Government Monopolies Really 'Stink'!

by Patrick Ryan O'Neill

July 17, 2009

On June 22^nd, 2009 the city “workers” of Toronto , Ontario went on strike. Since then, the trash has been accumulating and the city reportedly is beginning to stink! After centuries of man’s need to control individuals that they group into packs, society still insists on the draconian method of force and subsidizing unproductive institutions in order to solve economic or social problems – solutions that do not solve the problems and cause greater social and economic problems in return.  

The citizens of Toronto consistently have their wages plundered by men with fine hats whose self-legitimized claim to serving the public is actually organized like the mafia or some other organized gang. The gang of government servants has its own dress code, gang signs – which are often presented as authority-granting seals – and they even have their own territories. Gang territories, demarcated under the auspices of jurisdictions, are strictly enforced by fear of reprisal from competing gangs or by an agreement of mutual benefit derived from their continuation of the existing jurisdictional cartel. The Federal gang is the largest, most extortive and ruthless of all gangs. If any other gang would dare to overstep its boundaries and meddle in the affairs of the Federal gangs’ jurisdiction, there would be a battle over “turf”!  

The gang that dominates Toronto , that peace-loving city of Ontario , is having some troubles with a sect of its members--the Solid Waste Management Services gang, a.k.a. the trash collectors. Solid Waste Management’s members have been conspiring with another Torontonian gang, the Canadian Union of Public Employees (CUPE), and they want to muscle in on some of booty that the Toronto Municipal gang has been plundering from public. The two sects struck a deal: Solid Waste Management agreed to refuse to collect the public’s trash, and in exchange CUPE will muscle Toronto Municipal for some more of the public’s money – not themselves with the laws of supply and demand when it comes to pricing the value of the labor itself. The money will be divvied up between Waste Management and CUPE. The worst thing about this inter-gang uprising is that the community members are the real victims. Eventually Toronto Municipal will come to a truce with Waste Management and CUPE, by way of some sort of concession, which will of course be paid for by more extortion in the form of higher taxes levied against the community at large. In the meantime, Torontonians also suffer from mounds of stinky trash piling up, and no choice but to stick with the gang-controlled monopoly. They unfortunately have to pay taxes for services they are not receiving and will undoubtedly not be reimbursed their money.  

At what point will people finally understand that government monopolies are the worst gangs to handle serving anything to the public and that government monopolies combined with union warfare literally Stinks! It would be nearly, if not completely impossible, to find a private company that would violently refuse to take your money in order to serve you. On the contrary, private companies would even compete to serve you. Consider the above situation in the context of a free market where companies would compete for your business.  

While government-controlled monopolies are a disincentive to innovation, companies in the market would be continually incentivized through competition to serve as many customers as possible. The only way to win customers in the market is by satisfying the customers’ particular needs, for example, price, quality, convenience, etc. If customers become dissatisfied with a particular company, they will search for a company that better fits their needs. If enough customers become dissatisfied and switch to another company for the goods or services that they need, then the company will have to change to win back customer confidence, or the company will have to end its operations. Even in this case, the customer benefits.  

When a company goes out of business, its assets are liquidated in order to pay off any outstanding obligations; in the case that a company has no outstanding obligations, any positive gain on asset sales will likely be distributed among the company’s owners. When a company goes out of business, the former customers then patronize the remaining companies, or any new companies that may have entered the market due to the increase in demand. The liquidated assets are acquired by companies to be put to use. These assets are obviously cheaper for companies to buy up since the expediency of liquidation often places companies in a situation where time is more valuable than any higher gains that may be made bartering in the market. This forms an incentive for companies to buy the assets and expand operations with the expected intention of winning more customers. Democracy wins in the marketplace; the citizens have spoken, and companies responded to their demands.  

In Toronto , this is not what is happening. The Toronto Municipality holds a monopoly that is subsidized and where true prices to the customer are muddled beneath the bureaucratic quagmire of municipal budgets, resource allocation departments, and the like. Customers never know how much it costs them individually for the specific service of trash collection, and they also are unaware of the unseen options that they do not have because of the municipal monopoly. Companies are simply not allowed to compete for their business – this is gang turf! If one individual produces a minimal amount of trash, are they charged the same amount as an entire family? What about the individual that has a week, where they put no trash out to be collected – should they have to pay for a service they did not utilize on that particular week? Surely there is no defense of the government monopoly in this instance, and it cannot be conceived as being more efficient than the market’s handling would be.  

