Sunday, February 3, 2008

Wouldn't it be a pity if the Irish weren't green?

Fortunately they are. An article in the Times today described how Ireland has phased out plastic bags. Hippy-minded individuals and businesses such as Whole Foods have begun trying to do the same, but the key is what's stated in the article's title, "Motivated by a Tax, Irish Spurn Plastic Bags." In a town like Austin, maybe there are enough concerned citizens to put a dent in the use of plastic bags, but I don't believe people's concern can be relied on for real change. People will change when it pays to change and this is why wastefulness should be taxed. I can't think of a good reason to use plastic bags, but why not use them? They're free!

What happened in Ireland shows something interesting about conservation. It's the opposite of "you don't know what you got until you lose it;" people sometimes don't realize that some of what they got they can live without. Given that no one uses plastic bags in Ireland anymore, you could argue that Ireland's population could have always got along just fine without them. So, if they could always have got along just fine without them, why did everyone use them for so long? Because they were free! Then they were taxed at 33 cents a bag. According to the article, "Within weeks, plastic bag use dropped 94 percent. Within a year, nearly everyone had bought reusable cloth bags, keeping them in offices and in the backs of cars. Plastic bags were not outlawed, but carrying them became socially unacceptable — on a par with wearing a fur coat or not cleaning up after one’s dog." It's as though Ireland was always a country of conservationists, who just didn't know they were conservationists.

But this sea change ocurred only because of the tax. I think what happened in Ireland should be ammunition for those proposing any tax to encourage conservation or to reduce the use of things that harm the environment. Ireland shows us that it might not be so hard to change and that a tax might not be so bad. I would bet that most Irish don't even think or care about the tax anymore because you'd have to come up with a really good reason to use plastic bags in order to care. Just like you'd have to come up with a really good reason to use a non-hybrid vehicle or an incandescent light bulb to care if taxes made them more expensive than hybrids or CFL's. I can't think of any good reasons, and therefore I think after a few years no one would care about a tax that makes inefficient products more expensive than efficient ones.

1 comment:

Colin Smith said...

whether you knew it or not, what you just described is essentially the idea behind all of environmental economics. a modern market system hinges on the idea that prices have informational value. in equilibrium (in most cases), a price reflects the marginal cost of making something. thus, if you decide to purchase at that price, you're saying that the benefit you get from consuming something is equal to or greater than the cost of making it.

when you give plastic bags away for free, you're saying that they have no cost. therefore, if consumers value them at all, its optimal to use as many as they can. the problem is that plastic bags do have a cost, just not to those who make or sell them. they cost society, and future generations who will be left to deal with them. this is called a negative externality, which essentially means that the price does not fully reflect the cost of consumption. whenever this is the case, people tend to consume more than is socially optimal. some old french dude named pigou wrote a book explaining why we need to use taxes to correct for negative externalities when they arise.

anyways, the point i'm trying to make is that we don't simply need to tax things that are "bad". we only have to make sure that the prices of bad things reflect their costs. if people still chose to use them anyways then that's fine. the same is true with fossil fuels. oil's not inherently bad, its just environmentally costly. and given that there's a limit to how much CO2 the atmosphere can absorb, its important to make sure that the price of oil reflects this cost.

as a side note, grocery stores in the czech republic have been charging for plastic bags for years and it's worked really well. people don't think about it as any environmental issue. they just look at you like you're crazy if you decide to waste you're money that way.