Thursday, June 28, 2007

Couple of things

- A while back, I talked about this ... which is why I think Cindy Fetch's free market for water usage theory has flaws. While her theory has the potential to have some success, it also has the very real potential to allow wealthier citizens the right to draw larger amounts of water, thus worsening a crisis during a time when there is no relief in sight. Also, her point about this taxing the police is misguided as 1) police respond to emergency calls first and 2) there is a whole set of ordinance enforcement officials which handle instances like this.

- Seriously, I was expecting 'your momma' insults to start flying in the Paul Broun-Jim Whitehead smackdown on 1340-AM. The dumbest line of discussion? Broun saying Whitehead doesn't deserve the NRA endorsement because the latter 'doesn't own a gun.' And then Whitehead affirming later, with an NRA sticker on his truck, that he's a lifetime member. No need to talk about pressing issues gentlemen ... I'm glad to see you're focused on what's important.

- Erick from Peach Pundit sent out a blast email to discuss the City of Marietta prohibiting the Veterans of Foreign Wars from distributing American flags at the Fourth of July parade. Marietta, of course, changed its mind and is now letting them pass out flags from the sidewalks. Of course, if you read a bit deeper, you realize the whole thing was way overblown as the city actually allowed them to pass out flags prior to the parade's start and doesn't permit any organization to distribute materials from the parade route once the parade has begun. It ain't as if Marietta hates America and getting all worked up over one type of the flag distribution seemed a bit silly. But that's just me.

- I'm with GriftDrfit on this one ... I'm kinda flattered, but not really.

- Francis Assaf's letter is absurd. Though I may disagree with Ed Page on this issue, why should he be prohibited from voicing his opinion? Simply because he's a deacon at his church? People of faith shouldn't be permitted the right to speak their mind? Seriously, if you want to discuss free speech forget that flag issue and focus on this one ... it's ridiculous.

- Here's an interesting take on the Athens CVB branding process.

- I argue for trading the farm to land Greg Oden, but, as this indicates, the Hawks will probably do something vastly stupid.

- Ann Coulter. Blah blah. Elizabeth Edwards. Blah blah. I blogged a little, but I honestly don't care about this spat.

33 Comments:

Blogger Xon said...

Ironically, what Fetch proposes isn't really "free market" at all, but can only be suggested b/c there is already a monopoly on tap water distribution.

The best way for a monopoly to operate is to charge different prices to different people, which it can of course do b/c it's a monopoly. Some railroad barons did this in the 19th century. The wealthy pay more, b/c they can afford it and where else are they going to go? The poor pay less, b/c you'd rather get something from them rather than make it too expensive for them to use your product/service at all.

But the idea that the price could simply be "set" without the customers having any say over it implies that we are already in monopoly conditions (not a profound insight; we are talking about city water after all). And, contrary to the rhetoric of some, monopoly does not equal 'free market.' In a free market, there would be competition among several water providers. Whatever price structure emerged out of that competition would be the "market" price. Simply saying "What seems fair? Okay, let's charge that, and then add a bunch for every unit over such-and-such" is not a free market solution, but shooting from the hip like every other "socialized" solution.

I do sympathize with the free market sentiment that Ms. Fetch is following, though, even though her suggested implementation of it is a bit off. At the most basic level her instinct seems correct to me: since water is a "scarce" resource, its price should fluctuate to reflect that scarcity. If the price went up, then people would naturally and automatically self-ration thier usage without even thinking about it. Instead, we try to hold the price low and then "control" how much people use. It would make much more sense to simply raise the price across the board (and perhaps to add even more for all usage above such-and-such as well; this CAN legitimately happen under free market conditions, but it opens you up to being undercut by a competitor).

10:32 AM  
Blogger Jmac said...

OK, but again ... we're talking about water, not an iPhone or any of the coming knock-offs. This is something which, more than anything else we have, is absolutely essential to life.

Raising the price to deter consumption creates an environment where wealthier folks have the ability to use more water than others (which, again, has the very real potential to exacerbate an already bad situation with regard to our drought and current levels of water).

I'll concede the free market can do some good things, but not with regard to this.

10:45 AM  
Blogger Xon said...

Give me an example of a "free market" good that has ever simply been used up, though. By "free marekt" good, I mean a good that was owned and controlled privately (so endangerd species don't count, b/c nobody 'owns' them and the 'tragedy of the commons' sets in, which is NOT a "free market" problem but a 'socialistic' one) and which the owner was allowed to distribute as he or she saw fit to interested buyers, with no (or I'll let you get away with minimal) government regulation, control, price-fixing, taxing, jail-threatening, warmaking, tarrif-leveling, etc.

Water is important, yes! Which is all the more reason why its distribution should not be entrusted to government. It wasn't the free market that allowed grain to rot in warehouses on the other side of the country while a famine killed millions in India--it was the Indian government that was in control of that situation. It wasn't the free market that caused farmers to STOP growing food during the Great Depression while people were starving, it was government's attempted price controls and regulations. Etc. (I was just picking a couple quick examples) Governments squander scarce resources all the time. I do not understnad why the presumption is always against the free market in these "important" situations. What has government control ever done to earn our trust in such matters?

"Raising the price to deter consumption creates an environment where wealthier folks have the ability to use more water than others (which, again, has the very real potential to exacerbate an already bad situation with regard to our drought and current levels of water)."

