Friday, June 28, 2013

CATO UNBOUND: An Alternative to Municipal Recycling

By Bill Sheehan, Ph.D.,  Executive Director

A remarkable conversation is happening at the libertarian think tank CATO Institute.  The topic of June’s Cato Unbound is The Political Economy of Recycling.  Predictably, the lead article by libertarian economist Michael Munger from Duke University is full of bold arguments about the failure of municipal recycling.  There's plenty of red meat for three responders: Pulitzer Prize winning journalist Edward Humes (author of Garbology: Our Dirty Love Affair With Trash); former state legislator and deputy director at Recycling Reinvented Melissa Walsh Innes; and fellow libertarian economist, Steven Landsburg.  The bait is taken and there is plenty of disagreement along well worn lines about the value of recycling, commodities and landfills.

What struck me was that after all the ostensible disagreement, three of the four authors were in agreement that the solution to the shortcomings of municipal collection systems (aka “recycling”) lies upstream, with the producers that design and make products and packaging.

Munger starts his essay with the statement, “Almost everything that's said about recycling is wrong.”  For starters: the notion that everything that can be recycled should be recycled, or that zero waste should be the goal.  He argues, “we recycle far too much of the waste stream, because we use moral imperatives rather than economic logic.”  He advocates eliminating all mandatory municipal “recycling” programs nationwide (the bulk of Munger’s comments are directed at collection and sorting programs operated or overseen by local governments).

But after 4,500 words explaining the economic and moral absurdities of municipal recycling, Munger concludes:
“Ultimately, the solution is to refocus on market incentives rather than moral imperatives.  The organizations with the cheapest means of enacting change, and who have the last best chance to reconsider packaging of all kinds, whether it’s liquid, food products, or microwaves, are the manufacturers and retail distributors of the products we buy.  At present, no one is responsible for disposing of packaging, and so the state does its fumbling best to try to solve the problem.  The solution is to reconsider responsibility for disposal, at the level of initial production.  A property rights system that assigns disposal responsibility, and ultimately liability, to the manufacturer would encourage the use of effective market incentives to reconceive the very nature of waste itself.  And that might be less wasteful than recycling old ideas that threaten to bury us under a mountain of garbage.”  (Bold added)

Munger elaborates in a commentary: “[I]f we start asking the right question – not how to recycle garbage, but how to prevent garbage's existence – we might make progress.”  For example, the amount of plastic in bottles and aluminum and cans has been reduced by more than half in the last decade, he claims, but the answer may be to increase the sturdiness of containers so that they can be reused.  Fair point.

Humes takes issue with the “same old trash talk that’s been used against recycling for decades: that it’s too costly, or that it can cause as much environmental harm as landfilling, or that it has become some sort of unreasoned article of green faith rather than grounded in hard science.”  But he then agrees with Munger about the “real barrier” to recycling success:
“For it to succeed, recycling must be re-positioned as America’s last line of defense against waste, not the leading one. There are far more efficient, profitable, and environmentally beneficial strategies, among them: packaging reduction, life-cycle engineering, and replacement of incentives for wastefulness with ones that hold manufacturers responsible for the waste stream their products create.”

Walsh Innes takes issue with a couple of Munger’s points but spends most of her response describing a policy approach that delivers Mungers "ultimate solution" of “assigning disposal responsibility, and ultimately liability, to manufacturers”  -- using “effective market incentives to reconceive the very nature of waste itself.”  As Innes states, "Whether he knows it or not, Munger is advocating for extended producer responsibility (EPR), a legislated form of product stewardship in which the producers of a product finance and manage the recycling of the product at end of life.”

I expected the two libertarian economists to be pro-business and advocate for unfettered voluntary market competition as the solution to all problems.  Indeed, both Munger and Landsburg display the economist’s faith of letting price signals rather than morality drive decisions about what should be collected for recycling.  Munger, however, makes some interesting observations in a supplementary response commentary, Bootleggers, Baptists, and Recyclers

It turns out that Munger used to be a regulator at the Federal Trade Commission.  He quotes a former co-worker who described the unholy alliance between capitalist bootleggers and moralist Baptists that got prohibition passed in the US in the 1920s.  Munger sees a parallel in the municipal recycling field.  He sees a de facto coalition of fervent activists and “the enormous corporations that make up the recycling-industrial complex.”  The latter may not break the law, but they are happy to lobby for changes in the law that improve their profits and corporate bottom line.  For example, Munger notes, “the alternative to curbside recycling is bottle deposits and other kinds of packaging restrictions. Why do we recycle, rather than use these other policies? A pretty good academic case can be made that the answer is “Because the beverage companies prefer recycling, because then they don’t have to pay the costs of [managing waste] packaging!”

 Munger is not sanguine about reforming the municipal recycling system. If you explain the economic inefficiencies, he says, the moral wing of the coalition will smite you:  “Don’t you care about the environment?”  And if you raise examples where post-consumer recycling may actually be bad for the environment, such as collecting colored glass in places without markets, “the smooth corporate lobbyists of the economic wing will cite figures that show that recycling creates jobs and employs people in local communities.”

The CATO Unbound series on recycling is more than a rehash of the same arguments about municipal recycling that have raged for decades.  It’s interesting that most of the essays agreed that municipal recycling has not and cannot deliver all that is expected of it, and most converged on the solution of producer responsibility for waste to address the problem at the source.

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