How to Get an Even Better Trash Deal Than Bethlehem’s Single Hauler Plan

If John Callahan becomes County Executive next year, he should think about trying to negotiate a trash hauling contract on behalf of all Northampton County municipalities. The greater the number of households the County is buying for, the stronger their hand will be in negotiating down the price per household.

Comments

  1. John says:

    Your 2nd favorite mantra (although “throw money at it” is the runaway winner) – bigger is better.

    Man as you grow, mature and gain real world experience you’re sure going to learn a lot about what works and what doesn’t.

    • Jon Geeting says:

      I realize that you think government is bad at everything, and it’s true that government is bad at some particular things, but one thing government is good at is pooling buying power to extract low prices from suppliers. Monopsony bargaining works.

      • John says:

        You’re correct, government is bad at most of what it does but my post wasn’t directed at government, it was directed at your childlike fascination with size. Private industry is rife with examples where size didn’t work – it lead to gross inefficiencies, fiefdoms, turf wars, poor capital allocation, etc., all of which lead to subpar returns to investors.

        My point is very simple – bigger is not necessarily better. You need to do some reading on that point. Make your case based on real world economics (not policy class stuff) and let it stand on merits.

        By the way, I’m not against a single hauler. I am against politicians going against the will of the electorate. If Bethlehem residents want to keep their present system, they should be able to do so. Your view is the typical liberal “I know better than you so shut the fuck up and take it.” You can keep that attitude in NYC we don’t want it here.

        • Jon Geeting says:

          I’m not arguing that bigger is always better, just that for this particular service there’s an economy of scale. For some markets, like consumer goods, lots of competition between small firms is better than limited competition between big firms. In the case of trash collection markets or health insurance markets, it’s the opposite – fragmented buying power advantages service providers over consumers. It all depends on the market. But for most public services, I think you should concentrate buying power as much as possible to get a better price.

          I’m open to persuasion that the County is too large a service area for one company. In that case I’d say that the County Executive should propose dividing the County up into 4 or 5 zones and soliciting bids from different companies to be the single hauler for those zones.

          My attitude toward politics is that I support representative government – politicians should know better than their constituents, and make decisions based on that superior knowledge, not on what’s popular. That knowledge should include tons of input from constituents of course, but comparative public policy research and economics should weigh more heavily on their decisions.

          • John says:

            I’ll give you another example on your fixation with size – that pooling state pension plans will automatically and without question result in better investment returns. There are a myriad of cases where exactly the opposite happened in the industry. It’s not only not a certainty, but much more likely to be untrue, that in fact returns will be lower than they would be otherwise, even after taking into account the different fee structure.

            Your example regarding the county controlling trash removal by splitting into zones is nothing more than making county government bigger (see ‘bigger not necessarily better’ argument all over again).

            You do realize that townships that have already gone to one hauler can simply band together for negotiating purposes and accomplish what you want while spending exactly nothing? I know, you hate that because you don’t get to spend more of someone else’s money and consolidate control among the enlightened….

          • Jon Geeting says:

            I’m not arguing that they’ll necessarily invest the pension money better. I don’t see how you make that more likely. I will say that right now people who are not qualified to be managing plans are doing it without any training, in many cases entirely with state money and no local match. That sure does not inspire confidence. I am only arguing that they’ll save on management fees, since money is being wasted paying people to manage all these plans separately.

            The county plan would work because the County can negotiate on behalf of a much larger pool of buyers. Google monopsony.

  2. John says:

    I’m sorry, I meant to say – “Throw SOMEONE ELSE’S money at it.” Important distinction there.

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