Trash Talk

by on March 18, 2011 at 7:26 am in Economics, Law | Permalink

The normally sure-footed Arnold Kling slips with this really bad argument against private garbage collection:

Surely, if we all lived in small mountain communities we would need less government. But imagine purely private trash collection in an urban area. If you pay for somebody to collect the trash in front of your house, then instead of paying for my trash to be removed, my strategy is to put my trash in front of your house and free ride on your trash collection.

First, let me tell you I know Arnold Kling and no way is he sneaking out in the wee hours of the morning to secretly stash his trash.  No way.  Not ever.  Unlike other rotten people, I bet Arnold even pays for his house number to be painted on the curb.

Second, private trash collection works!  I know because my neighborhood has two private, competing garbage collectors and the service is better than I have ever experienced in any other neighborhood.  I get two trash collections a week (three counting yard matter such as leaves and cuttings), they take everything including recycling, the price is low and they work on government holidays.  Most of Fairfax County has private trash collection. In fact, around the United States and the world private trash collection is quite common and there are typically substantial cost savings, on the order of 20-30%.

It is important to note that cost savings come from creating competition rather than from privatization per se–substituting a private monopoly for a public one is not very helpful but creating and maintaining a competitive environment can work wonders.

Addendum: FYI, Arnold was replying to a good review by Stan Liebowitz of Arnold’s (also good) book, Unchecked and Unbalanced. Arnold, next time resist!

Andrew Montgomery March 18, 2011 at 7:35 am

So how do you avoid the free-rider problem, particularly in more dense urban areas?

The only solution (that I can think of) is for the city to mandate that each house must subscribe to a garbage-collection service. To ensure that you are subscribed, it would be most efficient to collect the payment at the same time as your property tax. Furthermore, you can’t just subscribe to a company that only collects trash once a year; or a company that only collects a certain type of garbage. We’d need minimum standards, regulations, etc. Before you know it the city government is running the whole show.

Genuinely curious to know how it works in your area.

Ryan Vann March 18, 2011 at 2:05 pm

I don’t see how a mandate or government provided solution actually fixes the free rider problem. There is still impetus to use neighboring bins if one creates trash above their proscribed threshold. Perhaps a mandate or government provided solution, along with varying bin sizes could help, but then there is loss of efficiency due to uniformity. If one is truly concerned about trash free riders, impose harsh penalities for engaging in that behavior.

Moreover, one could see what some of the worlds cleanest cities do to insure these things. I’m personally not really that concerned with the “problem.”

Slocum March 18, 2011 at 7:41 am

If you pay for somebody to collect the trash in front of your house, then instead of paying for my trash to be removed, my strategy is to put my trash in front of your house and free ride on your trash collection.

Private trash companies only pick up trash from their own subscribers in their own marked bins (using automated trucks). If you declined to subscribe to a trash service and instead made it a weekly practice to sneak out and stuff your trash into your neighbors’ bins, they’d notice that you never put a bin out and would quickly catch you trying to use theirs. So, yes, a silly concern.

JonF March 19, 2011 at 3:41 pm

We had private trash collection where I lived in Florida– but no special bins or anything. You put a sticker on your mailbox showing what company you had contracted with. So yes, there was a lot of free riding. Although the most common way people did it wasn’t sneaking their trash into their neighbor’s, but taking their trash to work and using the dumpster there, or dumping into apartment complex dumpsters when visiting friends living in the complexes. The area finally switched to publicly funded trash collection for single family residences, with the fees tacked on the property tax bill, but with private trash collecing companies bidding on a two year contract for the business.

Guan Yang March 18, 2011 at 7:43 am

Use marked bins and put locks on them.

jeorgi March 18, 2011 at 7:57 am

In his defense that doesn’t work in dense areas with poorly socialized people. I have been in countries and cities with private disposal and garbage strewn everywhere. It’s the richer subdivisions – small Fairfax counties if you will – that handle this better.

Floccina March 18, 2011 at 10:54 am

jeorgi, in his defense with poorly socialized people, even Government provided pickup does not work very well. I wonder if Government provided pickup works better than some arrangement that might evolve.

David Prottas March 18, 2011 at 7:57 am

There are other permutations. I might well negotiate a side agreement with one or more neighbors so that only one us enters into the contract with service provider with the cost of that contract being share. We might negotiate the allocation of the contract based on an equal split (after all, we are neighbors so may not wish to endanger our social relationships), or on the relative amounts of trash, or have the legal contractor pay a premium for the convenience of having to carry the trash only to his front.

The ability to freeride extends beyond my neighborhood. I may bundle my trash and surreptiously drop it off in bins in front of stores or in dumpsters behind. I would add that I have several affluent Manhattanites with second homes in the country who dispose of their trash this way (or even bring it back it into Manhattan to place on the curbs for public pickup. I expect that behavioral economics would need to explain those actions.

