Not that credible
The Athens Banner-Herald alludes to this in its editorial on the drought, but I think it's a bit misleading to say it's a 'credible argument' that landscapers are being unfairly targeted by the water restrictions or are facing hardships because of said restrictions.
What's hurting landscapers is the drought, not the restrictions. Even if we had more lax restrictions on outdoor watering by those businesses, folks would still avoid buying large numbers of plants because of the abnormally dry conditions we have. Even when I was able to water outside, it was almost pointless because the water would dry up so quickly.
What's hurting landscapers is the drought, not the restrictions. Even if we had more lax restrictions on outdoor watering by those businesses, folks would still avoid buying large numbers of plants because of the abnormally dry conditions we have. Even when I was able to water outside, it was almost pointless because the water would dry up so quickly.
posted by Jmac at 9:03 AM
66 Comments:
The drought, in and of itself, will only "hurt" businesses when the water literally runs dry. Of course it's the restrictions on outdoor watering that are "hurting" those businesses that require outdoor watering.
I do think it's a credible argument to argue that landscapers and other such businesses are being singled out, primarily because.... they are being singled out.
Certainly we are in a drought, and certainly conservation measures should be implemented voluntarily and by the relevant regulatory authorities. But the restrictions should not single out a special class of water consumption, and if they do, they are subject to being overturned in a court of law.
The easiest, and fairest, way to ration water use is to raise the price. When people get their first bill with sharply increasing fees for marginal use, they'll start doing all kinds of ingenious things to conserve water.
As to your outdoor watering being ineffective, I can only say that's your own fault. You need to water a lot at one time, rather than a little bit every day. And you need to do it when the sun don't shine.
As to your outdoor watering being ineffective, I can only say that's your own fault. You need to water a lot at one time, rather than a little bit every day. And you need to do it when the sun don't shine..
Well, apparently you've been spying on me ... though if you had been, you would have realized that I had actually been doing those things and still faced the challenges in keeping my garden amply watered.
I do think it's a credible argument to argue that landscapers and other such businesses are being singled out, primarily because.... they are being singled out.
Uh, how again?
From the Athens-Clarke County web site ...
All residential, commercial, governmental and institutional outdoor water use will be restricted from use of the Athens-Clarke County public water supply system.
Listen, it's a fanciful rumor being spread around town that the green industry was being targeted, but that isn't the case at all. All commercial entities are forbidden from outdoor water usage.
Naturally landscaping is hit harder by this, but other businesses feel the sting too. And it's not 'unfair' to target outdoor watering either seeing how it's the least essential to our usage of water (and, let's be frank, is the easiest to enforce).
I just disagree that raising prices will deter consumption, and I say that after visiting the homes of some folks over the past week who have enough financial resources to run their water all day, everyday (and one of them told me he'd do just that if the ban was changed to a sliding scale on price because that's how much his garden meant to him ... more than, you know, leaving enough water for me to prepare formula for my daughter).
It's an absolute certainty that people who regularly spend thousands of dollars each year on lawn maintenance services would gladly spend an extra few hundred dollars each year to water their lawns. That's a no-brainer.
Our problem is that we don't have the water to spare at any price (short of hiring a fleet of tanker trucks to run 24/7). So, the whole "charge people a lot more and they will use a lot less" argument is lame. It might help a little bit but it won't be nearly enough.
I can't believe that JT and/or Windy are still trying to trot out the old "Commissioners aren't doing anything about the water shortage" and people are still buying into that. Maybe Blake should get a wheelbarrow and dump all the articles he's written about all the steps the local government has been taking for several years onto their desks. Kathy Hoard has been leading a group of citizens, including local water experts to work on water quantity and quality issues for years, now. That's why we are so far ahead of most other parts of the state on this!
No large development or manufacturing or any other such thing can be approved without a careful study of their water requirements as opposed to our normal capacity to supply - and what happens in periods of drought. That's been going on for a very long time, too.
Bear Creek Resevoir was a response to how we can respond to both drought and how we can continue to support economic development (which is greatly impacted by water supplies everywhere in the world). So far, Bear Creek has been doing what it was designed to do - get us through a drought.
So, now where in the worst drought that anyone currently alive has ever seen in this area and we are very much constrained by it in every way. The final "armagedon" step - aka "Level F" plan continues to be formulated by experts (not the editors of the local newspapers) and it is outside the experience and knowledge base of all but a small handful of experts and it requires careful study because it is not going to make anybody happy. It sucks!
It is important to note that the plan is not yet needed - we haven't hit that level of crisis and we all hope we won't get there at all. But, the plan will be ready in plenty of time so there is no need to try to rush it.
The whole idea that we can "bill water customers to solve our drought problems" is a perfect example of the old saying "for every problem, there is a solution that is simple, obvious, and wrong".
I hate it for the green industry and I feel for them but drought has always been a risk of being in that business. Just like any form of agriculture - rain is the only viable solution to their problems and I don't know anybody who can make it rain - I wish I did.
Al
We agree that outdoor water use is being singled out. We disagree over the fairness of this.
You think outdoor watering is the least essential use of water. I think every use of water, except drinking, is inessential.
Price should dictate water use rather than someone's opinion about what is and is not a prudent use of a scare resource. Markets very efficiently allocate use.
This is easily accomplished by having a low price for the first 500 gallons or so of use, and very quickly increasing prices for each marginal increase in use. And it is automatically enforced across all consumers without discrimination and without requiring neighborhood spies.
If your rich friends prefer watering their garden to taking another three month safari, they should be free to do so.
If your rich friends prefer watering their garden to taking another three month safari, they should be free to do so.
But why should their economic abilities potentially hinder my ability to provide water for my family?
Of course you are right, JMac, that the drought is the primary problem of the landscapers and car washes. There is a shortage of water across the board because of the drought, and that means that these businesses are going to suffer anyway. But then adding on a ban to outdoor water use makes the suffering of these businesses even worse than it already was going to be. So this is not an either-or (either the drought causes their problems, or the outoor restrictions cause their problems), but a both-and.
As for your skepticism that price effects demand, Econ 101! If the price goes up, demand goes down, across the consuming group as a whole. This or that individual might not lower their demand, but most people will demand less water when the price goes up. And the steeper the rise, the more they will curtail demand.
If times really are desparate, then raise the price to, say, 10 dollars a gallon. (One of the anonymouses calls this sort of reasoning 'lame, and yet acknowledges that it will have an effect. So perhaps we just aren't raising the price high enough? And why not look into those tanker trucks, anyway? If times really are this desperate, then you have to consider expensive alternatives for getting water into town.) That's an absurdly high number just to prove a point--which is that we all know that raising the price will lower demand. Even rich people who SAY they would keep on watering their gardens and using all the water they possibly could...when prices were actually that high, probably wouldn't. There are always exceptions, but these don't change the rule. When water costs x/gallon, Athens uses Y gallons a week. When water costs x-n/gallon, Athens uses Z gallons a week, and Z is less than Y. This is undeniable.
And it's not 'unfair' to target outdoor watering either seeing how it's the least essential to our usage of water
Says who? The value of the different usages of piped water (not water-in-general) is subjectively determined by each individual, and every person values things differently. Does the guy who landscapes to put food on the table for his family think that landscaping is a 'less essential use'? Not to him, it's not.
"But why should their economic abilities potentially hinder my ability to provide water for my family?"
Well, first of all by that reasoning you might as well just 'go socialist' and deny any right to private property. Because the way one person uses their property could always arguably have the 'potential' to hinder someone else's ability to do something that they want to do.
For another thing, you can buy bottled water for drinking (and formula-making) for a reasonable price. There's not a shortage of water-in-general, but of piped water.
Look, I understand the desperation here. We are worried that water is going to actually run out. In which case, we are worried that it be used in the absolute 'best' way while it lasts. But the problem of economics is that there is no 'best' way, other than allowing individuals to decide for themselves how much water they want to purchase at its varying prices. The fact that there is a shortage such that Athens is in danger of running out of water in its reservoir (i.e., the pipes will literally be empty, no more functional indoor plumbing, etc.) doesn't change the underlying economic 'laws,' which are that whatever reservoir water is available needs to go to the uses that are most highly valued by the people using the water. There is no one, correct, right answer to that question. It is not a formula where you can just plug in "drinking" as the most important use for reservoir water, then "cooking," then "bathing," then (somewhere far down the list) "landscaping," etc. It is a complex matrix of thousands of individuals all doing their own thing. Some people want piped water for drinking, some for bathing, some for lawn-watering. Some folks get their drinking water from other sources, or are willing to do so if need be. Etc.
Your answer seems to be that whatever water remains in the reservoir should be distributed to all households in amounts necessary to drink, cook, and (I assume) bathe. That's the 'ideal' way the water should be distributed, acc. to your vision. But why? Who says that this is the right way for the remaining water to be distributed? Who claims to know this information, and how do they claim to know it?
"If the price goes up, demand goes down, across the consuming group as a whole."
Assuming, of course, there is elasticity of price :-). The key, then, is how much elasticity there is. There's probably some, but may not be a whole lot, given how water is more essential to life than, say, buying expensive pairs of shoes.
"That's the 'ideal' way the water should be distributed, acc. to your vision. But why?"
Er, because being able to drink and not dying is more important than having green lawns :-)
Look, I understand the desperation here. We are worried that water is going to actually run out...The fact that there is a shortage such that Athens is in danger of running out of water in its reservoir (i.e., the pipes will literally be empty, no more functional indoor plumbing, etc.) doesn't change the underlying economic 'laws,' which are that whatever reservoir water is available needs to go to the uses that are most highly valued by the people using the water.
Xon, with all due respect, I think this is ABSURD. How can you say with a straight face that there is no "best" -- only what the market will bear? It is best that no one dessicate. It is best that we all limit our water use to the abolsutely essential such that we may all survive. That is best -- economics be damned.
Stuart Cofer makes the point-correctly--that local ordinance REQUIRES landscaping.
In other words, the Commissioners who could've been planning reservoirs were instead crafting ordinances telling business owners what kind of bushes to plant where and in what quantity.
So, there's that.
Bathing every day is not 'essential' to life. Lots of common uses of water are not 'essential.' I don't want to do without those things either, but the point is that there is demand elasticity for water. If you had to pay 10 dollars a gallon for water, would you take a shower every day? I didn't think so. Elasticity.
"Er, because being able to drink and not dying is more important than having green lawns :-)"
Oh, I agree with that personally. And, of course, the vast majority of the human race agrees with it, too (maybe some suicidal gardeners are the only exceptions?), which is why we think of drinking as a more 'basic' usage for water than gardening. Because, in their own subjective evaluations of the things they can do with water, most people would drink it before anything else, up to a certain amount, and would then apply a certain amount to bathing and cooking, and then with any that was left over would apply it to things like gardening. This is the way most people value water. I agree.
And I also agree that, 'objectively' speaking, it is good not to die of thirst. I don't want anybody to die of thirst.
But my question originally was this: Why is a relatively even distribution of water in amounts that are sufficient for drinking bathing and cooking but nothing else to each and every household in Athens Clarke-County the right way to distribute the remaining water in the reservoir? You answer by pointing out to the value of people not dying of thirst. But this doesn't explain why your distribution preference is better. Because on a price system people don't automatically start dying of thirst. When water is more expensive, people use less of it. But their first priority for it is still drinking it. (For the vast majority of people). So, if all of a sudden water went up to some really cost-prohibitive price, then people who were not very wealthy would say "Damn, I can't do anything but drink and cook for the next while!" They would, in other words, ration their own usage of water, only using it for those purposes which they personally think are absolutely most important. No laws, no restrictions, no fines. None of that is necessary. Water will be put to those resources that people think are most important and it will be forgone for purposes that are deemed less important, simply because the price went up.
Also, though, we're talking about piped water, not all water. Water per se is still available from a variety of sources even if the reservoir dries up. Which is yet another reason why hysteria over dying of thirst is misplaced. You can still go to Kroger and buy a gallon of distilled drinking water for a buck fifty or something.
