Almost everything that’s said about recycling is wrong. At the very least, none of the conventional wisdom is completely true.  Let me start with two of the most common claims, each quite false:

1.  Everything that can be recycled should be recycled.  So that should be the goal of regulation:  zero waste.

2.  If recycling made economic sense, the market system would take care of it.  So no regulation is necessary, and in fact state action is harmful.

If either of those two claims were true, then the debate would be over.  The truth is more complicated than almost anyone admits.

There are two general kinds of arguments in favor of recycling.  The first is that “this stuff is too valuable to throw away!”  In almost all cases, this argument is false, and when it is correct recycling will be voluntary; very little state action is necessary.  The second is that recycling is cheaper than landfilling the waste.  This argument may well be correct, but it is difficult to judge because officials need keep landfill prices artificially low to discourage illegal dumping and burning.  Empirically, recycling is almost always substantially more expensive than disposing in the landfill. 

Since we can’t use the price system, authorities resort to moralistic claims, trying to persuade people that recycling is just something that good citizens do.  But if recycling is a moral imperative, and the goal is zero waste, not optimal waste, the result can be a net waste of the very resources that recycling was implemented to conserve.   In what follows, I will illustrate the problems with each of the two central fallacies of mandatory and pure-market recycling, and then will turn to the problem of moral imperatives.

 

1.  A Visit to Oz

My first experience with the recycling debate was in 2008, when I was asked to keynote  a conference in Freemantle, Australia.  The conference, called “Australia Recycles!,” was a gathering of recycling professionals and equipment vendors from around the Pacific rim.  And I was clearly the tethered goat left out for the tyrannosaur to gobble up.

The core argument was that market prices, not emotional choices or regulatory mandates, were the best guide to whether a community should try to recycle a particular material.  No one has to tell us to do those things, because price is a good guide.  We scrap cars because they are valuable metal.  The leftover rice and chicken go into the fridge, for tomorrow’s casserole.  And toilet paper…well, we throw it away, after using it.

I focused on glass, especially the kind of green glass used for wine bottles.  Glass is heavy and inert.  That means it’s expensive to cart around and handle, in addition to the problems of breaking and cutting workers. Glass is harmless in a landfill and breaks down into something very like the sand it came from.

The commodity that glass can be ground into, called “cullet,” just isn’t very valuable.  Mixed cullet, even from glass that looks similar, turns a dull black; sorting to avoid mixing takes time. Recyclists seem to believe that everything should be conserved, except time, the one resource we can’t make more of.

The alternative to recycling green glass is to use virgin materials—sand—and add the chemical compounds and color required.  A cubic yard of mixed cullet can actually be much more expensive to convert into usable glass than a cubic yard of sand, depending on conditions.  That means that “recycling,” when you add on the fuel costs and pollution impact of collecting small quantities of the stuff from neighborhoods, actually uses more energy, and wastes more resources, than using virgin materials.

There are exceptions.  If disposal costs are high and there is actual demand for the cullet, then green glass is highly recyclable.  The best example is northern California, with valuable land, a large population, and lots of manufacturers eager to put new wine in recycled bottles.

Still, given the costs and lack of demand in most areas, opportunities for environmentally responsible recycling of green glass are rare.  As a result, hundreds of municipalities across the United States have tried to suspend their glass recycling programs.[1]  Interestingly, in some of these (including my home town of Raleigh, North Carolina) there were legal or political barriers that forced the resumption of curbside glass collection.  Citizens voted to force the city to pick up the glass in those plastic bins, because they don’t like to throw the glass away.  The glass is picked up, trucked to the recycling facility, and either bagged or boxed and then shipped, in a different truck, to the landfill.  In effect, citizens are paying the city extra to throw away the glass, so that they can pretend it’s being recycled.[2] 

As I was going through my presentation, I was surprised at the reaction of the audience of the conference.  They weren’t angry; they were bored.  When I finished, a man stood up and gave what seemed to be the response of the entire audience, given their nods and smiles:  “Look, professor, we all know this.  Everyone knows that there are problems with green glass.  We all understand that there is no market for cullet.  But it doesn’t matter.  The main thing is to get people in the habit of recycling, because it’s the right thing to do.”

I guess I shouldn’t have been surprised, since everyone in attendance made their living from selling recycling equipment to cities and local governments.  But let’s be fair: no one in that room was cynical.  No one thought this was fraud the way I did.  Recycling gives people a chance to express their concern about the environment, and concern about the environment is good.  Sure, sometimes the actual effect on the environment is harmful, as in the case of green glass, but that’s a small price to pay for developing the right habits of mind.  I wasn’t wrong, I just didn’t understand their objectives.

 

2.  The economic problem of recycling

I once proposed a guessing game[3] to determine whether something is a resource or just garbage, to be disposed of at the lowest possible cost, including costs to the environment. The answer comes down to price.  If someone will pay you for the item, it’s a resource. Or, if you can use the item to make something else people want, and do it at lower price or higher quality than you could without that item, then the item is also a resource. But if you have to pay someone to take it, then the item is garbage.

As a society, we should recycle resources, but not garbage.  Recycling resources saves resources.  Recycling garbage uses up resources.  Of course, the ideas of “price” and “cost” were a little vague here, because prices we observe in a market fail to capture the full opportunity costs of foregone alternatives.  So the formulation above, to be valid, would require information about the “correct” prices.

Remember, what is at issue here is mandatory recycling.  Voluntary recycling is done because it’s cheaper, saves resources by definition, and will happen without state action of any kind other than the usual enforcement of contracts and property rights.[4] 

There are two quite different defenses of mandatory recycling programs.  These are (again, by definition) policies that require people to recycle commodities that appear to be garbage, not resources. The two explanations are:  (1) the resource is actually valuable, but markets underprice it; and (2) landfills are scarce, dangerous, or need subsidies to avoid dumping, meaning that throwing resources away is too cheap.[5]

 

2.A.  Underpricing Valuable Resources

It seems as if just throwing something away must be wasteful; it would be better to reuse it somehow.  The state of North Carolina, where I live, has a law against disposing of yard waste in a standard landfill.  This makes some sense. Yard waste decomposes naturally and turns into compost eventually, so it can be disposed of more safely than the dangerous waste we put in landfills.  But the city of Durham, where Duke University is located, decided that they would do the state one better.  The city council required all citizens to dispose of their yard waste at curbside, where it was picked up by city trucks and taken to the city composting facility.

The city collected an extra fee—about $60—from residents to operate this service.  Expenses were much greater than that, but the theory was that the composted yard waste could be resold to pay the rest of the costs of the operation.  Best of all, there would be no need for landfilling the yard waste once the operation was up and running:  yard waste in, compost out, with no waste going to any other kind of disposal.

The problem was that much of the yard waste was large stumps and tree limbs, resulting from several hurricanes and large storms.  The “compost pile” quickly became the “stump dump,” an enormous pile of rubbish.  The idea that the stuff was valuable was just wrong. It was garbage, not “black gold.”

And then it caught fire.  Spontaneous combustion deep inside the pile, a common result of decomposition and pressure, found enough oxygen to begin to smolder.  The city tried to put it out by soaking the pile, but that just made the smoke worse. The fire could not be completely extinguished for weeks, and neighbors for miles downwind complained of the pollution. So the waste that homeowners paid extra for reusing was dumped instead in the main garbage staging facility.

But remember, the law prohibits disposal of yard waste in landfills in North Carolina.    So, Durham shipped all its trash, including grass clippings, to a landfill more than 85 miles away in Lawrenceville, VA.  The clean-up and the extra hauling charges cost Durham an extra $1 million compared to landfill disposal.

The citizens of Durham were disgusted, but not in the way you might expect.  People such as Frank Hyman, a garden designer and former City Council member, argued that they had paid for yard waste collection with the understanding that the city would reuse it because it was valuable.  “That’s my expectation, and I think that’s the expectation of most people,” [Hyman said.]  “A lot of people may be angry when they hear the city is shipping the yard waste to the landfill.”[6]

This kind of reaction is common, and it’s a chief reason why many people support recycling.  The stuff we are throwing away seems too valuable to throw out.  The problem is that if yard waste were a resource, then trucks would drive up and down streets in your neighborhood, bidding up the price of your bagged grass clippings. That doesn’t happen because they are not really valuable. 