Alan Gunn March 18, 2011 at 8:02 am

It’s remarkable how often people who think government monopolies are essential use as examples things that a glance around the neighborhood will show being performed well by private, competing companies. I’ve been told fairly often that we need a postal monopoly because private carriers would only go to addresses that are easy to get to, an argument that can be refuted in three letters: UPS.. And then there’s the fable of the bees, though for that one you have to get out into the country.

Rahul March 18, 2011 at 8:12 am

But I suppose there still are remote addresses that UPS won’t serve but USPS will? So the objection stands, in principle.

What’s the “fable of the bees”? Something to do with pollination I’m guessing?

aub March 18, 2011 at 10:48 am

Where are these addresses? Supposing that they exist and then using that assumption to confirm your argument is begging the question.

Rahul March 18, 2011 at 1:34 pm

@aub:

http://www.ups.com/content/us/en/shipping/time/service/eas_download.html

UPS charges a “extended area surcharge” for these locations. More than a hundred zip codes. Not sure how much that is. If high it could be the equivalent of “does not deliver” for most people. So the undeliverable addresses aren’t as hypothetical as it might seem.

aub March 18, 2011 at 2:15 pm

Your statement was, “But I suppose there still are remote addresses that UPS won’t serve but USPS will? So the objection stands, in principle.”

Charging more to deliver or pick up for an area is not the same as not delivering to that area.

Your new argument- ‘If [the delivery surcharge is] high it could be the equivalent of “does not deliver” for most people. ‘ – is again backed up with no evidence – ‘Not sure how much that [surcharge] is.’

If you don’t know how much the surcharge is and how much the customer is willing to pay, then upon what factors do you assume that it’s the equivalent of not delivering?

So yes, the undeliverable addresses are still as hypothetical as they might seem.

Dan Dostal March 18, 2011 at 4:06 pm

Was Rahul providing a full academic argument? No. Don’t troll.

aub March 18, 2011 at 5:10 pm

Troll – One who purposely and deliberately (that purpose usually being self-amusement) starts an argument in a manner which attacks others on a forum without in any way listening to the arguments proposed by his or her peers. He will spark of such an argument via the use of ad hominem attacks (i.e. ‘you’re nothing but a fanboy’ is a popular phrase) with no substance or relevence to back them up as well as straw man arguments, which he uses to simply avoid addressing the essence of the issue. (Yeah, it’s the urban dictionary, but it’s a pretty good definition)

Are you saying that I’m trolling because I directly question Rahul’s strawman? For that matter, Alan wasn’t providing a full academic argument, either.

Floccina March 18, 2011 at 10:56 am

I was once told that the USPO would not deliver to an address near the Miami and that I need to use to UPS.

Glen Raphael March 18, 2011 at 4:33 pm

Actually it’s more often the reverse situation: There are many parts of the country where the Post Office will only deliver to a “Mail Stop” or a “postal box cluster” just off the highway that might be 20 miles from the actual address while UPS and FedEx deliver right to the door. FedEx and UPS would do just fine delivering all first-class mail everywhere if they were legally allowed to do so.

The “fable of the bees” was the notion that beekeeping was a good example of a public good. In feeding themselves, bees incidentally pollinate the nearby crops which is good for the farmers and it’s hard to charge for the passage of a particular bee over a particular bit of field. So it seems intuitively plausible that beekeeping might be worth subsidizing. However, it turns out that externality is easy to internalize and often has been. If you go talk to actual farmers and beekeepers instead of just armchair theorizing about what characteristics their markets *might* have, you discover that beekeeping is a private good. Two factors overlooked in the public goods argument: (1) hives are portable, (2) bees are lazy. Since bees do most of their foraging pretty close to the hive, beekeepers can and do charge money to provide pollinating services. (the payments actually can flow both ways – if the bees are hungry and the crops make for especially good-tasting honey, the beekeeper might pay the farmer instead of the other way around, depending on the season and market conditions)

mulp March 18, 2011 at 12:46 pm

UPS charges surcharges to deliver to some rural addresses, and in some cases contracts with the USPS to deliver.

And let’s be clear, UPS and FedEx started delivering parcels only after the Post Office started up Parcel Post as an add-on to RFD service and made a huge profit. For nearly a century and a half, American businesses could have offered RFD and Parcel Post because the Post Office didn’t, and it was left to the free market.

And even if you take into account the forced non-profit status of the current USPS and its tax exemptions, its prices are half those of UPS indicating a more efficient operation. UPS and FedEx have had to diversify to keep their package service viable – several non-diversified parcel services have gone out of business in the past decade.

Regular passenger service began only after Congress used the Post Office to subsidize regular air service between major cities on terms that made it clear the Congress would pay via Air Mail subsidies for running the planes, and carrying parcels and passengers would be pure profit. And RFD and Parcel Post was a major driver for road improvement which was a boon for automakers and drivers.