And maybe this is the better way for people to satisfy their thirst when local water is scarce anyway. This is my point and my concern, that in our zeal to make sure that nobody dies of thirst (which isn't likely anyway) we end up trying to funnel the remaining reservoir water into particular uses and away from others, as though we can actually say what that water is best used for. Perhaps it would be a better arrangement if most people bought drinking water from the grocery store, and put local piped-in water entirelry to non-drinking purposes. Perhaps it's 'better' if people only take baths every other day, or use a wash basin to 'spot clean' instead of full-bodied soaks/showers, and used piped-in water for other things. Maybe, at the end of the day, the convenience of piped-in water really is 'best' used for things like indoor plumbing (three cheers!) and landscaping. And water for other things (like drinking) can be gotten from other sources.
My point is that there is no a priori answer to these questions. There is no 'right' answer. There is only what people in fact would prefer to do when they are faced with the shortage. And the best way to let people work out the best arrangement for themselves under difficult circumstances is to allow them to make decisions based on prices. At that point, whatever people decide to do is fine by me. If they decide to keep drinking out of the pipes but stop watering, then that's fine. But if they decide to buy all their drinking water at Kroger, bathe only once a week and hire a landscaper to take care of their lawn, then that's okay too. I just don't see how we can say that one 'choice' by people is better than the other.
Instead, what we have now is politics and special interests governing who gets to use water and who doesn't. Who gets to keep making a living and who doesn't. Regulate. Pass a law. Call the cops on your neighbors. Trust us to take care of you. I don't know why anyone prefers that way of 'responding' to crises.
I agree that a steeply progressive cost structure --the more you use the higher the cost per unit-- would encourage people to self ration to a large degree. But, given that we do have a finite resource, there should still be, IMO, a cap on ultimate use amounts --it's not fair that someone w/ money to burn could use sufficient water that others are left w/out it for basic needs.
Also, your statement "They would, in other words, ration their own usage of water, only using it for those purposes which they personally think are absolutely most important. No laws, no restrictions, no fines. None of that is necessary." is incorrect. In fact, laws are very definitely needed to make the market work --if water is priced by a public utility the govt sets the rate; if it's done by a private utility there are also still rules about prices which have to be agreed to by state regulatory agencies so as to facilitate "competition" (otherwise you get the situation which the Sherman Act was designed to obviate). The market is not sufficiently sophisticated to allow variable pricing of water depending upon use, IMO. Indeed, only if people know ahead of time what the rates are for particular usage amounts will they self-ration in the manner you suggest; w/out such knowledge they will only kick themselves after having used the water for getting such a large water bill.
Why is a relatively even distribution of water in amounts that are sufficient for drinking bathing and cooking but nothing else to each and every household in Athens Clarke-County the right way to distribute the remaining water in the reservoir? You answer by pointing out to the value of people not dying of thirst. But this doesn't explain why your distribution preference is better. Because on a price system people don't automatically start dying of thirst. When water is more expensive, people use less of it.
But this law doesn't hold. It simply doesn't.
The point being that this isn't being employed as an effective way to defend the existing restrictions, but rather as an effective way to dismiss this line of arguing for a sliding price scale system.
You argue that under a price system, people won't start dying of thirst for what I assume are two reasons ...
1. Water consumption will go down;
2. Related to our existing restrictions, we have bottled water.
The problem with these arguments are that the first one isn't grounded in the reality of the situation, namely because its very defense is that people can use as much as they want if they choose to pay higher prices for it. We know this to be true based on past experience, which means we know that a portion of the population with the economic means to do so has the very real potential to use a disproportionate amount of a scarce - very scarce - resource (to the detriment of the greater community).
The second argument features the exact same quandary - bottled water costs disproportionately higher than public water service, meaning only a certain segment of the population will be able to purchase adequate amounts. And, if price rises with demand - and a lack of water coming out of faucet would necessitate rising demand methinks - then the price will continue to rise and rise until many folks are priced out.
Furthermore, while bathing isn't a vital necessity, do you not see how illogical this line of argument is? Not only is lacking enough water to bathe or flush toilets troublesome on a variety of levels, but it also presents a potentially very serious health hazard.
Listen, it's fun to debate the theories of economics in a classroom. But it's another thing to watch those theories be put to the test in the real world and see the challenges they face.
"if it's done by a private utility there are also still rules about prices which have to be agreed to by state regulatory agencies so as to facilitate "competition" (otherwise you get the situation which the Sherman Act was designed to obviate)."
Except that I reject the need for those regulatory agencies as well, and I think the Sherman Antitrust Act was a sham that obviated nothing and created far more problems than it claimed to solve. I'm further outside the box than you give me credit for. :-)
What I'd be interested in hearing, in the interest of open dialogue, is your take on exactly where my statement goes wrong:
"They would, in other words, ration their own usage of water, only using it for those purposes which they personally think are absolutely most important"
My claim is that this is what people do naturally. They use water (or any scarce economic good) in order of its more important uses (as they themselves determine what is important and what isn't). You disagree?
For Bob, let's say that the priority list for water goes like this:
1. 15 gallons, drinking (i.e., if Bob had only 15 gallons for the entire month, he would use all of them for drinking)
2. 1,000 gallons, bathing (i.e., if Bob had exactly 1,015 gallons of water for the month, he would use 15 for drinking, and then would use 1,000 for bathing)
3. 5 gallons, cooking (Bob does very little actual cooking, just how he rolls)
4. 150 gallons, lawn watering.
Etc.
My claim is that Bob will use water in order of these preferences, based on how much he buys. And how much he buys will change based on the price. So, for instance, if the price of water is 20 dollars a gallon (just to be ridiculous), then bob will quickly realize that he doesn't enough money for anything other than drinking water that month. He will end up forgoing lots of other stuff he would normally do with his money, cancel his cable bill, skip some meals, whatever--so that he can afford enough water to stay alive. He would spend about 10 dollars a day for a 1/2 gallon of water, which he would use entirely for drinking and nothing else.
But, let's say that water only costs 5 cents a gallon. Now Bob breathes a sigh of relief, goes back to paying his cable bill, stops skipping meals, and pays only 60 dollars that month for water. This buys him 1200 gallons of water for that month. He drinks 15 of these, uses 1000 to bathe, cooks with 5, waters his lawn with 150, and uses 30 more gallons on other things that are even further down his list of priorities.
The next month, water is at 50 cents a gallon. Bob decides that he can only spend 60 dollars on water that month again, but this time it only buys him 120 gallons of water. This is still plenty to drink (15 gallong), and he has 105 left for bathing. Which means that he skips a lot of baths, but still gets some washing in. And all the other stuff--cooking, watering his lawn, etc.--doesn't get done at all.
Are you denying that Bob will act this way in relation to prices unless there is a law or regulation in place? Please explain how this is so.
The first problem with your 'What About Bob' analogy is that not only do you expect the consumer to be so readily up-to-speed on his daily consumption, but you also expect the provider to have the necessary technology to accomplish this little exercise.
Are you denying that Bob will act this way in relation to prices unless there is a law or regulation in place? Please explain how this is so.
I deny so, and I don't need to hash out some lengthy hypothetical scenario to explain it. I know it won't work because you see irresponsible behavior and spending habits happening all the time.
Furthermore, this whole illustration is moot because it's a commonly shared good with a finite amount of availability right now. If Bob is rational in his usage, what if Gary and Ace are not? What if they say 'we've got billions of dollars, let's drain Bear Creek Reservoir dry so I can keep my mums looking good ...'
Then Bob's good economic sense falls by the wayside because of the economic actions of others.
We have a wealth of data from other utilities that is relevant to this debate. Progressive consumption pricing has been proven thousands of times in many different contexts. It works, plain and simple.
Second, in regards to the fairness issue, I'm tempted to ask why some of you think it's fair to put outdoor watering based businesses out of work simply because you are economically retarded.
This drought is not a one time short term circumstance. An outright ban on certain uses may well be part of a short term fix, but longer term the only sustainable and only fair method of rationing water will be through a progressive price schedule.
The real debate will be over water used to install and maintain landscaping, for example, versus water used in processing poultry. And the answer to that question will depend on scarcity, price, and willingness to pay.
There is no doubt that water usage would go down in a situation where there were no watering restrictions and we raised the price of water. However, this does not hold if we consider moving from the current situation of outdoor watering restrictions to one where we removed the restrictions and raised the price of water. Water consumption is presently artificially low due to the restrictions that are in place and there is no way to predict which direction water usage would go if we simply shifted to higher prices. It will definitely be lower than it would be in an unrestricted, low-price case but it may be higher than it presently is.
Xon: This is the bit where you're wrong "No laws, no restrictions, no fines. None of that is necessary". Actually, it is necessary if you want a market to function at even a very basic level --laws, for instance, are necessary to guarantee private property, for example; w/out laws (ie govt regulation!) I can come on your land and steal the water you paid for w/out sanction.
As to the Sherman Act not being necessary, we can debate the politics of how it came about but you continue to live in a fantasy land, my friend. W/out govt regulation markets tend towards either monopoly or anarchy. That's economic reality. No ifs, ands, or buts. Furthermore, w/out govt regulation many unscrupulous marketers can sell on the market to the detriment of all (Chinese toys anyone?), which is why many firms actually request govt regulation, because they cannot restrain themselves --which gets us back to the Tragedy of the Commons issue of a few days ago which you misinterpreted. You might argue "well, the market will shut those unscrupulous traders out", but only if there is perfect information so that consumers know who's producing the bad stuff --and we know, of course, that perfect knowledge is never going to be obtained; it's a theoretical construct that has no basis in reality.
"My claim is that this is what people do naturally. They use water (or any scarce economic good) in order of its more important uses (as they themselves determine what is important and what isn't). You disagree?"
I don't disagree that in terms of how you set up the argument this is the conclusion you reach. But your conclusion relies upon a number of assumptions:
1) that they are, in fact, making rational choices. Of course, you could argue that any decision they make is rational in their own eyes, but this gets tautological again --it's rational because they think it's rational. The only way it is a rational decision is if you define rationality based on prices. But this only begs the question of whether this is a good definition and then leads you into the realm of the argument that anything the market does is, therefore, by definition rational --an argument i simply don't accept.
2) it assumes that we all act as individuals in an atomistic world, that my actions don't affect your's and vice versa. In the real world we have a significant disparity in wealth, so my millions of dollars could buy up virtually all the water to water my lawn and leave others w/ very little money insufficient water for basic needs.
3) it assumes that what we do "naturally" is, in fact, "natural" --so much for any kind of socialization that shapes how we interact as human beings! Why are we competitive? because our society is set up to reward competition. If it were set up to reward cooperation then we would "rationally" be more cooperative. It is the structures within which we live that shape our behavior, not some ontological essence called "nature".
Second, in regards to the fairness issue, I'm tempted to ask why some of you think it's fair to put outdoor watering based businesses out of work simply because you are economically retarded.
This drought is not a one time short term circumstance. An outright ban on certain uses may well be part of a short term fix ...
So either I'm right or you're as economically challenged as I am?
Regardless, you falsely assume that my support of the existing restrictions - restrictions which are universal on all outdoor watering - translate into a long-term policy for water conservation. You yourself concede that we may need some short-term restrictions that are above and beyond the usual economic laws, so where exactly are we in disagreement?
Aside from over the feasibility of a progressive price structure to effectively and fairly provide water to the entire population, we seem to be in agreement when it comes to addressing the short-term crisis.
I'm tempted to ask why some of you think it's fair to put outdoor watering based businesses out of work simply because you are economically retarded.
Yeah? Yo Mama. That's how brilliant your argument was. So brilliant my two-word argument just kicked its ass.
I'm actually fine with differential pricing as long as it's combined with watering restrictions and some sort of mechanism to ensure that essential needs can be met at fair prices. And fair isn't "whatever the utility can force people to pay."
But it strikes me as ridiculous that we're debating whether or not to restrict non-essential water use when mother nature is already doing it for us.
