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.

50 Comments

Rainforest's picture

Again

Furst

metalsbyamile's picture

Came in 2nd

but first in short term trading today.

On to the CL goods.

Occasnltrvlr's picture

Thurd?

Thurd?  No freaking way, my first thurd!

Oh, did somebody write something?

ArtL's picture

4th!

In California the R party are pretty stupid and would rather be ideologically (and racially) pure than hold other than a token number of legislative seats in the State legislative bodies, so the state is run by corrupt D's.

metalsbyamile's picture

Also the trend

small to medium sized biz has slowly escalated,moving their ass off Kalifornicaton turf and relocating in Puerto Rico.Why, 4 percent tax vs a marginal tax  upwards of 50% when you combine the state income tax with the federal income tax, so  income tax liability goes down by upwards of 90%.

SteveW's picture

California recycling

About 10 years ago we went spent some time in SoCal in our motor home. We had become accustomed to recycling all our aluminum cans here in Canada, where one simply returned them to the store of purchase.

Well, we accumulated a huge number of cans but could never discover where to take them being unaware of authorized recycling centers. Fortunately one day we saw two men with a car from the 60's carefully checking bins for cans who were only too happy to take the accumulation off our hands.

It always fascinated me that different states had different refund rates and I wondered about cross border movement but am surprised to learn that interstate transportation of empty aluminum cans is a felony.

http://www.sacbee.com/2014/04/08/6307862/man-gets-6-month-sentence-for.html

erewenguy's picture

Doesn't anybody sleep?

Doesn't anybody sleep around here?

So let me get this straight. Government says - "we will pay you for your garbage". Eventually they change their tune to "stop bringing us so much garbage".

I would NEVER have seen that one coming. I wonder what would happen if someone came up with a program that pays girls to have babies, or one that pays people to not work?

wouldyoubelieve...'s picture

$1.2 bln fund

now you know the truth, they really don't want you recycling anything, that's their hooker and blow fund

El Gordo's picture

I remember the good old days...

...when government used to at least make an effort to disguise its fraud, waste and abuse.  Now days it seems it just up front about it, but since the populus is either dumbed down enough not to recognize it, or is just willing to accept it is still unclear.  Eventually when utopia is reached and no one is working any more to pay taxes, we can all just run in the candy forest chasing RFU's (rainbow farting unicorns) and eating the marshmallows that they poop.  Can't wait.

Gold Dog's picture

I'm a "10"

Woke up and saw that gold futures were way overbought, Wilders RSI at +80 and decided to grab some fiat to turn into money.

We retired people find it normal to make a pot of coffee at 2:30 am, I can finish sleeping at noon if I feel pooped out later.

Spent yesterday with the accountants and I feel like the Beatles song "we'll even tax the pennies on your eyes!"

If you tax it you will get less of it, if you subsidize it you will get more.

Your friend,

Dog

Boswell's picture

$20-$30 a Week...

Tax Free, off-the-books!

Yeah, I collect cans too. I pick up every can, glass & plastic bottle I see as I drive to work & back and on my daily errands & walking the dog. I also have a couple "honey holes" where thirsty people seem to hang out to boost my take. I started out just recycling my own stuff, then added my mom's, then at work, then any time I see one.

I put the money towards an extra ounce or two when I put in an order. ;-)

(AluminumCRV/Silver ratio is about 160:1)

I have noticed some of the "other people" doing it, cans seem to disappear quick if you don't grab 'em when you first see them. Fewer on the street lately.

Just got back from Vegas, no CRV there in NV, cans all over the place, could have paid for my gas! But I wasn't driving. ;-(  Yeah, "illegal" I guess, but a couple extra bags in my usual load would go through unnoticed. Maybe next time. ;-)

They are cracking down on non-CRV stuff comingled. I was putting in anything clear plastic for a while.

I'm taking some in tomorrow, I'm getting to know the guy, I'll grill him a little about how's business.

erewenguy's picture

Early morning coffee

Gold Dog - I usually wait until 3 am to put the coffee on.

Waking up the second time today, I see that G & S seem to have  had  an early morning jolt of caffeine. Green is good. 

Boswell - I have never seen the Al CRV/Ag ratio before. Sounds like a scrapper's dream.

