Rational Economic Behavior - Can This Prove Reliable as a Metric?
Here in California, one is barraged with idiocy, constantly and incessantly. If one steps back from the managed news, and asks critical questions, it even becomes comical, of not enjoyable, to see the simple human condition in its perfect, rational form befuddle the central planners.
So here is one I took notice of, and specifically because I wonder if this data can be useful as an economic barometer, a metric?
And by "this data" I mean recycling rates.
This story caught my attention: http://www.sbsun.com/general-news/20140408/man-gets-6-month-sentence-for-recycling-fraud.
See, here in The People's Republik of Kalifornia, the central planners have overrun the place. Even corrupt politicians are the norm, as are voting blocs of free shit army members, which create impossible conditions for any real change to occur. So, central planning progressives run the show.
One such feel good, environmentally sensitive program that the liberals implemented was the recycling program which was intended to encourage recycling of aluminum cans and plastic bottles. This scheme created a revenue stream to the state whereby beverage distributors paid a tax on every single container, which the retail customer absorbed at the time of purchase (called a CRV, which today is 5 cents per container for small ones, 10 cents for large ones). The retail customer could get the CRV refunded only by returning the used container to an authorized recycler.
Naturally, a huge bureaucracy arose to administer this program, to write rules, to enforce them, to impose fines, and as the recent article shows, to imprison people who act rationally, although in unintended ways by the central planners. See, the central planners have no clue of normal, rational economic behavior. No, they study models, and theory rather than reality.
In any event, it is an easy analysis to conclude that the beverage recycling laws created an enormous incentive to cheat. The article discusses one such scheme. There are others in the news stories, some of which are collected here: http://www.calrecycle.ca.gov/NewsRoom/2014/04Apr/12.htm
If one wants to explore the thinking behind the program, go to this page and read up on an analytical piece, here: http://www.calrecycle.ca.gov/Publications/Documents/BevContainer/2011026.pdf
What caught my attention was not the simple incentive structure that the progressives created. What caught my attention was usefulness of the program's data in tracking, in real time, the connection between recycling rates, the payment structure, and the general economy.
As economic conditions deteriorate, one would imagine that recycling rates would increase as a percentage of sales, because more people would tend to recycle to get the CRV rather than throw the containers away. Here too, one would anticipate a higher rate of fraud, given that the economic conditions likely lead one to provide for one's family in more, say, "non-traditional" means.
So, I am not surprised to see the recycling rate increase as economic times have steadily gotten worse since the California housing bubble burst. More controls have been placed on the program, too, such that fewer containers can be recycled per person, per day, etc.
I also have a request: can one of you wizards create a graph that tracks the recycling rate with the officially reported California unemployment rate?
Finally, I end with this. I find it comical that the central planners think they can outsmart the human condition. One need only look at the incentive structure to realize that subsidizing behavior only leads to more of it! Look around and learn to really understand the incentive structure. Match the incentives with human nature, and the outcome is easy to predict.