Veridical Driver March 18, 2011 at 2:02 pm

mulp:
It is illegal for a private courier to charge less than 3 times the rate of USPS First Class Mail. It is pretty easy to have the cheapest rates when you make it illegal for your competition to charge less than 3 times your rate.

Sbard March 18, 2011 at 7:24 pm

And yet UPS and FedEx still charge significantly more than this minimum rate.

Rahul March 18, 2011 at 2:13 pm

” its prices are half those of UPS indicating a more efficient operation.”

Why is USPS making a loss then? I thought I heard of talks of massive closures of post offices and layoffs?

Dan Dostal March 18, 2011 at 4:14 pm

Email. The USPS is still reeling from electronic changes. Even worse than losing mass mailings and the like, large documents that formerly made the USPS a lot of profit are now much more easily sent electronically. There could be efficiency losses/gains due to it’s public nature, but most importantly it’s entire business model is being thrown into question. At this point I find comparing UPS and Fedex to the USPS is completely disingenius. Humans delivering physical objects will be around much longer than humans delivering information.

Sbard March 18, 2011 at 7:26 pm

Don’t forget the spread of electronic bill payment. Think about how much mail volume for your average household came from sending bills and remitting payments. My parents used to regularly buy stamps by the roll, now my dad does almost all of his bills online.

Eric H March 18, 2011 at 2:30 pm

Let’s be clearer: USPS only started using stamps and rail cars after private companies did. There was a set of laws passed in the 1840s that effectively shackled private competition. Even today, postal inspectors may show up in USPS offices to fine people who are using private couriers to deliver “routine” mail. When they do, fines are levied and goods are confiscated. How is this a free market?

Ryan Vann March 18, 2011 at 3:09 pm

Lysander Spooner got hosed in that ordeal.

karl March 18, 2011 at 1:01 pm

You are obviously unaware that UPS (and its competitors) partner with the USPS for many services. Whether this improves service or not is still debatable, but it is the real world — not a fantasyland of private=good, public=bad.

Dan Dostal March 18, 2011 at 4:15 pm

Blarg. So just like every other major industry in existence, it was created by a mix of private and public ventures. Why is there so much argument about this?

Major Alfonso March 18, 2011 at 8:07 am

Nothing mentioned about the pricing and incentives for different forms of waste processing. Regulation of a private system is more difficult to work if you’re forced to build pricing structures that may not be dynamic and require public expenditure on enforcement anyway leading to things like illegal dumping (in old quarries etc), failure to sort out waste such as batteries, paints, electronics with metals, legacy waste problems when companies disappear, planning for incinerators requiring contracts with minimum intakes from private operators etv along with all the usual NIMBYism. Waste collection is much much more complex than simply getting one or two collections a week and the costs on the public purse from clean ups etc can be substantial. A waste processing facility here in Ireland burned for weeks recently after the 3 companies involved went bankrupt leaving a substantial cost as well as impacting on the environment and health of the locality. Striking a balance of regulation and competition is possible in this industry but it requires oversight.
Also you’ll have to design your public street trash cans to only have small openings to stop people disposing of domestic waste in them! Fly-tipping in general and specificailly in remote rural locations is a problem here alongside burning trash in the yard. All this needs to be in the calculation.

Joe March 18, 2011 at 8:08 am

A good way to prevent free-riding is to tell the ‘waste–management consultant’. I hear they can be very convincing.

Marius March 18, 2011 at 12:27 pm

Hahaha, great one!

Rahul March 18, 2011 at 8:09 am

So how does one select if a urban-service is a good candidate for privatization? Would sewage and water be good candidates too? How about mass-transport (buses etc.)?

Is privatization by itself sufficient, or does more than one company have to offer the service for the benefits to accrue. e.g. in Madison, WI we have a private electric company (MG&E) give us power and natural gas. But there’s really no option to chose which company as MG&E is the only provider. I’m wondering is this a government granted monopoly or a private one.

Are “natural monopolies” still a valid theory or is this line of economic thinking obsolete?

Ryan Vann March 18, 2011 at 1:59 pm

Probably a granted monopoly by your local Consumer Services Bureau. That is how we do things here in Tallahmazoo Florida. Honestly, I don’t see the point of a privitized program with a layer of bureacracy established to oversee the administration, but it could be a great upper-middle class make work program.

jh March 18, 2011 at 8:11 am

Definitely an insurmountable problem for which no trash company could ever find a solution.

Rahul March 18, 2011 at 8:20 am

The Howe-Institute report that Alex cites (http://www.cdhowe.org/pdf/commentary_308.pdf) to support the 30% cost savings is not strictly relevant. That case-study is not a strictly privatized example. It’s merely the city sub-contracting out trash collection rather than employ city employees in trash collection. There’s no free-loading effect here.

What Arnold Kling is talking about is requiring each homeowner to negotiate individually with trash-collection companies.

Aren’t the cases very different?