Of course, there are exceptions.  Aluminum cans, some kinds of paper, and corrugated cardboard are all valuable, once they are sorted and packed into high-density containers where the volume is large enough for industrial-scale recycling.  You may have seen homeless people picking through garbage for aluminum cans: They can sell these for about $0.50 per pound, or about 1.3 pennies per can.  The fact that people can sell some recycled products means that there is a market, when the stuff is actually valuable.

 

2.B.  Landfill Cost/Scarcity

The second argument in favor of recycling is that even if the stuff isn’t valuable, it’s cheaper to recycle it than to dump it in the landfill.  The argument I made above, which might be summarized, “Let markets do it, and if markets can’t do it shouldn’t be done!” rests on the comparison of two prices:  the price of disposal through trucking the waste to a landfill, and the price of disposal through recycling.  It is important to include all costs of both approaches, which is tricky since there may be a variety of external costs imposed by each method.  But the argument for abandoning mandatory recycling (remember, voluntary recycling always makes economic sense) has at its base the comparison of these two prices of disposal.

Empirically, this often comes out badly for recycling.  Recycling, including the costs of collecting the waste in tiny, mixed amounts, transporting the waste to a handling facility, sorting it, cleaning it, repackaging it, and then transporting it again, often for great distances, to a market that will buy the commodity for some actual use, is almost always more expensive than landfilling that same waste in a local facility.

The problem is clear once we come to understand the problem of pricing landfill space.  If there are only two alternatives for the waste, landfill or recycling, then landfills should be priced at the sum of the opportunity cost of the space used for the landfill and the externalities and costs of managing pollution resulting from landfill disposal.[7]  In these circumstances the price comparison would be valid:  if the recycled material costs less than the full economic cost of landfilling, then landfilling will be economically justified.  Of course, if those were the only two options, recycling would be voluntary, up to the margin where the price for the recyclable commodity falls to the cost of landfilling.

But that’s not how we price landfills, and for good reason.  There is a third alternative, or a whole category of alternatives, to landfill disposal or recycling.[8]  That alternative is illegal dumping, illicit burning, or other extra-legal “free” disposal.  The problem is that these alternatives are only “free” to the illegal dumper or burner.  The impact on society can be horrific.

One solution would be to police illegal dumping or burning very aggressively.  We try to do this, but covert dumping is easy, and burning in rural areas is very hard to police effectively.  Another solution, the one we generally settle on, is subsidizing landfill disposal.  In effect, we charge far less for landfill disposal than it actually costs society.

Unfortunately, landfill disposal is actually quite expensive, in terms of actual economic costs and externalities.  Yet because dumping is also very expensive, the optimal implied subsidy is large enough that the price we charge for landfill space is negligible.[9] 

And that, my friends, is why mandatory recycling may be justified:  we can’t charge disposers the economically “correct” price for the legal alternative, landfills, because then many of them will resort to the illegal alternatives, dumping or burning.  Recycling is economically justified if it costs less than the true total social cost of landfill disposal, but we cannot actually charge that price for landfill.  So we underprice landfill space and then try to persuade people to divert as much waste as possible from the landfill, if recycling costs less than that invisible “true” price.  Consequently, those who have argued that unaided markets can handle this problem are at least partly wrong:  for markets to work, we have to get prices right.  But prices are distorted here, against recycling, although for good reason (we want to avoid random dumping).  So, the answer is to require recycling, even though it seems more expensive, because recycling may be less than the “true” cost of landfill disposal.

 

3.  Morals, Not Markets

Of course, the astute reader may have detected a flaw in the logical justification for mandatory recycling.  If charging the “real” price for landfill causes dumping, why wouldn’t mandatory (and costly) recycling have the same effect?  After all, if recycling is expensive (though cheaper than the true cost of landfilling), then charging that cost will induce illegal dumping, right?  In fact, any cost greater than the (presumably optimal) price of landfill disposal will divert waste to dumping.  If that weren’t true, we could charge a higher price for landfills.  Wouldn’t we have to subsidize recycling, also?

The answer is much more complicated than space allows here.  But it is worth noting that we do in fact subsidize recycling, heavily.  There are colorful plastic bins, work crews, and specialized trucks that travel around neighborhoods picking up garbage as if it were a valuable commodity.

That subsidy by itself would not be enough, however.   We have to use another weapon to make mandatory recycling work, and not just be shifted over into illegal dumping.  That weapon is moral suasion:  you should recycle because good people recycle, and recycling is the right thing to do.  The shift seems minor, but in fact it changes everything.  How could we tell if recycling is cheaper, since we don’t actually know the “correct” price of landfills?  We simply assume that recycling is the right thing to do, and then apply subsidies and requirements until desired level of recycling is achieved.  And what is that “desired level”?  Without prices to guide us, the answer is simply “more.”  Putting garbage in a landfill is no longer expensive; it’s evil.

Three brief case studies will help illustrate this point.

 

3.A.  Running Garbage through the Dishwasher

When I was working on recycling policies for cities, I read a lot of web sites that described what was expected of good citizens.  Note that these policies were not mandatory; they were just what a moral person was expected to do.  The duties of good citizens came down to three things:  (1) recycle everything; (2) sort it assiduously; and (3) wash it carefully.

Note that this whole approach is entirely insulated from costs or the logic of price.  The reason “we” recycle is that people in our town are good people, not people motivated by money.  The value of the landfill is raised far above even its economically correct price for disposal.  In fact, the real value of the landfill approaches infinity, in this view.  The ideal amount of waste is zero; everything should be recycled.

The result is that people drive, sometimes several miles or more, to sort their garbage into little bins like they were playing demented Tetris.  Bottles and glass here, plastic here, paper here, aluminum there.  In many cities, the resulting separated waste is actually picked up, re-mingled, and landfilled, because it has no economic value whatsoever.  But that’s okay, because the important thing is the moral act of recycling, not the saving of resources.

The strangest part of this fetishization of garbage—running afoul of the “it’s really valuable!” fallacy I talked about above—is the practice advocated by many small towns:  run your garbage through the dishwasher.  Here are two examples of the genre:

“Do I need to rinse out my bottles and cans?
 Yes!  Rinsing cans, bottles and jars helps to reduce odor and discourage pests from invading your bin. An easy way to do this is to place cans and bottles and plastics in your dishwasher…”  http://www.beverlyma.gov/Public_Documents/BeverlyMA_Recycling/faqs  (Beverly, MA, accessed May 28, 2006).[10]

“Helpful Hints—Keep a container for recyclables near your dishwashing sink (A medium-to-large wastebasket work well).  Wash or rinse out cans, bottles, milk jugs, etc., while you are cleaning up after meals, or run tin cans and glass jars through the dishwasher.”  http://www.mason-city.com/SOAR/RecycleCollection.htm  (Mason City, IL, accessed May 28, 2006).[11]

Curious, I phoned the public relations officers with the recycling departments in several small cities in the Northeast.  I asked one extremely cheerful and energetic young woman how her city could justify asking people to put their garbage in the dishwasher.  Isn’t that pretty expensive, in terms of human time, and the energy to heat the water, compared to the value of the garbage?

Using the same tone of voice one would use to talk to a five year old—she clearly thought I was not the sharpest can lid in the recycle bin—she gave me the most concise explanation I have encountered in the whole genre.  She said, “Oh, you have to understand, sir.  Recycling is always cheaper, no matter how much it costs!”  For her, and for millions of people like her, recycling is not an economic activity at all, but a moral duty, without limits and for which cost is irrelevant.

Now, perhaps we need to use moral arguments to compensate for the fact that we have to charge “too low” a price for landfills.  But moral arguments are blunt.  Prices allow contingent imperatives:  recycle when, but only if, it’s cheaper.  Moral claims about recycling cannot be modulated:  if recycling is good, more recycling is better.  And the ideal is to recycle everything.  The problem is that, from economic perspective, from the perspective of balancing resource use, that’s just not true.  If you are trying to save energy and resources such as water and time, it never makes sense to put your garbage in the dishwasher.

