Everyones a hardware engineer they just don't want to admit it.

I think it could depend a lot where you are. I just took a look at my own paper bag from Trader Joe's in CA. I looked up the company that produced it, it seems like they're using 3rd party sourcing certification and source their pulp domestically. Also 40% of the bag is recycled. I'd love to be proven wrong but it seems like it's a lot better than plastic to me.

I think it's important to remember that re-using something like that a couple times is even better than using the recycling bin. I love those things because I end up with a small heavy duty trash bag for around my apartment which comes in handy surprisingly often. Of course it's not perfect, I also try to remember my really reusable bags.

I've started just throwing all my produce loose in my basket / shopping bag at the checkout. I'm gonna rinse it all when I get home anyway. There are exceptions of course