Zach March 18, 2011 at 9:58 am

I was going to post the same thing. There’s a duplication of effort involved in having competing services on a house-by-house basis. Presumably a perfect market could largely eliminate this and result in large firms servicing contiguous areas, but my experience with privatized public services isn’t one in which most people go to much trouble to evaluate their options very thoroughly (eg, in Baltimore one can get 100% wind power for less than the price of the most popular provider — 50% for a lot less & 0% from other providers for even less — but basically no one does). Overlapping service areas would also lead to an increase in road wear and air/noise pollution. Private contractors couldn’t be freely pressed into service to, say, use dump trunks to move snow or modify their routes in the case of some event not specified in their contract (visiting dignitary, natural disaster, etc). The indirect costs of privatized collection need to be taken into account as much as their direct savings in $CAD.

Andrew March 18, 2011 at 8:47 am

Government doesn’t penetrate small mountain communities due to the cost of doing so. In some cases, it’s easier just to bomb the people than govern them.

bbartlog March 18, 2011 at 9:06 am

Free-riding is an easy problem to solve compared to people just dumping their trash. Now, in a densely populated area with reasonable policing and social cohesion, dumping is probably not so problematic: you either have to travel a long way to dump your stuff, or else run a substantial risk of being caught. But in rural areas, or those with poor police coverage, anyone who can’t or won’t pay for private trash service can easily find some place to just toss their rubbish.

Bill March 18, 2011 at 9:07 am

We have private trash collection, and we have noise–with three different garbage trucks barreling down the alley at 7 am 3 different mornings.

We also have an early morning wake up call.

Priceless.

Zach March 18, 2011 at 10:07 am

In Baltimore we’ve only got private collection for roll-off dumpsters and I think every time I’ve lived near a construction site I’ve had to call the collector to complain about (illegal) pickups before 6AM. Showing up early for work is not such a problem with our public waste management. If residential pickup was privatized and controlled by a similar ordinance I’m sure that enforcing it would be easy, right?

anonygoat March 18, 2011 at 9:09 am

You must remember, Arnold is saying what he would do if he were (ahem) urban.

Wu March 18, 2011 at 9:12 am

Yup, Alex knows a thing or two about making bad arguments.

nelsonal March 18, 2011 at 9:13 am

Until moving to one of the few places in Fairfax county that does trash collection, I’d always lived in a private trash area. I’ve never heard of a neighbor sneaking trash into a receptacle the worst issue I’ve seen was the externality of the smell of one neighbor burning their trash in an especially rural area.
You paid extra if your dumpster bin didn’t close so sneaking trash meant a direct immediate cost for the victim who’d most likely notice quickly. I’ve seen people everywhere dump trash in commercial dumpsters no matter where I’ve lived (it was hazardous stuff in places with public trash).

decklap March 18, 2011 at 9:14 am

I think you give short shrift to the free loader issue. I live in a very dense area with a mix of private and public trash collection and it is not at all uncommon for my public bins to be full of some neighbors excess and I see private dumpsters full of construction debris from unscrupulous contractors all the time. The downside of being caught is exactly zero and anybody willing to skirt proper permits and pay for a roll off dumpster is more than willing to cut a lock.

Mr. E March 18, 2011 at 11:31 am

This is extremely common in Chicago. If you live in a house near an apartment complex, your garbage cans will always be filled with extra that didn’t fit into the garbage of the privately collected dumpster.

People that dismiss the free rider problem of private trash collection in urban areas are not reality based. It is happening at the very moment you are typing it isn’t a problem.

Lots of things work great in rich areas like fairfax county, which last I checked was the 2nd wealthiest county in the United States. Public and private schools both work great. Public and private garbage collection work great. But most areas are not the second wealthiest county in the United States.

http://en.wikipedia.org/wiki/Highest-income_counties_in_the_United_States#25_highest-income_counties_by_median_household_income_.282006-2008.29

Dan Dostal March 18, 2011 at 4:18 pm

Mod parent up.

/me wishes every forum were based on slashcode

Sbard March 18, 2011 at 7:38 pm

This is the main reason why public trash cans are virtually nonexistent in Japan. Garbage sorting requirements are extremely onerous and the cans outside convenience stores will not infrequently get filled with the domestic waste of someone who doesn’t want to go through with the hassle of sorting his garbage.

Bill March 18, 2011 at 9:20 am

Whether you have private trash companies or a local sanitation department is a matter of public choice, isn’t it.

My wife grew up in a college community–and they had public trash collection. And, they had to: how many students, at the end of the semester, would leave a matress or other unwanted belongings on the side of someone else’s private trash collection point if they could, or how many would just leave the trash somewhere, rather than pay for removal, or how many landlords would move it to someone else’s property. Also, in that community, trash creation was very variable. If there were private trash collection, you would have to pay a surcharge for the larger pickup at the end of the semester. Again, how many students would have skipped the charges, leaving it to the landlords, or how many landlords would have just kept the trash somewhere, or moved it, or ignored it.