 

3.B.  Moral Imperatives Defeated by Incentives at Duke Dining

In 2007 and 2008 North Carolina suffered a significant drought.  Durham County, home of Duke University, was at one point at least 10” below normal rainfall levels.  The reservoirs and aquifers were extremely low and falling fast.  Water had become a very scarce commodity.

For years, Duke (like most universities) had made a concerted effort to reduce its waste stream, and to divert waste that was created away from landfills.  This effort had focused particularly on “saving trees,” or reducing the use of paper.  And paper that was used was to be recycled, with containers placed on most floors in most buildings.[12]

But during the drought, the scarcity of water led the university to try to make changes.  This was perfectly sensible, given that water (used for washing china dishes, cloth napkins, and metal flatware) had become more expensive than landfill space (used for disposing paper dishes, napkins, and plastic utensils). The Commons, the faculty dining room, moved with many of the other food service units to use paper plates, plastic utensils, and paper napkins.  The nature of these products, made from low-quality fibers and stained with greasy food products, made them poor candidates for recycling, even by the usual friendly standards of universities.

At first there were grumbles. Then there were outright protests.  Students and faculty complained that “we all know it is wrong” to dispose of waste in the landfill.  (I asked at least twenty people, and I never got an answer for why “it is wrong,” they just knew that it was.)

The problem was that the university was trying to respond to the change in relative scarcity of resources in a responsible way.  The effective price of water had shot up.  It would be irresponsible, in terms of the opportunity cost of the resource, to continue to use water as if it were plentiful.

But that’s not how the students and faculty who had been exposed to moral suasion saw it.  No one had ever said, “Recycle because it’s cheaper”; instead, they had been told “Don’t throw anything into the landfill, because it’s wrong!”  By that logic, the protesters had a point:  moral imperatives shouldn’t respond to relative scarcity.  If it’s wrong to throw things into the landfill, it’s not an excuse to say “it’s expensive.”  Using moral suasion to solve the problem of charging a low price for landfill is actually dangerous, because people confuse sensible frugality, contingent on prices, with morality, which is only contingent on the good or bad character of the citizen.

 

3.C.  The Church of Recycling:   Holy Communion in Vitacura

I spend a lot of time in Santiago de Chile, in South America.  One of its wealthy neighborhoods is Vitacura.

Like most poorer countries, Chile has next to zero household recycling.[13]  Still, people wanted to show that they were morally good citizens, and so the city had created a small recycling facility in one of the lovely parks that dot the neighborhood.

We went on a Saturday morning, and found…church.  A long line of cars, engines idling, waited to pull up to the recycling facility.  The facility itself was beautiful, sparkling clean, and with attendants in clean coveralls.  As soon as one of the bins filled up, it was lifted with a built-in winch system onto one of the waiting trucks.

I watched for nearly an hour.  The waiting time varied, but it was never less than ten minutes and sometimes ranged up to twenty.  The queue curved up the hill and around a corner, as citizens waited for their chance to share recycling communion.  Since the line moved slowly, but moved, no one turned off their engine the whole time they were waiting.  These were all Audis, Volvos, BMWs, and other nice cars, the kind of cars good people drive.

After ten minutes of idle pollution, the church-goers arrived at the altar.  They parked, and got out, and put their precious garbage into the spotless bins.  I saw one young mother, with a baby in one arm, take a cardboard box and a 2-liter soda bottle out of the back of her Volvo.  She put the box in its bin, and bottle in its bin.  Why would a busy young woman spend a substantial part of her Saturday morning recycling such a small quantity of stuff?  The answer is just what it seems:  she was recycling, in a very public way, along with other good people from her city.  Because that is what good people do.  If I had asked her if it was worth it, I bet she would have given some Spanish version of “Recycling is always cheaper, no matter how much gasoline you burn waiting in line!”

 

4.  Conclusion

Neither the simplistic “if it’s recyclable, it should be recycled!” view nor the “let unfettered markets handle it!” perspectives are defensible.  For sound economic reasons, advanced nations underprice landfill space, often by substantial margins.  If you think that doesn’t matter, just take a look around at all the ad hoc dumps, burning, and trash in developing nations. 

The problem with underpricing landfill space is that we throw away many commodities and old packaging that could be disposed of more cheaply in some other manner.  It is at this point that the price system would be of value, but it’s because people are insulated from actual prices that we have the problem in the first place.

As a “second-best” solution, since we are denied the first-best price solution, we try to divert commodities out of the waste stream using moral suasion, appealing to public spirit rather than to the self-interest of the citizen.  But this requires that we elevate the value of the landfill space somehow in the minds of those we are trying to reach.  Unfortunately, without prices to guide us there is no limit on the value placed on landfill space, and we begin to make a fetish of garbage.  In extreme cases, citizens and public officials may even begin to try to divert garbage that should, on economic grounds, actually be disposed of in the landfill.  And when the relative scarcity of commodities changes because of the dynamics of modern economies, it may be very difficult to explain adjustments to those citizens who are persuaded that “Recycling is always cheaper, no matter how much it costs.”

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.[14]  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.

 

 

There’s a windswept spot overlooking Los Angeles called Puente Hills, where you can stand atop a mountain of trash 500 feet high. The broad plateau at its summit is large enough to hold Dodgers Stadium with plenty of room for parking. Set to close this October, it is the country’s largest active landfill.

Most of the 130 million tons of waste buried for eternity beneath its lumpy slopes could have been recycled.

Puente Hills, then, serves as a perfect symbol of where we are as a nation on the waste and recycling front: an immense geographic feature constructed of largely avoidable waste, built by an American public that makes 7.1 pounds of trash per person every day, yet recycles only about a fourth of that world-leading amount of garbage.[1]

The Environmental Protection Agency tells us that the largest single component of our landfill contnents consists of packaging and containers, which are, at least in theory, 100 percent recyclable. One out of every 100 pounds dumped in U.S. landfills consists of the highly recyclable and highly subsidized type of instant waste we call junk mail.[2]

 For a country so supposedly committed to recycling as its go-to response to waste, America is really quite bad at it. Japan and most European nations run rings around the U.S. on this score.

The question is: Why?

The answer lies not in 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, ort that it has become some sort of unreasoned article of green faith rather than grounded in hard science. None of this holds much water, though these arguments have been recycled in Michael Munger’s essay in varying degrees.

Such arguments obscure 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.

Recycling, in short, is better than nothing, but not nearly good enough on its own.

---

Early in his essay, Prof. Munger summarizes a classic anti-recycling argument: “Recycling is almost always substantially more expensive than disposing in the landfill.”

This is a technically accurate but highly misleading statement.  You could similarly argue that paying to go to the dentist is always more expensive than not going. Or that we sure could have saved on the military if only we had surrendered after Pearl Harbor rather than declaring war. Such comparisons, while literally true, yield absurd conclusions because they are stripped of the proper context.

Of course dumping stuff in a hole (or in a river or ocean) is always cheaper than subjecting materials to the complex industrial process of recycling, but that’s not the right comparison. Recycling economics should be weighed not as the last step in waste disposal, but as the first step in manufacturing. The proper comparison is not landfill vs. recycling, but virgin materials vs. recycled ones. Which is more costly to manufacturers of products?

The answer generally favors recycled materials, as there is enormous demand for recycled metals, paper, and certain types of plastic. Here, both the environmental and economic benefits of recycling are revealed: there are substantial energy and carbon savings that come with the choice of many recycled raw materials over virgin ones. Recycling aluminum cans, for instance, saves a whopping 96 percent of the energy needed to produce aluminum from bauxite ore. Recycling glass jars and bottles saves 21 percent of the energy needed to make new glass, recycling newsprint saves 45 percent, and recycling plastic beverage bottles saves 76 percent (other plastic types differ in the percentages, but the energy savings are there, too).[3]

The reductions in greenhouse gas emissions from recycling mean that supporters who proclaim recycling to be “the right thing to do” can say it based on hard data, not blind faith.

