The bureaucratic costs of recycling

Christopher Booker used to note this about lead acid battery recycling here in Britain. But today’s example comes from India:

India has 11 similarly vast solar parks, and plans to install another 39 across 12 states by 2026, a commitment to a greener future.

Yet this solar boom has a downside: the waste it generates from the panels, made of glass, aluminium, silicon, rare-earth elements; as well as power inverters and wiring.

One minor piece of pedantry, solar panels do not contain rare earths. But, you know, sigh. Solar panels are made of things though, when the solar panels are end of life, those panels then need to be dealt with. Perhaps reusing, or recycling, those things in those panels is a good idea?

Protocol dictates that solar waste from the plants must be transferred to e-waste contractors, authorised by the Central Pollution Control Board (CPCB), within a specified timeframe, typically 90 or 180 days.

Oh what a good idea. Lots of lovely bureaucracy.

Because authorised e-waste contractors are often unwilling to handle the waste in accordance with the CPCB protocol, a network of informal operators – who dismantle, aggregate, transport and recycle panels – have stepped in to fill the gap.

What a lot of really lovely rules and bureaucracy.

Tayyab* and his family work at the tail end of this waste-management chain. In a dimly lit and poorly ventilated room in Bengaluru, the 20-year-old and his younger siblings spend their days dismantling broken panels for their valuable metals and other materials.

“I take apart the metal frame, separate the glass and sort out different metals that can be sold separately,” says Tayyab.

Some work outside the rules and the bureaucracy.

Tayyab’s story is just one among many in the informal solar-waste sector, where workers find ways to extract value from the under-regulated but booming renewable-energy sector.

Ah. So the things that are valuable are extracted and reused or recycled. That’s good. But it can only be done by those not obeying the rules and the bureaucracy - for the costs of the rules and the bureaucracy are greater than the value of what can be extracted.

Which does lead to a thought. Say there’s something you wish to have done, something you wish to encourage being done - say, the recycling of the valuable bits of solar panels. The way to do it would appear to be having few rules and no bureaucracy, so as to lower the cost of recycling solar panels. Humans do more of cheaper things, less of more expensive - so, lowering the costs of recycling solar panels will increase the recycling rate of solar panels.

Anything we’ve missed there?

Kill bureaucracy to save the planet. Sounds good to us.

The groceries market seems alarmingly competitive to us

There are those trying to insist that significant parts of the American economy are uncompetitive. This allows the exercise of market power and thus excess or economic profits. True, this is the sort of analysis that comes from Senators Warren and Sanders so best not taken entirely seriously but there are also those we have to worry about like FTC chair Lina Khan.

Is there in fact some way we can test this?

Could be - back around the turn of the millennium there was considerable muttering that perhaps the UK groceries market was more than a little uncompetitive. Tesco was making net margins on sales of around 6% we seem to recall - around the highest in the world at that time for a supermarket chain. They’re now down around 3% and what’s changed is the irruption of the discounters, Aldi and Lidl, into the UK market.

There used to be very decent margins, price competition increases, margins are now lower. Yes, OK, it’s reasonable to think the earlier high margins were possibly a product of the absence of the price competition. Note that this is a market problem solved by the market, even if it’s still a problem.

But we can also use much the same logic the other way around:

Jeff Bezos had a golden rule for deciding whether Amazon should take the great leap from the internet to the high street. “We would love to [open physical stores], but only if we can have a truly differentiated idea,” he told an interviewer in 2012. “We want to do something that is uniquely Amazon.”

In the years since, the company has repeatedly tried to reinvent the supermarket. In 2016, it opened a till-free convenience store on the ground floor of its Seattle headquarters, using cameras and artificial intelligence to monitor what customers picked off shelves.

The following year, it paid $13.7bn (£11bn) for the upmarket grocer Whole Foods. And in 2020, it opened its own range of high-tech Amazon Fresh supermarkets in the US, before later expanding to Britain.

