Question

Rayan is a resident of Musta. He is a full-time employee in a coffee shop. His job duty is making coffee and serving the need of clients He is paid $10 per hour. After he finishes his coffee attendant job he travels to the Best Eastern Mall located 40 min away from the coffee shop where he works a second job in a clothing store for another $10/hour. He works 16 hours a day (leaves home at 6 am and does not come back till 11 pm) to be able to pay his rent and feed his three children.

One day, he was going to his second job, he noticed a crowd in front of Musta’s City Hall. When he asked about the reason, he was told that people were holding demonstrations to object the new recycling law that mandates all households of Musta to use Johnson Company bins for collection: blue for paper, green for cans, red for plastics, and black for food waste. The new law states that “No resident can use any company other than Johnson Company to collect its trash or recycle and that a civil penalty of $100 USD per violation will be collected.”

He continued his way to his second workplace hoping that the City Hall would respond to the demonstration by canceling this new law. He later learns that no public hearings were provided prior to the law going into effect. Additionally, he learns that two of the city council members have financial investments in the Johnson Company. The Johnson Company is the only trash and recycling company in a 100-mile radius. Later, it was stated in the local newspaper that the City Council did not solicit input from economists on the adoption of the new law.

Rayan decided to ignore the new law and continue his long-time practice of taking his trash to his workplace, the Best Eastern Mall. He felt as though no one would care if he emptied his trash in the Mall bins, after all they have plenty of trash bins. By doing this over the years, Rayan was able to save money. Rayan further justified not paying for trash disposal because he learned that the Johnson Company also owned Pure Water; the bottles are made from recycled materials from Musta residents.

Rayan receives a notice from the City of Musta accessing him $5,000 (the maximum penalty under the law) for “Violation of the city ordinance” because of his post on Facebook that reads “Ha Ha Ha, I don’t care what law the city passes about recycling—I have never paid for their trash and recycle and never will—I highly encourage my friends to ignore the law and dump their trash and recycling materials at the local Best Eastern Mall—it’s free!” Rayan was terminated from his job at the Best Eastern Mall and banned from shopping there.

Please provide answers to the following questions by 1/28/18 9 pm EST. There is no requirement as to the length of your answers. However, please be clear and concise. Wherever possible, you should include information from prior courses on economics. If you include a particular source in your answer please be sure to provide proper credit and citation.

Under the concept of rule of law, should local governments consider the economic benefits to a particular company who provides the services necessary to implement the law?

What's the primary motive of this law?

List or explain three (3) economic theories that would support or discourage this type of law.

What role, if any, do economists play in making laws?

What legal options does Ryan and/or the city of Musta has?

Answer 1

The rule of law states that government authority may only be exercised in accordance with the written laws, which were adopted through an established procedure. It intends to safeguard against arbitrary actions of government authorities. It also means that no government or official can enforce laws that are unfair or unjust. Rule of law is based on following principles.

1) Absence of arbitrary power or supremacy of law: According to this principle no man is punishable or can lawfully be made to suffer except for a distinct breach of law established in the ordinary legal manner before the courts of the land. In other words all individuals are bound to obey the law & no individual can be punished except for a breach of law & the offence should be proved before courts.

2) Equality before law: According to this no individual is above the law whether rich or poor or from any class or group. Even the government officials are to be dealt with same law & they are bound to obey it.

3) It also states that no law can be written that is either outside the law, violates a higher law or doesn't conform to fairness.

So if we look closely we find that there is a clear violation of equality & fairness in the actions of government. The preferential treatment of Johnson Company violates the concept of equality & fairness in implementing rule of law. Therefore local government should not consider the economic benefits to a particular company who provides the services necessary to implement the law.

The primary motive of this law is to provide economic benefit to the Johnson Company.

The economic theories which discourage this type of law are:

1) Customers need to be protected from market powers in the absence of competition.

2) Government should create fair completion environment & encourage it.

3) Government should create fair economically efficient price structures & establish regulatory processes

Yes economists who study the implications of rational choice play an important role in determining the effects of rule of law or a legal rule.