Patrancus's picture

Don't ever think

that (while pointing his finger) at Rep. Gohmert, TX " Don' t go there buddy" Attorney General Eric Holder you can bet he likes his asparagus. I would wager my stack that the lawlessness in the american Legislative branch of government has never been as lawless and arrogant as it is today, and the people who voted for these criminals are doing 1 of 2 things today. They are  moaning and groaning Oh Baa Ma or they have fled for the tall grass not wanting to take any kind of responsibility for their inaction to arrest these stateus criminals. Rational behavior is a thing of the past, american's are in some serious trouble with these thugs at the helm, hang on for your life.

http://www.bing.com/videos/search?q=Louey+Gomert%2c+Eric+Holder%2c+you+tube&FORM=VIRE7#view=detail&mid=B2328A06B08C08BF92C3B2328A06B08C08BF92C3

silver66's picture

I apologize for this price beat down

I just made a few purchases on-line. As such price should be dropping in 3..2...1

Wait till later today and get a 5% discount if my buying system holds.

Maybe I should break my purchases up into two buys. 1 oz in the morning and more oz in the afternoon

Silver66

Oh well

Stack till it hurts

metalsbyamile's picture

The Battle Rages On

Have not seen the volume intensify like this in some time.The $1320 line has drawn fierce buying and selling.It is amazing to watch tic by tic.

Do we establish a higher low or a no go. Tired of this, let's move up!

metalsbyamile's picture

Sellers overwhelming buyers presently

Every up is met with a down and it is continual buying met with continula selling.

The cap is so blatant and obvious, you can understand Turd geting nauseated.

realitybiter's picture

Great moments

are borne from great opportunities.

And that is what you have here.

buckle up.

Rip your face off rally, imminent.  you earned it.

metalsbyamile's picture

And so it goes

Buyers now overwhelming sellers!smiley

ArtL's picture

Heartbleed test link

Dr Jerome's picture

bullish

Glad to see you are somewhat bullish Metalsbyamile. Now all signals are confirmed! You were right a few weeks ago, whether the cycle analysis, is a good predictor or not...

Unfortunately, I have just about had my bellyfull of trading. My wife provided the "stop trading" indicator this morning. I am sitting on one AU May 1400 call that I will ride out wherever it takes me the next two weeks. After that, I think I am done trading. I'll leave this stream full of piranhas and try panning in some real streams in the nearby hills.

But I still have my retirement account that I can either put in stock funds, Or... I could trade metals ETFs with it. I figure it will be confiscated anyhow and shoved into T-bills at some point before I retire, So I have been buying into JNUG and NUGT every two weeks.

metalsbyamile's picture

Thanks Dr J

Unfortunately, like Turd, being right may have saved us some fiat, but at least it does not attack the stack.(long term hold so who cares what the paper price does, unless buying more).

Several long term members attacked me as negative, Not true at all, just reading the indicators along with acting on them.

I still see lows in June July or August ( higher lows that is) and will load up more phys and Pm stocks that i will not trade.

Good luck  Dr J, do not let the bashTURDS get you down, we are on the right side of right.

Edit-For the record  I stand with the bulls,ALWAYS. Short term trading and buying is a whole other matter.

Magpie's picture

Bigger than Cliven Bundy (h/t to Nana on Dots)

Urban Roman's picture

Hello stephanie ... admin ... anyone? ... bueller?

LastPass Heartbleed checker

  • Site: www.tfmetalsreport.com
  • Server software: Apache
  • Vulnerable: Very likely (known use OpenSSL)
  • SSL Certificate: Unsafe (created 9 months ago at Jul 23 15:40:41 2013 GMT)
  • Assessment: Wait for the site to update before changing your password

H/T to ArtL, above.

Dagney Taggart's picture

@Dr J

NO!!! Short DUST!

Regarding your PhD "intelligent" colleague from the other day: No offense, but PhD theoreticians are the epitome of destructive ignorance today, hands down. See Bernanke and Krugman. So much willful delusion when they are capable of more. Ten times the real-world wisdom and productivity is found in a garbage collector who have their feet on the ground and hands in the dirt.

I typically ignore them in my work, unless it's a geologist.surprise

Les Baux's picture

admin FYI

“sudo yum update openssl"

Then restart Apache.

Nana's picture

Merika- The Illusion

First "they" tried to enslave you under the 14th Amendment.

