The cashless scrap metal market – government bans recycling iron and steel
THE scrap metal is cashless. Yes, there has been a rising problem with the theft of scrap metal, yes, banning people paying cash for it will help, at least at the margins.
Theresa May, the Home Secretary, will ban cash transactions and and introduce unlimited fines for people caught trading stolen scrap metal.
Ministers have agreed to act after public outrage at the activities of criminals who have pillaged churches, stripped war memorials, stolen valuable sculptures, plunged villages into darkness and wrought havoc on the rail industry.
Metal theft is estimated to cost the country £1 billion a year, with more than 1,000 offences taking place every week.
However, it’s worth recalling the most basic point that economics has to teach us. Which is that there is no such thing as a solution: there are only trade offs.
And here the trade off is that yes, there will be some reduction in thefts (not a complete reduction, as some thieves will get organised and start shipping scrap to foreign dealers), but there will also be a drop in legitimate recycling.
Because, don’t forget, that’s what the scrap metal trade is: recycling. And it’s alomst certainly the industry which recycles the most of its products, the largest recycling industry in the world. As an example,
Nucor, the second or third largest steel company in the US, only uses scrap steel as its raw material: it makes no new iron or steel at all.
A ban on cash for scrap won’t make any difference to the large industrial producers: but it will to the collection of the little bits here and there which make up part of the feed of scrap into industry.
It might be worth it and it might not: but just a reminder than rules like this are not costless. They’re just changing the trade offs we face, not actually being final solutions to anything at all.