Those energy savings also can translate into lower prices for recycled commodities, although the recycling market is as volatile as they come and, as Munger points out, some raw materials such as glass are just dirt (or in this case, sand) cheap. Still, recycled PET plastic pellets (the material used in soda and water bottles) were selling recently for 22 percent less than virgin pellets.[4] Newly forged aluminum, recently priced at about $2,000 a ton, runs about six times the recycled price. China values our discarded paper, metal, and plastic so much it has helped make scrap our number one overall export by containerized volume.[5] Indeed, China’s first woman billionaire got her start collecting scrap paper in Los Angeles and exporting it in all those otherwise empty cargo containers headed back across the Pacific. One of Zhang Yin’s companies is now America’s largest volume exporter.  Trashed paper, it turns out, is treasure in the right hands.[6]

There is a strong business case for recycling and composting, not withstanding Munger’s example of a comically poor North Carolina yard waste program. Just ask Wal-Mart, which in 2006 launched a program to reduce its waste stream to as close to zero as possible. The company has reported an 80 percent reduction in landfilling in its California operations since then, which it accomplished by monetizing the material it once paid to have hauled away.[7] Food waste is composted and resold in the gardening department. Plastic hangars have been recycled to produce dog beds. Paper and plastic packaging waste is bundled and sold to third-party recyclers. According to the retail giant, the materials that were once a source of considerable expense are now net revenue generators, primarily due to recycling.

But if all this is true, and the old arguments against recycling are incorrect, why aren’t we doing better? Why are we still landfilling 69% of our waste, when we know from other consumer economies — Austria, Germany, and the Netherlands, for example — that’s its possible to recycle at least that much while landfilling far less?  Why are we continuing to erect mountains of garbage filled with perfectly recyclable plastic, paper, cardboard, and metal?

The answer can be summed up in one word: incentives. Our consumer economy is riddled with far more incentives to waste than incentives to conserve and recycle. That’s where recycling falls down and why other strategies must come first.

A perfect example is curbside municipal trash service. Most cities and towns charge homeowners a flat monthly fee for collection, hauling, and dumping of their trash. If there are recycling bins, citizens do the sorting on the honor system. This is an incentive to waste.

But about a fourth of trash collection in America is based on a “pay as you throw” system, in which customers are charged by their trash volume. Big full cans of garbage cost more to haul than little mostly empty ones, and so customers are charged accordingly. In the old system, low-waste homes subsidized high-waste homes, but in pay as you go, everyone pays their own freight. The kicker is that recyclables are not charged by volume. Full or empty, the recycling bin pickup is free. These communities provide consumers with an economic incentive to waste less and recycle more and, as a group, they recycle 30 to 40 percent more than the rest of the country.[8]

Junk mail offers more examples of perversely wasteful incentives we seem incapable of killing. Junk makes up over half our mail, 80 billion pieces of junk weighing about 4 million tons last year. This junk mail is doubly subsidized, first by a much lower postal rate than first-class mail. Then the creators of this unwanted tidal wave of waste get a second subsidy because they foist the cost of dealing with it off on the rest of us — consumers have to pay to have it hauled away.

For recycling to work as a viable waste strategy, these sorts of incentives must be replaced with incentives to conserve, to build an economy that is less disposable and more reusable, and to hold producers of wasteful products financially responsible for their wastefulness. If junk mailers were held responsible for the true cost of their product, which they are currently permitted to externalize, we’d soon see an end to junk mail. And for other products, these incentives would encourage a renaissance of better, more efficient design.

Munger makes a similar recommendation at the end of his essay. But where he seems to be saying such incentives would provide an alternative to recycling, they may be better viewed as an enabler of recycling. Not wasting materials in the first place is inherently more efficient, and therefore more profitable, than recovering wasted materials through recycling. Recycling then becomes the last resort, as it should be.

For those who might argue such incentives would hurt the economy, look again at the example of Wal-Mart, a company that does nothing unless it serves the bottom line. The retailer calculates that a mere 5 percent reduction in packaging size for its entire product line could yield the company $3.4 billion in annual savings for shipping, storage, disposal, and materials costs. [9]

Now that’s an incentive.

In his lead essay, Professor Munger states, “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.”  I agree and would also add that consumers can enact change by the purchasing choices they make at the register, signaling to the producer their preferences.  In discussing the multiple cost scenarios for landfills, Munger says that maybe recycling does cost more than landfilling, but Munger forgets to mention one vital aspect:  Manufacturers can’t get enough recycled glass, plastic, aluminum, steel and paper. Americans are burying and burning valuable commodities that will likely lead to a scarcity sooner than we’d like to believe.[1]

A recent white paper asserted that Americans are burying 11 billion dollars’ worth of goods per year that could be used for remanufacture.[2]  Will we realize our error in the future, and be mining these pits to dig out the valuable commodities that were so easily discarded? 

As a legislator in Maine, I served on a committee that had jurisdiction over solid waste management for the state, and every year we heard moving testimony from homeowners who lived near landfills and incinerators. You name it, we heard about it: smells, blowing trash, fumes, leakage, excessive trucking.  We also heard from advocates pushing for increased recycling of the myriad products that are thrown “away.” 

Considering how little improvement state and local government has made to reduce the amount of materials going into these facilities, both groups likely felt that their concerns fell on deaf ears.  To make an actual impact, more funding for infrastructure is needed, for programs like away-from-home recycling and enhanced curbside collection.  Munger’s essay correctly asserts that we do not properly quantify the costs of landfills or incinerators, since we know that they are heavily subsidized by taxpayers, and if the true costs were known, people might take the easy route:  tossing their junk in the woods. So, what can be done to highlight the true costs of disposal? 

One policy tool that Maine has embraced in the last ten years is making a difference in bringing in additional needed funding and in raising diversion rates for specific products, accomplished through legislated producer-driven programs. These programs address products including electronic waste, mercury thermostats, automobile switches, batteries, cell phones, and compact fluorescent light bulbs.  Government is constantly struggling to pay for solid waste management through user fees and/or property taxes, and there is growing acceptance that the producer has a better ability to create change than many individuals doing things on their own.  We also know that if industry is driving or financing the program to recycle their products at the end of their life, they will likely find more efficiencies than government ever could to bring down costs as well as investing in ways to utilize the collected materials to remanufacture new products, bringing down supply costs and scarcity fears for manufacturers as well.  So far, these types of programs have kept millions of pounds of electronics as well as the toxic metal mercury out of landfills and incinerators.[3]  

A robust economy is great for many components of our society, but one downside is that all of the stuff people buy during these up times needs somewhere to go at the end of its life, and their growing management costs now make up a sizeable portion of a town’s or city’s budget.

I read Munger’s wrap up with great interest and head nodding.   He hits the nail on the head when he concludes, “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.”   In these statements, Munger brings clarity to the issue of who best to run and pay for these programs.  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. Some businesses are using the term producer-driven recycling, so I will use them interchangeably here.  Ideal EPR programs are designed, driven, and financed by industry, leaving government in an oversight role.  Munger asserts that recycling itself is already subsidized, and he’s right:  by taxpayers.  In the form of EPR that I support, there are NO costs to the consumer at the time of disposal.  This addresses the fact that many people will choose to put something in the trash or throw it in the woods instead of paying a fee for disposal; take a ride through the woods in a rural area to see the proof. 

The costs for these programs are borne by the producer, internalized similar to costs for worker’s compensation or building maintenance, and are incorporated into the price of the product at purchase.  The consumer pays, not the taxpayer. Consumers and taxpayers are usually the same people, but one would pay for recycling service according to their consumption.

So why the need for legislation to set up an EPR program?  At least two reasons are brought up by industry groups who are in support of EPR for their products:  1) With legislation, there are no free riders, so all producers of that product pay into the system, and 2) the need for state anti-trust exemptions for the areas where the producers will need to look at market share and sales figures together to determine each company’s percentage to pay for the system (although there will still remain competition among service providers).  Paint and battery trade associations are seeking legislation with these elements to set up their programs, and they assert that they are vital to increase the success and implementation of the programs.  The costs for producer-driven recycling programs are internalized into the costs of the product at purchase, shared with the consumer, not with the general rate or taxpayer as is the norm here in America. 

Unlike many politicians who stay in elected positions for years, I chose to leave the Maine Legislature and work in this policy area full time at Recycling Reinvented.  I am passionate about this idea of producer-driven recycling, and for the uniquely American version of EPR that my organization is working to advance for packaging and printed paper.  We are also funding a study that is charged with testing the assumptions regarding recycling costs now versus under the new system if enacted. We are using Minnesota for the target state.  The study will answer this question:  Can producers internalize the costs of recycling their products at end-of-life for a lower cost to consumers than our current system of financing recycling through user fees and property taxes?