JMac, the problem is you're not understanding the law of supply and demand. What you say is the law 'not holding' actually IS the law holding. To wit:
"The problem with these arguments are that the first one isn't grounded in the reality of the situation, namely because its very defense is that people can use as much as they want if they choose to pay higher prices for it. We know this to be true based on past experience, which means we know that a portion of the population with the economic means to do so has the very real potential to use a disproportionate amount of a scarce - very scarce - resource (to the detriment of the greater community)."
I agree. Only a few rich people buy all the sports cars. People with more resources buy more stuff than people with fewer resources. Of course. Not a ground-breaking observation. But overall, the amount of something that is purchased goes DOWN in the community (which includes all the people, not just the rich people) when the price goes up.
And even among the rich people, the law still holds. Not every single rich person keeps buying the same thing no matter how expensive it gets. At 60k, 10,000 people want the new Corvette. At 75k, only 8,000 want one. Higher price, lower demand. Period.
You say that "people can use as much as they want if they choose to pay higher prices for it." But the whole point of the law of supply and demand is that they won't choose to pay higher prices for it at the same rate as at the lower rate. At one price, the community buys 20 widgets. At a higher, they buy 10 widgets. Even though there might be one guy who buys a widget at both prices, the community as a whole buys less at the higher price. You haven't refuted this at all.
The fact that a small proportion of the population will still be able to buy lots of water no matter how expensive it gets doesn't change the fact that the higher prices will cause the overall demand in the community to go down. Some rich people will keep buying the same number of gallons, perhaps (but these same super-wealthy aloof silver-spooners, who do not shed a single care over how expensive something is, and keep buying it over and over again no matter how expenseive it is because goshdarnit they just want it, aren't going to give a rip about fines for watering their lawns either!), but overall the entire community, taken as a whole, will buy less gallons.
And of course this does mean that rich people will end up with a greater proportion of water than they had before, but so what? Our goal in society is not to make sure that everyone uses the same amount of water, not even in a crisis. Or at least, it isn't clear to me why you think that this should be the goal. As I asked earlier: why do you think that this is the only 'right' way to distribute water in a drought?
"The second argument features the exact same quandary - bottled water costs disproportionately higher than public water service, meaning only a certain segment of the population will be able to purchase adequate amounts. And, if price rises with demand - and a lack of water coming out of faucet would necessitate rising demand methinks - then the price will continue to rise and rise until many folks are priced out."
But you offer no support for that last sentence. Saying that the price will go up when demand goes up (ah, look, now you're using the law of supply and demand yourself!) is certainly true, but you can't predict that it will go up so high that a bunch of poor people will be 'priced out'. Priced out of enough water to drink? Hmm..eight cups a day is 1/2 a gallon. So you're telling me that a poor person won't be able to buy 1/2 gallon of water per day? Or that, worst case scenario, there will be no charities that can afford the 5 per day to give the most destitute something to drink? Just how high do you see the price of bottled water going? (Not to mention that most people don't actually drink 1/2 gallon a day, despite what nutritionists say they ought to do. The survival threshold is much lower).
What will happen is lots of people will shift things around, spend less money on other things than they used to. But they will manage to stay alive with a 1/2 gallon of water.
"Furthermore, while bathing isn't a vital necessity, do you not see how illogical this line of argument is? Not only is lacking enough water to bathe or flush toilets troublesome on a variety of levels, but it also presents a potentially very serious health hazard."
But I thought we were talking about troubled times when there just ain't enough water. When that happens, you have to make choices. I thought that was the whole point. I'm not saying "La dee da, no water for bathing is no big deal", as I said in an earlier comment pretty clearly. I'm saying that, when water is scarce, there is no automatic 'right' answer about the way the piped-in water should be used.
You seem to be saying that it should be used for bathing over gardening because of the health hazard posed by not bathing. But these are not the only choices. This is often what choices look like when the government is involved through the long arm of the law, because laws are clunky and have to provide simple top-down solutions for everyone. So, the law says "Do not water your lawn; fines! Jail time! Disapproving stares!" And this makes us think that we are picking before bathing or watering. But we're not. We make a different choice with every gallon of water. People can choose to bathe less often (not give it up completely), but still use most of their water for baths and then use a little more for gardening.
With every new gallon of water that we receive, we make a choice about that gallon of water. What is its most valuable use? For that particular use? If I'm not thirsty, then it has a more valuable use (to me) than drinking it. If I'm already showered, then it has a more valuable use to me than bathing. If I know that I'm only going to get a few more gallons, much less than I am used to, then I have to decide how to cut back on my normal use. This is the idea of 'marginal utility' in economics that the first anonymous referenced in the very first comment. But there is no 'right' marginal use for a gallon of water. There is no 'right' way to cut back when you know the resource is scarce. It's up to me.
So, the question is, what will make people have less water to use, so that they will then have no choice but to cut back (in whatever way seems best to them)? And the answer is, higher prices. For the vast majority of people (only these hypothetical silver-spooners who are so inordinately wealthy that they do not care at all about price, ever, are exceptions) the higher price will cause them to buy less water. And now they have less water, see, so they have to figure out the best way to use it for them.
But when the price stays (roughly) the same as it has always been, everybody keeps using water like they always have. So the gubmint tries to force people to use less by mandating certain things that cannot be done with the water. Again, why such forceful methods are preferred by anyone is beyond me.
And this is not a 'theory' vs. 'real world' discussion, with me playing the rosy-glassed idealist and you the hard-nosed evaluator of what must be. Right now, people all throughout Athens Clarke-County are using water inside their house just as carelessly as ever. Why? Because you have given them no incentive to care. It costs the same. You have only told them they can't use it outside. This amplifies what is already a bad situation for certain portions of the population (like landscapers/gardeners/car washers), but other than that it isn't clear that you're having any "real world" benefit to your preferred policy. Explain to me precisely what the keep-the-price-level-but-punish-for-watering-their-own-lawns approach is actually doing that's good. And you don't get to say "It keeps people from dying of thirst," because that is just alarmism.
Nicki's dismissal was more succinct.
"As to the Sherman Act not being necessary, we can debate the politics of how it came about but you continue to live in a fantasy land, my friend. W/out govt regulation markets tend towards either monopoly or anarchy."
Example, please? Don't say Standard Oil (which was the explicit justification of the Sherman Act), becuase it was never a monopoly and in fact it's market price went down in the years before the Act was put into place. AND, the more successful Standard Oil was, the LOWER prices went. So there was no 'predatory' pricing that only lasted for a brief period and then they turned the screws up on consumers. You're just giving the standard view--saving markets from themselves! Hooray for anti-trust!--but let's hear some examples. Microsoft? Nope. In fact thier case was thrown out. Alcoa? The railroads? None of these cases fit.
Antitrust was an opportunity for politicans to get some more money flowing into their pockets. All for the good of 'the people,' of course.
I don't think I've ever maintained that the law of supply and demand doesn't work. What I have said is that often it does work to the detriment of a particular grouping of individuals and that another group with more economic resources can gobble up existing resources (thus depleting supplies, thus raising prices, etc. and etc.)
When I argued the laws wouldn't hold, it was more to illustrate that I think your outcome from the laws wouldn't hold (massive decrease across the board in consumption ... or at least a more effective and equitable means of reducing consumption).
But you offer no support for that last sentence. Saying that the price will go up when demand goes up (ah, look, now you're using the law of supply and demand yourself!) is certainly true, but you can't predict that it will go up so high that a bunch of poor people will be 'priced out'.
Um, but you've done just that repeatedly here. Repeatedly. Anytime we bring up, say, price gouging, you swoop in and say these things are just because they are a sign of the market responding to protect limited supplies. If we only have X number of gallons of water remaining on the shelves, and the provider wishes to keep that supply available so he raises the prices to a level where some people won't be able to purchase them, then logic dictates the majority of these people will make that choice based on their economic status.
But, still, whatever. I can accept that you can argue that I can't predict it will go up that high, but at the same time you can't effectively argue that it won't.
... but these same super-wealthy aloof silver-spooners, who do not shed a single care over how expensive something is, and keep buying it over and over again no matter how expenseive it is because goshdarnit they just want it, aren't going to give a rip about fines for watering their lawns either!
This is tragically flawed. They may not mind the costs associated with either fines or higher payments, but the latter is at least done legally while the former is a sign of restricted behavior with increasingly harsh punishments. So while you may be content in paying X amount for this much water and then X+1 for this much additional water, that is drastically different than paying X amount for a fine and then losing water service after that for a period of time
Hmm..eight cups a day is 1/2 a gallon. So you're telling me that a poor person won't be able to buy 1/2 gallon of water per day? Or that, worst case scenario, there will be no charities that can afford the 5 per day to give the most destitute something to drink? Just how high do you see the price of bottled water going?
Even if the price goes up to, say, $5 a gallon, that's an additional $17.50 per person per week, or $70 for a family of four. For families living in poverty, any additional costs threaten their livelihood and can impact their ability to make rent, adequately provide for their family, etc.
Furthermore, why should it come to the point where charities have to provide water to citizens? Particularly when this is a common resource?
And this is not a 'theory' vs. 'real world' discussion, with me playing the rosy-glassed idealist and you the hard-nosed evaluator of what must be. Right now, people all throughout Athens Clarke-County are using water inside their house just as carelessly as ever.
This just simply isn't true. Water consumption has been reduced by roughly 20 percent in our community. I know for a fact that I have greatly changed my water usage habits because of the drought (i.e. we boil bottles and pacifiers rather than run the dishwasher an extra two or three times a week, and then use the boiled water to water potted plants outside), and I know of good many other folks who have done the same.
I'm not saying you're a starstruck idealist - Lord knows I'd accuse you of being many things and an idealist ain't one of them - but I do think you're arguing for, in good faith, something which exists only in theory and I'm doing the best to honestly evaluate and assess what has and hasn't worked and balance that with the fact that we have, as of now, only a matter of weeks remaining in Bear Creek Reservoir and just three months before Lake Lanier goes dry.
Like Nicki, I'm no ideologue. If a progressive pay structure is the way to go, then I can be swayed, though I'm not there yet.
JMac:
"The first problem with your 'What About Bob' analogy is that not only do you expect the consumer to be so readily up-to-speed on his daily consumption, but you also expect the provider to have the necessary technology to accomplish this little exercise."
Huh? I expect nothing of the sort. Nobody actually writes down on a piece of paper, or works out in their head, precisely what their priorities are, but they express their priorities through their actions. My example with actual numbers was simply to make the illustration more concrete. Don't hold against me an attempt to make the conversation easier.
Farmer John has twenty pigs. He's got them all doing what he wants them to do. Who knows if this is 'right', maybe John is a crappy farmer and his pigs could be better used than whatever he is doing with them. But the point is that, Farmer John has made a decision of what to do with his pigs according to his preferences and understanding of how to achieve those preferences.
Now, a neighbor offers farmer John another pig for 400 dollars. Will John buy it or not? It all depends on how much 'utility' John expects to get from that twenty-first pig. He's not making a decision about 'pigs-in-general' versus '400 dollars'. He's making a decision between the 400 dollars in his pocket and that particular pig. The question is, what would he do with that twenty-first pig? And how much value does that use have to him? If Farmer John values whatever that use is more than the 400 bucks in his pocket, then he buys the pig. If not, he doesn't. But, again, I'm not saying that John literally thinks it through in just this way. What I am saying, though, is that we know John valued the pig more than the money because his actions tell us so. Actions speak louder than words, my momma always said. John decided to buy the pig. He must have had a reason for doing so.
As with pigs, so with anything else. Do you want another hug? Another gallon of water? Another house?
If a man is dying of thirst, then he wants another gallon of water REALLY badly. If he is already satiated, squeaky clean from a nice shower, doesn't need to cook anything and his garden is looking great, then he will probably be very uninterested in buying another gallon of water. Which is why he doesn't turn the faucet on! The fact that he didn't turn the faucet on tells us that he had no uses for any more water at that time which he valued enough to justify spending any money (raising his water bill). At that time. But the next time he feels thirsty or dirty, he goes back over to the tap and turns it on. Why? becuase the 'marginal utility' of that next little bit of water just because a higher-value item for him than it was before? He now has a use for that next bit of water that is valuable enough to him that he is willing to spend money on it.
