Squashing a garbage entrepeneur

An interesting story from a reader on Mish’s weblog,

Here in San Francisco picking up a garbage costs about $37/can per week. A contractor I know got fed up, canceled his service as did his neighbor. They simply loaded both houses garbage into his truck, took it to the dump and paid the $40 to get rid of it. He charged his friend $10.

As a contractor he had to go to the dump all the time anyway. Pretty soon he had a small business, neighbors paying him $10 instead of $37, a difference of over $1400 per year or the price of a vacation or plasma TV for the family.

He sorted their garbage and turned in the recycling for more money. Normally the neighbors had to keep two cans, sort their garbage themselves and the Garbage monopoly took all the recycling fees anyway.

Pretty soon he hired a couple of neighborhood kids and his crew of 3 did both sides of residential streets at the same time. If you had an old monitor or TV, motor oil, or paint to get rid of he’d take that too, sometimes he’d charge you $5 + what the dump charged for the special item. Need an extra pickup? No problem. He’d work from 5am to 8am and he was earning $200 per day and his workers $75.

The amazing thing he kept telling me was that the larger the truck you had the more money you could make. He was amazed that with only a modified large pickup truck he could make money at a third of what the Garbage company charged.

When the local garbage company and its union found out about "Joe" they complained to the city. Within a year a law was passed stating that garbage service was now mandatory for all residents at the price the city’s monopoly charged, which was shortly raised. And Joe? For a while he still took our recyclables until he was fined $4000, even though he had our permission. It appears our household recyclables are owned by the Garbage company, not us, as it subsidizes our low cost of garbage service!

Some might take this as proof that free markets work, if only the government would get out of their way. I take it as more indicative that we’ve never seen a free-market society and never will. When was there ever a time when a law couldn’t be passed to control economic activity? How could such a thing ever be? And if governments (or other powerful entities) are in the position of forcibly controlling the economic activities of others, how will we arrange for that control to always be exercised fairly and equitably?

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2 thoughts on “Squashing a garbage entrepeneur

  1. I would acknowledge that Man has never had the anarchic free market environment that most Austrians dream about, but there most certainly have been eras and places where government interference in economic transactions has been lesser and greater. Surely, for the sake of establishing some general economic generalizations and conclusions, one can distinguish between Hong Kong in the 70’s and the Soviet Union of the same period. Likewise, I see no reason that one cannot take the above example of garbage service and make similar conclusions as to what happens in a freer or less free market. Saying that there was never a time when a law could not be passed which controlled markets is merely stating the obvious. Who disagrees with that? Why would such a conclusion stop one from promoting and endorsing laws (or lack of laws) which left the economic environment more free than less?

  2. I agree that we’ve never had a truly completely free market. The key, I think, is to have a balance of power. People free to do whatever will make them money leads to oppression and abuse of people. The same is true of ruling entities that can pass laws to help them make money. It’s a fine line to walk, and history is rife with examples of both.

    Great example!

    ~Luke

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