Archives for November 29, 2012

Governments Create Markets: Bethlehem Trash Hauler Edition

One point I’ve been glad to hear from John Callahan and Joe Kelly is that switching to a single trash hauler does not reflect a problem with the private trash haulers.

They are doing the best they can within the wacky market design that city government has created for them. It just happens to be the case that the market design creates a lot of inefficiency and makes the city dirtier and poorer than it has to be.

Governments create markets. The rules and regulations established by governments shape the environment in which certain business models can succeed and others can’t.

Under the current regulatory mix, there’s a profit opportunity to run a business collecting people’s trash, so a lot of people do it. But that profit opportunity was created by city government.

When city government made the choice not to provide trash collection service to everyone, and mandated that residents take care of their own trash, that created an opportunity for people to start businesses providing that service, since most people prefer having a little less money than making a weekly trip to the landfill.

Just because that’s been the regulatory mix for a long time doesn’t mean it’s wrong to change it. John Callahan thinks that a different city policy will produce a cheaper, cleaner and more efficient organization of trash service, and he’s right. More people are going to be better off if city council changes the rules than the number of people who will no longer be able to extract regulatory rents from the city government’s botched market design.

Shorter Boehner: Democrats Should Propose the Spending Cuts for Us

It continues to amaze me how bizarre the Republican negotiating position is on the austerity crisis. House Republicans say there’s a “price for everything” to avert the austerity crisis and raise the debt ceiling, but they won’t say what that price is. They say they want to do entitlement cuts, but are insisting that President Obama and the Democrats identify some cuts for them to demand.

What? If people want spending cuts then they need to propose some spending cuts. Democrats aren’t the ones demanding spending cuts, so quite sensibly, they’re not proposing any. Republicans are the ones who want the cuts, so why are they keeping it a secret? Say what you want!

This whole thing is going to be a lot simpler if we just wait until after January 1st, when the only question to debate will be how much to cut taxes.