Wait, wealthy people already have this ability with the price being "flat." They can use as much as they want, and every unit costs the same. Raising the price will cause everyone (including 'the wealthy' taken as a group) to cut down on their consumption--to prioritize the most important usages (staying alive, bathing) from the less important (watering the plants). Holding the price 'low' is not a solution, unless you are really prepared for massive-scale interference in people's daily lives. Which of course, nobody in our country really has the stomach for, and so all that happens is that a few people get turned in for watering their lawns when they shouldn't. But rich people still have showers with five super-powered nozzles IN their house. Fountains in atriums. Etc. And they keep paying the same low price per unit of water for all those things that you can't (or are unwilling to) catch them using. Forced rationing never works unless you're willing to go "all the way" (wink wink). Even with a thing like water, where there really isn't much opportunity for a 'black market' to pop up (which plagues most rationing arrangements, like say sugar in WWII), you STILL get plenty of people who have very little reason to play by the rules that are set up. There are too many benefits to breaking them, and frankly who can blame them for thinking this way? Water is, as you say, a very important good, necessary to life. It freaks people out to be told that they cannot use all the water they think they need, especially when it seems to be piping into their house just fine.

Again, I'd like to hear an example of the free market making a town actually run out of water that would have had water otherwise.

Right now in Athens, even the poorest renters use more water than they really NEED to survive. It is cheap enough that they can afford to do this. If the price goes up, then EVERYONE will be forced to use water only for those purposes which they believe to be most important. For the very poor, this might mean skipping baths every other day, etc. For the very rich, this might mean that they cut back on a more luxurious use. Yes, the rich will use more than the poor, just like happens already anyway and you cannot prevent from happening. But overall, the general population will use LESS water at the higher price than they would have at the lower price, and so water will be better conserved.

The contol method is to keep the price low, which means that everybody keeps wanting to use just as much as they have always used. So then the gov't has to try to make rules about how much we are 'allowed' to use. And these rules are generally unenforceable, and they are incomplete even if they were perfectly enforced (i.e., there is no law against long showers inside your house), and people have little to no motivation to follow them all anyway. So all kinds of inefficiencies pop up in the way people use water anyway, despite the gov't's best intentions. Cheap water that we're not 'allowed' to use; this WILL lead to an all-out shortage eventually.

11:15 AM  
Anonymous Anonymous said...

Actually, the free market works with animals, too. That which we hunt, kill, and eat is plentiful; that which we strive to protect is rare.

If the Florida manatee walked on land, we'd put a fence around it and serve at McDonalds. Instead, it swims in rivers, we "protect" it, and good luck finding one.

11:25 AM  
Blogger Jmac said...

Give me an example of a "free market" good that has ever simply been used up, though. By "free marekt" good, I mean a good that was owned and controlled privately (so endangerd species don't count, b/c nobody 'owns' them and the 'tragedy of the commons' sets in ...

If water doesn't fall under this type of classification, then what does? Wouldn't water be a 'common' resource that all individuals need? I mean, if anything should be protected by a public entity for the common good, should it be water.

It's as if you've set up an argument that is set up to doom any counter I put up there. I feel like I'm playing Transformers with Owen Fletcher again, and he just said 'I have a force-field around my toys and you don't.'

They can use as much as they want, and every unit costs the same. Raising the price will cause everyone (including 'the wealthy' taken as a group) to cut down on their consumption--to prioritize the most important usages (staying alive, bathing) from the less important (watering the plants).

OK, but, again, the problem is that there are a good number of individuals who possess the type of wealth who could opt to water their yards all day, every day without regulations (regardless of the price). By having higher prices, the lower-income users (and most middle-class ones) have less access to use water based on their financial standing.

How is this equitable? How is it appropriate for those who have more disposable income to use more water - water to green their yards - that could have a very real effect on the amount of water available to the rest of the population should drought conditions continue? If more and more is taken out by a small percentage of the population, with no water replenished into those reservoirs due to the drought, then eventually you have such a low amount of water no one can use it.

The current system of restricted watering is the most fair for the crisis facing us. Leaving our water supply up to the whims of the market and purchasing power of only those who can afford it makes no sense. You point out inefficiencies, but they are ultimately minor ones because all systems have inefficiencies. And the inefficiences resulting from the restricted use system are considerably better than the ones that could arise from a free market, let-everyone-have-at-it approach to conserving water.

12:55 PM  
Blogger Xon said...

I know I went on in the third comment, sorry. And I could have been clearer on something. This is the paragraph that gets my 'thesis' out there most succinctly:

Right now in Athens, even the poorest renters use more water than they really NEED to survive. It is cheap enough that they can afford to do this. If the price goes up, then EVERYONE will be forced to use water only for those purposes which they believe to be most important. For the very poor, this might mean skipping baths every other day, etc. For the very rich, this might mean that they cut back on a more luxurious use. Yes, the rich will use more than the poor, just like happens already anyway and you cannot prevent from happening. But overall, the general population will use LESS water at the higher price than they would have at the lower price, and so water will be better conserved.

I was a bit unclear in an earlier paragraph when I said that higher prices would make everyone prioritize more important uses neglect less important ones. This is true, but as I acknowledge in the paragraph just above for people of different levels of wealth, what seems like an "importnat" use will change. So, when the rich cut back due to higher prices, the things they cut back on are luxuries. When the poor cut back, they are cutting back on things that are more basic to quality of life (like bathing, perhaps).