This is all the Bob example illustrates. It does not assume that anybody works all this stuff out in their head, nor does it assume anything about the 'technology' possessed by the seller. ??
"I deny so, and I don't need to hash out some lengthy hypothetical scenario to explain it. I know it won't work because you see irresponsible behavior and spending habits happening all the time."
But what are 'irresponsible spending habits'? I mean, what's the definition? When someone spends irresponsibly, what are they really doing? What does that mean?
You are saying that because people sometimes spend irresponsibly (whatever that means), that therefore I am wrong when I say that people act in accordance with their preferred values? Huh? So my Bob analogy is wrong because, while Bob might place a higher value on drinking water than on bathing water, he sometimes acts 'irresponsibly' and uses his last drinking water to wash his face? I don't know what you are saying here...
"Furthermore, this whole illustration is moot because it's a commonly shared good with a finite amount of availability right now. If Bob is rational in his usage, what if Gary and Ace are not? What if they say 'we've got billions of dollars, let's drain Bear Creek Reservoir dry so I can keep my mums looking good ...'
Then Bob's good economic sense falls by the wayside because of the economic actions of others."
Wait. So on your hypothetical the reservoir is already so low that two guys can use up all the water just on their lawns? If we get to that place, then we're already, more or less, out of water, and we have bigger problems than whether the last little bit (relatively) goes onto two guys' lawns.
or are you saying that there are actually tons and tons of gallons in the reservoir, but these rich guys greedily buy it all to water their lawns even though their lawns don't need that much water? Why would they do this, exactly? Are they just stupid? And if you can build your theory on "we need to intervene b/c sometimes people are just stupid", then I get to do the same. So, I say we need to keep government out of our lives b/c sometimes government agents are just stupid and do horrible things because they just don't know any better.
But, that aside, water is always a "commonly shared good with a finite amount of availability." There is never an infinite availability of water, is there? So by your reasoning we should always have laws and regulations in place that tell people what they can and can't do with water on their own property. Afterall, commonly shared good with a finite amount, and all that.
As an aside, you apparently think anti-poverty non-profits have way more money then they do if you think they can pony up an additional $5 per day for, say, 2,000 people for an undetermined length of time.
I don't understand the statements that the water will run dry, or is going to run dry. The water is running dry, present progressive.
No doubt the drought plus the restrictions ("the relevant regulatory authorities" being whom?) are hitting the landscaping community exceptionally hard, moreso than the computer programming or indoor plumbing communities (who could benefit from people opting to retrofit their homes for grey water or just to fix old leaks in anticipation of the progressive pricing plans).
But, for all that people want to say that market solutions are the better solutions, it seems that the end result for landscapers is the same in these conditions whether drought only or drought plus. If the prices were to increase to prohibitive levels, does anyone think that landscapers will be able to retain as much business as computer programmers or indoor plumbers? Even on the analysis that looks favorably on anarchocapitalistic markets, the market will squeeze out landscapers, particularly those on the low end of aesthetic production, leaving behind only those who can cater to the wealthier population who can afford by appealing to their aesthetic and functional interests. Squeezing out one's competition through better service and more efficient use of resources is just what such markets do, or are supposed to do.
In which case, the bankruptcy of some landscapers is blamed upon the market, which is noble and just for having been an active site of worthwhile competition. But if a law were applied uniformly and fairly, by restricting all landscapers from doing their craft with water, then everyone in that business, regardless of their aesthetic and functional sense, is restricted in their work, and such loss of business is impure and unjust having been in a site of thwarted competition.
If, however, the actors within the marketplace had such fiscal and entrepreneurial ingenuity, they would find a way to do landscaping without the use of water, just as computer programmers found a way to compute without vacuum tubes or plumbers without aqueducts. Supposedly the greatest thing about the successful participants in a market is their ability to recreate the business in such a way as to do the same thing in an entirely new and more efficient way. And if the participants in the marketplace were already going to do this when the drought reaches the point of catastrophe, what prevents them from doing so in the face of "artificial" scarcity? The unjustness of it all?
But the whole point of a free market is that it is the only "economic" way of having truly distributive justice: "the easiest and fairest way" of distributing a resource is by rewarding those with the wisdom and foresight to conserve, innovate, and protect. Those who starve and die, like the amorous cicada or the gallivanting grasshopper who sings and looks around for sex while the collective social unity of the ants toil in production and preparation, deserve their fate for their lack of virtue. (Just as it would be, so it goes, unjust to reward the lazy, the spouseless pregnant, the deadbeats, their lack of virtue.)
Xon's entirely correct: it's all a question of whose morality holds up as the defining one. The problem is that a morality still appears in the midst of a supposedly amoral network of exchanges based upon the collective sign of price, an aristocratic morality that has always been competitive with that of the egalitarians and the democrats.
There is nothing new under the sun, that ever-shining, drying sun.
So on your hypothetical the reservoir is already so low that two guys can use up all the water just on their lawns? If we get to that place, then we're already, more or less, out of water, and we have bigger problems than whether the last little bit (relatively) goes onto two guys' lawns.
Please. Do I have to be so overtly clear in my analogies? Must I say 2,358 people will use more water than they need just to suit
I didn't quibble with the specifics of your pig analogy, so I'd appreciate some courtesy the other way around.
or are you saying that there are actually tons and tons of gallons in the reservoir, but these rich guys greedily buy it all to water their lawns even though their lawns don't need that much water? Why would they do this, exactly? Are they just stupid? And if you can build your theory on "we need to intervene b/c sometimes people are just stupid", then I get to do the same. So, I say we need to keep government out of our lives b/c sometimes government agents are just stupid and do horrible things because they just don't know any better.
As Charles has effectively argued with you before, government agents are people. Now, are you arguing that once you become an agent of government you lose all common sense (and apparently self-serving and evil too)? I mean, this has to be what you're arguing because otherwise your position is that all people are stupid, and if all people are stupid then all people, regardless of their place of employment, are bound to act in self-serving, illogical manner.
In that case, would you want an entity populated by self-serving people governed by a system of laws to address this or perhaps a entity populated by self-serving people governed by profit?
So by your reasoning we should always have laws and regulations in place that tell people what they can and can't do with water on their own property. Afterall, commonly shared good with a finite amount, and all that.
Well, hence the call for a proper conservation policy (by a lot of folks) ... and market structures may, and probably should, play a key role.
Anonymous, you said:
"Xon: This is the bit where you're wrong "No laws, no restrictions, no fines. None of that is necessary". Actually, it is necessary if you want a market to function at even a very basic level --laws, for instance, are necessary to guarantee private property, for example; w/out laws (ie govt regulation!) I can come on your land and steal the water you paid for w/out sanction."
But you've divided up my statement and only looked at one part of it, when the two parts have to be taken together (If you only take them by themselves, then you misunderstand what I was saying). My statement was that no laws or reguations are necessary to get people to rank their preferences in order of their own subjective valuations and act accordingly. You then told me that we "need" regulations, but I don't see how on earth we need regulations to get people to do what they think is in their own self-interest.
And notice also that I don't assume any of the three things you say I assume.
You say that I assume:
"1) that they are, in fact, making rational choices. Of course, you could argue that any decision they make is rational in their own eyes, but this gets tautological again..."
No, I assume that they make choices that they think will bring them the things they value, in order of what they value more. If a man has thirty minutes to either shave or play a game of NCAA football before he has to be somewhere, the thing he chooses to do is the thing he 'preferred' to do. It is the thing he valued more, in that circumstance. Actions reveal preferences.
(This claim is a bit controversial, but not too much. It is the starting point of Austrian economics...see von Mises' 'Theory of Human Action', for instance. People act in accordance with their preferences. But this is not the same thing as saying that they act 'rationally,' as though the thing they do is always the best thing they could have done.
So I don't assume anything about people always being rational. Far from it. (But, by the way, since people are not always rational, that goes for the government agents who claim to be able to run our lives too, doesn't it?)
"2) it assumes that we all act as individuals in an atomistic world, that my actions don't affect your's and vice versa."
God forbid! May it never be! Our actions effect other people; absolutely.
"In the real world we have a significant disparity in wealth, so my millions of dollars could buy up virtually all the water to water my lawn and leave others w/ very little money insufficient water for basic needs."
Um...I don't follow this. Someone with millions of dollars could buy up almost all the water in the world to water their lawn? Why? This wouldn't just be irrational, it is mythical. Nobody would do this.
"3) it assumes that what we do "naturally" is, in fact, "natural" --so much for any kind of socialization that shapes how we interact as human beings! Why are we competitive? because our society is set up to reward competition. If it were set up to reward cooperation then we would "rationally" be more cooperative. It is the structures within which we live that shape our behavior, not some ontological essence called "nature"."
This is the farthest out of them all. Where have I ever said anything about life being "all about competition"? That's not my view at all. Humans are both competitive and cooperative, often (paradoxically) at the very same thing. How else can we explain the delicate dance that is the free market? :-)
Bob wants the trinket more than he wants the dollar in his pocket. Steve wants the dollar in Bob's pocket more than he wants the trinket. So Bob buys the trinket for one dollar. And everybody goes away happy!
As to the nature/nurture debate, again I wasn't weighing in on that at all. Both play a big role in human development. but I will say, since you've now brought it up, that if you think that the human propensity to value things differently and to act in accordance with those valuations is something that could be 'nurtured' out of us, then I confess I don't even know what that would mean. Sounds like crazy talk to me.
Someone with millions of dollars could buy up almost all the water in the world to water their lawn? Why? This wouldn't just be irrational, it is mythical. Nobody would do this.
But ...
... but you can't predict that it will go up so high that a bunch of poor people will be 'priced out'.
Xon, as an aside, are you no longer postmillenialist?
As for this:
"Someone with millions of dollars could buy up almost all the water in the world to water their lawn? Why?"
Switch it up. Someone(s) with millions of dollars could buy up the water, package it in tiny bottles, and sell it. As David Hamilton has pointed out a few times now, we call this Dasani. If progressive pricing causes people to switch to Dasani, that depletes the resource sooner, since more water goes into the process of producing the water as bottled than if it were "piped in" to people's homes. Would the prices of Dasani water go up, being that they are a private company anticipating the water dry up? Probably.
I suppose I'm just curious as to whether or not it is wrong or right, in this drought situation, for someone to hoard the water and then resell it to others for profit. And, if it is better or worse for those profits to be sent outside the community to global shareholders or kept within the local community. I'm assuming that the ACC-WBO spends it budget locally, at least relative to Coca Cola.
Well now. One accusation of economic retardation and suddenly everyone is ready to concede that price is an effective rationing tool. I'll take it.
JMac:
"I don't think I've ever maintained that the law of supply and demand doesn't work. What I have said is that often it does work to the detriment of a particular grouping of individuals and that another group with more economic resources can gobble up existing resources (thus depleting supplies, thus raising prices, etc. and etc.)"
I said: "...When water is more expensive, people use less of it." And you responded to this by saying:
"But this law doesn't hold. It simply doesn't."
So, that's why I took you to be denying the law of supply and demand in certain circumstances.
"When I argued the laws wouldn't hold, it was more to illustrate that I think your outcome from the laws wouldn't hold (massive decrease across the board in consumption ... or at least a more effective and equitable means of reducing consumption)."
Well, okay, that is clear now. Thanks for the further explanation.
Back to the top citation of you in this comment, though, you're not taking the full doctrine of supply-and-demand into account.
"What I have said is that often [supply and demand] does work to the detriment of a particular grouping of individuals and that another group with more economic resources can gobble up existing resources (thus depleting supplies, thus raising prices, etc. and etc.)"