Finally, this city had a history of private trash collection. It was the Italian mafia. Public trash collection replaced it when people got fed up with extortion–no trash pick up unless you buy uncle Luiggi’s cheese for your pizza parlor.

Jay March 18, 2011 at 9:39 am

“Most of Fairfax County has private trash collection.”

Private services for Pelosi, Reid, and the other aristocrats; public services for the plebes. I remember the “pergressives” telling us that ObamaCare would give the plebes the same healthcare coverage as our Senators. I also remember laughing so hard at the comment I fell out of my seat.

IVV March 18, 2011 at 9:41 am

I would imagine it is possible to get public trash collection in conjunction with the cost benefits of competition. It requires the public authority to accept bids from private contractors on a regular basis. Do a good job at a good price, you’re locked in for a whole town’s trash for a year or a few.

Certainly this works best with transparent local government and properly sized neighborhoods to compete for. No guarantee of that, but it’s one more example of the cost benefits of a transparent, accountable government.

Andrew March 18, 2011 at 9:49 am

There is nothing that says the government couldn’t (or shouldn’t) charge a fee, and if they charge, then they can and should exclude because they can, and if they can exclude then there is the free riding incentive. That’s what the police are for. The issue has less to do with government than whether or not it is a legitimate public good, which it obviously isn’t.

GW March 18, 2011 at 9:55 am

I lived in Portland, OR in the early 80s, a city that adopted private, competitive trash pick-up, and had to live with noisy pick-ups from 3 or 4 different firms each week. A government monopoly would have been bliss.

Mr. E March 18, 2011 at 11:34 am

I used to get woke up every Saturday morning at 6am by private trash collectors. Illegal, Yes. Every Saturday, Yes.

As I was working 80 hour weeks crammed into 5 days, it wasn’t always easy to fall back asleep. Once your body gets hyped like that from the work, sleep isn’t something easy to find…

Slocum March 18, 2011 at 9:59 am

bbartlog: Free-riding is an easy problem to solve compared to people just dumping their trash.
Yes, avoiding illegal dumping is the strongest argument for trash collection as a public service.

David Prottas: I would add that I have several affluent Manhattanites with second homes in the country who dispose of their trash this way (or even bring it back it into Manhattan to place on the curbs for public pickup.

The market solution to this in Northern Michigan is that some gas stations on the route home put video surveillance on their dumpsters with nasty warnings. But one (smarter than average) gas station operator near the cottage will let you toss your trash in their dumpster for $2 a bag. So we also buy our gas there. There’s also garbage service on our road — you buy special bags. But it’s not a read good idea to leave garbage out from Sunday night to Wednesday if you don’t want the raccoons or bears to get it first. Or, yes, if we have the space and it’s not too stinky, we bring it back with us and put it out with our normal trash.

Veridical Driver March 18, 2011 at 2:16 pm

Slocum:
Illegal dumping is a problem anywhere that garbage collection is rationed, irrespective of the rationing system (free market vs. government).

Sure, if your public system collects as much garbage as you can produce, with zero cost, then yeah no-one needs to illegally dump. But if you live in an area with free government-run garbage collection, but where the amount of garbage you are allowed to throw out is rationed (we are allowed one 200-liter trash bin every two weeks, and one 200-liter recycling bin every two weeks), illegal dumping is still a problem.

Rahul March 18, 2011 at 10:06 am

Could competing agencies cause additional pollution and traffic congestion in an urban environment? Also, what about the severe externality of a neighbor having piles of rotting garbage in his yard? It is bad enough having unmown lawns and unshovelled streets.

clayton March 18, 2011 at 10:08 am

Sure it works in your $200k/year economist neighborhood. Will it work in less affluent neighborhoods, which comprise the vast majority of U.S. neighborhoods?

Let’s imagine it works everywhere but the poorest 5% of neighborhoods. Then, we have trash piling up in the worst neighborhoods, making those neighborhoods even worse. Crime increases, poverty increases, fatalism increases: we have significant increases in the negative externalities of poverth that will be far more expensive to deal with than public trash collection.

Slocum March 18, 2011 at 10:59 am

What’s the quality of trash pickup and other city services in the poorest 5% of neighborhoods (in Detroit, for example) now? Do you really think they are well-served by city services and that private companies would be worse?

Mr. E March 18, 2011 at 11:36 am

It is awesome in Chicago even in very poor neighborhoods.

j r March 18, 2011 at 10:11 am

What happens when you go from talking about trash collection to something like fire protection?

Floccina March 18, 2011 at 11:11 am

One problem with Government provided firefighting services is that even though fires are far less common today than 50 years ago people fight to keep fire stations open and so we pay more than we should.

j r March 18, 2011 at 1:23 pm

Fine. I’m aware of the failures on the government provision side, but there do appear to be certain service that are actual public goods. And fire protection in an urban area seems to be one of them. Our cities could stand to be a great deal more libertarian, but I wonder if they could ever be completely so. This is something I always want to ask the anarcho-capitalists I know: can you have an anarcho-capitalist city?