But the point is that, still over all, the usage of water goes down when the price goes up. So water won't be 'used up,' or at least it will be used up less quickly than it currently is. Again, everyone (more or less) is using less water, the overall usage goes down, therefore there is more water left over for tomorrow, for next week, for next year, for when the rains come.

Put it this way: right now, all the people in ACC are draining x gallons of water per day from our reservoirs.

Now, pretend that there are free market conditions (which is impossible, actually, since there is only one water company in town' but hypothetically) in place, and so the drought allows water-delivery companies to raise their prices. (lower supply=higher price, ceteris paribus) With the new higher prices, all the people in ACC will now drain y gallons of water a day from our reservoirs.

Now, my contention is that y will clearly be less than x. Hence, water is conserved (which is supposedly our main concern here).

So, my question is this; on what basis do you think that y > x?

1:14 PM  
Blogger Xon said...

Oh, and you misunderstood/I miscommunicated re: the 'tragedy of the commons'. My point is that, when something--anything--is owned 'in common' by the whole community, then in reality it is 'owned' by nobody and it is degraded. If everybody in the village gets their water from a fountain in town square, then soon there will be poop in the water and overfed camels will drink all of it up. There will be mold around the edges of the fountain where water was spilled and not cleaned up, etc. This is the 'tragedy of the commons'. I was not putting it out there as a viable alternative to the free market: I was pointing out that in certain well-known circumstances in which the free market is blamed for some travesy (like endagnering or extincting species), the real culuprit is not the free market at all but the 'tragedy of the commons.' In those situations, the free market would actually be a better solution.

For instance, if all that land in Africa where the endangered rhino roam was actually owned by someone, then that would change the economic realities behind poaching a bit. Instead, we like to think that "nobody can own the land" (call this the "Africo-Native-American" view of property), and so nobody does. But everyone uses it to their heart's content, with no accountability, which is the problem.

I hope that's a bit clearer. I don't believe that water is a "common" good that should not be privately owned and distributed. The fact that it is basic to life does not change that fact, in fact it confirms it--b/c private ownership and distribution is the best way to make sure that water goes to its most efficient uses. Which in a time of shortage is exactly what we need.

1:21 PM  
Blogger Xon said...

And, to be a real fly in the ointment, don't even get me started on the fact that the water shortage is not a temporary effect of a drought, but an ongoing result (made worse by a drought, to be sure) of our gov't-controlled water. This is what causes shortages, fundamentally, so that the gubmint can then swoop in and 'fix' the problem for us (I don't mean it's a 'conspiracy'. Just that it's 'covenient' how it always goes. Gov't is 'necessary' to solve gov't-caused problems...)

Fun fun fun!

2:17 PM  
Blogger Jmac said...

All due respect ... Holy Lord. The deficit is not that, you know, we're 17 inches behind our expected rainfall but because of the government.

Wow. Absolutely wow. I've said it before, but you're the dumbest smart guy I know. :)

3:15 PM  
Blogger Xon said...

Even when we're not behind our 'averages', though, the gov't always worries about consumption of water in the summer time. The 'expected' rainfall isn't enough to keep up long term, under gov't control. That's all I'm saying. The drought certainly makes things worse.

But I'd love it if you tried to tell me why you think that y > x.

3:46 PM  
Blogger hillary said...

I'm assuming you can't argue here that countries where the water market has been privatized and it hasn't worked out so well for the poor serve as a counterexample, either, because none of them is operating on a perfect free-market economy.

Yes, I hear you know, in advance. Which countries are these? I've got to do some research and find that New Yorker article from several years back that addressed the issue.

4:42 PM  
Blogger Jmac said...

Well, quite simply, I'm using basic math here. We have a series of reservoirs and streams and rivers which supply us with water. When there isn't a lot of rain and we still maintain our current draw of water, said reservoirs and streams and rivers get shallower and shallower. As a result, we need to ask the public to use less water, but do so in an equitable and fair fashion.

Now, if we return to a pattern of consistent rainfall (55 inches or so per year for Georgia I believe), then we replenish not only these reservoirs and streams and rivers, but we also replenish our groundwater supplies.

4:48 PM  
Blogger hillary said...

Effing Texas. Stealing all our rain.

Anyway, the article was by William Finnegan and it ran in 2002. It's about Bolivia. More tomorrow.

4:54 PM  
Blogger Xon said...

Well, quite simply, I'm using basic math here. We have a series of reservoirs and streams and rivers which supply us with water. When there isn't a lot of rain and we still maintain our current draw of water, said reservoirs and streams and rivers get shallower and shallower. As a result, we need to ask the public to use less water, but do so in an equitable and fair fashion.

I'm using basic math, too. And my suggestion (letting the price go up in acc. with the market) will lead to the public using less water, too. This is not a choice between "kamikaze keep using tons of water" and "equitable city planners ask us to use less water". It is a choice b/w two different WAYS of cutting down on water usage. Your way is to keep the price low, but then deman through law that people use less. My way is to simply let supply and demand fluctuate the price.

Both ways will cause the total amount of water consumed to go down, most likely. (No doubt that this will happen on the free market plan; I have some doubts as to how significant the drop will actually be on the "make it a law" approach).

