So, John (rightly, imho) points out that the crazy is full upon us when our fellow citizens spy the dead claw of Marx/Lenin/Obama bearing down on suburbia in the decision of some town to hire a single trash hauler.
Then E.D. comes along and says, no, this is what sanity looks like, in the sense that choice is always and everywhere an unfettered good. (His words: “the Tea Partiers are right this time: having choice is a good thing, even for trash collection.” — italics in the original)
Then E.D. takes some lumps here and there and responds forcefully.[Boy, have I got to stop doing such extraneous crap like reading to my son. Now John’s gone and weighed in again. I give up. I’m just going to post this sucker and live with its irrelevance.]
I’ve a couple of thoughts on that latter post of E. D.;s, which I’ll deal with first, and then I’ll dive into my larger objection to his original argument, which seems to me to make a naive error on the nature of markets.
Please jump the jump for the rest of this. And remember: I never promised you either brevity or wit.
On this more recent post: One: I think E.D. conflates unhelpfully the concept of a short term -sole provider contract with a true monopoly. It makes his argument stronger, but it misses at least one key difference, which is that a properly maintained bidding program makes it difficult for corporations to block market access to each other, but monopolies maintained by force of law aim explicitly at preserving such moats.
Two: E. D. rewards some people with the power of choice at the expense of others for no obvious reasons. For example, if Fountain Hills does choose to pollute, what of the poor, mythical community of West Fountain Hills, who now have to pay to purify the run-off into their reservoir? Contrary to his claim, there is something pernicious, at least potentially, in such decisions, and one of the reasons we have government, and especially different levels of government, is to navigate through what economists call the externalities of economic actions. (More on that below).
Three: I think the corporatist argument is a red herring; it is not obvious that “the most efficient” solution to Fountain Hills’ trash collection issues is to create a town department (again, E. D.’s italics). If the routes to be served could occupy 3 and a 1/2 trucks and 6 1/4 people — then it may indeed be more efficient to hire someone who can deploy resources over a larger area and so on. None of this comes as a surprise to folks who’ve actually spent their own money on projects in the world.*
There’s more to say about this post, but someone else can say it…except for this. E. D. concludes by asking “do we, as a people have the right to make stupid choices.” And the answer I’d give is “yes.”
But where we differ is that I would argue that this “right” is not unfettered. And you can see what I mean if you think, as I do, that the question of whether you can buy a happy meal (which has next to no impact on anyone but yourself and or your kid) is different from the question of whether or not you can let your garbage rot on the street that fronts my house as well as yours.
But all that is prologue to what I see as the larger error E. D. makes in his initial argument, that what this is all about is the superior value of choice over all other potential goods.
Now, based on his more recent post, I’ll accept that E. D. is making something more than a pure economic claim; he sees the right to choose a lousy garbage hauling system as a crucial liberty issue. But at least as I read his original post, and looking at his remarks about monopolies in more recent one, there is a certain amount of economic reasoning going here as well. So that’s what I’m going to talk about for the rest of this overlong post.
So, to E. D.’s first post, two responses.
1: Any thought that begins “the Tea Partiers are right this time,” does indeed have a small but finite chance of being correct. But you won’t lose many bar bets by taking the other side every time.
2: It seems to me that E. D. falls into a conservative tic that drives me crazy every time. E. D. being smart, the error is a little more subtle than usual, but look carefully at this passage:
We want to be able to choose what kind of computer we buy – and not just because maybe we prefer Apple, but because we know that competition keeps innovation up and prices down.
Now, in trash collection you probably won’t see too much innovation, but competition will keep prices down and quality of service high. If you don’t like the people picking up your trash, or the containers they provide, or the driver is rude, or whatever – you can switch.
The assumption that lies behind this is that there is a truly free market, the kind of abstract, Ec 10 market we learn about in the first economics course one takes in college.
These are the markets beloved of budding economists, as they are very easy to analyze mathematically. They are even more cherished by Randbots, McArdle acolytes and too many of the incoming GOP Congressional delegation.
And they exist! Kinda.
That is to say that there are some markets in which information is truly equally available to all parties, there is a fully competitive suite of market actors are engaged in transactions and so on, such that the market finds maximally efficient pricing at all times.