Ryan Vann March 18, 2011 at 2:10 pm

A city is a jurisdictional entity, so no by definition.

j r March 18, 2011 at 3:39 pm

is it really that hard to understand what i’m asking? it’s not about the jurisdictional entity. it’s about the nature of urban v. rural living.

Dan Dostal March 18, 2011 at 4:47 pm

Are your anarcho-capitalists not xenophobic? I’m not sure I’ve ever met an anarcho-capitalist that could stand living near millions of people. Of course, no one in Montana lives near millions of people, so maybe I have a sample bias.

Glen Raphael March 18, 2011 at 4:48 pm

Same thing happens – if you look around a bit you’ll find lots of examples of private competitive fire departments providing superior service to what the public ones do. Rural/Metro in Arizona is a good example: http://www.ruralmetro.com/about_ourhistory.asp

Alan Gunn March 18, 2011 at 10:33 am

“But I suppose there still are remote addresses that UPS won’t serve but USPS will? So the objection stands, in principle.”

Everything people use except mail is delivered privately. Food, furniture, the stuff your house is made of, fuel, cars, on and on. What in the world could make mail so different that the people who move all this other stuff wouldn’t move it? The “fable of the bees” refers to a once-widespread belief that bee keeping should be subsidized because bee keepers, on their own, wouldn’t take the benefits of farmers getting their crops pollinated and so wouldn’t do enough bee keeping. Stephen Cheung looked into the matter and found a thriving market in which farmers paid beekeepers to set up in their fields and orchards. (The subsidies remain, however). See also Coase’s “The Lighthouse in Economics,” showing that privately owned and run lighthouses were common long before economists “explained” that only governments would do that.

mulp March 18, 2011 at 2:37 pm

But almost all those private deliveries depend on free access to public services known as roads, and some significant part of the road system is not funded by use fees, but by taxes on property, no matter how much the property owner uses the roads or wants them.

I’ve argued that all the roads from those going by your house to the Interstates should be leased to private firms, with the lease holders as a consortium allowed to dictate the vehicle requirements for GPS trackers and usage meters with the entire road law system turned over to the private consortium. The lease holders could contract with local police to provide road law enforcement, or operate their own police force, perhaps making use of the GPS recording system to enforce speed limits as well as calculating the toll fees. Traffic cams with vision systems and transponders verifying the GPS trackers would enforce the private rules placed on road users. Converting the roads to private operation would require a Federal law to ensure uniform national standards, but the need for gas taxes and government run licencing of drivers and cars and vehicle use fees would be eliminated in favor of more efficiently private sector revenue collection to pay for road services. The for-profits would have huge incentives to invest more in roads to justify charging higher prices to increase their revenue and thus profits.

Sure, the cost of food might go up as the lightly used rural roads needed by farmers would be charged much higher tolls, but city dwellers would reap the benefit of lower transportation costs which would surely offset the higher prices they pay for food.

Really, why should we put up with the socialism of Hoover and Eisenhower and Reagan who are the ones who imposed gas taxes to pay for free roads instead of letting the private sector run the road system? (Eisenhower and Reagan both doubled the gas tax, while JFK, LBJ, Nixon, Carter, Bush, and Clinton did not hike the gas tax.)

Alan Gunn March 18, 2011 at 3:05 pm

Well, I agree. Private roads are a good idea. Even the French, not known for free-market absolutism, have a lot of them. Absent that, though, I suppose gas taxes are a rough proxy for charging for road use.

Ryan Vann March 18, 2011 at 3:15 pm

Don’t fret, GPS tracking will fix road use problems eventually.

Rahul March 18, 2011 at 3:57 pm

GPS tracking of miles is already the norm on EU highways for trucks I think.

Andrew Montgomery March 19, 2011 at 9:39 am

Actually I think it should be the reverse. Local roads are used, and paid for, by local taxpayers. The gas tax isn’t ring-fenced for road budgets, it just goes into the general revenue pool.

In many places, long-distance roads have tolls. These are relatively cheap to enforce, with manned or automated booths. If you don’t want to pay you can still use the back roads.

Sticking GPS trackers on cars is a massive invasion of privacy. Did you drive to the abortion clinic last Friday? The mosque? The psychiatrist? The union meeting? Who would have access to the tracking logs? Only a select few people such as the police, federal law enforcement, employees of the tracking company, car insurance companies, and of course any lawyer who asks for them. Private investigators would work with corrupt officials to supply data to suspicious husbands or employers. Criminals would have stolen cars, GPS jammers (you can buy them on eBay today), electric bicycles, and other means of evading the law. The only country that even comes close to having a nationwide vehicle tracking system is Singapore, and their government is usually described as “authoritarian”.

