A Paperless World?: A Case Against IP
Tue, Sep 7, 5:26 PM ET, by Zachary G. - Freshman Equities Trader, Hedge Fund Live
In the 2nd century AD, Chinese court official Ts'ai Lun sought to create a new medium of communication that could be used throughout the vast empire. After experimenting with various materials, he created a mash combining mulberry bark, hemp, and cloth which he pounded into thin sheets and hung to dry. His invention would later become one of the most commonly used materials in human life. Today, paper and paper products continue to play an integral role in our existence and its production and applications have expanded immensely. We use paper to communicate with each other, to package and ship our products, to disseminate information, and to express ourselves. Despite these traits, the evolution of our society has begun to outpace the evolution of the product. In today's culture, paper and paper goods hold several inherent drawbacks that will ultimately prevent it from securing a definitive place in our future. First, the process of making paper is complex and environmentally invasive. Aside from deforestation, paper production is energy intensive, requires large amounts of water, and often entail the use of caustic chemicals. According to a study conducted in 2002 by the American Forest and paper Association, paper manufacturing is the third largest user of fossil fuels worldwide. Furthermore, while the practice of recycling paper has increased to 63.4% in 2009, 28,855,000 tons of paper remain uncrecycled. This equates to 95 million cubic yards of landfill space devoted to its disposal. In an age of environmental concern, these products could suffer a decrease in demand due to personal consciousness and become an easy target for federal regulation. Next, technological innovations have given rise to alternatives to paper that did not exist in the past. For example, the popularity of the e-reader could pose a major challenge to the traditional printed page in the long term. The e-reader has the ability to compress an entire volume of textbooks into a device that can be carried in one's back pocket. Furthermore, e-reader users have instant access to an immense amount of content without ever having to leave one's couch. This unique trait significantly improves convenience for users while slashing distribution, printing, and raw material costs for publishers. The immediate popularity of the Amazon Kindle underscores the myriad of benefits that e-reader technology holds over traditional mediums. Furthermore, the use of programs such as online bill pay and electronic ticketing further reduce our reliance on the printed page. In the past two years the United States Postal Service posted negative net income, a clear indication that new technologies have begun to replace outdated practices. International Paper (NYSE: IP) is a global paper and packaging company that primarily operates in North America, Europe, Latina America, Russia, Asia, and North Africa. The company is composed of six business segments including Industrial Packaging, Printing Papers, Consumer Packaging, Distribution, Forest Products, and Specialty Businesses. The company operates 21 pulp, paper and packaging mills, 146 converting and packaging plants, 19 recycling plants and three bag facilities in the United States as well as a variety of manufacturing facilities throughout Europe, Asia, and South America. International Paper could remain a going concern as long as the status quo stays intact; however, a paradigm shift away from how the world traditionally uses of paper and paper products could be devastating. To believe we are headed towards an entirely paperless world would be foolish, but as new technologies become more effective and affordable and environmental protection becomes increasingly important investors may begin to view paper and paper goods as a symbol of stale technology and a wasteful past. Visit HedgeFundLIVE.com.
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