As to asking the public to reduce their water usage "in an equitable and fair fashion," what does this mean? Are we worried about poor people not having any water to drink b/c the rich hog it all? But that doesn't happen now, so why would it happen if the price went even higher? (Plus, I'm not against charging a low price to a certain point, and then more for every unit over... whatever price structure the water company works out under market conditions)

5:12 PM  
Blogger Jmac said...

As to asking the public to reduce their water usage "in an equitable and fair fashion," what does this mean? Are we worried about poor people not having any water to drink b/c the rich hog it all? But that doesn't happen now, so why would it happen if the price went even higher? (Plus, I'm not against charging a low price to a certain point, and then more for every unit over... whatever price structure the water company works out under market conditions)

Your latter point is welcome to see, even though I still don't agree with that method.

But, regardless, I think this is rather simple.

We don't have folks using obscene amounts of water right now because we have the rule of law telling them they cannot. And I would venture to say that, contrary to popular belief and some of your assertions, the overwhelming majority of the public adheres to the water restrictions that are set up.

By watering on (at the time) alternating days and in a short period of alloted time, less water is consumed (you concede that). This explains why we don't see one group of individuals use more than another group.

The proposal you had - not the amendment with certain price levels for initial use - was that you raise the price to deter use. In order to effectively deter use, it's quite conceivable (you concede on this too) that one group of individuals will use substantially more water.

Thus, with no regulations and no restrictions on when or how much you can water, you set up a scenario where one group of individuals have the ability to continue regular indoors consumption and increased outdoor consumption (it could be twice a day, every day for some).

It's a combination of things that covers not just the availability of water usage to a select few but also when and how often they can water.

Best case scenario ... we stay where we are now. Worst case scenario ... we see increased consumption by a select few that further impacts our water supply.

6:09 PM  
Blogger hillary said...

Okay, let's start with the typing. This is all from that Finnegan article, which appeared in the April 8, 2002, New Yorker:

The idea behind privatization is to bring market discipline and efficiency to bear on a crucial and frequently corrupt sector. Supporters argue that only private capital--which means, in practice, multinational corporations--can afford to expand water and sanitation networks sufficiently to reach the underserved poor. Since corporations are in business to make money, they often increase water rates. But, in theory, higher water rates can also help to promote conservation. Indeed, privatization advocates say, any valuable commodity--and this includes health care and education--that is provided free eventually gets taken for granted and wasted. According to this argument, turning water into a commodity may even be the only practical way to avoid worldwide shortages and environmental disasters. Public subsidies for essential services such as water may sound like humane policy, but in the real world subsidies benefit the powerful, because they have the resources to manipulate them.

In Cochabamba, which has a chronic water shortage, this unintended consequence was grotesquely clear. Most of the poorest neighborhoods were not hooked up to the network, so state subsidies to the water utility went mainly to industries and middle-class neighborhoods; the poor paid far more for water of dubious purity from trucks and handcarts. In the World Bank's view, it was a city that was crying out for privatization.

9:18 AM  
Blogger Xon said...

"The proposal you had - not the amendment with certain price levels for initial use - was that you raise the price to deter use. In order to effectively deter use, it's quite conceivable (you concede on this too) that one group of individuals will use substantially more water."

The wealthy already use substantially more water. They are wealthy, after all. They have luxurious indoor usages of water (multiple shower heads, bedays, atria, etc.), which are not restricted. They use landscaping services to water their lawns, which are businesses exempted from the restrictions. Etc. Laws making people cut back on how much they water their own lawns does not change the fundamental disproportion of wealthier water quantities and poorer water quantities.

"By watering on (at the time) alternating days and in a short period of alloted time, less water is consumed (you concede that). This explains why we don't see one group of individuals use more than another group."

Less water might be consumed overall, but the breakdown among rich and poor is still disproportionate. One group still uses more water than another.

Just to make up numbers to keep the concepts straight in our collective head:

"Normal"

Poor people--100 gallons a day
Rich people--500 gallons a day
Total-- 600 gallons a day

Lawn Restrictions in Place

Poor people--90 gallons a day
Rich people--450 gallons a day
Total --540 gallons a day


The total might go down, but the rich could still be using tons more than the poor. And clearly this is what is in fact happening, since the rich have plenty of other ways to use extra water besides watering their own lawns.

Thus, with no regulations and no restrictions on when or how much you can water, you set up a scenario where one group of individuals have the ability to continue regular indoors consumption and increased outdoor consumption (it could be twice a day, every day for some).

There is a "natural" regulation on how much you can water, and that's the price of water. Wealthier people are not going to use tons of water on their lawns just because they feel like it if it's more expensive. Rich people--on the whole--respond to changes in price just like everybody else.

Plus, if the price were higher, then the wealthy might cut back on some of their indoor consumption as well. No laws required, no reliance on neighbors to turn each other in (talk about fostering community spirit!), etc. The point is that everybody--rich or poor--would only use the water they needed for the most important water-related purposes, in their judgment, within their respective budget.

If water literally were running out, then on the free market the price would soar and everybody would cut back even more. If it all dried up anyway and lots of people died of thirst, then probably we have bigger issues than a watering ban could solve.

