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Tuesday, February 21, 2023

What Garbage Collection Rates Can Teach Us about Affordable Housing

Government-created monopolies can charge astronomical prices, which is why companies and politicians fight so hard to preserve them.

Image: iStock

Some problems are perplexing and complicated, with solutions evading the wisest among us. 

The need for affordable housing is not one of those issues. The causes and cures are not complicated. They evade us only because somewhere between kindergarten and college graduation, we never learned basic economics.

Often, one avoidable and seemingly-unrelated problem can inform the solution to another. Take your garbage, for example. It should interest you to know that if you live in Montana, garbage isn’t very affordable—its disposal, that is. Depending on where you live, you are probably paying for gold-plated garbage trucks (figuratively speaking) owned by companies that earn net profits two to four times higher than their counterparts in other states.

Economics 101: When demand is high (lots of garbage to dispose of), and supply is low (an artificial scarcity of trash haulers to choose from,) you will pay far more for those emptied garbage cans than you would if market entry was unrestricted and garbage collectors competed fiercely for your consumer dollars. I say “artificial” because scarcity is NOT an indigenous creature of the free market. It’s a mutant beast conceived of by protectionist politicians who make monopolies out of special interests. Such is the case in Montana.  

For the second session in a row, legislation has been introduced—HB 191—to repeal the state requirement that new garbage collection services must first be approved by the Public Service Commission and issued a “Certificate of Convenience and Necessity” through a long, drawn-out and financially back-breaking process. Finishing this absurd legal obstacle course is almost impossible. The result: government-created monopolies that can charge pretty much anything they want. Maybe this year, legislators will discover their consciences and backbones, and repeal this anti-consumer, anti-freedom statute.

How does this lesson inform us about the scarcity of adequate, affordable housing in many Montana communities? The answer is in two sentences. Freedom works. Government intervention and control does not. 

The first approach produces an abundance of supply at a price most consumers can afford. The second produces shortages, unserved consumers, and dramatically inflated prices. Too often, local governments have chosen the second course, and desperate, economically ill-educated consumers clamor for more of the same.

The town of Bozeman is a classic example, where we suffer from decades of increasingly-restrictive zoning laws, property use ordinances, city and county land use planning, contractor fees, and skyrocketing property taxes to pay for the skyrocketing cost of local government. All of these measures have the ultimate effect of constricting supply and driving up building costs, which in turn renders rental prices and home ownership out of the reach of many would-be residents and families. Add to that the inflation created by out-of-control federal spending, and the situation becomes truly bleak. 

So what has been the local response of the economically illiterate that tweaks the sympathetic ears of city commissioners? The formation of a so-called “tenants union” that demands “the banning of Airbnbs and VRBOs and using city housing funds to subsidize existing short-term rentals into long-term leases.” In other words, taking over people’s property rights and destroying the local jobs their enterprises create. “Power to the people!” It’s eerily reminiscent of the film Doctor Zhivago, where the Red Army took over Zhivago’s family home and divided the rooms among the deserving proletariat.

But perhaps a more modern solution is to just require “Certificates of Convenience and Necessity” for every new dwelling that’s allowed to be built in our communities. Then the tenants’ unions and the city planners can enjoy total government control. Brilliant!

Do you see a pattern here? Do you see any similarities between the Marxist-socialist thinking that socialized a garbage industry, creating scarcity and high prices, and the Marxist-socialist thinking that socializes housing and creates scarcity and high prices in the shelter we seek? 

If you don’t, read Economics in One Lesson by Henry Hazlitt, and you’ll begin to figure it out. Freedom and free markets work. Top-down government control never does. Trust freedom.

  • Roger Koopman recently retired from the Montana Public Service Commission, having represented PSC District 3 for 8 years.  He has also served two terms in the state House of Representatives from Bozeman.