How well would that business model function in other industries? How successful would a restaurant be if it charged its customers once a month instead of charging them based what food they had ordered and consumed? Whether you ate at the restaurant once, many times, or not at all during the previous month, you would still be sent a bill. The new monthly billing system charges all clients equally by adding up all total expenses for meals consumed during the billing month, and dividing it equally amongst all clients, regardless of the quantity of food consumed. This is all done under the auspices of “lower costs” for the consumer. It is easy to surmise that the restaurant would see a sudden drop in clientele. What if this company had the legal right to force you to pay for services regardless of whether you are a customer or not? Are the company’s fees more likely to go up or down? Costs would indubitably go up because there is no competition to instigate client-centered practices. Because the fees are not distributed proportionally, there is no clear understanding of cost effectiveness or what you are getting for each dollar.  

This business structure ultimately leads to customers consuming increasingly more of the product than they would have otherwise been inclined to do if the market distributed the goods and services according to unfettered supply and demand. This increased consumption is done in an effort to recuperate losses--or perceived losses, since customers have no idea what the actual costs are. In other words, if an individual is being billed at the end of each month for the average costs at a restaurant, rather than how much they have actually consumed, they are more likely to visit the restaurant more often and consume more, in an effort to get more for their money. This is no different when it comes to trash.  

If trash collection were to be truly privatized--not simply government contracts for collection being granted to private companies, rather allowing the market to organize service provision where the customer is the direct consumer and there is no government middleman--the entire system would be radically changed. Though leaving trash collection completely to free market forces would prove to be the best and most efficient means of dealing with trash collection, even allowing private companies to compete for government contracts to collect trash in Toronto ’s Municipal jurisdiction would prove to be an upgrade to the current system that the citizens are suffering under. The National Post, one of Canada’s nationally distributed newspapers, states that Toronto, Oshawa and Windsor are the only three cities left in the province of Ontario that still have government trash collection; Windsor trash collectors have been on strike since mid-March.[i] The area of western Toronto known as Etobicoke, put its trash collection services out for tender in 1995, prior to their merger to the Municipality of Toronto in 1998[ii], and the services are still contracted out. The number of employees needed to collect their trash went from 71, under government-run services, to 35 under private contract, and the costs were reduce significantly.[iii] Though outright privatization has no comparison, with examples like Etobicoke, one must wonder why Toronto does not consider putting their trash collection services out for tender. Do they really have the citizens’ best interest at heart?  

The current governmentally organized method of sending trucks out once, or in some municipalities, twice a week on standardize routes to collect trash is becoming a bit archaic.  A more logical system would be to pay for the services when you need it. For example, the household that needs trash collection multiple times a week because they produce so much trash, would likely be charged for multiple service charges, and furthermore be charged by weight and/or volume for their trash collection, since it costs a trash company more money the greater the quantity of trash it has to process. In like manner, the minimalist individual that produces very little trash will have to pay for fewer service calls, and be charged less per service call because the weight/volume of trash would be less expensive for the company to deal with. In this way, the individual is given an incentive to produce less trash, and call on the companies less frequently, thus reducing roadway congestion and producing less environmental pollution than running goliath trucks on daily standardized routes.  

Since the true costs of the disposal of an individual’s, family’s or household’s trash will be solely borne by those individuals and they would have an incentive to produce less trash, they are likely to call on the private trash collection companies less often. This will ultimately have a positive outcome on environmental factors, such as reducing trash production, disposability of containers and products, and possibly alternative packaging for goods, i.e. companies would be incentivized to produce packaging for their goods in a more environmentally friendly manner, or in lighter, less superfluous packaging than we currently have. Furthermore, this would likely lead to more efficient vehicles for collecting trash. The current trash collection model is to send trash trucks out on regular routes on a daily schedule, regardless of whether individuals need trash collected or not. Some household need the service that particular day, and others do not. This does not matter to trash collection management, and it matters even less to the trash collectors themselves, who are, of course, “Just doin’ their job!” When less people and trash need to be accommodated in one run, shift, day, etc. it may be more economical to change the method of trash collection. A paradigm shift is likely to result in scheduled pick-up, organized more pragmatically, and which would likely utilize smaller, more agile and more fuel-efficient vehicles than the dinosaurs that conquer the roadway day after day. Additionally, individuals may avoid service charges altogether, by dropping their own trash off at trash collection points, which is not currently an option under government monopolistic schemes. This would save them money, and reduce costs for the company in the form of fuel, labor, vehicle wear-and-tear, etc.  