I mean, if the sun suddenly got hotter and evaporated all our lakes and rivers, then no 'method' is going to keep people satiated. The free market is not magic. But neither are governments; yet we all know that if there were a real disaster and water were literally running out that the gov't would "blame" the free market and would then swoop in to pass more regulations which would have no net positive effect at all.

9:40 AM  
Blogger hillary said...

Continuing:

.... Then, in 1999, the Bolivian government conducted an auction of the Cochabamba water system as part of its privatization program. The auction drew only one bidder: a consortium called Aguas del Tunari. The controlling partner in the consortium was International Water, a British engineering firm that was then wholly owned by Bechtel. . . . But the government, unfazed by its own weak bargaining position, decided to proceed.

The terms of the two-and-a-half-billion-dollar, forty-year deal reflected the lack of competition for the contract. Aguas del Tunari would take over the municipal water network and all the smaller systems . . . in the metropolitan area, and would have exclusive rights to all the water in the district, even in the aquifer. The contract guaranteed the company a minimum fifteen-per-cent annual return on its investment, which would be adjusted annually to the consumer price index in the United States. On cooperative wells such as Villa San Miguel's--which the government hadn't even helped build--the new water company could install meters and begin charging for water. Residents would also be charged for the installation of the meters.

[at this point, people start to get concerned, and the government ignores their concerns]

9:44 AM  
Blogger Jmac said...

OK, but - and this will sound unnecessarily harsh - but you have little if any statistical or real world evidence to back this up. Granted you're operating in hypotheticals with regard to your consumption numbers, but your numbers are completely non-reflective of the actual situation.

The average consumption rate is 164 gallons per day per citizen of Athens-Clarke County. The numbers indicate that the overwhelming majority of folks fluctuate between 140 gallons and 250 gallons per day regardless of income.

Again, there is absolutely nothing to suggest that the wealthy are already using vastly larger amounts of water, but plenty of evidence to suggest that the existing regulations are having a positive effect on controlling water usage and preserving our existing reservoirs and supplies.

You can adhere to an unadulterated free market theory, and I can respect you doing that ... however, over and over again, it seems that you end up arguing for practices which exist only in hypotheticals while I (and the vast majority of folks) can point to policies and practices that have been in place to see what works and what doesn't work.

As a result, we end up having a rather fruitless discussion time and time again. I mean, it's one thing to believe the sky is green because of X and Y, but if the sky is actually blue then, well, the sky is actually blue.

9:57 AM  
Blogger hillary said...

[continued]

. . . . When the first monthly bills from Aguas del Tunari arrived . . . stunned business owners and middle-class householders began to join the Coordinadora's protests. Some bills had doubled, and ordinary workers now had water bills that amounted to a quarter of their monthly income.

[then Finnegan explains that the water company didn't do this arbitrarily but to fund expansion and creation of a large dam, "But the dam project had less to do with how privatization works in theory than with the reality of how multinational corporations must come to terms with local politics."]

[people begin protesting more adamantly, and the government starts shooting at them and refusing to negotiate; also, a little before this, Finnegan discusses how the government in place had pretty much made its peace with the World Bank and the IMF and also tends to be made up of the white ruling class, meaning it's definitely not the same thing as the general population of Bolivia. The company leaves, due to strife, and the World Bank says it won't honor the contract. Laws have been rewritten to reflect the use of water as a public good, but they're not working very well either. The major problem is still that the rich are on the network and the poor are not, and the latter therefore pay 10 times what the former do. The World Bank is not interested in helping out. Neither is the IMF. So neither is private enterprise.

At the very end, it seems that the country's still kind of screwed, and you can point to a lot of reasons for that. There's also an example, in the last section, of a different privately owned water company expanding lines to an area outside La Paz, where people have also grown unhappy, but in this case the problem is that they _do_ conserve and extensively so, but they don't use enough water to make the water company happy. That's one of the most interesting parts of the article.]

9:57 AM  
Blogger Jmac said...

And I say that latter statement knowing that, yes, supply and demand is very effective at controlling the flow of goods and services like Coke and gasoline and widgets.

However, it is less effective when it comes to things such as water usage or health care or other things.

To adhere to such a one-size-fits-all type of approach is rather silly to me (it's why I dismiss socialism and libertarianism). There are elements of a variety of economic and political thoughts and systems which can be incorporated and meshed together to develop the most sound policies and practices.

10:01 AM  
Blogger Xon said...

Aguas del Tunari would take over the municipal water network and all the smaller systems . . . in the metropolitan area, and would have exclusive rights to all the water in the district, even in the aquifer. The contract guaranteed the company a minimum fifteen-per-cent annual return on its investment, which would be adjusted annually to the consumer price index in the United States. On cooperative wells such as Villa San Miguel's--which the government hadn't even helped build--the new water company could install meters and begin charging for water. Residents would also be charged for the installation of the meters.

None of this is the sort of "free market" I would endorse, btw.

Privately-owned cooperative wells were simply co-opted by a company with permission from the government. That ain't good, no kidding.

And what does it mean to have a contract that "guarantees" a certain return on your investment? If it's genuinely a free market, then you are taking a risk by investing and there is no guarantee. If the Bolivian government was subsidizing this "guarantee" (the article apparently doesn't say), then that again is not a 'free market' thing to do.

