Free markets aren't rubbish – in fact, they solve our rubbish woes

Just one of my tiny attempts to make the world a better place

Worstall on Wednesday The UN noted last week that there's rather a lot of computing and other electrical and electronic waste around. Meeellions upon millions of tonnes, in fact. As they say, it might be a good idea to think about recycling some of this crud. However, if we're going to do that then we need to get the economics of this right: and I've not noted anywhere that does just yet.

In their words:

“Worldwide, e-waste constitutes a valuable ‘urban mine’ — a large potential reservoir of recyclable materials," said UN Under-Secretary-General David Malone. "At the same time, the hazardous content of e-waste constitutes a ‘toxic mine’ that must be managed with extreme care.”

Well, as we've noted here before, whether a mine is valuable or not depends upon what the costs of processing it are as opposed to the income from having done so. A large deposit of metal-bearing earth that costs more to process than the value of the finished metals is dirt, not a mine with ore in it.

There's no doubt that some electronic waste falls into this category. There's also no doubt that there's other bits of it that are profitable to recycle right now: I've a mate who will do you a deal on any AlNiCo magnets you might have lying around from truly old disk drive systems.

Then there's the largest group, the stuff that isn't obviously one of the other. Given that some of it is toxic we might rather like to try and shift it into that “yes, let's recycle for profit” pile by a bit of judicious intervention. Which is where getting the economics of this right comes in.

Scrap material, of any kind, operates under a sort of anti-economics. We're all used to the idea that one unit among 10,000 on a ship is worth less than one unit on a shop shelf: prices go up as things move through the retail chain. Scrap works the other way around. Each unit is worth more as it is aggregated with more such units. One manhole cover ain't worth much, certainly not the cost of nicking it. Take 10,000 tonnes of scrap steel in one place, though; each piece has a higher value per kg than each would have separately.

It's this that underlines the economics of scrap recycling. How do you pay for it to get into those large piles where it has an obvious economic value? There really are lots of such things which are worth nothing where they are but would have value in a pile. We know that the cost of collecting them together won't allow a profit: if it would, then they would have some value where they are now, dispersed all over the place.

So, we want to make the process of gathering them up have some value, if only because some of these things really are toxic. Of course, though, we want to do this in the most efficient manner possible.

We could, for example, have huge fines for people who don't deliver for recycling, or kill them or something. As the existence of fly-tipping shows, fines (although we've not tried execution for that offence yet) don't entirely work. We could have dedicated networks of rag-and-bone men (for that's what they would be, when you think about it) touring the streets looking for material to recycle. We can all think of other methods, too. Yet the one that most obviously would work would be to attach a value to the collection of these items themselves.

The most obvious method of doing that is to charge, at purchase, some small fee. Looking in a shop here in the Czech Republic an hour ago, there's a small fee charged for recycling on the purchase of new electronics; 200 korunna (about Ł5 or so, roughly) on a 12,000 korunna monitor. That's about the right sort of number. Not enough to make anyone half-inch it for the recycling fee but enough to make people willing to either hand it in or to collect the stuff.

However, the scheme here sends that money off to the recycling plants to subsidise them, which isn't my point at all. Rather, when, for example, the Scouts do bob-a-job week, or when someone's wandering around skint, an old phone has – say – a value of a tenner, or an old monitor being worth a fiver, that makes it worth someone really looking for cash to schlep it over to the recycling centre. We thus harness that good old human motivation, greed, to the more modern desire of keeping Gaia pure by charging a deposit when people buy electronics – a deposit that they get back when it's handed in. The beauty of it is that we make the deposit large enough so kiddies and scroungers will do the work of collecting the stuff up.

It's very like the system in certain US states of paying five cents for an empty drinks can. Exactly the same in fact, only changing the amounts under discussion.

I know I have something of a reputation of being a free market absolutist around here. This not quite true because I'm entirely happy to admit that markets aren't perfect and there are some problems they don't deal with well. However, I do still end up, as above, thinking that many problems can be solved by a bit of judicious intervention into markets, rather than trying to abolish them or work out a non-market way of doing something.

So, our problem is that there's lots of stuff that's worth recycling when it's in a pile and not when it's dispersed. Create a value to the process of accumulating it into piles and let greed do the rest.

Why not? ®

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