Cheryl Kagan Doesn’t Understand How Markets Work

If you want to understand how little the Democrats understand markets, look no further than this quote from State Senator Cheryl Kagan from the Baltimore Sun:

And while the statewide measure might require more widespread adjustment and added costs at first, Kagan said, it could help drive demand for cheaper options made from paper, plastic or even corn starch and sugar cane. The Democrat called it the most popular issue she’s worked on in Annapolis.

“The market will demand alternatives,” she said.

The quote is in reference to the polystyrene ban that was passed by the General Assembly this year. The bill bans the use of the material commonly known as Styrofoam across the state.

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Now, the polystyrene ban is asinine for a number of reasons. As the Sun story notes, it’s going to raise costs for businesses and consumers alike. One restaurateur estimated “an increase from 5 cents per foam container to $1 or more for plastic alternatives.” It’s going to create new challenges for small businesses, many of them restaurants that are already operating on the margins of profitability, while larger businesses are going to be able to absorb the costs. It’s going to force small egg producers to invest in more expensive products that will cause them to be less competitive against larger out-of-state competitors. And of course, ultimately the polystyrene ban is a regressive tax on the poor since they will be disproportionately affected by higher prices for necessary goods like eggs.

But I want to get back to this Cheryl Kagan quote: “The market will demand alternatives.”

What betrays the point that Kagan is making is that the market was clearly not demanding alternatives. If the market were demanding alternatives, then the alternatives would already be used by those companies. Companies that were interested in keeping prices down for consumers had no interest in investing in higher-cost materials that may not be as effective as polystyrene, particularly considering there’s no real evidence that substitute materials are going to be any better for the environment. And companies that were willing to create “environmentally friendly” products to appeal to a certain demographic were certainly free to provide those alternatives to the public.

The market is not demanding alternatives in Maryland. The government is forcing the use of alternatives at a level that the market cannot sustain.

The reason that General Assembly forced the issue of a statewide ban also has something to do with the market, too. Democratically-controlled counties had already passed their own local polystyrene bans. This raised costs for doing business in their county and legislators from those counties clearly did not want to be at a competitive disadvantage with other counties that did not have such a ban. So instead of convincing their localities that they made a mistake, Democrats went with “two wrongs make a right” and forced the issue of a statewide ban.

If you want to understand why Democrats make such economically boneheaded decisions, remember this Kagan quote. She is the perfect poster child for Democratic ignorance of markets, economics, and the fiscal consequences of government overreach.

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