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City Licensing and the Garbage Cartel

Written By: Editorial  |  Posted: Saturday, May 5th, 2012

The Eau Claire City Council with the help of the five refuse haulers have shook their magic eight ball and prognosticated what is the voice of the invisible hand.  The market forces of Eau Claire can only handle so many garbage companies taking away refuse from resident's curbs.

Coincidently, it's five, along with the two city run haulers in charge of city government waste (I wish there were a lot more people hauling away government waste, but I digress).  This Monday, the city council will bring up for public discussion changes in the rules regarding waste in Eau Claire.  On Tuesday they will vote on the proposed changes.  Among the changes is the creation of a quota which will only allow five companies plus the two city services to haul away residential garbage and trash.

According to the city council item summary, "a lack of refuse haulers licenses available brought this ordinance to the council's attention."  This could have been solved easily by stopping the limiting of licenses (or better yet, eliminating licensure completely). But the City only allowing five companies to haul away garbage basically sets up a monopoly or rather, a pentopoly where no other companies can compete unless they can persuade the city council to let them become part of the "big five".

In a letter to the City of Eau Claire, one of the five refuse hauler owners said the following, "An argument against limiting the number of licenses in the City of Eau Claire to 5 may be that it reduces competition in the area.  Residents of Eau Claire have a choice between several companies already with competitive pricing."  This is easy for them to say beings they are one of the five allowed.  And how do they know what a competitive price is?  And why is 5 the magic number? 

The owner continues in the letter, "Another argument against limiting licenses may be it prohibits those who dream of owning a garbage company from obtaining a license."  The owner then answers the argument by saying that they can wait until one of the five goes under or sells their company and license to them.  In other words, the owner wants to use the mighty hand of government to keep anyone else from competing with his business. 

This is oppression.  What if someone with a landscaping truck wants to supplement his low income by picking up bags of garbage for say, 75% of the average price?  Perhaps with the bad economy, allowing the unemployed this option may help to bring much needed provision to their table.  But the garbage cartel refuses such an idea.  You must have the proper truck, the proper licensing, proper insurance, etc., and even then, you still can't make a living at this because only five are allowed.

I will quote the owner one more time, "The City of Eau Claire designates which area refuse trucks can be in on certain days to limit the number of large trucks that are in each neighborhood.  Therefore, several haulers will be in the same neighborhood at the same time "jockeying" for position on residential roads."  There is an easy solution to this.  Stop limiting the days in which garbage can be picked up.  This law also limits the poor person who wants to pick up garbage at a cheaper cost.  He can't go around Eau Claire one day a week; he must do one neighborhood each day of the week.

This last quote exemplifies one of the fears that is motivating the quota, the garbage companies want to use the government to limit competition. 

The answer is to let individuals freely choose who they want to haul away their garbage.  If the existing garbage companies hate the idea of a free market, if they want to eliminate competition, then provide a better service.  Don't use government fines and protectionism.

For more on this subject read Are Local Leaders Smarter then Us

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