06/08/2012 03:49 pm ET Updated Aug 08, 2012

L.A. Bans Plastic Bags, Misses Larger Point

Last month, Los Angeles banned plastic bags. That's good for the environment. Ask any seagull. It's also fairly coercive.

You can already see where this is going: No money in the world can buy plastic bags legally. Bag peddlers get pushed out on the street, start an underground economy, and charge exorbitant amounts of money for bags of dubious quality. Cartels and bag gangs form. Conflicts ensue, tearing at the very fabric of society.

Not quite. This is plastic bags after all. Still, the L.A. ban effectively puts an infinite price on plastic bags. Disposable plastic bags have real costs. Again, ask any seagull. But infinity seems like a high price to pay.

There are some clear limits to markets. But even Nicholas Kristof's review of Michael Sandel's latest book, on the limits of markets, makes an exception for pollution. Pricing pollution appropriately -- through a pollution tax or an outright cap -- is most often the better choice.

Ireland decreased its plastic bag use by 90 percent, a billion bags a year, through a 15 Eurocent PlasTax in 2002 (since raised to 22 cents). Washington, D.C., similarly has had a five-cent fee since 2010, leading to large decreases. Those fees may well be too low to be optimal. But I can't imagine the true environmental cost of the average plastic bag to be more than, say, a buck.

There's also a much larger point here. We are talking about plastic bags here. Even if the world embraced the smartest possible plastic-bag policy -- an Ireland-style small fee and fundamental global shift in norms -- the planet would notice, at best, a baby step.

But perhaps some of these rather non-intrusive PlasTaxes with huge environmental benefits can show the way for much larger environmental problems, like carbon pollution. Banning carbon is out. We could do a lot worse than use well-designed PlasTaxes as as way to point to how environmental policy done right can work in practice.