Chickens strike for equal pay: A Duct Tape Economics case study.

I am a fitness enthusiast and love to eat healthy. So, the recent lack of access to eggs and the price hike get on my nerves. Compounding that with seeing non-stop ads and articles pushing weight loss drugs on the public makes for a good showdown between two products on opposite ends of the intrinsic value spectrum.

This article isn’t written to convince you. I will present an example that highlights Duct Tape Economics, a concept I cover in my book, Congruence. It is intended to help you start a deeper exploration. If it intrigues you, dive into Congruence.

How do we value and price eggs?

Eggs, along with milk, are the most basic products consumed by nearly every human across all cultures throughout their lifetime and nearly every single day. Here are some interesting data points about chicken eggs in the United States:

• When was the product launched? Thousands of years ago.
• How much positive value does the product create? It’s a daily staple that can account for ~8% of daily food intake (2 eggs).
• How much value outflow does the product cause to a user? Little to none.
• How much overall value must we attribute to this product in terms of solving our real-world problems? Very high!

If we think like a normal human being, would we not expect the egg industry to command significant total sales revenue? I was surprised to find out how small it really is. At the price of an average egg six months ago (~$0.25), total egg sales in the United States were only $23B (Total US egg production is 93 billion eggs)! Statista reports a total US egg market that is even lower at $17B.

Now, let’s contrast eggs with a completely different category – weight loss drugs – to highlight the distorted incentives in our economy. If something feels fundamentally 'off' about how we value products, there’s a reason for it.

Weight loss drugs, which I see marketed as “diabetes medication,” have been all the craze in the past few years. I don’t have any personal experience with the product, and I hope never to. I will let you explore the medium- and long-term health implications of this largely unproven product. I want to focus on two simpler questions.

How do weight loss drugs compare in total sales?

The stock market has been hyping up the total sales of these drugs to reach $100 billion by 2030. Total sales in the United States for only four weight loss drugs already reached ~$26B in the last four quarters, which is higher than egg sales at their $0.25 per egg price.

Why does a product like “weight loss drugs” exist?

Weight loss drugs are marketed as lifesaving. Let’s ask some rational questions about that claim. A basic problem-solving tool is the Five Whys. Let’s ask some why questions.

1. Why are lives at risk? Lives are at risk because obesity and overweight conditions lead to other health complications that reduce life expectancy.
2. Why are obesity and overweight a problem? It has been documented for decades that obesity is increasing in Western economies due to poor food choices and health habits.
3. Why are poor food choices and health habits a problem in most economies? People spend more money if they get takeout, keep eating food they don’t need, or drive a car instead of walking or standing on a public train or bus.
4. Why do we want people to spend more money even if it makes them unhealthier? Spending more money makes the economy “bigger,” even if the spending is unnecessary or harmful.

We didn’t even get to the fifth Why, but that's the real economy we live in. I call it’s Duct Tape Economics in Congruence. Mistaking it for Capitalism distracts us from harnessing its true power – efficient value creation.

Duct Tape Economics is “an economic ecosystem that encourages trade that addresses symptoms of problems, as opposed to the root causes of problems. . .” (Source – Congruence: The Playmaker’s Guide to High Value Companies)

If we encourage overconsumption of unhealthy and fattening foods on one side and offer expensive, dependency-creating weight-loss drugs on the other side, we are not really solving a “problem.” We are conveniently addressing a symptom we created through other non-value-creating behaviors.

Should we invest more in egg production or weight-loss drugs?

Eggs have been proven to create value for millennia. There is no evidence that weight-loss drugs solve root causes of any problems and may even prove to cause more harm than good over time. The answer here is obvious. So, why don’t we ensure capital flows to such an obviously value-creating product and the people that make that product available to all of us?

To understand that inventive problem, you have to internalize the difference between Duct Tape Economics and Capitalism. To understand that difference, we have to answer what value really is! A burger chain might sell an “extra value pack” that includes fries and coke. But is that truly extra value if it causes health problems? Or is it a pricing gimmick?

As I said earlier, I am providing you with a window into the Duct Tape Economics that we misunderstand to be capitalism. I hope you dig deeper. We shouldn’t be surprised that the chicken unions are calling in sick!