The Economics of Homesteading and my soap adventures

After many years as a vegetarian, I have finally started eating meat again.  Not because of some fundamental change in values, but because for the first time in my life, it has become much easier to find meat that I think has had a reasonable life.  We now have many friends up at the river and some friends in town with farm connections and recently we used such a connection to acquire some pork.  The farmer asked me if I would also like the fat saved to render into lard.  I don't know anything about rendering lard, and I had the impression that lard was bad for you anyway, but I couldn't stand the thought of the fat being thrown out, so I had to say yes.

It turns out I'm not terribly good at rendering lard, even though it is supposed to be easy.  You are suppose to dump it in a slow cooker and let the fat melt.  The idea is that if it melts at low enough temperatures it will be white and odorless (the stuff you like to bake with), but if the heat is too high, it smells piggy.  Mine smelled piggy even with the slow cooker.  I was a little disappointed because I had learned that if you render your own lard it is not nearly as bad for you as lard from the grocery store.  Even so, piggy pastries didn't sound appealing.  Fortunately, lard makes an excellent soap.

Now I know nothing about making soap (just like I knew nothing about rendering lard), but the idea of having my own handmade soap thoroughly appealed to me.  So I embarked on learning to make soap.  My in-laws did not get it.  They asked me repeatedly, "but why would you want to make your own soap."  I came up with lots of fluffy answers about quality and craftsmanship, but ultimate the answer was "because I got this fat for free and I read that you can make your own lye too if you have hardwood ashes and we have some of those at the river right?  So my soap will be free!"  To which Gus replied, "oh great you will have saved us $0.75 on soap this year."

Rendering the lard

My finished "piggy" lard

My first batch of soap.  Sadly the colours faded a lot with time.

Gus was being unfair.  It is probably closer to 5 or 6 dollars, but if you consider the many hours I would spend researching how to make soap, acquiring my materials and then actually doing the "dirty" work, it is very clear that the whole thing is far from free.  And far from economical....

Unfortunately, this point really applies to much of homesteading.  The open market is quite efficient at producing products cheaply.   The soap making industry, for example, makes millions of bars of soap.  When you make that much soap you can afford to buy specialized equipment, amass specialized expertise and so forth, which makes every individual bar of soap much cheaper than my individual bar of soap.  This whole phenomenon is referred to as economies of scale and in most cases, it creates a real problem when you want to argue that homesteading is economical.

There are, of course, a few caveats.  The first is how much your labor is worth on the open market.  If you can only make minimum wage, then each hour you spend on soap making costs $10.25.  If you are highly trained in some profession and make, say, $40 dollars an hour then you are making very expensive soap.   Gus and I have discussed this many times (as we are both avid DIY) and for most of our projects, if you account for our labor costs, we would do better economically to hire it out.  (Of course, all of this assumes that you have a job/could get a job.  If you are in the middle of the great depression, doing it yourself may indeed be economical.)

So why do it yourself?  Mostly I hear reference to cost, and we've already established that it usually isn't cheaper unless you ignore opportunity cost.  But there are other reasons.

1) You like it.  This one is pretty hard to argue against.  Hobbies are hobbies and there is nothing to say that my homesteading is any worse than your golf, or video games or whatever.  Unfortunately, this also isn't very interesting.

2) It actually provides you with two commodities, the product and the skill.  I now have lots of soap.  I also now know how to make soap (more or less).  Whether or not that skill is of particular use is another question, but I definitely could not have added the soap-making-skill to my soap purchase at the store.

3) Markets suffer from imperfect information.  This one is the most interesting, so I'll spend a few paragraphs on it.

One of the big benefits of capitalism is that it can increase everyone's prosperity even if each individual is working towards their own selfish ends.  It works because in general a trade between you and me will only happen if it benefits both of us.  But capitalism also relies on an assumption that is sometimes quite false and that is the idea that in our trade we are both completely aware of what the other is offering.  In other words, we have perfect information.

As an illustration, consider our recent visit to the car mechanic.  Our power steering was seized.  Upon examining the car the mechanic informed us that the steering column was rusted and needed to be replaced.  They said that they had done a deep scan of the car and discovered that the breaks also need replacing.  We have noticed nothing wrong with the breaks.  So there are two possibilities: (1) the breaks need replacing and they should be replaced now or (2) the breaks might need replacing someday, but it isn't really imminent.  As my husband and I know nothing about cars, we have no way of determining which of these scenarios are true.  Trading the mechanic cash  for working breaks definitely benefits both us and the mechanic (capitalism at its best), but giving the mechanic cash to replace breaks that won't seize until something else breaks first only benefits the mechanic.

The only way to solve this information problem is to acquire information.  We might do this by sending our car to many mechanics (quite expensive and they are all biased in the same direction) or we might learn how to fix our own car so we can tell on our own whether the breaks work.  The latter should seem familiar to the avid DIY.

Of course, soap is a bit different.  It is pretty easy for me to tell whether I like a bar of soap.  If it sucks, I will only buy it once.  Information where soap is concerned (and many other homesteading activities) is relatively more available, so it is a little harder to argue for homesteading based on imperfect information. But you could still make the case...  Besides, I have found homemade soap to be nicer and it costs a lot more a bar...so maybe I can go back to justifying it economically.    Until then, I guess I will just have to leave my in-laws mystified at my eccentricities.