[cperciva]

If they knew in advance that the clothing wouldn't sell, they would never have made it!

But companies stockpile goods in anticipation of potential demand. For example, they'll "overproduce" winter coats because some winters are colder than average. This sort of anti-overproduction law means that the next time there's an unexpected need -- for example an unusually cold winter -- there will be a shortage because there won't be any warehouses full of "just in case" inventory.

[roughly]

So they externalize the cost of their own incompetence and you’re suggesting it’s bad to internalize that cost.

[Jiro]

Failing to predict cold winters is not incompetence in the normal sense.

[Veedrac]

This rule isn't internalizing an externality.

[Nition]

Could they overproduce and keep unsold stock for next winter, and if unsold stock gets too high, stop producing more until it reduces?

[SpicyLemonZest]

They mostly do keep unsold stock, only a fraction of it gets destroyed. See the EEA's full analysis from 2024 (https://www.eea.europa.eu/en/analysis/publications/the-destr...).

[philwelch]

They could, but it’s a tradeoff. Inventory costs money and if you cut production, that means laying off workers and possibly selling productive assets, at which point it becomes more expensive to scale production back up.

Every business decision is a tradeoff. Smart government interventions in the economy add weight to that tradeoff to reflect externalities not otherwise accounted for; this is how cap-and-trade on SO2 emissions works. Hamfisted government interventions set hard and fast rules that ignore tradeoffs and lead to unintended consequences.

[Swenrekcah]

It seems to me that is exactly what could be enabled by this law. It is forbidding the destruction of last year’s winter coats.

[imtringued]

I don't think this is accurate. It's more that the textiles are produced in Asia and transported in containers.

Due to the high shipping costs, they err on the side of filling up the containers to cover the fixed cost. After selling the clothes, there might be enough clothes left over to fill shipping containers to return the clothes, but they will be clothes from different brands and manufacturers.

It would require extraordinary coordination on both the origin and destination country to return the clothes to the manufacturer where they could add the left over clothes to the next batch that is being shipped out to a different country.

[birdsongs]

Do we really need warehouses full of "just in case" inventory? It's not life or death, it's just slightly more profitable for companies to overproduce than it is for them to attempt to meet demand exactly.

Climate change is coming, fast and brutal. I'm okay with these multi-billion-dollar revenue companies making a few points less in profits, if it means slowing climate change by even a fraction of a fraction of a point.

They don't need those profits. But our children need a viable planet.

[SpicyLemonZest]

Companies can't meet demand exactly, no matter what profit margin they take, because it's not possible to predict demand exactly. Biasing towards overproduction is how you minimize the risk of shortages when there's a bit more demand than you expected.

[stodor89]

> This sort of anti-overproduction law means that the next time there's an unexpected need -- for example an unusually cold winter -- there will be a shortage because there won't be any warehouses full of "just in case" inventory.

Clothes are something extremely overabundant in the EU. And even if they weren't, the unexpected overdemand will result in just using your old coat another year or buying one you like less. Workers are being unnecessarily exploited and resources are being unnecessarily wasted... so I think nudging companies in the right direction is way overdue. Will it work the way EU thinks? Probably not. Just like GDPR was well-intended, but the result is higher entry barrier to new companies and a bunch of annoying popups. But I'd argue that's a result of "not enough" regulation rather than "too much". Companies caught abusing our data should have been outright banned IMHO.

[sehansen]

In this case they aren't destroying the unsold winter coats so they can keep doing this under the new law.