Expansion of producer-driven, recycling programs would substantially increase recycling rates, reduce government spending, and use private sector efficiencies to reduce the overall cost of recycling.

The ultimate goal is to progress to a new recycling paradigm in the United States, highly accessible to all citizens and financed by industry through consumer purchases, not by the general taxpayer.  Although different EPR programs are used elsewhere around the world in over 38 countries, we are seeking a uniquely American approach.  This downsizing of government to create a more efficient system and get more materials back into manufacturing will reduce the public need for more incinerators or landfills.  Efficient recycling is an investment in our economy. 

 

I.

When I get a delivery from Amazon, I throw the packaging in the trash. I do that partly because it’s free. My trash collector charges by the month, and I almost never exceed my allotted volume, so disposal costs me nothing at the margin.

But landfill space is not free, and if I’m not bearing the cost, someone else is. Arguably this means I throw out too much trash.

The most obvious solution is to charge me for landfill space, which might induce me to order fewer packages, or to order packages from sellers who go easier on the styrofoam, or to recycle. Unfortunately, a landfill charge might also induce me to discard my trash on my neighbor’s lawn or (if I burn it) in my neighbor’s lungs.

You might think a better solution is to pass a mandatory recycling law. But if I’m already ignoring laws against dumping and burning, I’ll probably ignore that law too.

Maybe you’d do better by convincing me that recycling is a moral imperative, so I’ll do it instinctively. Unfortunately, now instead of recycling too little, I’ll recycle too much. The policy goal is not to encourage recycling; it’s to encourage recycling when it’s efficient , and not otherwise.

Where does that leave us? The thrust of Michael Munger’s essay (as I understand it) is that your mistake all along has been trying to influence my behavior when you should have been trying to influence Amazon’s. If, for example, we place a hefty tax on styrofoam packaging, then Amazon will use less of it, which at least alleviates the problem.

II.

Unfortunately, taxing the manufacturer suffers the same shortcoming as all the other policies: To get some incentives right, it must get others wrong. Sometimes it’s optimal for Amazon to load up heavily on packaging material, which I, the customer, subsequently recycle. A tax on styrofoam does nothing to elicit this outcome.

More cryptically, Munger suggests that we could make Amazon “responsible for the disposal of packaging,” though I’m unclear on exactly how that would work. Does it mean that they’re required to send someone around to my house to collect the styrofoam? If I receive packages from eight different retailers, do they send eight trash collectors? Or do they coordinate their efforts in some way I can’t quite imagine? I don’t quite get it, though I certainly agree that it’s worth thinking about.

III.

That quibble aside, I agree with much of what Professor Munger has said, and I believe he’s said it well. So let me concentrate on some of the things he didn’t say, particularly with regard to using moral suasion as a policy instrument.

Professor Munger argues (in effect) that there’s both an upside and a downside to selling recycling as a moral imperative. The upside is that people will recycle more of what they should recycle, and the downside is that they’ll recycle more of what they shouldn’t. And he’s given us evidence that the downside can swamp the upside.

But there’s another great downside he didn’t mention. Namely: When you cast policy issues in moral terms, you degrade the character of public discourse. You lead people to see conflicting priorities as an occasion for battle, rather than an occasion for compromise. You send the message that policy is best decided by appeals to one’s inner conscience (or, more likely, to the polemics of demagogues), rather than by appeals to impersonal cost-benefit analysis. And this is a very bad thing. If overusing landfills is a bad habit, then branding everything you don’t like as evil is a far worse one.

If we’re determined to instill blind moral instincts that make people behave better most of the time, I’d like to nominate a blind moral instinct to respect price signals and the individual choices that underlie them—an instinct, for example, to recoil from judging and undercutting other people’s voluntary arrangements. I like it when my neighbors dispose of their beer cans properly. I’d like it even more if they’d stop trying to dictate other people’s wages, working conditions, housing contracts, and drug habits.

By concentrating our moral resources on recycling, we not only crowd out that nobler mission; we actually undercut it, by sending the message that price signals are unreliable. Of course, some price signals are unreliable, but the whole point of the moral suasion agenda is to get things right most of the time, not all of the time. Every time a misguided locavore makes the world a poorer place by choosing expensive local food, it’s because she’s absorbed the false lesson that prices are generally a poor measure of social cost - a lesson first absorbed, I suspect, at the feet of the recycling propagandists she first met in elementary school.

IV.

That’s a good reason to be squeamish about using moral suasion as a policy tool. On the other hand, there are times when we might want to overcome that squeamishness. I’m on board, for example, with making people feel guilty about committing murder for hire. I might be on board with making people feel guilty about working as OSHA inspectors, or accepting jobs that wouldn’t exist without tariff protection, or installing solar panels solely because they’re subsidized.

But there’s plenty of other socially wasteful behavior that nobody’s ever thought of trying to stigmatize. For example, I sometimes refuse to buy overpriced items even when I value them at more than their marginal cost. When an airline can fly me to California for $200, and I’m willing to pay $300, but (because of monopoly power) the price is $1,000, I choose not to fly. That’s socially inefficient in exactly the same way that my failure to recycle is inefficient —I elevate my own selfish interests over a clear opportunity to create value for others (in this case the stockholders of the airline company) and to enrich the world as a whole. The reason we (sometimes) have too little recycling is I (and people like me) won’t incur $1 worth of trouble to sort my trash, even when it might save my fellow citizens well over $1 in disposal costs. That’s no different in principle from my unwillingness to spend an extra $100 on an airline ticket, even when it might enrich my fellow citizens by well over $100.

I’m pretty sure, in fact, that my refusal to buy overpriced goods causes considerably more social harm than my refusal to recycle, yet I don’t feel a shred of guilt over it. Why, then, should I be made to feel guilty about not recycling?

V.

Ideally, we’d each be born with a conscience that’s guided by a Ph.D.-level grasp of the nuances of social cost-benefit analysis. Absent that, we’re looking to encourage good rules of thumb.

By and large, we should encourage people to trust market outcomes. We should make exceptions when it comes to things like murder for hire, but those exceptions should be rare.

Ought there, for example, be a great campaign to get people like me to buy overpriced airline tickets? I think not, for several reasons. First, I’d like to encourage respect for price signals even when price signals get things wrong, because price signals so often get things right. Second, I think we should generally be cautious about labeling people as sinners.

I am quite sure that, as social problems go, irresponsible trash disposal does not rise to the level of murder for hire, and I suspect it does not even rise to the level of balking at outrageous air fares. It’s true that imperfect price signals sometimes lead people to throw away the wrong things, but imperfect price signals are not unique to the waste disposal industry. Because of imperfect price signals, people plant the wrong crops, drive the wrong cars, and choose the wrong careers. If you’re out to combat bad market outcomes through moral suasion, why ever would you choose to focus on trash disposal when there are so many richer targets available?

Dr. Bruce Yandle of Clemson University (and my old co-worker at the Federal Trade Commission!) has a theory of regulatory reform he dubbed “bootleggers and Baptists.”  It cautions reformers not to expect arguments about cost, rationality, or actual bad consequences to have much effect in policy debates. He put it this way:

[W]hat do industry and labor want from the regulators? They want protection from competition, from technological change, and from losses that threaten profits and jobs. A carefully constructed regulation can accomplish all kinds of anticompetitive goals of this sort, while giving the citizenry the impression that the only goal is to serve the public interest.

Indeed, the pages of history are full of episodes best explained by a theory of regulation I call “bootleggers and Baptists.” Bootleggers, you will remember, support Sunday closing laws that shut down all the local bars and liquor stores. Baptists support the same laws and lobby vigorously for them. Both parties gain, while the regulators are content because the law is easy to administer. Of course, this theory is not new. In a democratic society, economic forces will always play through the political mechanism in ways determined by the voting mechanism employed. Politicians need resources in order to get elected. Selected members of the public can gain resources through the political process, and highly organized groups can do that quite handily. The most successful ventures of this sort occur where there is an overarching public concern to be addressed (like the problem of alcohol) whose “solution” allows resources to be distributed from the public purse to particular groups or from one group to another (as from bartenders to bootleggers).