But despite the company becoming the world’s dominant internet retailer, Amazon’s near-decade of trying to reinvent the supermarket has stubbornly remained an ambition rather than a reality.

Amazon is not exactly a constrained competitor in the American groceries market, by either ambition or capital availability at least. Yet there seems to be no room in that marketplace for the extra competitor - or no room at some usefully profitable set of prices. From which a useful conclusion is that if it’s not possible to enter through greater efficiency or lower prices then the market as it is is efficient without excess or economic profits.

Which is an interesting finding, no? That there’s no room left for a competitor does rather mean that the current competition is sufficiently cutthroat. Not that we expect actual evidence to convince Senators but it’s nice to know all the same.

Pensions - net matters, not gross

We’ve all seen those claims around that pensions savings don’t, in fact, invest in new assets, new companies. That, instead, the money just goes into buying up second hand pieces of paper which funds the rip off of the City houses (cont. pg 94).

There’s a reason for this:

This has meant that UK-listed companies are receiving just £500m in net investment from pension funds each year.

Goldman Sachs said defined benefit (DB) schemes – which pay a fixed income but are largely closed to new savers – are selling £2.5bn of shares per quarter to pay out pensions to retirees.

At the same time, defined contribution (DC) pensions – which do not guarantee a specific income but depend on the performance of financial markets – are buying £3bn of equities over the same period.

People eat their capital to finance their retirements. This might be done inside a pension fund, a tax wrapper or simply directly and individually. But it is not true that a pension is simply the income made from some pot of money. It’s eating into that pot itself, that stock, over time.

Therefore it is necessary that those assets - whatever they are, shares, bonds, direct assets like buildings, windmills, anything - be bought from the retiring generation by those now beginning to save themselves.

Which is why much of the financial markets is indeed trading second hand pieces of paper. Because this generation of retirees needs to sell the things they invested in 30 and 50 years ago.

Any plan based upon an estimation of the gross number is therefore going to be wrong. It is the net which matters. What is left over of the new investment after the old has been purchased? Also, any complaint that The City just trades old paper is entirely missing the point. For, obviously, people need to be able to sell what they’ve invested in, so there must be a market in old investments, right?

Let's explain again why rent controls are a bad idea

In many ways, the frequent calls from politicians to implement rent controls are remarkable; insofar as, despite their repeated failure to solve the rental crisis, they are still being consistently proposed as the solution. In Scotland, where temporary rent controls have predictably driven down the availability of private properties by 20% and raised rents on new tenancies by 14%, the SNP have doubled down on their failure and is seeking to ban rent increases for up to five years. 

When rent controls have been tried elsewhere the results have been identical. Take Berlin, where the 2020 rent caps which fixed rents at below market rates were accompanied by decreases in supply five times as large as reductions in prices. Equally in Stockholm rent controls have resulted in a shortfall of 27,000 apartments. As a result the average queue for a rental apartment in the capital is 11.3 years

Unfortunately Sadiq Khan's most recent proposal for solving the housing crisis is likely to be just as much a failure in London as it has been everywhere else. His plan is to deliver 6,000 new homes in which rents would be capped at a third of local salaries. He has also urged the government to delegate him the power to freeze rents across the capital. If granted this would cause serious issues for an already troubled housing market. 

Considering that policymakers are continuing to tout rent controls as the answer to our housing crisis, it’s worth once again explaining why they inevitably hurt the very tenants that they are meant to support.

The answer  lies with one of the key insights of economics, incentives matter. Changing the incentives presented to the seller of a good will have an impact on the buyer and vise-versa. Rent controls have significant negative impacts on the incentives of landlords to operate in the rental market, and therefore generate adverse consequences for tenants

The impacts on sellers in the housing market are two-fold. Firstly, capping prices will weaken the incentive to rent out, encouraging landlords to sell properties and invest in other more profitable asset classes such as stocks or bonds. YouGov polling has shown 37 per cent of landlords would reduce the number of properties they let if an external agency like a council was given authority to set rents both during and between tenancies. Properties from this sell off tend to be sold to new those intending to live in the properties as unlike landlords they are unaffected by the rent caps. This will inevitably create shortages in the rental market, as demonstrated by decline in rental properties available following the rent cap policy in Scotland. 