But, under supply and demand, what happens when the supplies are 'depleted' by some greedy rich bastard buying it all up? (I don't grant that that normally happens, but I'm trying to roll with the punches here.) Ah, the prices go up, as you pointed out. Okay, but what happens when the prices go up? Follow the law all the way through to the end. Higher prices means higher profits for the water suppliers, which means...added incentives for other people to provide water to the area...which means...increased supply....which means...prices go back down again.
"Um, but you've done just that repeatedly here. Repeatedly. Anytime we bring up, say, price gouging, you swoop in and say these things are just because they are a sign of the market responding to protect limited supplies. If we only have X number of gallons of water remaining on the shelves, and the provider wishes to keep that supply available so he raises the prices to a level where some people won't be able to purchase them, then logic dictates the majority of these people will make that choice based on their economic status."
Right. But this is not the same thing as what you did. For one hting, as you yourself admit when you use the word "logic dictates", I gave reasons to think that 'price gouging' leads to people conserving resources. I didn't just assert it. Also, I made no predictions about precisely how high or low prices would go, or exactly how much people would respond in response. I am simply, again, applying the law of supply and demand, as found in most any Econ textbook. If the store owner raised the price of flashlights, then those flashlights will sell more slowly, and only to people who are willing to pay the higher price. That is not speculation on my part, it's simply the logical application of supply-and-demand. At the lower price, the first 10 people through the door would buy all 20 flashlights (I'm not 'asserting' these exact numbers, I'm just giving examples. Who knows what the actual numbers are). But if the price doubles, then the first ten people might only buy one flashlight each, which leaves 10 more for the next 10 people. I would cut off my arm if politicans would learn this damn lesson and get off people's backs already. Yes, I am passionate about this issue. ;-)
"But, still, whatever. I can accept that you can argue that I can't predict it will go up that high, but at the same time you can't effectively argue that it won't."
But this is the fallacy of appealing to ignorance. You can't prove I'm wrong, so by default I'm right? If we don't know, then we simply have to say that we don't know. And that goes for both of us, of course.
But I've given reasons to think that the price won't go up so high that poor people will literally start dying of thirst, wanting water but simply unable to scrounge up the money for it. Furthermore, I direct your attention to my comments about supply-and-demand above. When the price goes up to help conserve a scarce supply, in the end the price usually comes back down again as more supplies come in. Higher prices leads to more supply, which leads to lower prices again. It's a dance, bro. Like traffic in Vietnam.
This is tragically flawed. They may not mind the costs associated with either fines or higher payments, but the latter is at least done legally while the former is a sign of restricted behavior with increasingly harsh punishments. So while you may be content in paying X amount for this much water and then X+1 for this much additional water, that is drastically different than paying X amount for a fine and then losing water service after that for a period of time
I didn't realize that the ACC government actually threatened to take your water use away if you were caught. I thought it was justa fine. I stand corrected. Thanks!
"Even if the price goes up to, say, $5 a gallon, that's an additional $17.50 per person per week, or $70 for a family of four. For families living in poverty, any additional costs threaten their livelihood and can impact their ability to make rent, adequately provide for their family, etc."
Oh, absolutely. Like I said, other things get shifted around. But then again, we are in a DROUGHT, a sever water shortage after all. So I don't know how we expect that such an occurence is not going to be difficult, and of course these things are always most difficult on the poor. I'm not being callous; it bothers me greatly. But there's that whole 'real world' thing that I'm always accused of ignoring. In the real world, if water is suddenly scarce, then poor families might suddenly have to choose between drinking and paying rent. I'm not saying that's a desirable choice, or that we don't want to do what we can to end the nasty situation as soon as we can so they aren't under that burden any more. But my point is just this; these poor families will choose to buy water in that situation. Because, as everyone keeps rightly saying, water is necessary to survive. So, when people act as though the drought is going to make people die of thirst, I don't buy it. It will put some terrible strain on poor families, though. I don't deny that.
(Also, though, in reality I imagine that most poor families would forego bathing to save money, rather than missing rent. So they could still make rent and have water to drink. Not that that is much better, of course.)
"Furthermore, why should it come to the point where charities have to provide water to citizens? Particularly when this is a common resource?"
Well, first of all, no it's not. Not really. Water is owned just like anything else. The fact that the government has come in and said "We will handle this. We will build the reservoir (which requires property, probably taken from someone else), build the water treatement plant (more property), bury all the pipes (property!), set the prices, and run the show." Just because the government owns it doesn't mean that it's truly owned in "common". If this is what you mean by calling it a 'common' resource, i.e., that everyone owns it equally, then I simply disagree. I though all you meant by common was that it is a resource that everyone makes use of it--i.e., we all use water. But it is not 'commonly' owned; it is owned by the government.
Or, and I get the paradox of property rights here, we can say that it is commonly owned, simply because there are no private citizens who are the owners. I'm fine with saying this, but then my answer is just that you need to remember that I believe water ought to be privately controlled. For one thing, one could argue that this would enable us to survive a drought much more comfortably, because the private interestes that profit off the water have every incentive to come up with ways to protect thier business in the case of a drought. Like that time I went to Bojangles and they told me they were 'out of business;' it's bad for business, man. If water were privately controlled, then companies could compete to deliver water to homes, and companies would be more likely than government to come up with viable backup plans in the event of a drought (like, as has already been mentioned in this thread, althernative reservoirs).
Anyway, it comes to the point that charities have to help poor people meet their basic needs when crappy things happen like our water runs out! That's just part of the deal; sorry. I thought that was what we are talking about; a drought that severely depletes the water supply. To say that "everyone has equal right to the water," becaue it's owned in 'common', isn't really an answer at all. First of all, 'right to the water' or not, if it doesn't rain we ain't gonna have any water for these people. Take your complaints about 'rights' to the clouds, or to God (not recommended). If our reservoir had, say, 100,000 gallons left in it, then saying "it's owned in common" tells us absolutely nothing about what we should do. Say we give everybody in Athens one gallon each; nice and equal since it's common property and all. And then two days from now everyone has drunk their portion and now the reservoir is empty. Now what? We need to get past talking about 'common rights' and start talking about "How the frick do we find a way to get water in here to the people?"
"This just simply isn't true. Water consumption has been reduced by roughly 20 percent in our community. I know for a fact that I have greatly changed my water usage habits because of the drought (i.e. we boil bottles and pacifiers rather than run the dishwasher an extra two or three times a week, and then use the boiled water to water potted plants outside), and I know of good many other folks who have done the same."
But, again, I didn't say that all people in Athens were using water carelessly inside their homes. I said that people were. I.e., some people. I have no doubt that water consumption has gone down somewhat; I wasn't denying that either. Overall consumption has gone down for at least two reasons, I'm sure:
a. the outdoor restrictions
b. people's consciences when they know there's a drought
But not everybody is equally conscientious (which you realize or you wouldn't endorse the outdoor restrictions), and some folks don't care about outdoor watering anyway. Some people I'm sure are still just using water to their heart's content inside their homes. And an hour long shower is worse than watering your lawn, isn't it? But overall the numbers have gone down, sure. But they would go down with higher prices, too. The argument I'm making is not "higher prices make consumption go down and water restrictions don't make consumption go down." My argument is that higher prices make consumption go down in a way that is more efficient. I.e., consumption goes down in a way that conserves water for its more important uses (as determined by the counsumers themselves), and it helps create the conditions under which water can be more readily re-supplied to the area if need be. I say bring on the tanker trucks, start looking for other land to buy up to build another reservoir (preferably by private companies who can compete with the ACC Water Authority), start piping water in from surrounding lakes in greater quantities. Lots of other things that can be done, and the incentives to do them are greater when people are responding to the incentives of the market prices rather than when people are responding to "Hey! Don't spray water on your shrubs!"
You didn't quibble with my pig analogy because I'd already complained about your quibbling with my Bob analogy. But I take your point about the greedy landscapers. You mean a whole bunch of rich people decide to buy water for landscaping, even though the prices have gone way up.
But as I said at the beginning, while I don't doubt that there are some opulent folks who might do this, most rich people will submit to higher prices. For one thing, most rich people don't get rich by throwing all caution to the wind and buying the same thing over and over regardless of changes in price. They tend to watch their bottom line a bit more than that. Maybe not the Kennedys and Bushes of the world, who inherit their wealth and have never had to concern themselvs with much of anything, but most wealthy folks don't get there entirely by inheritance. And so the idea that wealthy people, as a group, will just keep on watering their lawns in a drought, just because they can, is not plausible to me.
In other words, it's not like supply and demand only affects the poor and middle class folks. They all adjust to higher prices, the rich just keep on consuming the same stuff nonchalantly. That's not quite how it normally goes. Rich folks, generally, make adjustments to price changes too. In fact, being wise about such things often plays a contributing to their wealth in the first place.
It's similar to an argument against the hysterical levels of some defenders of the 'war on terror.' They would have us think that there are millions and millions of people throughout the world who are just itching to blow us all up. But the truth is that the number of people who really feel that way are quite small. How do I know? Becuase the reality is that it's pretty easy to be a successful suicide bomber. Any one of us reading this could, if we really wanted to, make it happen tomorrow. Even under ever-widening gaze of our cute little police state, we could still very easily wreak havoc. So why doesn't it happen more often than it does? Because most people are like you and me; they don't want to kill a bunch of innocent people.
Most rich folks are no worse.
So, we're back to a few rich folks consuming like crazy regardless of price (though even here progressive pricing, severe prog pricing, can help curb even the wildest millionaire's spendthriftery. I mean, we say that these folks are willing to consume no matter what, but what if water became 1 million dollars a gallon for every gallon over the amount needed for the necessities of life? Even Bill Gates would have to care.) But if it's only a few, then we're back to wondering how much of a problem their foolishness can really be, in the grand scheme of things.
"In that case, would you want an entity populated by self-serving people governed by a system of laws to address this or perhaps a entity populated by self-serving people governed by profit?"
I either prefer profits or I don't care. I'm not sure.
I don't care because, if all people are stupid and their stupidity leads to chaos anyway, then the system of laws to address this' are just written by the same stupid people, which was my original point about government? My claim has never been that when a person becomes an employee of the government that they suddently "become" stupid. My claim has always been a retort to the anti-market people who argue that we can't trust markets b/c people sometimes do stupid things. If you want to worry so much about stupid people in the market, then you have to worry about stupid people in the government, too. If you don't bring that argument up in the first place, then I don't go there.
On the other hand, some reflection does make me prefer stupid-profit seekers over stupid law seekers. Because at least in principle the profit-seekers are seeking sometihng which, if attained, can have good results. Law claims to do that which no law can do. So law seekers, whether stupid or wise, simply cannot succeed b/c of the impossibility of their task. Profit seekers are not in the same boat.
Anonymous, I'd like to point out that I've always been fine with differential pricing under the conditions I noted.
We've been in heavy duty conservation mode at my house since about june and use about half the average. So we're not much worried about water restriction as long as there's still water.
I suppose I'm just curious as to whether or not it is wrong or right, in this drought situation, for someone to hoard the water and then resell it to others for profit. And, if it is better or worse for those profits to be sent outside the community to global shareholders or kept within the local community. I'm assuming that the ACC-WBO spends it budget locally, at least relative to Coca Cola.
What water are these hoarders buying, exactly? The same water that is already being piped in? Or are they going to another source of water and buying it up to sell for a profit?
I'm not familiar with the details of Dasani, so forgive my being a bit thick here.
And, no, I haven't stopped being a postmilennialist. That question intrigues me, though.
Jmac, the two statements of mine that you juxtaposed aren't incompatible, as far as I can see.
Someone with millions of dollars could buy up almost all the water in the world to water their lawn? Why? This wouldn't just be irrational, it is mythical. Nobody would do this.
But ...
... but you can't predict that it will go up so high that a bunch of poor people will be 'priced out'.
In the first quote, I make a prediction (more of a statement, really; are there any people right now, with lower prices, who buy up millions of gallons just to use on their lawn?) about the way people would or would not behave.
In the second quote, I question whether a different prediction that you made was adequately subjected. I like one prediction, but not the other. What's the problem?
I'm not operating under some principle like "All predictions are ill-founded." I believe that some are okay, and some aren't. It's a case-by-case thing.
