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Posts Tagged ‘unintended consequences’

A few days ago, in a dutiful contribution to the country’s economic recovery, I went out and bought something: a toasted coconut gelato. I decided that I’d rather savor dessert than save an extra few dollars. I came out happier than had I stayed home with my money. The gelato guys, for their part, preferred my cash to an unsold cup of gelato. Thus, the sale made them happier as well.

This “voluntary exchange” between buyers and sellers, in which both parties end up better off than they were before, is a key tenet of capitalism. It’s a simple, un-coerced, free-market swap of money for goods.

Who could argue with this efficient interaction, largely unsullied by government regulation (at least not in any obvious way)? Indeed, many economists, business people, and politicians believe that if more of our economy functioned on capitalist principals we would all be better off. The idea is that the less the government gets involved, the more people can go about their voluntary capitalist exchanges, sowing seeds of happiness and profit in their paths.

For a variety of complicated (and frequently erroneous) reasons it is often assumed that protecting the environment interferes with the above mentioned pursuit of money and well-being. There is something to this perspective. One of the government’s only tools for addressing environmental, social, or economic problems, is to pass new laws and create regulations. Unfortunately, new rules are often fraught with inefficiencies, weighed down with bureaucracy and spew forth a sea of unintended consequences in their wake.

Which is why I love Brunswick’s pay-per-bag garbage program: it’s completely capitalist in spirit and at the same time it does a spectacular job of helping the environment.

As most readers know, pay-per-bag refers to a system in which citizens pay to purchase each garbage bag they use. The more garbage a household generates, the more bags they use, and the more they pay.

Those who have whittled their garbage down to two cans a year, pay almost nothing. Yes, I do know several families who have achieved this feat. And yes, when I visit their houses, I find myself constantly peering around and making suspicious comments such as, “OK, what do you do with your toothpaste tubes?” and, “Where are you hiding the packaging for that new pot?”

Back in the old days, garbage collection was funded by tax revenue. Two families with the same taxes would, in effect, pay the same for garbage collection, even if one household lugged out six cans a week brimming with greasy pizza boxes, and the other had enlisted Harry Potter to shrink their weekly garbage into a dense pea-sized lump (which, I’ve concluded, is the only way to get to two bags a year).

Without delving into economic jargon or quibbling about the details, having the amount homeowners pay for garbage be independent of the amount of garbage they actually use is closer to a socialist system than a capitalist one. Light users subsidize heavy users, all for the greater common good of getting the garbage collected. It is not a voluntary exchange of money for services: everyone pays irrespective of the services received.

Yet, it is also a system subject to the unintended consequences that inevitably crop up when markets are run by regulations rather than a free exchange of goods and services. Importantly, the motivation citizens might have to throw out less–an action clearly beneficial for the environment as well as for the life of the landfill and consequently the town’s bottom line–is largely removed. When everyone pays the same amount, there is limited motivation for individuals to toss less stuff.

Enter good old capitalist pay-per-bag in January of 2007. The town of Brunswick charges $1.00 for large bags and just $0.50 for bags about half the size. For some, absorbing this cost represents a financial challenge, for most others it’s a small nudge to figure out how to produce less garbage. The less we throw out, the more we save.

And throw out less we certainly did. Before pay-per-bag, Brunswick residents tossed out approximately 6-7,000 tons of garbage a year. Today, we are down to just 4,000 tons a year: nearly a 40% drop.

This tremendous decrease in trash volume was not only attributable to the pay-per-bag program. At the same time the new rules were implemented, Brunswick also switched to single stream recycling (in which all recyclables can be put in one container) and increased the types of materials that could be collected for recycling.

The town has just passed the five-year anniversary of pay-per-bag’s inception. During this time the reduction in trash tonnage has added over 2 years to the estimated life of the landfill. The longer the landfill lasts, the longer the town has before it has to take on the high costs associated with closing it, and with finding a new place for our garbage. This is a huge cost-saver for the town.

For most people, protecting the environment frequently does not appear to be aligned with their own self interests. At the same time it’s clear that we all depend on a healthy environment for basic needs such as our food supply, and clean water and air. Using free market forces to link environmental protection with
individual self interest, is one of our most powerful tools for moving forward.

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