Wednesday, January 21, 2009

NYPIRG: Enemy of New York's Store Owners

We have watched the NY Public Interest Research Group in action for close to thirty years; and in that time have never seen the group advocate any public policy that would benefit business. Apparently business and the public interest are mutually exclusive-which tells us a lot about the group's world view. The world view in question is highlighted by NYPIRG's zealous advocacy of the expansion of the bottle bill-and its equally zealous opposition to any proposal to take the containers out of the retail outlets.

Of course, the group's mindset is not only hostile to local businesses, it is at the same time ignorant of basic economics that could better inform their policy positions-making them less subject to ridicule. Here's NYPIRG refuting an industry "myth: "

"MYTH: The Bigger Better Bottle Bill will increase beverage costs by 15 cents a bottle.

FACT: The beverage companies are exaggerating the costs of the bottle bill. The beverage companies are threatening to increase the cost of beverages by 15 cents per bottle if the Bigger Better Bottle Bill is passed. Five cents of this is a completely refundable deposit – an upfront cost that consumers can get back when they return their empty container. Of the other 10 cents, a few pennies are for the handling fee (1.5 cents additional handling fee for beer and soda, 3.5 cents new handling fee for non-carbonated beverages); the remaining 6.5-8.5 cents are “mystery costs” that the beverage companies have so far not explained or accounted for. Prices for bottled water and other beverages are already quite elastic; there is no basis for the industry’s claims that a small increase in the cost will impact sales."

To start off, if beverage companies are saying that an expansion of the bottle bill will increase prices by 15 cents per container, that supposition has nothing to do with the deposit; costs come from elsewhere and they remain a "mystery" only to NYPIRG. Unlike beer and soda, added containers under expansion come from product that is not store door delivered-water and juices are delivered with other groceries from food distribution warehouses. Empty containers can't be simply loaded onto delivery trucks for back haul. And, by the by, this extra handling-along with back room processing for recycling, is not cost free.

And for those of us who were present at the creation, so to speak, we can remember how beer and soda prices skyrocketed after the bottle bill first passed in 1981. All of this is certainly a mystery to NYPIRG. And all this is without the escheating of the unredeemed deposits-money that is currently being used to defray redemption costs. It is telling that bottle bill expanders never give a thought to using the unredeemed deposits-if they were escheated and could actually be found-to help defray retailer costs. No, they simply want to abscond with the funds for their own pet uses, and the customer be damned.

But NYPIRG is also strangely silent about how the expansion would escalate the cost of doing business at retail; apparently, this isn't one of the "myths" propagated by greedy business owners. But the group does have a strange view of the provision in the legislation that would reduce the redemption requirements for store owners located in NYC near redemption centers, saying that the provision: "Reduces the number of bottles and cans that retailers in New York City must redeem if there is a redemption center nearby. This provides a powerful incentive for NYC retailers to assist in the establishment of new redemption centers. Lowers the takeback requirements for bodegas and other small stores. Allows all other retailers in NYC to accommodate high-volume returns during the window of time that is most convenient for them."

This is kind of like a community benefit agreement for a project that has no community benefit. And, even supposing that a retailer was willing to expend the resources, "to assist in the establishment of new redemption centers," what would that do to the cost of beverages-and the profitability of inner city supermarkets that are rapidly disappearing?

And what about the reduced selling space for markets that are already cramped? NYPIRG remains silent here as well, unconcerned as it is about the fate of local food stores. Which leads us full circle. NYPIRG represents a view of the public interest that relegates business to a kind of ignominious nether world. In the group's view, advocating for those interests that create jobs and generate tax revenues, is part of a selfishness that should be eschewed; in favor of policies that will make stores and other businesses less productive as economic engines and job creators.