Yeah, Xon, ACC has made it clear that further violations that go beyond the fine can result in cancellation of water use. However, I think it has been reported that there have been no to half-a-handful of second-time violators. So, we are not at that point of state intervention, yet.
Dasani states on their website that they use the "local water supply" to draw their water. I take it that the bottlers in the various places of the region, therefore, use the water supply of that region. I don't think it too improbable for other bottlers to use similar methods for obtaining their water. Even so, my question did assume that the hoarder was using the same municipality/community water as what's piped in. It wouldn't be as interesting if the water were trucked in, though that's interesting in itself.
Also, as much as we say the water is a necessity for drinking, it has been pointed out that we more use water for chicken-guttin' in this town. I can't say for sure what Plan F rationings will do for that industry, but I do think that less water pressure in the pipe will cause all that minced chicken to sit somewhere, which has to be addressed by backing off on production, laying off workers, and selling less product. How much of our local economy depends upon those jobs, in comparison to landscapers? The original anonymous was concerned with the targetting of landscapers—would it have been more preferable to target everyone with the restrictions? I'm not sure, and anonymous can only say for sure, but it seems that the claim that progressive pricing is fairest and easiest is meant to say that the best way to target everyone is to target everyone's ability to pay. So, yes, perhaps it is preferable to place rations on everyone, just not through "laws" but rather through "pricing" (which seems to me still an act of law given that the water is currently owned by the local government; Xon's objections noted).
It also seems to me that water's a necessity for energy production, since whether it's nuclear or biomass or coal, we still convert water into steam. UGA uses a lot of water for heating and cooling its buildings. Cold winters mean running electrical heaters and gas furnaces, requiring motored fans to push that hot air through buildings. I do think the marketeers are right that we won't get to the point where people die of thirst. We will much sooner get to the point where energy issues pose the problem of where to draw water in sufficient quantities to keep up this quality of life.
Maybe I'm wrong about that.
Xon: you make my brain hurt and what I post below is now buried about 2 million posts ago (you really do seem to have a lot of time on your hands :-) ).
"But overall, the amount of something that is purchased goes DOWN in the community (which includes all the people, not just the rich people) when the price goes up."
Again, it depends on price elasticity. The less price elasticity, the less true this is.
"You say that I assume"
yes, you do, even if you don't recognize it. For your argument to work in ref to what you were talking about at that point, the 3 conditions I pointed out logically have to exist, whether you recognize them or not (Sorry!). Maybe take a logic class when you're not reading AUstrian economics.
"Um...I don't follow this. Someone with millions of dollars could buy up almost all the water in the world to water their lawn? Why? This wouldn't just be irrational, it is mythical. Nobody would do this."
Why is this any more mythical than the myriad Bob examples you have presented us? In fact, given your own supply and demand logic, it's perfectly rational and feasible, though admitedly unlikely --what's to stop someone w/ enough money in an unregulated market from buying up all the water for their own use, even if it were priced at $10,000 a gallon? Bill Gates could do it if he wanted to --the rest if us would die of thirst, and he'd have the greenest lawn in the world. That's the thing when you start arguing for unregulated markets. In the theoretical world what's sauce for the goose is sauce for the gander --if a good is available for purchase and someone has enough $ he can outbid all others and corner the market.
As to anti-trust legislation, are you seriously trying to argue that, left to their own devices, firms don;t try to develop monopolies (that grant them monopoly pricing) and, through aggressive behavior, that they don't prevent others from getting into the market to undermine their monopoly?
"Maybe take a logic class when you're not reading AUstrian economics."
Do they offer classes on logic? Where could I take one?
"Why is this any more mythical than the myriad Bob examples you have presented us? In fact, given your own supply and demand logic, it's perfectly rational and feasible, though admitedly unlikely --what's to stop someone w/ enough money in an unregulated market from buying up all the water for their own use, even if it were priced at $10,000 a gallon?"
The fact that nobody wants to do this. Just like there are very few people who want to blow people up to win 70 virgins in paradise, there are very few people who would want to "buy up all the water in the world for their own use." First, why would they want to do this? Humans are psychological creatures. Please describe the mental conditions that would have to obtain for a person to want to do this.
Second, nobody has done this now with prices much less than 10,000 a gallon, when it would be much easier to do so. But you are worried that if the price were RAISED that suddenly some rich guy (who didnt' want that much water when it wasn't even 10 cents a gallon) would want to buy ALL the water? Again, supply and demand. Which is not an "Austrian" idea.
"Bill Gates could do it if he wanted to --the rest if us would die of thirst, and he'd have the greenest lawn in the world. That's the thing when you start arguing for unregulated markets. In the theoretical world what's sauce for the goose is sauce for the gander --if a good is available for purchase and someone has enough $ he can outbid all others and corner the market."
The evil rich man buys ALL the water in the world (even at 10k a gallon, eh?) That's a nice story, but if a person wants to do something like that then he can certainly try. But see, historically market cornering doesn't work out so well (that is, unless the monopolist is in collusion with the government).
"I say, Buffy, shouldn't we buy up all the world's water and then charge people exorbitant rates to use it? We could make a killing!"
"A LOVEly idea, Hubert! Just lovely!"
Well, then have at it, chief. You have to pull off the following balancing act:
1. actually get all the other private owners of water in the world to sell their shares to you, voluntarily with no governmental coersion
2. raise prices to a level that is far above what the 'going' rate for water was before you bought up all the water.
3. Somehow pull off (1) completely before you try to do (2). Otherwise, you will give private owners who you haven't bought out yet a motivation to compete with you. They will be able to beat your high 'monopoly' prices. And their success will make them much less likely to sell to you now that they are kicking your entrepeneurial tail.
4. If you pull off (1) and (2), you must then somehow prevent any new competitors from coming into the market. What about someone who starts desalinating water at a price lower than your monopolist prices? What, are you going to own all the ocean water in the world, too? Are you going to buy up Antarctica? Are you going to acquire legal rights to water by-products from chemical processes? Are you going to own all the raindrops before they fall?
Monopolies are easy to topple, if competition is allowed. To prove me wrong, please provide a counterexample. Remember, monopolies that exist because the government protects them don't count.
By the way, I'm not being snarky there, however it may sound. I already know of a couple of examples of possibly-genuine monopolies that you might bring up, but I'm not doing your research for you. :-) Let's see what you actually come up with, and then we can discus what was really going on in those situations.
"The fact that nobody wants to do this. Just like there are very few people who want to blow people up to win 70 virgins in paradise, there are very few people who would want to "buy up all the water in the world for their own use.""
I didn't say "in the world" but no matter, that doesn't really change the argument, merely the details. The point is not whether anyone would want to do this any more than it is that people would "want" to die of thirst through lack of water. The point is that in an unregulated market it's a possibility (if, admitedly, a remote one). If you want to play the argument about supply and demand (as you have on myriad posts) then this is a logical outcome of your position. Whether it is unlikely --though not impossible-- that the situation described here would happen is besides the point. In your world, the market is rational, prices are rational, and if the market mechanism is such that it allows even the possibility of this outcome, then that's a rational outcome, according to your logic. The extremity of the example merely highlights the logic of your thinking. It says nothing about whether this would happen "in the real world".
"Monopolies are easy to topple, if competition is allowed."
I agree completely with you. Our point of divergence is that I would argue that w/out government regulation of the market, competition is squashed by the actions of selfish (in an Adam Smithian sense; not making any moral judgement here) individuals who want to maximize their own self-interest. Part of this self-interest is to not face competition because that way they can enjoy monopoly profits. You seem to think that govt only restrains competition whereas, in fact, w/out govt competition cannot happen. Again, to use the example of private property, it is govt --not the market-- which guarantees and regulates through the rule of law property rights, which are at the heart of "competitive" capitalism. Or am I mistaken?
"Let's see what you actually come up with, and then we can discus what was really going on in those situations"
I don't need to, as we are talking in the realm of the theoretical, and any understanding of theoretical economics shows that, unregulated, selfish individuals wish to expunge competition. If you want to talk at the realm of the empirical/ real world, then if you can show me a society where there is no government then we can use that as a starting point. It seems to me that you want to have your cake and eat it --you talk in the theoretical realm about supply and demand and prices (which is fine) then use realworld examples to undermine theoretical challenges to your position. Yet you retreat back to the theoretical world any time anyone else uses real world examples to challenge you. So, if you can find me a real world situation w/ no govt at all, wherein the market works perfectly, and wherein all consumers and producers have perfect information, then we can talk. Until then you're just grandstanding.
The point is not whether anyone would want to do this any more than it is that people would "want" to die of thirst through lack of water. The point is that in an unregulated market it's a possibility (if, admitedly, a remote one). If you want to play the argument about supply and demand (as you have on myriad posts) then this is a logical outcome of your position. Whether it is unlikely --though not impossible-- that the situation described here would happen is besides the point. In your world, the market is rational, prices are rational, and if the market mechanism is such that it allows even the possibility of this outcome, then that's a rational outcome, according to your logic. The extremity of the example merely highlights the logic of your thinking. It says nothing about whether this would happen "in the real world".
But I have never defined whatever the market does as 'rational.' You keep insisting that that is a logical entailment (any advice about where I can go to take that class on logic, by the way?) of my position, but it isn't. Unless you are using some definition of 'rational' I'm not aware of.
The free market that I advocate is nothing more than everyone exchanging their property for other people's property by mutual volutnary agreement. There are no laws or coersive authorities interfering with this voluntarism. That's it. That's my idea of the 'free market.' It has nothing to do with everyone being 'rational;' it has to do with people being free to do what they want with their own property. Doing what they want, not necessarily what is 'rational'.
So it is completely relevant to consider whether a person would 'want' to buy up all the water in an area or the world. The free market is a place where people can do what they want (so long as it does not infringe upon the property rights of others). You tell me that the market makes it 'possible' that a rich guy could buy up all the water in the world. Well, if this is not something that anyone would ever want to do, then no, my position does not make this a possibility.
Plus, I don't know about you, but I am trying to talk about actual solutions to water shortages here. I'm not just debating hypothetical ideas about markets, I'm trying to actually propose the market as a solution for the real situation we are in. So bringing up a possibility which even you say is remote (and I would deny outright) seems like an irrelevant argument for you to make.
Me: "Monopolies are easy to topple, if competition is allowed."
Anon: I agree completely with you. Our point of divergence is that I would argue that w/out government regulation of the market, competition is squashed by the actions of selfish (in an Adam Smithian sense; not making any moral judgement here) individuals who want to maximize their own self-interest. Part of this self-interest is to not face competition because that way they can enjoy monopoly profits. You seem to think that govt only restrains competition whereas, in fact, w/out govt competition cannot happen. Again, to use the example of private property, it is govt --not the market-- which guarantees and regulates through the rule of law property rights, which are at the heart of "competitive" capitalism. Or am I mistaken?
Yes, I think you are mistaken. But that's okay, it's a free country.
You say that you agree with me that monopolies are easy to topple through competition but you don't really seem to agree with me because when you say that "competition is squashed by the actions of selfish indivudals who want to maximize their own self-interest," that's not agreeing with me.
Perhaps you could elaborate as to how a "selfish individual who wants to maximizde his own self-interest" ends up "squashing" competition. Who is this self-interested person you are thinking of? A monopolist? But monopolists do not have the power to squash competition on their own (without government assistance). Their higher prices always create huge incentives for competitors to rise up. There is nothing the monopolist can do about it (except realize that trying to charge such high prices is not the way to go as far as good business is concerned). So who is it you are talking about? Who are these people who "squash competition?"
Then when I asked you to come up with an actual example of an evil monopoly that required the government to come in and regulate so that the market could 'work' properly, you simply refused to provide any examples and told me that I'm the one who is grandstanding. (Even though you are the one who made the sweeping claim, complete with your rhetorical disbelief that I can actually argue against your understnading, that these things happen frequently enough to require regulation and goverment interference in the market. You brought it up, but then said you are under no obligation to give examples of what you have in mind):
"I don't need to, as we are talking in the realm of the theoretical, and any understanding of theoretical economics shows that, unregulated, selfish individuals wish to expunge competition."
