The problem with policy is policy. This is easily forgotten by both Democrats and Republicans promising utopia via legislation.
Think California’s policymaking in the area of plastic bags. The Golden State was the first one to ban “single use plastic bags” at grocery stores back in 2014. Customers subsequently had the “choice” of purchasing an even thicker, reusable, and recyclable plastic bag, or a paper version. Each set the consumer back .10 cents.
As is sometimes the case, what happens in California spreads. Subsequent to its legislation, cities and states nationwide adopted plastic bag fees of the .5 and .10 cent kind as an inducement for shoppers to buy reusable bags. There’s your unintended consequence.
Bringing reusables back and forth to stores proved less enticing for some than paying the per bag fee, only for the purchased plastic bags to morph into something more than grocery bags. In particular, they became low-cost trash bags, thus mitigating the efforts of legislators to use bag charges as a way to shrink usage altogether. Put another way, an artificial price was introduced by California legislators, and an artificial market response similarly revealed itself.
Taxes have a tendency to change behavior, and the bag tax unearthed newfound uses for plastic bags. It’s something for carbon tax proponents to think about as they pursue a tax on the consumption of gasoline as a way to shrink usage. They might consider if, rather than shrinking their carbon footprint, consumers might divine new, carbon-intensive ways of paying the tax. Something to think about, but that’s a digression.
For now, and rather than recognize the law of unintended consequences, California legislators are trying to fix the errors of their 2014 legislation with new legislation. Readers can no doubt guess that the presumed good in the lawmaking will prove unequal to unexpected consequences. And in this case, they’re not entirely unintended given the less than vague qualities of the proposed legislation.
Precisely because it’s so vague, it could result in bans not just on reusable shopping bags, but other reusable bag forms including backpacks and handbags, single-use plastic carriers including trash bags, Ziploc style bags, lawn bags, and other types made of paper or plastic. In short, there are a lot of limiting factors given the vague wordage that could have California quite unwittingly banning backpacks and others like it.
To which some readers will not unreasonably respond that there’s no chance such an outcome will be arrived at in the end. And there’s no argument with the response.
Still, it speaks to the folly of policymaking in 2014, 2024 and beyond. The problem is the policy that substitutes the narrow knowledge of legislators for the markets themselves. In placing a fake price on bags, legislators have essentially put consumers in the position of buying their way out of what some might imagine is environmental harm.
Which means the better solution is to repeal the old legislation altogether, remove the artificial pricing that came with it, and leave it to grocery stores to try varying approaches to the perceived plastic bag problem. For now, and having pursued legislation in search of a problem, legislators in California and beyond have been introduced yet again to the law of unintended consequences.
John Tamny is president of the Parkview Institute, editor of RealClearMarkets, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors.
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