But almost all markets we experience on a daily basis aren’t like that. They lack one or more of the properties needed to achieve that perfect efficiency. Information is unevenly distributed. Scarcity/equity concerns don’t get reflected in raw free market outcomes you (who gets places at Bronx High of Science or in the best charter school in town) and so on.
And as discussed above, externalities abound. (Sniff deeply at the thought of your neighbor on a once a fortnight pick-up plan. She may tolerate rotting garbage funk in her back yard more readily than you do when it drifts over your rhododendrons. And I’ll bet you can imagine a much richer range of crap to fall out from too fundamentalist an genuflection at the Divine Rand’s altar.)
Most important: “free” markets as they exist in the world in which we all live are very often much less freely competitive than they need to be for the outcomes of economic activity to be efficient.
Lots of examples exist, and I’m not even going to try to sketch the universe. But it doesn’t take much to work out ways that a choice of three or so providers doesn’t actually produce market efficiencies. For reference sake, think of the way cable and internet services are priced in lots of American communities. Competitive, much, even with multiple players?
There is in fact an emerging sub-discipline of academic economics focused on questions of market design that studies exactly how to deal with all the real world situations in which the simple free market example doesn’t hold. (See, e.g., this blog.)
Finally, just this last thought: there is a real problem, at least for me, in what I interpret as E. D.’s conception of liberty. If elected representatives shouldn’t make choices that bind on their constituents, then what’s the point, or possibility, for any kind of governance?
This is what E. D. said:
Freedom of choice is something near and dear to most Americans of every political stripe. We just tend to snub our noses at other people’s choices – whether we’re talking about trash pickup or economic association on the one hand, or reproductive choice on the other – someone is always looking to limit what we can and cannot choose.
That sounds lovely…but recall that what we are talking about is a town government, i.e., a body subject to the discipline of elections, figuring out how to provide a public services. That town did not say, “we shall have one hauler of trash to eternity!” Rather, it let out a contract through a competitive bidding process. Such contracts have terms, some number of years, as well as conditions — some services (curbside recycling, in this case) included, others perhaps not. The town got to choose among different bids; and the residents of the town get to choose those decision makers in these funny things called elections.
It remains a mystery to me just how this is a meaningful assault on the liberty of those poor deprived trash haulees — or rather, I do not see how anyone seriously thinks that the principle that E. D. defends as he defends it here is compatible with any society more complex than a village.
Certainly teabaggers disagree with me They are willing to forgo any efficiencies or other social goods that might result from such a structured sequence of choices — if they believe that these might exist at all. They do not take as consequential the notion that their actions have consequences for others, who therefore have a legitimate interest in their “free” choice. They seem to think, foolishly IMHO, that any communal decision is at best a kind of petty tyranny, and we would all be able to live in harmony if every interaction were negotiated between individual, fully autonomous parties.
And they don’t want anyone to touch their Social Security.
Which, I guess frames the point I want to make about E. D.’s post. He’s too smart to fall into the solipsism snarked here, and he is, as far as I can tell through only reading acquaintance, he is genuinely committed to the notion that you need government to allow society to work — which is another way of saying he’s no teabagger.
But habits of thought die hard, and I’m sure I’ve got my own tics — but here the fetishization of choice requires one to suspend what one actually knows about the world. And that’s never good.
*I’ll cop to a little exasperation here, because this is one of those where a little real-world experience helps a lot. This exact question is one every small film/video production company asks itself, as my tiny enterprise did for more than a decade. You can come to different responses — I never bought production equipment, because I could never use the gear enough in any given year to amortize it. Much better for me to rent gear.
Other folks came to different answers….all of which to say that the search for efficiency in the use of capital (which is what we are talking here) is exceptionally grounded in the specifics of what you are trying to do on the ground.
To say, as E. D. does, that ” The most efficient and sensible thing to do would be to provide the town with a public municipal trash service, cutting out the middle-man and the corporatist trap altogether…” (italics in the original), is simply wrong.
Images: Trash people in Köln/Germany by HA Schult
Henry Charles Bryant, “Market Scene,” before 1915.