Arnold Kling  

A Review of the Widely Unread

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In the latest issue of The Independent Review, Stan Leibowitz reviews Unchecked and Unbalanced. I suppose that the right response from me should be "Thank you for taking the time and trouble to review my book" rather than quibble with the review. But I cannot resist. He writes,


Kling avoids a discussion of the proper tasks of government and instead moves to a suggestion that what he calls functional governmental units compete to provide specialized services, such as picking up the trash, previously provided by the local government monopoly. He also suggests that groups such as neighborhood associations be allowed to form as if they were "charter" groups (analogous to charter schools) that would take on most of the activities currently associated with city or county governments. These arrangements would increase the number of decision makers, thereby decreasing the influence of the average political decision maker.

A more fundamental question he does not consider is why any form of governmental unit needs to pick up trash as opposed to having private companies do it. And why does everyone in a neighborhood need to choose the same provider, as he suggests? I spend the summer in a small mountain community where everyone in town transacts with one of several private firms to pick up his household's trash. This arrangement seems to work fine.

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.

Yes, there are Coasian bargains or rules that can prevent this. But the enforcement costs are a lot higher in an urban area than in a small mountain community.

There are two reasons why I wrote a book on competitive provision of government services rather than an argument against the very notion of government services. One is that other people can write and have written books claiming that we need no government services. The other reason is that in an urbanized society, doing away with government services comes across as implausible. Instead, my approach is to suggest experiments that reduce the monopoly power of existing governmental units.

[UPDATE: See Alex Tabarrok's amusing takedown of my argument.]


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COMMENTS (12 to date)
Grant Gould writes:

At the risk of "fighting the hypo"...

In the Coase's lighthouse "most examples of public goods aren't" category, though, note that "pay-to-throw" trash systems (where one pays by the bag) suffer all the same potential externalities and yet are fairly common in reality -- in fact are generally favored on the environmentalist left because they encourage recycling.

The circle is squared by using trash bags or twist ties with distinctive designs. One purchases a certain number of these not-quite-free-to-forge tokens from the trash company; so long as the cost of throwing away a bag is less than the cost of forging the tokens, the externality is dodged.

Ray writes:

"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."

Why do you suppose trash collection would be bargained individually. More likely, you would form an arrangement with everyone on your block for trash collection. Maybe every time someone bought a house, he would have to enter into necessary contracts with his neighbors, sort of in the way that coops work. Zoning can be implemented this way too.

Troy Camplin writes:

Apparently you've never lived in a rural area with private trash pickup. I did all my life. The free rider problem doesn't happen, because the person dropping off their trash would be told off by the property owner. In rural areas, people take property rights pretty seriously.

Nathan writes:

"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."

I find this notion truly bizarre. What you're saying in essence is that a free market won't work because too many people adopt a "strategy" that is nothing more than straight-up theft. But most people aren't inclined to steal due to internal, moral reasons. I doubt one person in a hundred would attempt this "strategy." Even if this is not true, such theft is hardly easy. Discretely carrying large bags of garbage to your neighbor's house would probably require doing so at night (God help you if your neighbors are the type to put out the cans in the morning instead of the night before!). If the combination of the cost of the theft itself (e.g., having to get up at 3 am to commit it) and the criminal penalties for trespass and theft are sufficiently large, even a completely amoral homo econimus would choose to pay for his own garbage collection.

Jeff Hallman writes:
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.

The force is weak within that one.

In the Woodbridge, VA neighborhood where I used to live, residents invidually contracted with trash collectors. The collectors provided big plastic wheeled trash bins that we rolled out the night before. The bins from different collectors were different colors and different designs. They also had the company name stenciled on them. The collection crews had no trouble figuring out which bins to collect, especially since the two main collectors did their pickups on different days of the week.

Amotherphil writes:

Arnold, you blew this one.

Haven't you ever heard of weekly collection limits or indicia of (pre)payment such as stickers adhered to trash-in addition to all the other methods such as proprietary containers.

Its a matter of very simple and effective controls.

Noah Yetter writes:

I live in Lakewood, CO, a suburb of Denver immediately to its West. In most (all?) parts of Lakewood, there is no municipal trash collection and as in the above story each of us must contract with a private trash collection service.

Now, I can't speak for the whole city, but certainly on my street no one EVER puts their trash in front of someone else's house.

You don't need Coaseian bargains or HOA enforcement or any of that nonsense. People in a civilized society largely behave in a civilized manner.

JazzBumpa writes:

Sorry to interject a note of reality. I'm the president of a homeowners association in a pseudo-rural township. We have taken on quasi-governmental functions, because the local government won't or can't. We even contract for street repair, which I think is pretty extreme, rather than rely on the county. We contract for removal of both trash and snow, along with care and maintenance of our entrances; and pay for it with association fees.

Having one contractor haul trash for 255 homes is far more efficient than having several haulers. Billing the association once is more efficient for them than billing 255 homes. Guess what - we get a better rate. Also - there is less heavy truck stress on the neighborhood road pavement, which actually has its own value, if you pay attention to these things. It's really a shame I have to explain this to y'all.

Kling's trash-punk the neighbor strategy also is inoperative, as a no-charge bonus.

I'll guarantee you that if the local government would do this stuff and I didn't have too, there would be a significant utility enhancement for me, and I would gladly pay extra in taxes for their bureaucratic inefficiency. We on the Association board do this stuff for free.

I really love the way cranky libertarians live in a universe divorced from reality, or even a planet that has actual people on it.

Now, I must go hug a squid.
JzB

Patrick R. Sullivan writes:

There's a lot more to Stan's review than trash collection. Y'all might enjoy actually reading it.

pippip writes:

JazzBumpa, your post is really bizarre. First you explain how a voluntarist mutual association fixed all your problems (surely a perfect libertarian outcome?) because the government was too incompetent - then complain that there isn't enough government.

If you want to pay extra for inefficient bureaucrats to run your association, why not just hire one? You can even write mandatory strikes and extensive paid vacation in to their contract, and deliberately choose the least motivated and qualified candidate you interview. What are you waiting for?

---

As for OP arguing against private waste collection on the basis that people might fly tip, that's like arguing for monopoly State Car Service on the basis that sometimes cars are stolen.

EclectEcon writes:

I live in a community with private garbage collection. The town abandoned garbage collection over a decade ago, and within weeks there were many different firms vying for our business. Each of them provides tags or some sort of tokens that we can buy at different variety store outlets and which must be attached to each bag of garbage. This way we have garbage collection several different days each week because we keep tags/tokens for each company on hand, even though each company collects only once/wk. It seems to me this solution should be scalable to larger communities.

In many cities, larger apartment buildings that provide garbage chutes in the buildings contract privately for collection.

I see no reason for gubmnt intervention in the market for garbage collection. Garbage disposal is probably a different question, though. More here

My 14-unit condo association in Westwood has private trash collection, as did my similarly small condo association in Uptown Dallas. In Dallas we did have to put a lock on the dumpster to keep out free-riding neighbors. In L.A., the dumpster is inside the locked garage.

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