Then "they" created the FR and IRS.

Then "they" took away real money and replaced it with paper backed by gold.

Then "they" took away the gold backing, leaving nothing but paper fiat.

Then "they" took away the real value of anything.

Then "they" printed fiat unlimitedly devaluing the FR note by 98%.

Do you see what "they" have done.

"They" have taken everything you have ever owned and worked for over an entire life time. Your hard earned labor produced by your blood, sweat and tears and made it worthless.

"They" can and did print fiat to steal, plunder and rob you.

"They" give you fiat then tax you out of everything when "they" could simply print more fiat to cover "their" whatever.

"They" have taken everything of true intrinsic value.

So my question is this: Why is the United States Government "borrowing" fiat "money" at interest created out of thin air by the privately owned FR when the Constitution grants the Congress the power to coin interest free "money".

Why is the United States government allowing this. Why does the senate and congress allow this. Why does the states allow this. Why do the people allow this.

"Give me control of a nation's money and I care not who makes the laws." - Mayer Amschel Rothschild

WineGuy's picture

Canada's Former Finance Minister - DEAD

http://news.nationalpost.com/tag/jim-flaherty/

He literally just resigned about two weeks ago. 

Colonel Angus's picture

Dr. J and Dagney...

I also hold a PhD, but it is worse than someone like Dr. Jerome. You see I'm a mathematician who happens to do things on the financial side of our subject. And that leads to troubles because I like to think about common sense things. I often regale my students with stories of planting or the chickens or working on the tractor to show them to not be afraid of failures and to expect them before successes...and also that you will only succeed after many failures. It's called learning!

Anyway, I was at a conference where someone started talking about their data on some country's consumption of something and how it affected the GDP. They said, "We assume a neo-Keynesian DSGE (dynamic stochastic general equilibrium) model with parameters blah blah blah." I was in a classroom I'd been teaching in just weeks before and was feeling like pushing the envelope, so I said, "Why do we assume such a model? Hasn't it been thoroughly discredited by today's environment and by things like the broken window fallacy?" Everyone turned to look at me like I'd farted in church. Best answer from the now bumbling speaker, "Well, we have to be able to compute something!" 

And there's the problem. We have to compute something or else we don't feel useful or needed. We have to compute something to publish rather than warning our students to think for themselves. And I can be as big of a hypocrite on this. I'll compute theoretical risk measures of theoretical portfolios of loans for banks in order to tell them not to take on one more Liar Loan. (They didn't listen.) I look at the crappy data that comes out of Eastern Bloc countries and try to cobble it together to make some argument about how some policy has helped or hurt GDP or unemployment or something.

At least I tell my students on the first day of the term that they shouldn't believe a single word out of my mouth but should instead test everything for themselves. Sometimes I even say they should imagine I'm some sort of politician trying to get their vote and get into their wallets. I want them to be that much of skeptics and to understand for themselves. I also tell them one of my overriding philosophies in life...after "don't eat yellow snow", it is that I don't trust anyone with the title "Doctor." Good policy in life... 

ancientmoney's picture

@Nana re: Merika . . .

You asked:

"Why is the United States government allowing this. Why does the senate and congress allow this. "

Then you answered those questions:

"Give me control of a nation's money and I care not who makes the laws." - Mayer Amschel Rothschild

The One Bank, a group of eight banking families led by Rothschilds, own the Fed and the IMF.  They got their nose under the tent just before Christmas, 1913.  They've been eating our seedcorn ever since.

Dr Jerome's picture

Colonel, are you NOT left handed also?

Dagney, It really is amazing how brilliant a PhD can be in their field and clueless in others. But there are many who are not even brilliant in their field, merely "qualified" with the proper degree awarded by a lackluster faculty.

Short Dust? hmmm I fear my state plan does not allow options or shorting. And that is a whole 'nother conspiracy.

Colonel, Your story of the neo-Keynsian conference is a hoot. I am reminded of a movie scene:

Inigo:  You are using Bonetti's defense against me, uh?
Man In Black:  I thought it fitting, considering the rocky terrain.
Inigo:  Naturally, you must expect me to attack with Capo Ferro.
Man In Black:  Naturally, but I find that Thibault cancels out Capo Ferro, don't you?
Inigo:  Unless the enemy has studied his Agrippa,   which I have!

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