At first glance, John Cochrane makes a compelling case that pay toilets should not be illegal.
The absence of pay toilets is in fact a delightful encapsulation of so much that is wrong with American economic policy these days. Activists decide free toilets are a human right, and successfully campaign to ban pay toilets. For a while, existing toilets are free. Within months, upkeep is ignored, attendants disappear, and the toilets become disgusting, dysfunctional and dangerous. Within a few years there are no toilets at all. Fast forward, and we have a resurgence of medieval diseases that come from people relieving themselves al fresco….
You will jump to “what about people who can’t afford to pay?” as House did, consuming the majority of her article that should instead have been about practicalities. This too is a great teachable moment. One of the top 10 principles of economics is, don’t silence prices in order to transfer incomes.
Clearly, a more free market offers the possibility of higher quality and increased access for toilets. So, problem solved, correct?
Well, not entirely. Failure to use a sanitary toilet use may impose externalities on others. Urinating and defecating in public areas (i.e., not in a toilet) may lead to a disease spread. Consider the case where public elimination results in significant disease spread. Individuals willingness to pay for private bathrooms may underestimate society’s willingness to pay if they do not internalize the value that their toilet use has on reducing the spread of disease to others.
Nevertheless, even if externalities are large, it may not necessarily be the case that making pay toilets illegal is the solution. In this case, the solution could be the use of government provided free toilets along-side private pay toilets. A key question is how much funding to allocate to public toilets and–more importantly–whether funding to maintain toilet cleanliness would be useful. Or, the government could provide subsidies for the construction of public toilets and allow private entrepreneurs to operate these toilets and charge a fee. This would decrease entrepreneur cost–and thus lower cost to consumers–but allow for proper toilet maintenance.
Even before the construction of new public toilets are needed, Cochrane proposes an even simpler solution: “let restaurants, bars, gas stations, or even retail stores charge for the restrooms they have now.” Businesses current solution to the non-pay problem is often to forbid people from using the toilet entirely or at least limit toilet use to customers. Payment for toilet use in these facilities that currently do not allow non-customers to use a toilet would at least expand supply.
In short, the free market may not be a perfect solution in this case, but it is a good starting point.