Whether we realize it or not, waste is important to us. If it wasn’t, we wouldn’t be doing the same! And all of this garbage is generated by the fact that we freely acquire goods in an incredibly competitive free market, where choice is everywhere and the consumer is king.
Can you imagine living in a place where there was no choice between goods or services? One brand of car. One brand of clothing. Doctor. A barber. A sewer service. A garbage man. Stop there, because in many communities in Montana, if not most, there is only one garbage collection brand to choose from, which means there is no choice at all. . The cost and quality of the service are fixed and cannot be influenced by the consumer’s choice.
There is probably no area of government monopoly creation that is more harmful and less logical than the Class D garbage collection industry, where state law subjects potential competition to an almost impossible at the Public Service Commission (PSC). Under the guise of “consumer protection,” monopolies and near-monopolies are effectively established in nearly every community in Montana, slamming the door on market entry and abrogating a fundamental right of private enterprise. This is the worst government protectionism, which inevitably results in much higher prices and lower quality service than it would be in an active, open and competitive market. Every consumer suffers, while a small number of pampered and protected businesses reap outsized profits by avoiding competition and shedding normal business risks.
The sheltered industry, profiting from its often obscene profit margins, will of course bring a flood of sophisticated arguments. For example, they will argue that “uncontrolled competition” destabilizes the market and threatens the quality and reliability of service to the public. They will warn that “upstart operators” might dump their waste in ditches and on public land, and so on. I have heard all of these claims and many more before the PSC, and I am here to tell you that they are nonsense. I have yet to see a shred of evidence that proves their arguments. How can there be? They oppose the role competition itself.
How much do Montana waste haulers in monopolized markets overcharge their captive customers? Since the PSC does not regulate their rates, complete information is not available. But as an example, it was revealed during one of the PSC’s application filings that the Republic Service’s Montana 2014 annual report showed an average profit of 41% statewide. This compares to testimonials showing that Oregon’s profit margins average 8-10%.
Monopolistic companies are not, by definition, bad suppliers. They are simply creatures of the market conditions in which they operate. If there is no competition to drive rates down, there is much less incentive to keep rates low. The function of market price signals is removed. Likewise, if there is no threat of losing market share to another operator, there is less reason to vigorously pursue a consumer’s business with new or better offers. Where else can this consumer go?
Rep. Caleb Hinkle’s HB 338 would end these state-sponsored monopolies. Of course, the incumbent garbage companies, with a strong stake in the status quo, are sure to wage a vigorous and alarmist campaign to kill Bill Hinkle in order to maintain their privileged position. Consumers, as usual, will be underrepresented at legislative hearings.
Who are these consumers? They include not just all homeowners, but most homeowners, manufacturers, service companies, retailers, school districts, colleges, universities, local governments, and just about every other entity that generates solid waste. All of them deserve the best possible service at the lowest possible cost. They will never see this happen in the absence of competition in the industry, where monopolies are created by government but not regulated by government.
The stakes are high, but the answer is simple. Embrace consumer choice and economic freedom, and say no to government-created monopolies.
This article has been republished with the permission of the author from the Sun Times.