Thursday, February 17, 2011

The Bag Ban and Price Floors

I can't decide if I support the bag ban because I can find precious little real evidence of the menace of plastic bags other than the occasional anecdote and I can't find anything about the ease of recycling said bags.  So there you are, if the societal cost of the bags is high enough and there is no better alternative solution (e.g. making retailers that use them accept them for recycling) then I support it.  But if either is not true (and I admit to being a bit suspicious that they are) I do not support it.  What I don't support is making public policy in the dark and until there are very good answers to these two questions, I find it hard to support action.  It seems to me considering all the packaging that the stuff we put into these bags come with, the bag itself is hardly the point.  In any case, my preferred solution is a tax equivalent to the cost to society they impose, proceeds of which can be used to deal better with them.  Then the market will provide the appropriate amount of plastic bag use.

But that's not what I wanted to talk about here.  What I want to talk about is the mandated price for paper bags (five cents) that comes with the bill.  This is asinine in my view.   First, most retailers give a five cent discount for reusable bags and thus will shift from a discount for reusables to a charge for non-reusables - creating no new incentive to use reusables.  But more importantly, the charge will create a market distortion.  Retailers that can buy paper bags for considerably less will actually have an incentive to sell them rather than encourage the use of reusable bags - all thanks to the government that is trying to get people to do the opposite.  This is a perfect example of why all legislators and policymakers should have to understand basic economics ... or read my blog. ;-)

By the way, Polti-Fact Oregon is making a fuss about the word tax, and I agree the bag fee is not a tax (to be so it has to be transferred to government in most working definitions of 'tax') but it is a price floor.  So here is a question, other than minimum wages, can you all think of examples of other government created price floors in Oregon.  The bottle bill is a deposit so it is pretty close but not exactly the same, so what else?

1 comment:

Jesse said...

Retailer motivation is an interesting question, which I hadn't yet heard. Five cents on a bag. Lets say the retailer earns three after overhead. Even if I didn't use reusable bags, my grocer would earn about six cents a week, 4.3 weeks per month, so about three dollars a year? Even with their volume, I have to assume that they have higher priority efforts afoot.

In Oregon, this policy effort is mostly organized by people who work in the recycling industry, plus some affinity groups, such as Surf Riders. Plastic film degrades the systems that process all other materials. Plastic is highly recyclable, but it can't by processed along side other materials.

The idea of a nickel on a bag is focused on customer awareness of a cost; to persistently ask them to make a choice. The difficulty or ease of an action often plays a big role in the choices that people make. I think we can all agree, that single use bags are generally a waste of precious resources. The nickel may serve to remind people of that waste.