At first blush, of course, this “alliance” appears bizarre.  Baptists sought morality, upright living, and service to the church, community, and nation.  Bootleggers were tough, large-scale capitalists, happy to break the law if it increased their profits.

Yandle’s observation (and he was in this, as in all things, entirely correct) was that if you are trying to reform a regulation that appears obviously wrong from an economic perspective, it may be harder than you think.  The reason is that the regulation has created a set of economic interests that benefit from the status quo, and is supported by a set of (apparently distinct) moral arguments that may have nothing to do with economic consequences.

Which brings us to recycling. We see a coalition that depends on a large, fervent band of activists, bent on saving the world through the environmental version of upright living and service to the community.  They are the Baptists.  And their allies are the enormous corporations and powerful moneyed interests that make up the recycling-industrial complex.  They may not break the law, but they are happy to lobby for changes in the law that improve their profits and corporate bottom line.  When you think about it, in fact, 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 packaging!”  (http://conversableeconomist.blogspot.com/2012/11/was-curbside-recycling-invention-of.html)  To put it bluntly:  are advocates of curbside consumer recycling good stewards of the environment, or are they just dupes of powerful corporate interests?

Wolves in Green Clothing

Clearly, that’s a bit over the top.  And, like most analogies, the “Baptist-bootlegger” analysis is itself inexact.  Bootleggers presumably did not believe in temperance, and were just cynically using the Baptists for moral cover.  Many, and probably almost all, of the folks who work for companies and organizations in the recycling-industrial complex genuinely believe they are doing something important for the environment.

The problem is that in many cases, they are objectively, empirically wrong.  If we actually cared about resources and the environment, we would be better off immediately eliminating all mandatory recycling programs nationwide.  We waste more energy, and cause more pollution, by trying to recycle than we would if we abandoned these programs and let market forces pull what is valuable from the waste stream.  In mandating public recycling, we have had to extend regulations to prevent private recycling.  More and more cities (including New York: http://www.nytimes.com/2007/10/15/nyregion/15recycle.html  )  actually prosecute private companies that “steal” material for the purpose of recycling it!  The reason is that these craven thieves are taking the material that should be recycled, and leaving behind the garbage.

Recycling companies and contractors that work with local governments are doing something quite different.  Their goal is not to save resources, but rather to make money.  Their chief source of income—and profit—is not the sale of recycled materials.  Rather, it is subsidies from taxpayers.  If the subsidies ended, so would most of the enviro-bootleggers’ profits.  That’s why the aid of the enviro-Baptists is crucial:  the question is transformed from an economic question—where consumer-level mandatory recycling makes no sense—to a moral question—where it is the consumers themselves clamoring to pay extra for the chance to go to church.

By portraying themselves as serving the environment, these corporate wolves in green clothing are able to secure huge profits, protected from competition by exclusive contracts.  The largest companies, such as Waste Management and Industrial Services of America, are sophisticated rent-seekers, with a comprehensive strategy for lobbying for new subsidies, expanded programs of recycling, and increasing the number of products diverted from the waste stream.  Of course, since these are private for-profit companies, their goal is not to save money, but to make money.

Any attempt to reform the system will run into just the problems that Yandle points out.  If you explain the economic inefficiencies, the moral wing of the coalition will smite you:  “Don’t you care about the environment?”  And if you show that post-consumer retail mandatory recycling is actually bad for the environment, the smooth corporate lobbyists of the economic wing will cite figures that show that recycling creates jobs and employs people in local communities.  This new version of the Broken Window fallacy (http://bastiat.org/en/twisatwins.html) actually goes so far as to claim that after you break the window, you should recycle the glass!

Replies to Participants

Finally, a brief answer to the three excellent Response Essays posted on this site.

Edward Humes:  We have an empirical disagreement, but it is a minor one.  The question is which is the exception and which is the general rule:  As I see it, the general rule is that we recycle far too much of the waste stream, because we use moral imperatives rather than economic logic.  There are exceptions, because some kinds of resources should be recycled, in terms of their value and the savings they imply in terms of conserving energy required to make products from virgin materials.

But those exceptions should not be taken to disprove the general rule that mandatory—as opposed to voluntary private—recycling is an enormous waste of resources.  The reasons that this would be a mistake are outlined above, but they are worth repeating.  If mandatory recycling were ended, a substantial number of private processes for capturing the small portion of the waste stream that is actually valuable would spring up immediately.  We don’t have those now because (1) public recycling is subsidized, driving private recycling out of the market, and (2) when private recycling is attempted, it is banned or even prosecuted as a violation of the law.  As it stands, since private recycling is criminalized, only criminals can recycle privately.  So saying that recycling is efficient is disingenuous.  Of course recycling, as a general matter, is efficient.  The question is whether mandatory recycling of materials that are not economically viable is efficient.  The answer to that question is no.  And yet we do a lot of it.

Melissa Walsh Innes:  Well, it depends what you mean by “demand” and what you mean by “recycled.”  I have a substantial demand for Melissa Walsh Innes to come do yard work at my house.  The grass is tall, there are weeds everywhere, and I need some oak trees taken out and the wood split so it can season in time for next winter’s fireplace season.  Why doesn’t this happen?  (1)  It’s too expensive to pay her to do it.  Still, I would really be glad if she would do it, for free.  (2) Suppose I would pay her expenses and the value of her time (as a yard worker) to come do this work.  She still wouldn’t do it.  Her time is worth far more as an analyst and advocate for sensible environmental policies.  The opportunity cost of the resource—her time—is far too high to waste it on doing yard work at my house, even though I have a really high “demand” for her to come do that, if only she would do it for free.

The point is that firms’ “demand” for recyclables is a lot like my demand for Melissa to come do yard work at my house.  These companies would in fact appreciate it if someone would wash the material, sort it, and deliver it to their door in a form where it can be used cheaply and efficiently, as long as they will do it for nothing, or at taxpayer expense.  But the companies cannot afford to pay for it, because (1) it’s too expensive to pay citizens to work as garbage collectors and (2) even if they did pay, the opportunity cost of the time spent sorting, and the resources spent washing and transporting the garbage is too high.

As for “recycled,” here is a fun game you can play at home:  when someone says “Everything that can be recycled, should be recycled,” ask them a question.  “What do you mean by recycled?”  It turns out they have no idea.  They will sometimes just mumble and say, “You know… RECYCLED!” as if that is an answer.

The actual answer is usually just, “It was diverted from the landfill.”  But where does it go?

• We recycle plastic by shredding it and using it as a fiber.  Or by burning it, recapturing no more than 15% of its energy potential.  It would be better to bury it, so in the future it could be strip mined when it is actually more valuable. 
• We recycle glass by grinding it and using it as fill in asphalt or other road building material. 
• We recycle paper by shredding it and using it to make mulch.  It is extremely rare for “recycling” to mean anything like “return the material to remake the original plastic or glass container, saving virgin materials,” or “return to the paper factory, to be used to make actual paper, saving trees.”

Actual recycling happens sometimes, and (to be fair to Melissa) it happens a lot at industrial or commercial scale.  Large quantities of homogenous, clean plastic, glass, or paper (especially newsprint or corrugated) really are valuable.  So, large scale recycling—which is what she is actually talking about—is viable now.  And it is happening now, because it saves money and resources. My complaint is with involuntary, retail scale, consumer recycling, particularly of glass.  By and large, that kind of post-consumer recycling is a net waste of resources, if you account for sorting, cleaning, and transporting.  And the stuff doesn’t get recycled at all, but is just diverted from the landfill and disposed of, at great expense, somewhere else.  Because we have fetishized landfills to have a value far above their actual economic cost.

Steven E. Landsburg:  Steve suggests that we should not cast recycling as a moral issue.  That’s like saying that dogs shouldn’t eat out of the garbage.  It may be true, in some sense (I certainly agree!), but it is the nature of dogs to eat out of the garbage (Wait!  Isn’t that recycling?  Garbage that’s eaten is diverted from landfills, right?) 

It is the nature of rent-seeking industries to convert consequentialist claims that are economic losers into moral claims that are political winners.  The important insight that Yandle had about Baptists and bootleggers is that these policy coalitions exist for a reason.  The symbiosis between the moral argument and the practical argument is fundamental to the way that politics works.  And recycling is a political issue, not an economic one.

