If you're trying to get a handle on the idea of "internalizing externalities", have a look at this. It's about "bottle bills". I grew up in a state where you paid $.05 in deposit on every drink you bought, then got the same amount back for taking the bottle to a recycling/redemption center.
Now, to digress for a moment: I'm older than I think. A nickel used to mean something back in the 1970s... a Bazooka bubble gum, or maybe even a superball. Get a few of them together and you'd even have a shot at a Cal Ripken rookie card now worth way more than a nickel. Anyway, this nickel deposit hasn't been adjusted for inflation, and so on and so on (so it goes). (In fact, how long ago the 1970s was has really been driven home for me right now as I realized for the first time -- when writing "$.05" above -- that keyboards don't even have the "cent sign". I grew up writing on an electric typewriter that DEFINITELY had a little c with a line through it.)
But more importantly, as the article notes, there are other reasons why soda and beer cans aren't the big story anymore when it comes to the idea of dealing with packaging and waste. Now we're all bottled water and SoBe and so on (so it goes).
Anyway, the relevant point is about internalizing externalities. Those beer and soda cans, if dumped unceremoniously into the garbage, had a "social cost". The bottle bills attempted to internalize those social costs (or at least an approximation of them) by moving the burden of paying for that waste to private actors. If you pay careful attention to the article, you'll note the debate over which private actors should bear these costs: the consumer of the drink or the producer/bottler. (Think of the factory and the town in our in-class example.)
On a more general note: this just goes to show how much political economy turns up in the news around us, and how often the principles economists and political scientists talk about make their way into these little items. Hopefully, you'll never be able to think about things like recycling (regardless of whether you think it's essential or a useless waste of time) the same way again.
1 comment:
Yeah,
I sometimes see a 5¢ deposit return offer, but I don't know where to turn it in for the 5¢. Besides, 5¢ isn't particulary worth it.
I suggest the bottle bill be increased to 25¢. The promise of a shiny quarter might make it worth my while if they also increased the convenience of turning bottles in for recycling. But right now, if I'm going to recycle to bottle, I just throw it into one of the recycling bins if one is available.
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