A sweetheart deal b/w one company and the gov't is corporatism, not free market libertarianism. I know you could predict that answer from me, but hopefully I gain some credibility for actually pointing out the elements of the Bechtel debacle that don't fit the free market approach.

10:53 AM  
Blogger Xon said...

"However, it is less effective when it comes to things such as water usage or health care or other things."

Why? What's the difference?

Where can I see the numbers on per capita water consumption?

10:58 AM  
Blogger Jmac said...

The ABH had a story recently on the restrictions, and then I'd recommend contacting the ACC government for further breakdowns.

11:26 AM  
Blogger Nicki said...

It's ineffective/unfair because water is essential. Also, keep in mind that in a completely free market our water wouldn't even necessarily stay here. You can bet that if water could be transferred without any government interference it would be, and I wouldn't be surprised if it were transferred for the sole purposes of maximizing profit, as power was transferred during the California brownouts.

Anyway...I just started recycling my graywater. Which is legal the way I'm doing it (by hand) and illegal by most other methods around here. I'm about to invest some money in making my receycling more effective. Meanwhile my husband was telling me last night about a house he worked on and was fairly pissed about. The homeowners were installing a 100 gal/minute showerhead, which the contractor could not supply adequate water pressure to.

The fact of the matter is that water is a finite resource and we must have incentives for conservation and punishments for failing to conserve. The government does not create this shortage -- if anything the government has for many people alleviated the shortage they would have if they had their own wells and the resultant levels of contamination and risk of complete loss of water that go with it. In my opinion any free market in water is an illusion based on the investments of public utilities. And water is too important to consign to the vagaries of the market.

But still, how do we encourage conservation? In my opinion private companies don't encourage it or incentivize it because it doesn't benefit them. Exceptions exist where there are capacity or political pressures, but those are far less likely than the consistent emphasis on profit. Existing conservation schemes ask people to conserve -- but they don't really incentivize or compel them.

So, right now we have penalties for watering at inappropriate times in certain ways, but we don't have any for water use inside the home, graywater recycling is illegal, and water costs the same at all times in the day despite the fact that water loss is radically higher when watering occurs mid-day. On the electrical side we have voluntary premium "green" energy, we have voluntary enrollment in peak cutoff programs (I belong to Georgia Power's) -- but we don't have net metering and we don't generally have differential rates based on time or consumption. So in effect we have an incentive program that is incomplete.

11:27 AM  
Blogger Xon said...

"It's ineffective/unfair because water is essential. Also, keep in mind that in a completely free market our water wouldn't even necessarily stay here. You can bet that if water could be transferred without any government interference it would be, and I wouldn't be surprised if it were transferred for the sole purposes of maximizing profit, as power was transferred during the California brownouts."

1. I disagree strongly with your understanding of the CA brownouts. "Deregulation" was a misnomer that involved, unsurprisingly, tons of regulation. Power companies went elsewhere because state bureaucracy made doing business too expensive. (Search for "California power outages" on mises.org for lots on this. I know the site is controversial, but it is great for getting the 'free market' perspective. I recommend it for that, not because I accept everything that is said as true.)

2. I don't understand the connection between "x is essential" and "x must be distributed by the government." People keep talking about the vaguaries of the market; but what about the inefficiencies of the government (which are notoriously much worse)? I'm trying to get some sort of direct comparison here b/w what happens when gov't runs things and when the market runs them. It is not enough to simply point to the perceived faults of the system you don't like as much, as though that settles matters.

I don't believe in some magical system that will never allow anything bad to happen to people. So, sure, I can agree that in a free market people will still get diseases and die; people will fall into all sorts of misfortune, etc. But the problem is that we look at this "facts of life" bad stuff and then turn it into an 'argument' against the market. As though the same stuff doesn't also happen under government control. (And, in fact, gov't inefficiencies virtually guarantee that it will do a far worse job responding to any of these "facts of life" than the market)

The comparison I want to make is difficult, though; I admit that. Maybe it can't be done; but I've got nothing better to do on a Friday than talk it over, so feel sorry for me. :-)

3. You think that the free market would truck all of Georgia's water somewhere else? Why on earth would that be the case? Are there a bunch of eskimos who don't know what ice is wanting to pay a hundred dollars a gallon or something? Seriously, I don't know what "profit maximizing" ventures you are thinking of. There are millions of Georgians right here, all of them demanding water. There is a market for water right here; why would it all go somewhere else? That's odd.

JMac, while I try to track down precise numbers for myself, I have to point something out about the numbers you've given. You said that people in ACC use 120-250 gallons of water a day, regardless of economic status. Even that low number is way more water than anyone should need to survive, so this would mean that all people--even the poor--are using more water than they really need. Thus raising the price and causing everyone to use less isn't going to cause anyone to die of thirst or anything. So I still don't see the problem with a more free market solution to this.

The bottom line here is that I don't understand how the government thinks it is able (or that it has the moral authority) to decide which uses of water are more important and which ones are not. But this is the implication of any government 'managed' distribution: we need to save water for the more important purposes, and we know what those are. Which is simply false, becaue "importance" is always a subjective valuation of individuals and cannot be dictated from a central authority.

