Wikipedia has some coverage of the cost/benefit analysis that is somewhat interesting (though obviously far from comprehensive):http://en.wikipedia....ost-benefit_analysis
Here's a decent quote:
Economist Steven Landsburg has suggested that the sole benefit of reducing landfill space is trumped by the energy needed and resulting pollution from the recycling process. Others, however, have calculated through life cycle assessment that producing recycled paper uses less energy and water than harvesting, pulping, processing, and transporting virgin trees. When less recycled paper is used, additional energy is needed to create and maintain farmed forests until these forests are as self-sustainable as virgin forests.
Other studies have shown that recycling in itself is inefficient to perform the “decoupling” of economic development from the depletion of non-renewable raw materials that is necessary for sustainable development. When global consumption of a natural resource grows by more than 1% per annum, its depletion is inevitable, and the best recycling can do is to delay it by a number of years. Nevertheless, if this decoupling can be achieved by other means, so that consumption of the resource is reduced below 1% per annum, then recycling becomes indispensable – indeed recycling rates above 80% are required for a significant slowdown of the resource depletion."
Some more interesting info (more on the pro-recycling front):http://www.oberlin.e...u/recycle/facts.html
And a list of some opposing views (as in on both sides of the argument):http://en.wikipedia...._Opposing_Viewpoints
Overall it looks like, if done right, recycling is generally a net win, especially if you account for all factors (within reason), including the pace of landfill use and the availability (or lack thereof) of space for new landfills.
I think the "recycling does more harm than good" is one of those deliciously counter-progressive memes that took hold based on a few factors, one being that yes the initial recycling efforts were less efficient than would be ideal, but another perhaps stronger factor being that it's simply convenient to believe that recycling isn't that effective and it's being foisted on us by "the man". Because hey, who wants to recycle anyway? It's a pain in the butt. Unfortunately, like everything in this world, the recycling efforts are ultimately only as good as the corporate contractor you have doing the work, and most local governments lack the ability - or at least the will to enforce - strict oversight necessary to ensure best practices and maximal effectiveness.
Ultimately Renegade is right that a fundamental shift in culture and perspective, away from consumerism, is necessary. Unfortunately American culture and economy and industry are deeply rooted in the practice of mass consumption and disposability. It will take a sea change to move beyond that...
None of this means it's not worth doing the right thing, doing your part, trying to make a difference!