Observations and Distortions
A free market provides for the wants of the consumer by utilizing scarce resources in a manner that becomes more efficient over time. This is always true -- in a free market, that is. But when we observe the market and assume it is free, we tend toward conclusions that are not true. Consider this situation:
Each Friday I observe the garbage trucks working their routes through my neighborhood.[1] Each truck is manned by one employee. These men serve as both driver and loader. A laborious and slow task to be sure. Now, if I assume a free market, I will believe that I am witnessing an efficient utilization of capital (truck) and labor (driver/loader). But is that true?
First off, the refuse company has an exclusive contract to serve residents throughout my township.[2] The company's competition is political based, not market based. So the company is likely not as lean and mean as a free market would demand.
And then there is minimum wage. It could be that the company would hire a separate loader at some salary less than the current and future minimum wages.
Finally, there are the host of laws and regulations that dictate how capital and labor are employed.
So, I observe something every Friday. Is it an efficient utilization of scarce resources? Not a chance.
I try to keep this in mind every time someone talks about failures of the free market. My first question is always: Which market is free?
Notes:
1. Due to township mandated recycling, the refuse company must run three trucks through my neighborhood: one for yard waste; another for recycling; and the final for everything else. We, the residents pay for this "service."
2. Absent the exclusive contract, the refuse company would utilize resources as efficient as possible given the remaining governmental interventions in the market -- minimum wage included. But that employment of capital and labor would still not be efficient when viewed from a free market perspective.
Comments (8)
newson
a closer approximation of free-market rubbish disposal is the council clean-up. hard rubbish on the verge is quickly salvaged by cruising "junk" collectors, amateurs and professionals.
only a small proportion of the waste actually finds its way to the town landfill.
Published: August 29, 2009 10:34 PM
Shay
In Austin, Texas, a city that prides itself on being green, I cannot get electric service without trash as well. I must pay $14.61 per month regardless of whether I generate any trash. I am apparently more green than expected, since I generate only 1.5 small kitchen bags of trash per month. I would rather make my own arrangements for this disposal, but I have no choice.
And looking at the overall utility bill, it's amazing how much I would be required to pay even if I cut my electric and water consumption to zero: $47.51 per month.
Published: August 30, 2009 3:27 AM
BioTube
Austin also has an ordinance prohibiting "scavenging" of the sort newson talks about.
Published: August 30, 2009 9:07 AM
bobbobberson
I have a free market-trash system. It is great. I do not generate much trash. As a bachelor I eat out alot and rarely around the house much. I have a selection of garbage services, and maybe three different companies. A guy went door-to-door selling his refuse company. I got him down to $40 a quarter but decided not to do it because I found another free market alternative.
I barter with a neighbor to take 2 bags of trash a month in exchange for borrowing my lawn-mower twice a month.
Large amount of refuse (like when we remodeled) were taken by my family and I to the city dump and we paid a one time fee.
Published: August 30, 2009 10:42 AM
Current
There is quite a free market in refuse services in Ireland. The service isn't provided by the council, you have to pay a private company. They provide you with stickers to put on your bins showing which company you are with. The stickers have bar-codes on them that are periodically changed. These ensure for the company that you are paying for the service.
If you generate only a small amount of waste you can get specific bags for that purpose from the refuse companies. Each bag you buy grants you the service of having the full bag removed.
Refuse trucks here have a driver and a couple of guys at the back who fetch the rubbish.
There is still the minimum wage in Ireland, so it's not a fully free market. Nothing is.
Published: August 30, 2009 1:13 PM
Anarca
Hey guys, this is totally unrelated to the subject in question but I think it is worth it. I was checking the Wikipedia article on Hayek (http://en.wikipedia.org/wiki/Friedrich_Hayek) and noticed that somebody added a bullet alleging that Hayek "strongly supported" Pinochet (the chilean dictator). I checked the source and it is completely unreliable and I want to correct this mistake. Unfortunately I dont know enough about Hayek's life to do so, so maybe someone here is willing to do it.
Published: August 30, 2009 2:41 PM
Gabe
Pretty free-market for trash pickup in Scituate MA. (no-exclusive township rights), but the landfill options for the trash companies are limited. In any casse...we pay about $50/month(once a week pick up) and they always have a driver and at least one loader.
Published: August 31, 2009 9:28 AM
Ohhh Henry
... Due to township mandated recycling ...
I think that you can dismiss every single allegedly green initiative taken by the government as having more or less the opposite effect on the environment and on the bottom line compared to their stated aims and goals.
I just walked past a large company's office complex and in their front lawn was an area about 10 x 10 yards which had been allowed to grow into a meadow with no mowing or weed control. Green religion states that this is good for the company employees and the planet because of no lawn mowing, no herbicides, etc. But the "meadow" was most spectacularly lush patch of ragweed that I've ever seen. They're literally killing their employees with asthma, causing all kinds of hay fever symptoms, sick days, spreading nasty pollen all over the neighborhood wafted by the winds and making many people sick. When they inevitably cut down their ugly, unhealthy "meadow" they will spread the seeds around the neighborhood and ensure that the "green" disaster will have ill effects for years to come.
So it goes with recycling, cash for clunkers, cap and trade, ... it turns out that coerced monopolies are actually bad for you.
Published: August 31, 2009 1:36 PM