recovery. And he introduced me to "Silicon Sam" (Samuel Goldwasser) RepairFAQ web page. And I started matching Silicon Sam and other NESDA parts replacement manuals to understand the purchase orders coming out of Asia, Africa and South America.

Sounds like a stretch?  Take automobile chop shops in the USA... Most car theft is for parts. The auto scrap industry is 80% scrap metal by weight, but the 20% of the weight (like aftermarket entertainment consoles and turbochargers) that can be sold for reuse is 80% of the value. Pareto Principle Redux.

At DEP, my recycling division was oriented around "value added" to raw materials. Recycled office paper takes less energy and chlorine to make into tissue paper than trees cut down and hauled from forests. A LOT MORE VALUE. And the working secondhand components and parts from used electronics, like automobile parts, have a LOT more value than the raw materials.

What European and American NGOs assumed - that we (white people) know more about recycling than poorer nations do - was by no means an assumption held in Japan, South Korea, Taiwan, Singapore, etc. Or if we did know more (credit due to high end raw material secondary smelters like Umicore of Belgium), it was the wrong "circular economy" answer to the question of why the free market steers valuable components to international parts markets.

Egypt reuse 2007

For the next 20 years, I flew around the world, to places like Egypt (above), Peru, China, Singapore, Lithuania, Bosnia, Ghana, Malaysia, and/or flew my key managers to visit those locations. When you see parts being removed for reuse, suddenly "recycling by hand" seems like an affordable way to separate raw materials - because the 20% of the parts that have added value are more valuable.

And more valuable to the environment, too. The greater orbit of device repair and parts reuse allows the environmental lifecycle and carbon costs embodied in mining, refining, and manufacture to be extended rather than - literally - shredded.

Peru 2012

Well, this was all written about more poetically in my 2011 Motherboard VICE news op ed, "Why We Should Ship Our Electronic "waste" to China and Africa. The reason for this update is that it was true in the Infrastructure Report in 1999 (final draft, published by EPA 2000), true in 2011, and true today... but the parts are always changing.

Elective Upgrades in rich countries tend to flood markets overseas, and displace and shorten the lifecycle of the used electronics imported and maintained by those countries decades earlier. That's why you see 1970s TVs in Agbogbloshie junkyards, and NOT A SINGLE LED OR LCD in ANY of my visits there.

One of the $50,000 per month in TV parts sales from Middlebury Vermont

My company today harvests and tests TV parts for reuse, just as we did with Dick at Electronicycle in 2001. But we learned to do this by visiting and listening to Geeks of Color in Emerging Markets, the valedictorians who turned USA and European flip phones into 170,000 mobile phone tower "critical mass of users" in Africa.

The "circular economy" term bothers me because it's primarily still about the "raw materials revolve around us" school of European and NGO thought.  Basel Action Network is STILL trying to impugn and denigrate world trade. It has been 9 years since we proved they were lying about African geeks... and 12 years since Mike "Fishing as a Boy" accused Joe "Hurricane" Benson to start "Project Eden".  This is about false eyewitnesses telling a story of racial profiling, fitting for Atticus Finch.

In Ghana, the technicians actually reassemble LED bulbs onto LED light strips to repair the inside of LED televisions. These techs run 100% of the Import Economy, have no interest in "dumping", and their parents were children when the CRTs shown at Agbobloshie were imported decades ago.

The circular economy doesn't revolve around us.

The circular economy doesn't revolve around us.

Like Copernicus and Galileo, Takahashi described a circular market for electronic parts which was far simpler, far more beautiful, than the Ptolemy model - the very complex explanation for how stars and planets and moons and suns move in the sky when assumed to orbit the earth. The movement of goods in the free market - to emerging markets, especially in Asia - was explained as being dependent on poverty and weak environmental enforcement.  Like Jupiter zig-zagging two steps back every X years in Ptolemy's sky, European environmentalists and environmental NGO's made a ridiculous claim about 80% of exports being "dumping", and built a "Circular Economy" model around the environmental benefits of keeping minerals and metals inside Europe.

The circular economy doesn't revolve around us.

When Huckleberry Finn tears up the letter to turn in N* Jim, the runaway slave, it became the passage I go back and read the most often. Those of us continuing to jail and impugn and racially profile techs like #JoeHurricaneBenson might as well be the Catholic jailkeep guarding Galileo.  It's immoral to insist on a model of "circular" for the purpose of denying the poor the opportunity - and yes, right - to repair. When you know your 80% "primitive waste" statistic was a lie even as it set the stage for INTERPOL's disastrous "Project Eden", you can keep running with that lie, you can keep tricking people with it. But Copernicus and Galileo and Yuzo Takahashi cannot be hidden, cannot be undone. 

Terry Gou

Simon Lin

Rowell Yang

Allen Liu

Lee Byung-chul

Chung Ju-yung

I always ask visitors if they know any of these names. Visitors at Good Point almost never do. They know "Steve Jobs" and "Wozniak" and "Bill Gates" and "Henry Ford" and the "Dodge Brothers". All of those tech founders would immediately recognized most of these names, and wouldn't have to read far in the Network of Tinkerers to see the cost of fake statistics to prosperity and ingenuity in emerging markets. And the Network of Tinkerers continues to offer the best hope as Africa goes Solar. More to come.