Monopolies are sole institutions that wholly control a particular sector of the market for a product or service. While it is governments that exclusively hold monopolies via force or coercion, markets always provide a vast range of choices, which are provided by various companies. Opening up trash collection to the market would result in various companies competing with innovative ideas to raise quality and bring down costs. Private companies that compete in the marketplace to provide goods and services are always seeking the most efficient (i.e. cheapest) means of producing the goods and/or services that they provide to the customers. This constant flux of goods and service provision means that products and services are always improving and improving in accordance to the demands of the citizenry.  

Also formal or informal neighborhood trash collection associations may be formed by individuals living in a particular localized area, which would be accommodated by the private sector to the benefit of the company and the clients. Individuals, families, etc. would still have to pay per pound/volume for their trash collection, but organizing pickups together would save time and money for the company, and could be accommodated by Group Service Charge Plans. One service charge would be split among all of those individuals that are organized within a certain geographical limit and registered with a particular group or association. In this case, instead of each person or household paying it, costs would be borne by all association members that were having trash collected on that particular day. That way, organization and order will spontaneously arise in neighborhoods. Some people may prefer to pay more for the flexibility or to avoid having to organize with their neighbors, and these needs would also be accommodated by the market as well.  

Applying the market-based approach to trash collection also erodes the popular misconception that recyclable items would simply be thrown away if government did not organize and collect the public’s recyclable waste. As many markets often complement each other, trash collection and recycling are no different. As a simple, yet illuminating example, consider the following. Some companies provide complete hamburger or cheeseburger sandwiches, but that is not the only option for burger lovers. Interested consumers have the choice to purchase the ingredients individually, and prepare the sandwiches to their liking on their own. Though the companies that provide the ground beef do not simultaneously provide the sandwich buns, there is no panic nor concern that these items will not be provided through the marketplace, and thus negatively affecting the sales potential of the ground beef. In addition, there are several companies that solely produce condiments such as ketchup, mustard, pickles, etc. Yet these companies are not concerned that their businesses are in jeopardy just because they do not ruthlessly monopolize the entire market on burger production and distribution. This is simply not how markets operate and examples abound, great and small, simple and complex. Wine, wine bottles, bottle corks and cork screws are all manufactured by various and competing companies, but at the end of the day, consumers only see a vast array of finely bottled wines to choose from. What about salt, pepper and salt & pepper shakers? The list is infinite. If the market functions for all other goods and services under its domain, it would be nonsensical to presume otherwise in the case of trash collection and handling recyclable materials.  

If customers were to become aware of the true costs of having their trash collected and thus called upon to solely bear the costs proportionate to their waste production, a number of things would likely happen. As mentioned above, individuals, families, etc. would likely be more conscientious about how much trash they produce and companies will align themselves with the new market demands which dictate more environmental friendliness and lighter and/or more easily disposable packaging. Furthermore, private companies would be incentivized to find profitable means of recycling reusable goods. This means that instead of the current system, where citizens are bullied into paying an undisclosed and ambiguous amount of money to have their recyclable goods carted off and disposed of (the majority of which is not put to productive means and causes tremendous pollution), companies would be able to pay individuals for their recyclable goods. Private companies would be able to purchase waste recyclable materials from individuals and process it into a form that other companies could use in producing goods from these materials. Many people are unaware, but this happens in varying degrees currently with metal. Often enterprising individuals rummage through trash for metal products that they salvage and then sell to metal recycling/processing companies; both these individuals and the metal processing companies are able to make a profit, the metal is recycled and other private companies are able to purchase metal at a cheaper rate than purchasing new raw metal. This is not the same as some places where an additional fee is charged under the auspices of a “deposit” which is returned when the empty container is returned. This is another example of government coercion, where money is stolen, and then returned after good and obedient citizens jump through some hoops. How efficient this method is as compared to how the market would handle the situation is unknown due to government monopolies on collection of recyclable materials.  

Not all Torontonians are so fixated on demanding the oppression of government gang monopolies, though. According to The Globe and Mail, a nationally distributed Canadian newspaper, Torontonian Bill Hennessey and his brother saw the strike as an opportunity to serve his fellow community members, relieve the pressures from the mounting trash and make a profitable business out of it. The Globe and Mail reports that Hennessey and his brother offer door-to-door trash collection in Northern Toronto and they have even set up a website for their new fledgling company in order to better inform customers of their services[iv]. Should the Toronto Municipal gang take a hint from these guys? They are likely to put them out of business for trying to infringe on their gig. Until then, the vast majority of Torontonians are stuck with a government monopoly that really Stinks!