Secondly, it reduces the incentive to invest into the production of new housing. Developers and landlords know that their properties will be struck by rent controls, which will prevent them from generating adequate revenue to justify investment in new development. This will limit growth in the supply of housing, in the long run worsening the housing shortage. 

There have been various examples of this effect, in 2023 Get Living paused its £200 million plan to build 1500 new homes due to the Scottish Government's rent control policy. As the Scottish LandLords association stated, “The rent control proposals, as has been seen in places like Ireland which has similar measures, will see reduced investment and more landlords leaving the sector, leading to higher costs for tenants.”

These combined effects mean that rent controls, aimed at keeping rents low for tenants will only result in a reduction in the supply of housing, creating housing shortages and preventing development. 

The Greater London Authority's target for affordable housing starts by 2026 is between 23,900 and 27,100 per year, but by February only 4% have been started - just 874 new houses. As for the £4.8 billion "Building Council Homes for Londoners" program, council house building starts since last May has been precisely zero. 

Without allowing for greater development significant increases in rents are inevitable, rent controls do not offer a genuine solution to this challenge. Unsurprisingly the solution to the London housing crisis is less- not more government- regulation. Deregulating planning leading to greater investment into property development would expand the supply of housing, reducing rent prices without creating property shortages.

Seems perfectly reasonable politics to us

Tobacco firms are lobbying MPs and peers in an effort to derail Rishi Sunak’s flagship policy to phase out smoking, the head of Britain’s biggest cancer charity has said.

A change in the law is suggested. Those both in favour of that new law, those not so, then talk to politicians to suggest why a yes or no vote should be suggested.

That is how politics works in a democracy, no? The Peeps - all The Peeps, whether as individuals or groups - get to have their say?

Mitchell told the Guardian that the “world-leading” legislation was “the most important public health policy shift I can remember” and could “see the blight of tobacco removed” from society for ever.

Smoking is the single biggest cause of cancer in the UK and worldwide and causes at least 15 different types of the disease, she said. But the proposals to bring in a smoking ban for the next generation were being privately undermined by tobacco companies.

“We know the tobacco industry is working quite hard to dilute the bill,” Mitchell said. “MPs and peers have briefed us that members of the tobacco industry are seeking to make arguments [against] and amendments to the bill as it goes through the passage of parliament.”

What isn’t democratic about this?

Are we supposed, instead, to have a system where the Prime Minister says so and then it happens? Without discussion, reference to those affected?

Well, yes, that is the line being put forward here. That opposition to the declaration by the technocracy is in itself evil. Which does, as we say, seem to be missing the point about that democracy and the consultation of the people part.

As it happens we think the combined rules - about smoking itself and then also about that substitute, vaping - being suggested are so insanely stupid as to be verging upon evil. It’s entirely obvious - to us at least - that the black market will expand, tobacco will become cheaper in real terms and this will increase the smoking rate. As has happened in Australia.

But this idea that no one should be allowed to have a word with politicians about how stupid this is - that actually is evil.

A problem with having a truly democratic economy

We are, of course, entirely fine with that form of democracy where it’s everyone particularly interested in something who gets to decide upon the matter t6hrough their production, consumption and so on. You know, the market?

There are those who instead insist upon what they call a properly democratic economy. One where all vote on something and therefore we gain what is voted upon - we’re all subject to that tyranny of the majority in everything. Plus, of course, if everything is decided by democratic politics then everything will be intermediated by politicians:

The former top Democrat on the House Science Committee’s space subcommittee

Ranking members on a House committee do have a certain amount of power in their field. Budgets are built upwards in the American system, from the relevant House committee and up.

