Feed on

I’m in the middle of a book on America’s garbage “crisis.” We’ve written plenty on the issue of trash in the past here so I wanted to focus on one particular claim that I encounter in almost every book and article on the topic.

The argument is that companies like Coca-Cola are free-riding by offering “one-way” containers for use (think modern plastic bottles and aluminum cans) as opposed to the reusable glass bottles that were common prior to 1960.

Ignore for the time being that “E”nvironmentalists take it as a matter of faith that the plastic bottles are worse for the environment (or that it matters at all) because they use fossil fuels to be produced and require energy to collect and dispose of and then, horror of horrors, sit in a hole in the ground for thousands of years. Glass bottles that are reusable of course don’t first need to be manufactured and then collected and transported to the bottling plant (they are heavier too, and of course this collection requires no resources) and then requires lots of energy and water to clean and resanitize to be rebottled. Nope – that all magically happens. And of course remember that bottling plants require manpower to run and research, instead of allowing people to be engaged in something more valuable apparently it is virtuous to have a nation of dishwashers.

But the point I’d like to think about is the free-riding claim. Coke does not bear the cost of disposal, collection and burial of waste and the attendant environmental damage that goes with it, so it therefore is socially delinquent.

Which raises several questions.

(1) Are not the users of products responsible for ANY of this? It may in fact be more reasonable for users to deal with these costs than sellers for obvious transaction cost reasons. But that’s not the key point.

(2) Coke ALREADY bears these costs. It would be lovely if any “E”nvironmental writer even stopped to consider this as a possibility before dismissing it. Throwing out bottles for the consumer is costly – not only do they need to keep trashcans and haul them out each week but more important they all pay “tipping fees” to dispose of the 10 billion cases of soda that are consumed in the US every year.

With these added costs, it becomes more expensive, ceteris paribus, to consume plastic bottles of Coke than the alternative. And this means consumers are willing to pay less than they otherwise would for these bottles. And this means Coke earns fewer profits as a result. That is, they’ve paid the cost. Arguing that disposables are more convenient and hence in higher demand is a red herring for this point. I’ve never encountered an iota of thought from writers about this.

By the way, it is estimated that Americans generate 102 tons of trash per year. At an average tipping fee of $35 per ton, this means that we should be paying $3,570 per year, directly or indirectly, to dispose of our trash. This point alone is worthy of future posts, we will leave it unaddressed for now.

(3) Would we like to be consistent in applying this criticism? It would spell the end of schooling, religion, government and the sale of almost anything. You’d think this point would be too obvious to make but again I’ve rarely if ever seen it acknowledged. Why, if we grant that Coca-Cola is a societal derelict, is it that only they are derelicts? Sellers of lumber don’t bear the costs of tear down and burning after their products’ useful lives have ended, do they? Or better yet, sellers of “E”nvironmental books don’t bear the disposal costs of their books. Or better yet, purveyors of doomsday predictions, poor educational practices and the like do not bear the costs of what their customers do with that knowledge. Should we tax or ban the teaching of chemistry because students can use this information to make chemical weapons? Should sellers of advertising be responsible for following up (recycling if you will) with every recipient of the message to make sure it was understood properly? And so on.

Again it’s not so much that folks ought not think about trash or ask if there are better ways to get along doing the things we do. Per usual the point is that folks can’t be bothered to think hard about whether they are being reasonable, whether or not something else is going on, whether they are missing something or to use their own language to understand the hidden costs of their ideas.

People believe what they want to believe.

UPDATE: I found this research paper this morning to be interesting and germane (remember who is promoting home ownership – it’s not just government, of course, but banks and realtors too although I don’t see why banks entirely care whether people rent or own, after all, someone has to own the building and they are likely to save costs by financing fewer larger loans than many smaller ones – plus this would mitigate the need to securitize them, wouldn’t it?)

Does High Home-Ownership Impair the Labor Market?
by David G. Blanchflower, Andrew J. Oswald  –  NBER Working Paper#19079

We explore the hypothesis that high home-ownership damages the labor market.  Our results are relevant to, and may be worrying for, a range of policy-makers and researchers.  We find that rises in the home- ownership rate in a U.S. state are a precursor to eventual sharp rises in unemployment in that state.  The elasticity exceeds unity:  a doubling of the rate of home-ownership in a U.S. state is followed in the long-run by more than a doubling of the later
unemployment rate.  What mechanism might explain this? We show that rises in home-ownership lead to three problems:  (i) lower levels of labor mobility, (ii) greater commuting times, and (iii) fewer new businesses.  Our argument is not that owners themselves are disproportionately unemployed.  The evidence suggests, instead, that the housing market can produce negative ‘externalities’ upon the labor market.  The time lags are long.  That gradualness may explain why these important patterns are so little-known.

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