How interesting the many views are on recycling presented in this conversation.  Even though some of the ideas contrast starkly to my own, I admit that this opportunity to further flesh out recycling and its role in our society has invited me to step back and look at it through these different lenses.  The lenses don’t fit very well, and some of them seem blurry, but a new perspective is always welcome, however uncomfortable.

Since both Michael Munger and Steven E. Landsburg explore the pros and cons of mandatory recycling laws, I think it best to clarify or define what they actually mean (at least in my opinion).  When I hear “mandatory recycling laws,” I envision this: a consumer being told that it’s against state law to throw that corrugated cardboard box into the trash, and that they must put it in the recycling collection.  Will they be arrested and detained if they throw it in the trash? No. Will anyone even notice that they are not following the law?  Likely not, as these kinds of laws DO lend themselves to the suasion that Michael Munger expounded on in his first essay.  The kind of laws that I’ve been talking about, mainly producer-driven or EPR laws, are different, in that they are not telling consumers at home what they can or can’t do with their stuff. They put the responsibility on producers.  I read the suasion arguments with interest, and will enjoy using that set of “lenses” in my future thinking on influencing consumer behavior.

Steven E. Landsburg questions how mandatory recycling would even work, stating:

More cryptically, Munger suggests that we could make Amazon “responsible for the disposal of packaging,” though I’m unclear on exactly how that would work. Does it mean that they’re required to send someone around to my house to collect the styrofoam? If I receive packages from eight different retailers, do they send eight trash collectors? Or do they coordinate their efforts in some way I can’t quite imagine? I don’t quite get it, though I certainly agree that it’s worth thinking about.

Allow me to shed light on how this conundrum would actually work in reality I’ll use packaging and printed paper here to keep it simple, and yes, these programs are already happening all across the globe.

The producers of packaging would have the choice of being solely responsible for their packaging (like Steven used in the Amazon example, although I doubt they would prefer to drive to Steven’s house to pick up the discarded boxes) or the usual choice is that they join forces in what is referred to as a PRO, a Producer Responsibility Organization.  Sometimes these producers refer to themselves as “stewards.”  This non-profit organization would coordinate the recycling of their members’ discards, and would contract with groups such as Waste Management all the way to small, local haulers and recyclers to collect the materials that are worthy of being recycled.  The PROs are generally very small, often with just a handful of administrative staff that coordinate the work of (in the case of packaging) many thousands of members who are working in this system.  This kind of program for packaging and printed paper is rolling out as we speak in British Columbia.[1] It’s really quite simple, and it creates a structure where the cost of recycling (valuable) materials such as packaging and paper are internalized into the cost of those products.  My organization is working to put a uniquely American plan in to action.[2]

Munger states:

We waste more energy, and cause more pollution, by trying to recycle than we would if we abandoned these programs and let market forces pull what is valuable from the waste stream.

Come on, just let everyone throw everything, all of the ridiculous volumes of paper, metal, and cardboard, into landfills and incinerators?  Isn’t Munger’s suggestion the same kind of idea as with paper mills of old:  just let them dump the toxic chemicals into the river?   If it’s worth anything, someone will create a market for it… just let the taxpayers clean it up afterward, when the remediation costs become a responsibility for the state (like landfills). 

Munger also talks about rent-seeking behavior by haulers and manufacturers that use recycled feedstock. He’s right that companies often want someone else to pay for the stuff they would like to get back for remanufacturing. Recyclable materials are already cheaper than virgin in some cases, and some companies are also concerned about the volatility of commodity markets.[3] In our work talking with trade associations about this, one executive stated “Well of course we want the material. We just don’t want to pay for it.”

Munger’s initial argument that manufacturers or brands would “encourage the use of effective market incentives” is spot on. EPR envisions brands being the payer for services, and in an effort to lower costs they serve as an effective counterweight against rent-seeking behavior by their suppliers and haulers that accept recycled material. Local governments that primarily enter into contracts with for-profit haulers to assist with solid waste management do not have the scale necessary or market knowledge needed to be that counterweight.

In the most polite way, I believe that Munger’s assertion that most recyclables are going in the landfill is mistaken. Yes, in some markets, glass recycling is problematic, but it is improving with technology. We talk with glass recyclers often, and they are always looking for new sources, not just for construction projects. Unlike the gluts of materials collected 20 years ago, today no one is going to spend money collecting stuff that doesn’t have a market. The market might not always pay as much as one would like, and the end use (like mixed glass cullet in some regions) may not be the highest and best use in all cases.

Regarding “voluntary” vs. “mandatory”: Yes, high-volume paper sources like retailers are in high demand so the private market can usually work in the commercial sector without assistance. But when it comes to residential recycling, collecting a diverse set of materials in high volumes improves the economics. Consumers don’t want to drive around dropping small amounts of material at manufacturing plants. Haulers and cities aggregate this material for economies of scale. Since the revenue offered for this material goes up and down, a diverse set of materials hedges your bets. It’s a bit like investing in a mutual fund for the long term instead of shopping around for specific stocks every day. Making the opportunity to recycle regularly maintains consistency; retailers might lose money on weekdays and make a lot on weekends, but they stay open every day because otherwise customers stop coming.

Regarding the mandatory nature of recycling, ask yourself this. Would you make garbage pickup mandatory? Voluntary participation may sound great, but sooner or later illegal dumping and burning of waste causes enough externalities that others have to take action to address them. The question then becomes, “What is the most economically efficient way to internalize the externalities?” This question applies to recycling as well. Our producer driven approach would gain the economic efficiency while also accomplishing the environmental objective.

I agree with Munger that using moral suasion doesn’t always work or reflect economic reality. We have found that different messages work for different people. Someone might recycle their metal cans because they want to avoid excessive new mining of aluminum, and another might not care a hoot about that tree hugging nonsense, but know that there are local companies that would use that material to make new products, hopefully bringing down the cost of products in the future.  Unfortunately, that last scenario doesn’t happen often, because most people don’t hear from the private sector, “We need your stuff.” That is not the core competency of manufacturers, so government is the entity doing most of the education, even to the extreme example of telling people to put their recyclables through the dishwasher, a most ridiculous suggestion. A producer-driven system creates a stronger economic signal between the consumer and manufacturer by binding consumer brands and their suppliers together.

I’d like to hear more from this group about their level of comfort with keeping the status quo—taxpayer financing, not consumer purchase cost structures—or in Munger’s essay, just throwing it all away and someone will get the good stuff somehow.  I’m certain that America should not be subsidizing landfills and incinerators with taxpayer money.  EPR is a tool to change that paradigm, and internalize the externalities of all this “stuff.”  I lob the ball back to my colleagues. Just make sure to recycle the ball’s packaging before you write your next response.

An alert reader sent me this article, which I assumed had to be a hoax, or something from The Onion. But nope, it’s legit. Well, perhaps “legit” is the wrong word. But it’s real, and here is an excerpt:

In most cities, if a person were to look out a window and see a group of people rifling through trash cans, it would be cause for alarm. But in San Francisco, it’s just a typical garbage day.

As part of the city’s latest effort to boost its already high recycling rate, city trash inspectors are going from neighborhood to neighborhood, digging through residents’ carts to make note of improperly sorted materials.

…With clipboards, rubber gloves and a flashlight in hand, cart inspectors hit the streets — before the trash trucks — to analyze residents’ diversion habits.

“There are three of us on the morning route,” said Tina Addi, who has worked as a city cart inspector since August. “We start about 4:45 a.m. because in the neighborhood that we’re in, the trucks come a little earlier than they have before.”

Following the inspections, the afternoon team comes back to each house to explain to residents what they did wrong — and not everyone is thrilled to chat about their poor recycling habits.

Now, let’s be sure you see what is going on here.  The city (in other words, taxpayers) is paying people civil service inspector level salaries (at least $60k) to look at garbage and check to see that none of the things on the list of recyclables is being put in the garbage.

The goal is not to decrease the waste of valuable resources.  The goal is to minimize the physical waste stream by diverting garbage into more expensive forms of disposal.  And the means the city has chosen involves at least 20 full-time human beings who drive around—in trucks with internal combustion engines—to paw through garbage. This is an enormous waste of resources, and an increase in pollution, for the sake of acting on a moral imperative that has absolutely no real basis in environmental stewardship.

