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.


  1. The single trash hauler system has nothing to do with efficiency or saving the citizens money and everything to do with plugging that 500K hole in the Bethlehem budget and bringing yet another revenue stream under the City’s control. If Bethlehem did not have this pension crisis, this would have never even been proposed.

    I can tell you that the numbers that they are throwing around, at least in my case, it would actually hurt me vs. helping me as the service costs i currently receive are lower than what the mayor’s figures are saying i will pay.

    We are nipping and biting around the real issue throughout all of this and that is the unsustainable pension obligations of local government. Until the politicians on both sides of the isle sit down and really take a hard stance with the unions and these obligations, the taxpayer will continue to get nickled and dimed on every service there is.

    Pension money is dead money for City services. It brings no value to current operationals services. I know you are a big government guy John, can you imagine the cash flow for services you could have if even you took 1/2 the savings from pension restructuring and would apply it to current operations?

  2. Another misconception by you. Government had nothing to do with creating a market for trash disposal – that market created itself with the first people that settled in Bethlehem. Did Government regulate that market? Yes. But create? No.

    Government’s decision here is whether to INTRUDE FURTHER into the market.

    • Jon Geeting says:

      LOL whoever first came up with the current trash policy created the market. Markets don’t “create themselves”

      • LOL no. The presence of trash creates the market. It was a market that people at that time could choose to participate in or not. Take to dump? Burn it? Hire someone to take it away? All market choices that had nothing to do with some bureaucrat creating a policy.

        Your policy is the first intrusion in that market by Government. It changed the market but did not create it.

        • Jon Geeting says:

          You are hilarious. It’s the presence or absence of policy that creates the market. If the policy is to not set any rules for trash collection but fine people for illegal dumping, that’s still government creating the contours of the market.

          • Let me give you another example – kids mowing lawns. A kid lives in a neighborhood and puts flyers in doors advertising his services.

            Market? Yes. Government bureaucrat creating it? No. And before you go off, the reason people first started cutting grass was to keep critters away from houses and prevent fire tinder from building up, not because a bureaucrat wanted to regulate grass height.

            Please stop thinking the sun rises and falls only because assholes create policies.

          • Jon Geeting says:

            That’s easy – the government shapes the grass cutting market by turning a blind eye to child labor and tax laws. If the laws on the books were enforced, there’d be no such thing. That’s not an argument that they should enforce the law, but just saying that it’s the same government policy that’s applied to any gray-area business. If the activity remains harmless you don’t enforce the law, but if some guy started hiring a bunch of tweens on the sly to start a mid-sized lawn mowing business, then you’d start enforcing the child labor and tax laws.

            You could also step back and point to local governments creating maximum lot occupancy regulations which create lawns in the first place. Government land use regulations create profit opportunities for lawn-mowing kids.

          • Thanks for agreeing with me – “Shape” the market is correct, governments do that all the time. “Create” the market is wrong – the market here clearly existed without any action or inaction by government.

            Now is the part that you admit you’re wrong.

          • Jon Geeting says:

            But I’m not agreeing with you. Whether the government decides to act or not to act creates the market. There is no such thing as a neutral position.

  3. “The government shapes the grass cutting market by…” That’s not creating a market Junior, that’s influencing an already existing market.

    Are you changing your mind now?

    • Jon Geeting says:

      Huh? I just explained how governments create the market for lawn care by mandating lawns with land use regulations. They also shape the market by regulating teen lawn cutting as a gray area business.

      Scarcity (in this case scarcity of time) creates the demand for lawn care, but what kinds of businesses are able to form to meet that demand depends entirely on what the government’s rules are.


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