Andrew March 18, 2011 at 10:40 am

On the sidewalk house numbers, it is questionable if not paying is actually free riding. There is probably a technically optimum number of houses to be numbered and it’s probably not 100%. I think at most it would be to number one side of the street because that’s what the Ambulance driver might be looking at. So, it’s likely that we way over buy for some things based on the social stigma against free riding. I can see why a trash company wouldn’t want you to double-up with your neighbor’s trash can, but is it really less optimal to do so compared to having two half-filled trash cans?

blah March 18, 2011 at 1:08 pm

While true that the optimal number of painted house numbers isn’t 100% (it’s 50% or thereabouts), the guy not having his painted ought to pay the neighbor to his left half the fee incurred to have HIS painted. Or some such scheme.

Otherwise, yes, this is a free rider situation.

Your concern with less optimal is admirable but keep in mind that least optimal is having multiple providers servicing the same street in the first place.

Ryan March 18, 2011 at 10:53 am

RFID the trash bags.

I live in Suburbia, USA and pay $144 measly dollars for a year of trash service. If I lived in the city, then I would have to pay $43 every 2 months ($258/yr). There’s 3-4 services that I can choose from since I live outside of the city.

Floccina March 18, 2011 at 11:08 am

Maybe un-bundling trash collection would be good. Make a way to elect the trash collection commissioner.

Jacob March 18, 2011 at 11:35 am

I was 24 years old before I even knew that public garbage collection existed. It was incredibly worse than the private garbage collection that we had to deal with back home. And believe it or not, the local country hicks *DIDN’T* let trash build up in their yards, and I’ve never heard of anybody sneaking their trash into another persons dumpster. The same is true of the urban parts of the city, except that people will occasionally pick up debris from the sidewalk and stuff it in the nearest dumpster (I suppose that technically counts as “Free-riding”).

Reading some of the comments in response to Alex’s post, I was honestly sort of dumbfounded. I also became a slightly bigger believer in the Free Market.

Sbard March 18, 2011 at 7:35 pm

I’ve never lived anywhere that trash collection was paid for through taxes since I was three or so. Even during the brief period where my family lived in an HOA controlled subdivision, we were still responsible for contracting our own garbage disposal. Where I live currently, trash is a line item on the bill from the local municipal utility company rather than some form of municipal tax.

Jacob March 18, 2011 at 11:47 am

You could argue that the trade-off is that private companies charge extra for recycling, and most people aren’t willing to pay the extra fee.

Andrew March 18, 2011 at 11:55 am

Some free-riding is fine and maybe even good. I’d be cool with homeless people riding the bus at no charge because the actual additional cost is near zero and the additional revenue from those folks is zero.

Also, my next-door neighbor takes his trash to the dump. I don’t really understand why he shouldn’t have this choice even if government decided to monopolize our trash rights. In fact, the government war on free-riding creates free riders on the other side.

Rodney March 18, 2011 at 12:49 pm

I’m with Arnold on this. My parents owned a small plot of land in a very affluent NJ township that had private garbage pickup. I can’t tell you how many times we came to tend the garden there and were confronted by piles of garbage bags that people had dumped — just because there wasn’t a house there. From the discarded mail in the bags, we could tell that most of it was coming from neighbors. While Alex exclaims “private pickup works” he is not seeing the whole picture from his (presumably) suburban front yard. The free-rider problems here are real but may not be simply people sneaking trash into their neighbor’s bin.

Veridical Driver March 18, 2011 at 2:11 pm

I live in a city that uses a 100% unionized government monopoly for trash collection.

It also has strict limits on how much a household is allowed to throw out (each house has its own registered trash and recycling bin). Businesses pay based on volume. Which pretty much means that his nightmare scenario that he presents for “privatization”, is the reality for our entirely government-run system.

Andrew March 18, 2011 at 2:13 pm

Taxing people for trash collection doesn’t exactly halt dumping directly- it increases the incentive to produce trash for collection. How are we sure that is a net positive compared to periodic anti-dumping enforcement?

mulp March 18, 2011 at 3:06 pm

In my town, threats of having to hike taxes to pay for closing the public land fill resulted in increased recycling, so much so that the closing was delayed almost a decade, which built up the fund for the closing so there was no tax hike when it closed.

Then we had the debate on what followed, and the options were to eliminate the public waste disposal site forcing everyone to buy private service, requiring private service by assessing a fee to each property owner, taxing to pay for private collection, and a few others.

The cheapest to the community was tax funded private collection from one of the big firms that have set up waste sorting, recycling, energy production, and land filling, but that put the local mom and pop’s out of business, so they were preserved and taxes were used to convert the landfill facility to a transfer station. Many of the mom and pop waste haulers rely on the town transfer station, and the big national waste haulers don’t service households because they don’t have the density needed for their automated pickup trucks which require special trash bins.

Each year before town meeting, the public works lays out a pay to throw plan, with free recycling. And every time, the recycling increases, especially after the waste hauler now pays for single stream recycle while charging for non-recycle, which makes recycling cheaper for the town and household, so the town hasn’t yet go to pay to throw on each bag.