So, for instance, we've chosen to tell people in ACC, essentially, that watering your lawn is not an important-enough use for water. But for some people, it might be very important indeed. Aside from purely ascetic considerations (and, seriously, who are we to tell the person who prefers a beautiful garden to a long shower that he's wrong to water his plants?), think of the situation Katie and I are in right now. We're trying to sell our house. The realtor says "You need curb appeal--buy some brightly-colored annuals that will pop when people drive up to the house." So we drop 100 bucks on some flowers, spread them through our landscaping, and...watch them die b/c we're not allowed to water? Which makes it harder to sell our house, which makes us pay more moeny on our mortgage as the weeks rack up, which makes us accept a lower offer when one finally comes along, etc.

Now, if I had the choice, I would GLADLY pay more money for extra water that I was allowed to water my lawn with. I would cut back on other 'inside' uses (take shorter showers, etc.), or I would just pay more for the extra. And I'll bet I've got neighbors in this fine town who would happily give up some of the water they're currently using, if the price was right. (I mention this only to illustrate that it's not as though every drop I put on my lawn is causing someone to die of thirst or anything. There are people who would gladly give me water to use on my lawn for a price, which means that they don't NEED that water for survival.) The point is, why is this option denied to us? Why does the gov't come in and proclaim which uses of water are appropriate and which ones are not, when clearly the uses I want to make of my water can be accomodated by our supply without anyone being forced to die of thirst?

2:11 PM  
Blogger Jmac said...

The only response I can give to you - aside from repeating earlier points I made - is that we view this in a fundamentally different manner.

Without being overly crass or snarky, my view that of 'we' while your' view is 'me.' And, thus, we have the nature of most of the disagreements we have when it comes to ideology.

Your analogy of you and Katie selling your house, I think, clearly illustrates this. You're willing to pay more for water, the rest of the folks be damned, if you can keep your curb green. There's no regard for the existing supplies of water or their availability to the rest of the population (or, for that matter, the reason why we curb outdoor watering which is because it is an extremely wasteful use of a scarce resource in this time of drought).

Are people dying of thirst now? Probably not. But a callous and ill-conceived approach to water conservation - particuarly a foolish one like surrending it to the free market - that would replace a system which, apparently much to your chagrin, is actually working quite well has the real possibility to lead us into dangerous territory when it comes to our water sources.

Now, I did want to address your third point because that's so far removed from what I would logically expect you to put out there, I almost banged my head against a wall.

You seriously believe there won't be outside bidders and clients for Georgia water sources? Seriously? You recognize the global economy we have now where the computer I type on is full of parts probably from China, Vietnam, Germany and Sweden?

You recognize that we currently drink bottled water from springs and sources all over the world?

You recognize that here in Georgia, in the absence of the free market approach you're advocating, we are currently embroiled in water usage issues with Alabama, Florida and South Carolina?

I can concede that California might be a stretch, but I think you'd see Georgia water go to the highest bidder, and that bidder could be somewhere in Tennessee or Florida or Alabama.

That, and this ...

I'm trying to get some sort of direct comparison here b/w what happens when gov't runs things and when the market runs them. It is not enough to simply point to the perceived faults of the system you don't like as much, as though that settles matters.

Dude, without going all schoolyard on you, you do that too. Again, you repeatedly say how inefficient government is, but base it either on studies from mises.org (which you concede isn't exactly a fair source of information) or design it in hypotheticals. I think government, quite frankly, is tremendously more efficient in many things than you or other free market advocates give it credit for (i.e. substantially lower administrative costs).

Government, in my mind, is a tremendously beneficial partner in our society. The problem with government comes when it gets too bureaucratic and doesn't recognize when it needs to make necessary changes and streamline certain procedures or when it has ineffective or inept leadership at its helm.

This isn't to say that I dismiss the power of the free market to help do plenty of good things, but I also think those who are so derisive of the power of government do so based on the same personal feelings you laid out against Nicki's comment.

3:09 PM  
Blogger Nicki said...

Ok, I'll play...

1. I disagree strongly with your understanding of the CA brownouts.

You are making assumptions that are not in line with what I said.

2. I don't understand the connection between "x is essential" and "x must be distributed by the government."

Because if X is essential then it must also be provided to some people who cannot pay for it, or cannot pay what the market will bear for it. And we do not allow people to starve or dessicate merely because they cannot afford the commodities in question.

People keep talking about the vaguaries of the market; but what about the inefficiencies of the government (which are notoriously much worse)?

This is an assumption, and one I would argue which is wrong. You are essentially arguing for the best of the free market against the worst of government, and this is an unfair choice.

At their best, both systems will address the needs of many people. But at its best the free market will not provide essential services unless it can do so profitably, whereas the government will. And therefore it has no place in being the sole controller of essential services.

It is not enough to simply point to the perceived faults of the system you don't like as much, as though that settles matters.

Er, what? That's exactly what you just did.

I don't believe in some magical system that will never allow anything bad to happen to people.

Yes, but do you believe in a system that meets the basic needs of all citizens? 'Cause the free market doesn't provide it. Additionally government is the agent by which we as a whole benefit ourselves by having more citizens be more productive and or having citizens do those things that in the short-term go against their profits and in the long-term increase them -- the free market doesn't do that, either.

You think that the free market would truck all of Georgia's water somewhere else?

During the California brownouts Enron transferred power out of the state which allowed them to increase the price of the energy. That incentive will always exist as long as the generally public investments in infrastructure can be exploited by corporations to maximize their profit, which is their only motive. Oh, and one "fact of life" that occurred in this case is that people died.