Most importantly, and as I have said several times, it completely discounts the value of citizens’ time spent sorting, cleaning, and dealing with garbage.  The only resource that has any value in the whole system is the recycling rate.  And any rate less than 100% is evil.  Not wasteful (throwing the stuff away actually saves resources); evil.

Economists are generally able to combat this sort of thing.  We recognize that optimal child mortality rates are positive, because it is just too expensive—not in terms of money, but in terms of opportunity cost of resources—to save every child born with spina bifida, exposed meninges, or without a functioning circulatory or respiratory system. We recognize that the optimal level of pollution is greater than zero, because the material human cost of eliminating pollution is too horrific. Why are we paying smart and active young people to paw through garbage?  Why are smart and active young people so misled by a pseudo-religious ideology that they are willing to accept such make-work jobs?

This is a cost we have not talked enough about.  There are two ways to think of the solution to a problem.  Consider the problem of polio, a disease that killed tens of thousands and ruined the lives of millions around the world in the 1930s through 1950s.  One solution was to try to ease the suffering of polio victims, developing better iron lungs and systems of braces, wheelchairs, and prosthetics to make it possible that they could live some kind of life.  This industry was enormous, and highly profitable.

The other solution was to develop a vaccine, the one that Dr. Jonas Salk finally perfected in 1952, and which showed itself to be effective within a decade.  By the late 1960s, polio had been reduced sharply in the United States.  Now, it is almost unknown here and in most of the rest of the world.  Of course, the makers of braces, crutches, and iron lungs took a beating, because no one needed their products anymore.  But the total costs to society were dramatically reduced, even accounting for the “loss” to the equipment manufacturers.

When it comes to waste management, we are at the stage of manufacturing braces and iron lungs.  Our brightest and most motivated young people are pawing through garbage, arguing about who is more holy and who is most devoted to the misleadingly moralized cause of recycling.  Huge investments in industry and innovation are being misdirected—may I say “thrown in the garbage”?—because we are working on the wrong problem.

Wilhelm Humboldt, who contributed to the creation and the founding of the modern system of university education (he helped found the University of Berlin, now Humboldt University, in 1810), noted the tendency for misguided government programs to divert talent away from more useful occupations.  In The Limits of State Action, he wrote,

We must not overlook here one particular harmful consequence, since it so closely affects human development; and this is that the administration of political affairs itself becomes in time so full of complications that it requires an incredible number of persons to devote their time to its supervision, in order that it may not fall into utter confusion.  Now, by far the greater portion of these have to deal with the mere symbols and formulas of things; and thus, not only are men of first-rate capacity withdrawn from anything which gives scope for thinking, and useful hands are diverted from real work, but their intellectual powers themselves suffer from this partly empty, partly narrow employment.<

Many of our brightest, most motivated young people are working on how to take materials that are, by any sensible standard of resource stewardship, already garbage, and waste resources by pretending that they are not garbage, but have value.  This is worse than building iron lungs, because at least iron lungs worked to make the problem better, though of course iron lungs could not cure polio or make it go away.

We need to be working on the waste management equivalent of the Salk vaccine:  prevent the creation of a massive and expensive waste stream at the source.  We have to change the incentives so that manufacturers are responsible for the waste they create, the packaging they use to move products, the containers they use to hold liquids, food items, and consumer goods.

I have been criticized by my colleagues in this exchange for being cryptic, unclear, or simply unwilling to offer specific solutions.  The reason is that I doubt that we have a very good idea of the answer, because until now we have not had a very good idea of the question.

Who will solve the problem, and how?  I am a Hayekian; I have no idea.  And unlike the Salk vaccine there may not be any one identifiable person or idea that solves the problem. 

What I do know is that if we recognize that the answer is not arguing over how to handle garbage that already exists, we have to produce less garbage in the first place.  The answer may be counterintuitive, of course.  Where we have reduced the amount of plastic in bottles and aluminum in cans by more than 50% in the last decade, the answer may be to increase the sturdiness of containers so that they can be reused. Instead of reducing the bulk of pallets and packages, the answer may be to make packages reusable, in the same way that shipping containers are now refilled and reused rather than melted down and reprocessed after a single use.

If we start asking the right question—not how to recycle garbage, but how to prevent garbage’s existence—we might make progress.  As it stands, too many people, and too many large powerful corporations, have a financial stake in the status quo. They are making the waste management equivalent of iron lungs and polio braces.

Given the right incentives, one of those bright young inspectors who now is using a flashlight to dig through garbage at 4:30 in the morning might stop wasting her time and figure out a way to solve the problem.  Recycling is a red herring, a way of letting manufacturers and the groups that create garbage avoid responsibility—financial, political, and moral—for the mess they are making.

Here are my final thoughts in response to Michael Munger (whom I hope to meet sometime; he seems like an intelligent, funny guy). 

Munger has noted in his essays some of the most ridiculous recycling scenarios that are at work in the United States. Who can look at them and not want to throw the whole idea of recycling in the trash?  In Munger’s latest essay “Recycling is a Red Herring,” he’s correct in pointing out the lunacy of well-paid municipal workers pawing through people’s trash to find recyclables. Perhaps ironically, I do support unpaid college students (participating in a research project) pawing through trash for waste composition studies, a highly informational endeavor to indicate what products are ending up in the trash more than others. States use this information to determine solid waste policy, potential bans of materials from landfills, need for future organics collections, and so forth. 

Instead of anecdotal stories, which are admittedly more fun to read, I prefer to focus on facts and solutions, and not ones that fall so easily into common preconceptions of the left or right points of view. I actually believe that this is why my organization, Recycling Reinvented, which supports producer-driven, mandated recycling for valuable materials, has been having such interesting conversations with policymakers on both sides of the aisle on how this kind of recycling paradigm shift could benefit their states. Those on the left like the financial assistance to local governments as well as the environmental benefits of decreased landfilling and air quality improvements from less burning. Those on the right like the industry developing and running the system, with a downsizing of government’s role in recycling. 

A colleague of mine noted to me that Munger often ignores the elephant in the room, the externalities related to landfilling versus recycling. Especially important is methane, which is 24 times more potent than CO₂ and its related greenhouse gas emissions impact. If these essays are really intended to delve into the economics of recycling, then these externalities need to be accounted for.  No, it’s not alright to just throw everything into the trash and wait for the magical recycling fairy to come along and market all the valuable recyclables.  Landfills and incinerators cost taxpayers many millions of dollars, with large subsidies that are huge externalities. A recent article in Minnesota’s Pioneer Press[1] noted that if their Newport plant “burned 30,000 dollar bills every day for 19 years, that would almost equal the $219 million in public subsidies it has received through 2013.” These externalities need to be internalized by manufacturers, getting the general taxpayer out of the subsidization game.

Munger states, “We need to be working on the waste management equivalent of the Salk vaccine:  prevent the creation of a massive and expensive waste stream at the source. We have to change the incentives so that manufacturers are responsible for the waste they create, the packaging they use to move products, the containers they use to hold liquids, food items, and consumer goods.”  He goes on to say that “I have been criticized by my colleagues in this exchange for being cryptic, unclear, or simply unwilling to offer specific solutions.” He actually just stated the answer, the same one I am advocating for; we’re just using different phrasing.  He calls them incentives for manufacturers, and I call it producer-driven recycling, but they would have the same purpose. If all manufacturers agreed to do it, we wouldn’t need legislation to avoid the free-rider issue. Alas, that doesn’t seem to be happening, so mandated it is. 

I also agree with Munger on all of the following points:

• We need to produce less garbage in the first place – Yes!
• We need to make packaging more reusable – Yes!
• If we ask the right question—not how to recycle garbage, but how to prevent garbage’s existence—we might make progress – Yes!
• Too many people, and too many large powerful corporations, have a financial stake in the status quo – Yes!

And most importantly, recycling is a red herring, “a way of letting manufacturers and the groups that create garbage avoid responsibility—financial, political, and moral—for the mess they are making”—Agreed! Let’s get to work on this. How about we start in North Carolina?

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