“You’ve heard the word ‘full moon.’ Sometimes you need to take the opportunity just to come out and see a full moon is that complete rounded circle, which is made up mostly of gases,”….“And that’s why the question is why or how could we as humans live on the moon? Are the gases such that we could do that?” the congresswoman said.

We might have mentioned before that we’re fully supportive of democracy itself - some issues simply have to be handled that way. But as we’ve also mentioned before majoritarian democracy is as with government. Vast areas of life work markedly better without it, we need to reserve it for when it’s really needed.

Some laws really do amuse

We’ve mentioned this before around here:

Google has temporarily blocked links from local news outlets in California from appearing in search results in response to the advancement of a bill that would require tech companies to pay publications for links that articles share. The change applies only to some people using Google in California, though it is not clear how many.

The California Journalism Preservation Act (CJPA) would require large online platforms to pay a “journalism usage fee” for linking to news sites based in the Golden state. The bill cleared the California assembly in 2023. To become law, it would need to pass in the Senate before being signed by the governor, Gavin Newsom.

As has happened in Spain, Australia, Canada and so on when such laws have been proposed. Of course, the Californian insistence is that this time will be different.

There’s a dual contention here.

Firstly, Google (and Facebook etc) profit from, perhaps even steal, the work of journalists and newspapers by presenting them in search and social media. This reduces the revenue to the newspapers and woes is us.

Secondly, the traffic generated by being in search results and social media is a vital source of income for journalism and newspapers.

Which is what leads to the conclusion that Google (and Facebook etc) must pay for the news being stolen, but must also continue to run the news they’re stealing.

Only politics could possibly advance such absurd logic. Which is one reason for - a very good example of -why we continually insist that politics really isn’t a good way to run the world.

This is going to work well, isn't it?

The bill would empower the Federal Trade Commission (which would also get $1bn in additional funding) and state attorneys general to stop companies from charging “grossly excessive” prices, regardless of where alleged price gouging took place in a supply chain.

Of course, it’s Robert Reich so it’s clearly going to be bad economics. The suggestion is that the bureaucracy will tell everyone what prices should be. Which is not, not really, a course of action which has a great track record.

The Soviet Union told everyone what all prices need to be all the time- that didn’t work. Venezuela told everyone what toilet paper prices should be - toilet paper immediately disappeared from Venezuela. True, civilisation existed before toilet paper, civilisation can survive the loss of toilet paper but we’re really very sure that giving bureaucrats the power to determine fair toilet paper prices is not worth the disappearance of toilet paper.

As this is America under discussion it will also get worse. That top layer - some 3,000 people - of the bureaucracy is politically appointed, replaced with each turn of the Presidential administration. Thus in the political campaigns in the run up to any election there will be a certain pressure on those running the bureaucracy to fix prices in only that one, voter pleasing, direction. You know, job preservation? Well, voter pleasing in that short term sense of reducing the price now at the cost or reducing availability a little further out - after the election say.

That 20th century was - among other things - a grand economic experiment. Price fixing by bureaucrats was the system that didn’t work. We really have been there, done that, perhaps we should obey The Science and not do that again?

A musing - no, not amusing - on the Welfare State

The IMF says we need to cut - harshly - the levels of benefits:

Britain and other rich nations have been urged by the International Monetary Fund (IMF) to cut benefits and taxes to tackle the worklessness crisis.

Mel Stride vowed to “do whatever it takes to get Britain working” as the IMF said men in particular would be encouraged to find jobs if countries lowered taxes and benefits. More training and childcare support would help more women into work, the organisation said.

The IMF research, which was based on analysis of 38 OECD industrialised economies, including the UK, US and Germany, recommended that higher pension ages would also keep people in work for longer.