Even that low number is way more water than anyone should need to survive, so this would mean that all people--even the poor--are using more water than they really need.

Eh, more assumptions. I don't know what an essential level of water usage is, but presumably people are using that amount in drinking water, but also in sanitation, cooking, and irrigation. Irrigation does have valid purpose. And if the price is high enough people may not starve, but they may be paying an exorbitant portion of their income to obtain water and that is equally bad.

Which is simply false, becaue "importance" is always a subjective valuation of individuals and cannot be dictated from a central authority.

Wrong. Drinking water is more important than anything else. Everything else should be minimized when we are experiencing a shortage such that it will be available in sufficient quality such that none of us are in dire straits. As individuals, 99% of us would agree, and the government represents this essential viewpoint.

So, for instance, we've chosen to tell people in ACC, essentially, that watering your lawn is not an important-enough use for water.

Yes, because it isn't when we're triaging water use. But ultimately if people are uncomfortable enough about complying they'll respond by not clear cutting and mass grading and installing swathes of sod instead of native plants. Ultimately people will be smart enough not to install that which requires an unsustainable level of usage of such a limited resource.

(and, seriously, who are we to tell the person who prefers a beautiful garden to a long shower that he's wrong to water his plants?),

Yeah, but most people are having both. And watering at high noon 7 days a week. Which is both a waste of a precious resource and not even effective.

So we drop 100 bucks on some flowers, spread them through our landscaping, and...watch them die b/c we're not allowed to water?

See above. It's an issue for both you and I in the short-term (dude, gray water. It's really no biggie.), but what you're suggesting is that we should all be paying a premium for water such that no one should have to consider not watering efficiently unless the pain in the wallet creates the incentive for them to.

Which makes it harder to sell our house...

Well, live by the government and die by the government, I suppose. Because all of our property has speculative value conferred on it by the services provided by our government and the way that relates to various values associated with your property. Your speculative value is diminished when the government cannot or will not provide the service you expect it to. And, too, this wouldn't be an issue if your house were to receive an offer during a rainy season or a dormant period.

when clearly the uses I want to make of my water can be accomodated by our supply without anyone being forced to die of thirst?

Again, an assumption.

Incidentally, I'd be totally o.k. with differential pricing based on hours of usage. That's a market-driven solution right there, though it's not a free-market solution.

3:17 PM  
Blogger Nicki said...

FYI, here's an interesting breakdown of how the average person "spends" his/her water usage:
http://www.elmwoodpark.org/water/Facts.htm

I just called the water department in preparation for my big conservation initiative to see what my actual consumption is. Roughly 115 gallons/day.

4:41 PM  
Anonymous Anonymous said...

It's good to know there are people with nothing better to do with their time than write 29 insanely long screeds on the merits of the free market.

Jmac, I know you have a job.

8:15 PM  
Blogger Polusplagchnos said...

Maybe they're just fast typers and thinkers, dude, used to the format of the online debate.

7:27 AM  
Blogger Xon said...

JMac, my father is in town and we are getting ready for a move. I am content to let you and Nicki have the last word you have already had, except for one thing.

The claim that I am taking a 'me' view is directly in contradiction to what I said. I DID pick my current situation to illustrate my point, because there was no danger in my being inaccurate that way. If I happen to have a situation in my life right now that fits my point, then why not use that for my example?

But now remember what else I said in my example. I pointed out that I'm sure there are other people who would gladly give me some of their water to use for my lawn, if the price were right. In other words, I am not saying "let me water my lawn, screw everybody else." I'm saying that I can water my lawn without screwing everybody else.

If people were allowed to use as much water as they wanted but the price went up to compensate for the lower supply, then all people would make choices about water they wouldn't make when the price was lower. Many people would not water their lawns, b/c they don't want to pay for the extra water. But some people (like me), due to their particular situation, might think that lawn-watering was important enough that they were willing to spend the extra money for it. And when those people (like me) made that choice, they would not be causing a crisis for the community, b/c everyone in the community is only using water for those purposes which they think are worthwhile at the now higher prices.

In other words, with higher prices, the only people who are watering their lawns are those who think lawn-watering is pretty darn important compared to the average person. The price is higher; anyone who keeps watering values it relatively highly. Because the price is higher, I know that most people are cutting back on water usage; so I am not causing a shortage by watering my lawn.

4:15 PM  
Blogger Nicki said...

Yeah, but water would have to be radically more expensive for most people to conserve it. And the problem remains that the free market doesn't really incentivize the smart use of water -- it merely makes it radically more expensive for people to use water. And some people will not make responsible choices, no matter how expensive they are. (in fact, there are plenty of examples in which consumption is a status symbol. Why wouldn't lush english-style lawns and whatnot be included in that?) When water is scarce, therefore, we cannot rely on the free market to govern its use.

There's also another matter, which is that water conservation occurs at many, many levels and it is difficult to address it at the far end without some cooperation on the other end and throughout. You wouldn't desire the use of water if it weren't stylish to use it thus, (if other people with homes on the market weren't doing the same and creating an expectation.) And we all would need less water if our houses were constructed to require less of it. In this are the free market is extremely ineffective -- because rarely is conservation a factor in maximizing profit.

2:36 PM  

Post a Comment

<< Home