So, the evidence is to the contrary that free tax funded services leads to excess use.

And I won’t pay for pickup because I generate about three to four large trash bags a year that must be landfilled or burned in a waste incinerator with pollution collection. (I’m single, but nearly everything you get can be recycled without a lot of hassle.) My taxes for waste disposal are much lower than for the roads, and as I only drive about 50 miles a year on the town roads (with a car rental or riding in a friend’s car), it costs me probably more in taxes per mile for my road use than my socialist government run waste disposal for my small amount of waste a much larger gift of recyclables that helps pay for the other waste disposal.

Ryan Vann March 18, 2011 at 3:18 pm

“So, the evidence is to the contrary that free tax funded services leads to excess use.”

Your anecdotal story doesn’t constitute a body of evidence. I’m sure results vary.

Gerard MacDonell March 18, 2011 at 2:16 pm

A neighbour at my old house on Sycamore Drive in Wesport CT piled the results of his bathroom remodeling in the dumpster I had rented and had placed in front of my house. I don’t know who it was but he does. At my new house, somebody dumped a Christmas tree at the top of my driveway. That was less irritating. Softwood makes a nice sound when burning. If I were to model this, I would assume there is some sort of hurdle that needs to be cleared before it makes sense to steal garbage removal services from your neighbour.

Tim March 18, 2011 at 5:06 pm

I’m actually less fascinated in the trash discussion and more in wondering why we don’t discuss a way of privatizing that will lead to rollback to public monopoly if the private markets can’t provide sufficient competition.

Mr. Econotarian March 18, 2011 at 7:24 pm

I grew up with private trash in Montgomery County, MD. I believe it is still mostly private.

The elephant in the room has been ignored: local governments are using socialized trash collection to obtain recyclables which they then sell for cash. The flow of recyclables (and thus cash) is assured by passing laws requiring it. Even in places with private trash, there often is socialized recycling.

Sbard March 18, 2011 at 7:39 pm

You’re perfectly free to drive your recyclables to the scrapyard on your own if you really want to.

Hyena March 19, 2011 at 6:30 am

I’m not sure the free rider problem is actually very large with trash pick-up. Getting caught sneaking trash imposes pretty high social and possibly financial penalties–it’s embarrassing to most people. If your neighbors don’t pay enough to check for people sneaking trash, then it’s likely that the risk isn’t worthwhile. If your neighbors do pay enough, they are more likely to be looking (and the penalties likely higher still).

But I think the biggest deterrent is the limit of the cans. Properly designed, you just can’t put enough trash in them to free ride. Maybe a plastic shopping bag or two’s worth, but you’re not going to sneak a household’s worth of garbage into a full can and most people probably won’t bother with the trash until it’s good and ready. Laziness probably saves us all from free riders more often that we like to admit.

Fake Name March 20, 2011 at 4:05 pm

Why don’t the trash pickup companies, charge by the weight? It would give the homeowner incentive to make sure other people do not sneakily dispose their trash into his/her bins.

Meredith L. Patterson March 21, 2011 at 8:05 am

There’s no need to use anything as complicated as RFID.

In Belgium, municipal trash collection is paid for by the sale of specially marked bags, which are the only bags the trash service will pick up. You buy them in any grocery store and most convenience stores. In my town, trash bags cost 2 euros each and you can put anything in them; recycling bags cost 50 eurocents each, are larger, and are translucent so that the trash men can see if you’re trying to cheat by putting nonrecyclables in the cheaper bag. (If you do, they slap a large red sticker on it and leave it, and your neighbors give you a hard time if you don’t retrieve it.)

My family of 2 generates approximately one trash bag and one recycling bag a week. 2.5 * 52 = 130 euros a year. If we generated more trash, we’d pay more; the system scales nicely. (Dumpsters are not a common phenomenon here, so the opportunity for dumpster free-riding is smaller.) All it took was tying payment directly to consumption, in simple units of bag-volume rather than the more complicated “weight of the trash” approach I’ve seen bandied about elsewhere.

The only complaint I have is that it’s an enforced monopoly — a benign one, but it still rankles me. Introducing competition could lower prices but would also introduce more opportunity costs, such as the additional noise and traffic of more trash trucks or the annoyance of having to let your trash company know you’ll be putting trash out (which could be a neat way for a company to optimize its route, but might be too much of a hurdle for customers. Seriously, who wants to put more work into getting rid of their garbage?)

hibikir March 21, 2011 at 2:52 pm

Around here the answer was collective bargaining: We were running private garbage disposal in my county: Pick your company, pick your services. A couple of elections ago, there was a vote to try to do some collective bargaining: The county was divided into 5 garbage districts, and there’d be open bidding to provide monopoly access to each district for 4 years, using some specific contract terms. As it happened, the best bid provided a better price at each service level than anyone of my neighbors were paying by a significant margin.

Now the issue will be the second auction, as there’ll be less companies with extra capacity to want to bid for the residential collection services.

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