The comments are likely to fuel the debate among Conservative MPs over the benefits reforms needed to boost work.

Which leads to the musing.

The current definition of poverty is less than 60% of median household income, adjusted for household size, usually measured after housing costs. It’s also said that “low wages” are those that are less than 60% of median wages. The minimum wage has been pushed up over that 60% level.

Well, OK. It would be harsh to insist that those unable to work should be in poverty, that those working also be in poverty.

And yet we have this problem identified by the IMF - a large portion, too large they say - not working because work’s not worth it. Therefore cut the taxes upon work - at least at the low end - and also cut the benefits from not working. So as to open up the gap between the incomes gained by not working and those gained by working.

But there’s a very strong implication here. Which is that 60% is too high a portion of median income to gain by not working. For, if that can be gained by not working then some to many will make that choice. That is, at the very least, implicit in the IMF’s advice.

The musing at the end of this being, well, perhaps it’s just not possible to have the welfare system raising all up to 60% of median household income and also maintaining the incentives to go to work. Perhaps all that free time to do other than work actually is worth 40% of median income?

Perhaps we need to adopt a lower poverty measure in order to make the system as a whole balance?

It is a musing but one, we think, that does have to be mused through.

The Theory of Moral Sentiments & Adam Smith's View of Morality

Many people are familiar with Adam Smith’s The Wealth of Nations (WoN), But Smith’s ethical thinking was just as important. In fact, it was The Theory of Moral Sentiments (TMS), published 27 years earlier, on 12 April 1759, that made him famous.

Just The Wealth of Nations, this book marked a complete break from the thinking of the time. Ethics had until then been widely assumed to be based on God’s will (or the clerics’ interpretation of it); or something that could be deduced through abstract reason; or even something that could be felt through some ‘moral sense’ like touch or vision. 

Replacing this speculative thinking by scientific method, Smith argued instead that morality stemmed from our human nature as social beings, and our natural empathy for others. By observing ourselves and others, he said, we could discover the principles of ethical behaviour. Ethics was a matter of human psychology, stemming from how we form judgements about ourselves and others, and the influence of customs, norms and culture upon it.

This scientific approach to ethics was a sensation. It was very much in line with the Scottish Enlightenment, which sought to apply observation and scientific method to the study of human affairs. Old hierarchies were breaking down; industrialisation was eclipsing Scotland’s feudal past; radical thinkers like Francis Hutcheson and David Hume were pushing new boundaries, and religious pluralism was creating a more active debate on virtue and morality.

Smith’s book explained that morality is rooted deeply in human psychology, especially the empathy we have for our fellow humans. By our nature, we understand, and even share the feelings of others. Wanting others to like us, we strive to act such that they do. Even if there is no one else around to see how we behave, we are still impelled to act honestly, says Smith, as if an ‘impartial spectator’ is judging us all the time, setting the standard by which we rate ourselves and others. And under this imaginary eye, every choice we make helps us appreciate that standard more clearly and act more consistently in accordance with it. It is as if an invisible hand is drawing us to act in ways that promote social harmony.

TMS is mainly a descriptive account of human moral action. It examines how people actually make moral choices, and the pressures on them to do so. It also provides a guide on how we can cultivate our morality, emphasising the importance of self-reflection and self-improvement. 

Smith’s radical scientific approach in TMS and WoN provided a foundation for the subsequent development of psychology, sociology, and economics, establishing them as distinct subjects of academic enquiry. And its suggestion that self-interested actions—wanting to be liked by others, or exchanging things we value less for others’ things we value more—could produce a cooperative social and economic order, continues to have a central place in liberal thinking.


All this makes the themes in The Theory of Moral Sentiments just as relevant today as they were in 1759. Through self-reflection, we can make better moral choices. Through our empathy with others, we can foster understanding and create a more peaceful society. Through an appreciation of our shared feelings and interests, we can live and work and collaborate together for the mutual benefit of the whole of humanity.