There be people who wish to do this, but they are not able to do so. That's both the reality and the theory. I'm sure Bill Gates wishes Apple couldn't compete against him. But they can, and they do, and there's nothing he can do about it. There are a lot of people who prefer Apple. Bill Gates can lie awake every night wickedly wishing for total domination, but he can't get it because the market won't let him.
"If you want to talk at the realm of the empirical/ real world, then if you can show me a society where there is no government then we can use that as a starting point. It seems to me that you want to have your cake and eat it --you talk in the theoretical realm about supply and demand and prices (which is fine) then use realworld examples to undermine theoretical challenges to your position. Yet you retreat back to the theoretical world any time anyone else uses real world examples to challenge you."
I'm sorry, did you give any real world examples to challenge my position? What were those again?
I simply am not doing the bait-and-switch you are accusing me of. Free market economics is a theory, and so it has theoretical argumentation behind it. It also plays out in the real world, and so real world occurrences can be explained in terms of the theory. This is not a problem for my position.
You ask for a society where there is no government interference in the market as though we can't discuss free market economics unless there is such a thing. But this is like saying that we can't discuss Richardson's tax proposal since it hasn't been put into place yet. That's not true, and it's falsity has nothing to do with this non-existent conflict between 'theory' and 'reality.'
"So, if you can find me a real world situation w/ no govt at all, wherein the market works perfectly, and wherein all consumers and producers have perfect information, then we can talk. Until then you're just grandstanding."
Where did 'perfect information' come from? Is this another magical 'implication' of my view that you have astutely seen but that I coyly refuse to acknowledge I hold?
And your reasoning works just as well against any economic theory. As soon as you can find me a real world situation with a government that regularly meddles in market activity, where eveything works perfectly (whatever that means) and everybody has perfect information (whatever that has to do with anything), then we can talk. Until then, your economic position is just grandstanding.
Do they offer classes on logic? Where could I take one?
Any state U. Philosophy or law.
Thanks, Nicki!
Sho' 'nuff.
Okay, I can't take it any more. I'm being snarky about the logic class stuff. Sorry, please forgive my sarcasm.
I’M USING CAPS HERE FOR CLARITY (I AM NOT SHOUTING)
But I have never defined whatever the market does as 'rational.' You keep insisting that that is a logical entailment (any advice about where I can go to take that class on logic, by the way?) of my position, but it isn't. Unless you are using some definition of 'rational' I'm not aware of.
YOU HAVE CONSISTENTLY ARGUED THAT PRICES AND THE MARKET ARE THE MOST RATIONAL WAY OF DETERMINING DISTRIBUTIONS OF RESOURCES.
The free market that I advocate is nothing more than everyone exchanging their property for other people's property by mutual volutnary agreement. There are no laws or coersive authorities interfering with this voluntarism. That's it. That's my idea of the 'free market.' It has nothing to do with everyone being 'rational;' it has to do with people being free to do what they want with their own property. Doing what they want, not necessarily what is 'rational'.
WELL, THEN, YOU HAVE AN IDEA OF THE “FREE MARKET” THAT WILL NEVER EXIST IN REALITY, SO WHY BOTHER THEORIZING IT? FOR YOUR VISION TO APPEAR IN THE WORLD WE WOULD HAVE TO GET RID OF ALL POWER RELATIONS OF CLASS, GENDER, GEOGRAPHIC LOCATION, KNOWLEDGE ETC SO THAT WE WERE ALL ATOMISTIC INDIVIDUALS WITH COMPLETE FREE WILL AND COMPLETE FREEDOM OF CHOICE. AIN’T GONNA HAPPEN, MY FRIEND
The free market is a place where people can do what they want (so long as it does not infringe upon the property rights of others). You tell me that the market makes it 'possible' that a rich guy could buy up all the water in the world. Well, if this is not something that anyone would ever want to do, then no, my position does not make this a possibility.
THIS IS THE BIGGEST LOAD OF KANTIAN IDEALIST NONSENSE I HAVE READ IN A LONG TIME. THE MARKET OPERATES THE WAY IT DOES BECAUSE WE WANT IT TO OPERATE THAT WAY? THAT PEOPLE GET TO DO “WHAT THEY WANT” IN THE MARKET PLACE? OK, I WANT TO EARN A MILLION DOLLARS AN HOUR. GIMME A BREAK! AND BESIDES, HOW DO YOU KNOW THAT BUYING UP ALL THE WATER IS NOT SOMETHING ANYONE WOULD EVER WANT TO DO? ARE YOU NOW OMNISCIENT? OK, SO I’LL PLAY ALONG. I CAN STATE CATEGORICALLY THAT IF I HAD THE MONEY I WOULD WANT TO BUY UP ALL THE WATER AND MAKE SURE NO ONE ELSE HAD ACCESS TO IT SO I COULD CHARGE WHATEVER PRICE I WANTED. THERE, NOW YOUR POSITION IS A POSSIBILITY.
Plus, I don't know about you, but I am trying to talk about actual solutions to water shortages here. I'm not just debating hypothetical ideas about markets, I'm trying to actually propose the market as a solution for the real situation we are in. So bringing up a possibility which even you say is remote (and I would deny outright) seems like an irrelevant argument for you to make.
I, TOO, THINK THERE IS A NEED FOR A BETTER PRICING MECHANISM. OUR DISAGREEMENT IS, THOUGH, A THEORETICAL ONE. YOU SEEM TO THINK THE MARKET WILL SOLVE ALL OUR WATER WOES; I DON’T. IT’S PART OF THE SOLUTION BUT GOVT REGULATION, IMO, IS ALSO A PART.
Yes, I think you are mistaken. But that's okay, it's a free country.
FUNNY RESPONSE BUT YOU’D GET AN F IN MY CLASS FOR YOUR RESPONSE. SO, DOES THE GOVT GUARANTEE THROUGH THE RULE OF LAW THE PROPERTY RIGHTS WHICH ARE AT THE HEART OF A CAPITALIST ECONOMY, YES OR NO? IF NO, WHO DOES, IYO?
You say that you agree with me that monopolies are easy to topple through competition but you don't really seem to agree with me because when you say that "competition is squashed by the actions of selfish indivudals who want to maximize their own self-interest," that's not agreeing with me.
I DO AGREE W/ YOU. WHAT I AM SAYING IS THAT, PARADOXICAL AS IT MIGHT SEEM, COMPETITION CAN ONLY BE GUARANTEED VIA REGULATION OF SOME SORT, EITHER THROUGH INDIVIDUAL ACTORS COMING TOGETHER TO AGREE TO NOT DEVELOP MONOPOLIES OR VIA GOVT FIAT, AS W/ ANTI-MONOPOLY LAWS. IN OTHER WORDS, A COMPLETELY UNTREGULATED ECONOMY –IF THAT WERE EVER POSSIBLE—WOULD NOT BE ONE IN WHICH WE WOULD NECESSARILY SEE COMPETITION, GIVEN THE “NATURAL” (I USE THAT TERM ADVISEDLY ) TENDENCY OF INDIVIDUALS TO WANT TO CORNER THE MARKET TO GAIN MONOPOLY PRICING ADVANTAGES
But monopolists do not have the power to squash competition on their own (without government assistance).
RUBBISH, THEY DO IT ALL THE TIME WHEN THEY BUY OUT THROUGH ACQUISITIONS AND MERGERS COMPETITORS, OR WHEN THEY ENGAGE IN DUMPING FOR A TIME LONG ENOUGH TO PUT COMPETITORS OUT OF BUSINESS
Their higher prices always create huge incentives for competitors to rise up.
YES, ASSUMING THAT THE COMPETITOR CAN GET INTO THE MARKET AND HAS ENOUGH CAPITAL, SKILL, ETC TO DO SO. SOMETIMES THEY WILL BUT OFTEN THEY DON’T –TRIED STARTING AN AIRCRAFT MANUFACTURING COMPANY OR A STEEL MILL RECENTLY? GOT A SPARE FEW BILLION SITTING AROUND WAITING FOR THIS OPPORTUNITY?
There is nothing the monopolist can do about it (except realize that trying to charge such high prices is not the way to go as far as good business is concerned). So who is it you are talking about? Who are these people who "squash competition?"
POWERFUL CORPORATIONS
Then when I asked you to come up with an actual example of an evil monopoly that required the government to come in and regulate so that the market could 'work' properly, you simply refused to provide any examples and told me that I'm the one who is grandstanding.
QUITE, AND I SAY IT AGAIN. WE ARE ARGUING AT THE THEORETICAL LEVEL HERE, SINCE I WAS RESPONDING TO YOUR THEORETICAL ARGUMENT. GOVTS REGULATE MONOPOLIES AND OLIGOPOLIES ALL THE TIME. SINCE WE HAVE LAWS TO PREVENT SUCH MONOPOLIES, ONLY BY ABOLISHING THEM COULD EMPIRICAL EXAMPLES BE SHOWN, AND SINCE THAT ISN’T LIKELY TO HAPPEN THEN WE ARE STUCK IN THE THEORETICAL REALM. BUT, HAVING SAID THAT, THIS THEORETICAL ARGUMENT WILL NOT BE ANSWERED BY EMPIRICAL EXAMPLES, BECAUSE WHATEVER EXAMPLE I GIVE YOU YOU WILL ALWAYS HAVE THE RETORT “WELL, THE MARKET WASN’T OPERATING PROPERLY ANYWAY” OR SOME SUCH WHICH. IT WILL BE ANSWERED BY PARSING THE LOGIC OF YOUR THEORETICAL STATEMENTS –THERE WE GO AGAIN, THAT PESKY LOGIC.
I simply am not doing the bait-and-switch you are accusing me of. Free market economics is a theory
EXACTLY
, and so it has theoretical argumentation behind it. It also plays out in the real world, and so real world occurrences can be explained in terms of the theory.
REALLY? WHERE? WHERE IS THERE A SOCIETY/ ECONOMY WHERE THERE IS NO GOVT REGULATION FOR YOU TO TEST YOUR THEORY? WHERE ARE THERE “FREE MARKETS” THAT OPERATE W/OUT SOME GOVT PLAYING SOME ROLE?
You ask for a society where there is no government interference in the market as though we can't discuss free market economics unless there is such a thing. But this is like saying that we can't discuss Richardson's tax proposal since it hasn't been put into place yet. That's not true, and it's falsity has nothing to do with this non-existent conflict between 'theory' and 'reality.'
BUT THIS IS LIKE COMPARING APPLES AND ORANGES. RICHARDSON’S TAX PLAN MAY COME TO PASS OR IT MAY NOT, BUT WE CAN STILL DEBATE ITS (IL)LOGIC. A WORLD W/OUT GOVT AND/ OR REGULATION WILL NEVER –REPEAT, NEVER—COME ABOUT. SO, THE “FREE MARKET” IS A COMPLETELY HYPOTHETICAL ENTITY AND ALWAYS WILL BE.
And your reasoning works just as well against any economic theory. As soon as you can find me a real world situation with a government that regularly meddles in market activity, where eveything works perfectly (whatever that means) and everybody has perfect information (whatever that has to do with anything), then we can talk. Until then, your economic position is just grandstanding.
EXACTLY. I CAN’T THINK OF A SOCIETY WHERE GOVT DOESN’T REGULARLY “MEDDLE” IN THINGS IN ALL SORTS OF WAYS –FROM MORE OBVIOUS EXAMPLES LIKE PRICE CAPS AND TAXES TO LESS OBVIOUS ONES LIKE BUILDING ROADS AND SCHOOLS WHICH ARE NECESSARY FOR THE ECONOMY TO OPERATE. I AM NOT CLAIMING THIS IS SOMETHING THAT WORKS PERFECTLY AND NEVER HAD –GOVT HAS MANY FLAWS. AND SINCE WE WILL NEVER HAVE PERFECT INFO WE WILL ALWAYS HAVE MARKET “IMPERFECTIONS”. I AM NOT CLAIMING THAT WE WILL EVER HAVE A WORLD W/ PERFECT INFO, BECAUSE THAT WOULD BE EQUALLY ABSURD. WHAT I AM SAYING, DEAR XON, IS THAT YOUR ARGUMENTS ARE NOT GROUNDED IN ANY REALITY THAT WILL EVER COME TO PASS. THEY’RE FUN IN TERMS OF INTELLECTUAL JOUSTING AND THINKING THROUGH THE LOGIC OF VARIOUS POSITIONS, BUT HAVE NOTHING TO DO W/ REALITY.
