Paul's Internet Landfill/ 2018/ Breaking the Poop Cartel

Breaking the Poop Cartel

Today I listened to an interesting Planet Money podcast, about poop cartels in Senegal. In Planet-Money-speak, a "cartel" is a group of organizations (in this case poop-collectors) who agree not to compete with each other, thus raising prices for consumers and destroying economic efficiency.

Here's the story, as related by the podcast. In Senegal there is no municipal plumbing, so people use septic tanks. Unfortunately, septic tanks fill up and need to be emptied. The classy way to do this is to hire a toilet sucking truck, which will suck up all the sewage from your septic tank and take it to a waste treatment plant. To do this you go to a big parking lot and ask a trucker for a price. Then you accept that price, because there is no point in going to any other trucker -- they will all give you the same price, and they will not negotiate. It is a hefty price, too: $40 to $60 USD, which is a month's salary for many people.

So many people turn to the illegal, but cheaper option: they hire people with shovels to dig up the sewage from their septic tanks. But these operators don't take the sewage to waste treatment plants. Instead they dig holes in the street and transfer the sewage there. It is unpleasant and the neighbours complain, and the Senegalese government has made this illegal. But for people who cannot afford to hire a truck, it is the cheaper option.

Enter nonprofit groups and university-trained economists from America! They knew there was a lot of supply of truckers, so the price to hire a truck ought to have been lower. So they set up a text-messaging system where individual truckers could bid on jobs, and the lowest bid would win. The truckers were skeptical at first. Wouldn't the competition reduce prices and lower their wages? Don't worry, said the economists. What you lose in margin you'll make up in volume, because more people will be able to afford your services!

So the economists set up a text-messaging service where a random subset of truckers are allowed to bid for a contract. The truckers start undercutting each other to get work. Prices fall! On average prices fall 7%. Some additional people (it is not specified how many) hire poop trucks. Hooray!

Then the grant funding the economists's work end, and they hand the service (dubbed "Uber for Poop" by the journalist, which one economist considers a compliment because Uber is doing great things) over to the Senegalese government, which runs it for an additional year before dropping the project. Then journalist Robert Smith tells us he is taking a fellowship, and won't be around as much any more, but thanks for listening to Planet Money.

Let's summarize, shall we?

Yay capitalism! Yay market forces. Keep listening to Planet Money and keep pretending that it does not have an agenda of its own.

Look, man. I'm not trying to say that it is okay for poop to get buried in the street, or that it is easy for the Senegalese government to provide actual plumbing the way we have in North American cities. I am not even saying that there is no role for do-gooder NGOs or university economists in fighting poverty. If these are your conclusions then you are missing the point.