Sunday, May 23, 2004

Re: Coercive Recycling

I am not sure that we can easily state that such a law significantly changes the job market.

Obviously, the key variable in understanding the problem here is price sensitivity. It would be interesting to see if there is a noticeable difference in the purchase of plastic bottles in Iowa. If the drop in demand for cans is made up for in the demand for bottles, then what we have essentially done is made a system of wealth transfer from can producers to bottle producers (though I would venture to suggest that they might be the same firms).

While Iowa can claim a 2% raise in recycling (though I might suggest that other factors might have been relevant, such as the rise of a recycling culture), what happens to the people who never claim their money? As David points out, on the aggregate, this is a significant portion of income that is not being spent elsewhere. The rest is obvious.

1 comment:

David said...

I agree that the law is not something that is solely hampering the growth of the Iowan economy. But we have to be careful when we use the word "Significant." I don't know what you mean by that. After all, if the law costs just one job (which wouldnt't surprise me), it's certainly significant to that person.

As for wealth transfer, be careful. It's not a cut and clean transfer. Plastic is made from oil, cans are made from aluminum. I guarentee you that those resources aren't extracted from the same firm. The extended order is really extended; I'm sure there are other firms that exclusive deal in the production, distribution or purchase of one and not the other.

Meanwhile, by inflating the cost of one, what is lost because the wealth travels to another? Well, we don't know...we can't know. That's part of the problem of convincing others but it's part of the wonder of the economy.

Finally, I agree. I really don't know how supporters of the law can make that claim. But I wouldn't be surprised if half of that two percent is from the law.