18 March 2011

The Free Market Works: Garbage Edition


Second, private trash collection works!  I know because my neighborhood has two private, competing garbage collectors and the service is better than I have ever experienced in any other neighborhood.  I get two trash collections a week (three counting yard matter such as leaves and cuttings), they take everything including recycling, the price is low and they work on government holidays.  Most of Fairfax County has private trash collection. In fact, around the United States and the world private trash collection is quite common and there are typically substantial cost savings, on the order of 20-30%.

The lesson to be learned from all this?  When you deregulate a market and open it up for competition, the results improve dramatically.  Note, though, that there must be actual competition.  A private monopoly is no better than a public monopoly.

Also, take a look at the original objection to privatization:
Surely, if we all lived in small mountain communities we would need less government. But imagine purely private trash collection in an urban area. If you pay for somebody to collect the trash in front of your house, then instead of paying for my trash to be removed, my strategy is to put my trash in front of your house and free ride on your trash collection.

Unless one is unable to opt out, this objection applies to public trash collection as well.  I know because I’ve done it.  Thus, the only way to solve the alleged free-rider problem is to create a public system where citizens cannot opt out.  Does anyone think this will work better than the free market?

3 comments:

  1. Just wait a few decades, 'til one of the companies muscles the other ones out and/or buys them up, and becomes a monopoly. It will truly be a landfill in every pot :P

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  2. one hundred percent market share is not the mark of a monopoly; government-enforced barriers to entry are.

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