To be sure, Xon, as I understand his general argument, doesn't say that the reasons why people make the choices they do are in themselves rational. He only says, consistent with the Austrian economic model and with a psychology from Jonathan Edwards, that people do have reasons for what they do, that people do not make completely indeterminate choices. These choices do not have to be "rational" in the sense that they are well-formed, justified and coherent inferences available for public or common scrutiny: "rational" as the exercise of reason as opposed to sophistry, psychosis, or fallacy. Rather, they are "rational" in the sense that they have a proximate cause in someone's network of beliefs: "rational" as a belief having a basis or foundation in another belief. Xon, however, doesn't use 'rational' in this other sense to describe individual choices, and it'd be difficult to find it if he's consistent about it.
What Xon does say and has said is that, taken as a whole, a system of subjective valuations in economics, when left to itself, produces a rational distribution of goods, services, and money. (This is not to say an equal distribution, nor does it say an unequal one. This is more general than that.) The chaos of ordinary human subjectivity produces an ordered and efficient social site of exchange. It is rational in that it is subject to discernable laws, in a sense similar to how quantum mechanics, as chaotic and indeterminate as particular instances may be, is yet quite accurately described with mathematical rigor.
It's similar to saying that the Presidency is a noble institution: this is not to say that every and each President is noble.
Also, I don't think it's a persuasive claim that Xon and the marketeers are "idealist" whereas those who advocate some sort of government regulation of the market are "realist" or deal with the "real world." We're all using the same world from which to draw our judgments about conduct, and from those judgments constructing a framework in which we interpret and interact with that world. Xon, and the quippy anonymous with a sense of humor, note that everyone acknowledges price as a means of controlling behavior. This is a real world observation, and one we use daily to structure our lives and to embody. How is it idealist if almost all of us recognize it as a fact of life? Even if we do question its ethical or moral dimensions, we still recognize that this economic condition is predicated upon it. We differ, instead, on how far to take it as a law, whether it is fundamental or instrumental. This is a difference that has nothing to do with whether we deal with theory or with praxis: we're all intermixing and coherently weaving these two together.
Xon's argument is idealist in that he believes that simply wishing something makes the world change ("Well, if this is not something that anyone would ever want to do..."). In other words, and following Hegel and Kant, in this view of things it is one's psyche which brings order to the world --which is, of course, why the Austrian economists spent so much time talking about psychology and how it is our psychological wants that shape how the world works economically (as opposed to, say, material class relations). Of course, they also spent so much time talking about psychology because they were hanging out w/ Freud in Vienna, but that's another story :-)
I agree w/ you when you say that Xon does NOT "say that the reasons why people make the choices they do are in themselves rational" by any "objective" standard --whatever that might be and whomever may decide that rationality. But he does commit a kind of intellectual cart before the horse act which is, actually, very postmodern, to wit: their choices may not be rational in an "objective" sense, but because they make them they are rational to them, therefore they are rational choices. By this logic, all decisions are rational ones. When everything is "rational" then the concept loses its analytical coherence and power.
"RUBBISH, THEY DO IT ALL THE TIME WHEN THEY BUY OUT THROUGH ACQUISITIONS AND MERGERS COMPETITORS, OR WHEN THEY ENGAGE IN DUMPING FOR A TIME LONG ENOUGH TO PUT COMPETITORS OUT OF BUSINESS"
Well, since "they do it all the time," could you please provide an example or two? Someone who, through acquisitions and mergers, squashes all competition for an extended period of time? Or someone who "engages in dumping" to drive competitors out of business and then raises their prices much higher later on? Actual examples, please. Don't tell me you have no obligation to provide them; you have just claimed that my view is "rubbins" because this sort of thing happens "all the time." Well, then, bring forth thy evidence.
Which, to be fair, you actually do provide what I assume are meant to be examples of this sort of thing, so let's look at those:
"YES, ASSUMING THAT THE COMPETITOR CAN GET INTO THE MARKET AND HAS ENOUGH CAPITAL, SKILL, ETC TO DO SO. SOMETIMES THEY WILL BUT OFTEN THEY DON’T –TRIED STARTING AN AIRCRAFT MANUFACTURING COMPANY OR A STEEL MILL RECENTLY? GOT A SPARE FEW BILLION SITTING AROUND WAITING FOR THIS OPPORTUNITY?"
There is no monopoly in aircraft manufacturing, nor in steel milling. There are a relatively few number of corporations that produce the vast majority of the products, but that's not a monopoly. These corporations still compete with one another. (Of course, steel mills and aircraft manufacturers are also subsidized by the government, so the competition is skewed by that. But since I'm against government subsidies of this sort, this is not a problem for my position. In fact my position predicts that government subsidies skew the market.)
You also answered my question of who, exactly, "squashes competition" by saying "HUGE CORPORATIONS."
You're condemning all huge corporations in general, then? Or are you thinking of some in particular? Contrary to what many think, free-market libertarianism is not 'corporatist'. To whatever extent corporations are subsidized by the government (i.e., 'corporate welfare'), that's a bad thing and it is an anti-market practice. That sort of government subsidization and favorite-playing can lead to the stifling of competition, to be sure. But, again, that's not an example of the "free market" letting the big bad corporate wolf stifle competition. It's the government who does the stifling, by giving special deals and assistance to some corporations and industries but not to others. That is not free-market activity.
Although, again, I don't know precisely what corporations you have in mind...
As to the claim that since the free-market I advocate has never and will never exist (I agree with the former claim, but not necessarily the latter) we are therefore not able to discuss it, that's just not true. Charles (Polusplaghnos) already defended my overall view more than adequately on this score. He does not agree with me, yet he understands my position properly.
In politics, we discuss things in terms of moving towards an ideal all the time. It doesn't matter whether the ideal itself is possible; we can still discuss whether or not a particular move in that direction would be positive or not.
For instance, take the minimum wage for one example. Abolishing the minimum wage would not suddenly turn us into a total free market economy with aboslutely no government interference in economic matters, but it would be a (small) move in that direction. And clearly we can try to discuss what would happen if there were no minimum wage, whether or not we think it a realistic possibility of it happening or not.
When I say that my theory "works out in the real world" (imo), I am not saying that there are actual examples of pure free market economies that we can look at and discuss. What I am saying is that this should be the goal towards which we strive, and that incremental moves in that direction (most often, but incremental moves can be funny things sometimes) will tend to improve the overall economic situation over what it was before the move was made. The 'theory' of free-market economics, for instance, tells us that the minimum wage puts people out of work. That's a 'real world' application of the theory, whether or not there are any pure free market economies in existence or not. I defer the rest of my time on this issue to the fine comments Charles already made on my behalf.
"THIS IS THE BIGGEST LOAD OF KANTIAN IDEALIST NONSENSE I HAVE READ IN A LONG TIME. THE MARKET OPERATES THE WAY IT DOES BECAUSE WE WANT IT TO OPERATE THAT WAY? THAT PEOPLE GET TO DO “WHAT THEY WANT” IN THE MARKET PLACE? OK, I WANT TO EARN A MILLION DOLLARS AN HOUR. GIMME A BREAK!"
To put this as politely as I know how, you seem obsessed with finding the right ideological label for me (other than the one I claim for myself, of course, because we cn'at just accept my own summation of my position as accurate), but this project is not going well for you. You are wrong yet again, and Charles probably finds it hilarious to hear me called a Kantian idealist. But put that aside.
When I say that the free market allows people to do what they want, I don't mean that in some absolute sense. "I want a million dollars," "I want to fly by flapping my arms," "I want to pick apples out of my back yard and then sell them for 100 dollars an apple," etc. What I mean is that people are able to do what they want with their own resources, so long as they do not violate the voluntary actions of others (I realize this 'free so long as you don't infringe on others' formulation is probably what you are identifying as 'Kantian' in my position, but there are many non- and anti-Kantians who would also affirm it. Like Mill, for starters.) You can only sell apples for whatever price you can convince someone else to pay. But as to whether you want to sell your apple or eat it yourself, or whether you want to spend your time doing something besides picking apples, these things are all up to.
If you have ten million dollars in the bank, then you can do what you want with it. You may spend, or hold onto, as much of the money as you want on whatever you want*. If you only have 500 bucks to your name, then obviously you can't just will yourself into a million dollars (unless you're the federal reserve, badda-bing!). But you can do whatever you want with that 500 bucks. This is what I mean by "do whatever you want." I thought this was fairly obvious from my previous explanations, but c'est la vie.
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*-A slight hiccup between my position and the anarcho-capitalist 'Austrian' position at this point. I don't want to lecture about it, but I do want to acknowledge that it is there. I actually am 'okay' with the idea that certain activities and products can be outlawed altogether (although you must take into account the negative side effects of black markets that will often result) on moral grounds. So, for instance, I have no problem with a government outlawing child porn, and that would qualify in some sense as an 'interference' with the market, since presumably there are people out there who want to buy child porn and I'm saying "No, you can't, at least not legally." But such things are few and far between, are reserved only for the gross immoralities, and are not efforts to 'profit' off the vice (like 'sin taxes' on cigarettes). But 'pure' Austrianism would say that the market should dictate how much child porn we have in our society, just like anything else.
Let's see, what's left? (These are some long exchanges we're having, forgive me if I miss something...)
"FUNNY RESPONSE BUT YOU’D GET AN F IN MY CLASS FOR YOUR RESPONSE."
Oh, you're a teacher? Me too. What do you teach? Are you at UGA?
Anyway, I'd get an F for being funny?
SO, DOES THE GOVT GUARANTEE THROUGH THE RULE OF LAW THE PROPERTY RIGHTS WHICH ARE AT THE HEART OF A CAPITALIST ECONOMY, YES OR NO? IF NO, WHO DOES, IYO?
I am a bit leery of 'rights' talk, which makes me weird for a libertarian. But, granting the basic idea behind why people talk that way, I am more-or-less a 'classical liberal.' I like the Declaration of Independence, the Constitution, and the Articles of Confederation (most of all!). The idea in all those documents is that people have 'natural' (or 'human') rights to their life, liberty, and property (and I would argue that all of these are basically one: property). These natural rights are given by, ahem, their Creator, not their government. The government has no 'right' to tell people what natural rights they have. ('Right' is an ambiguous term, of course, one of the reasons I am leery of such talk. There are other notions of 'rights', such as legislative or civil or entitlement rights, in which the government grants certain priveleges to people through its laws. But these are a lower-order kind of right, and can never override the natural rights that we have no matter what the government says.) The Constitution does not 'give' us our rights, it simply recognizes and orders the government to respect the rights we already have.
The right to property is fundamental to all human civilization. Without it there can be no civilization. For the government to infringe upon that right by claiming ownership for itself over people's bodies or over the fruits of their labor is a grotesque tyranny that amounts to little more than slavery.
We have the right to our property, to dispose of it as we see fit, whether or not the government acknowledges that fact.
Fortunately, most governments in western civilization do acknowledge it, at least kind of. Which is one reason western civilization has done well for itself, historically speaking.
When a just government, deriving its powers from the consent of the governed, acknowledges people's property rights, then in that sense I would say that it 'guarantees' them through the legal system. So, if someone violates my property rights, I have recourse to the government to restore my rights insofar as that is possible. If a man burns leaves and causes smoke damage to my house, he has harmed my property, and I have every right to sue him, or whatever. In that sense, the sense that the just government operates a system of courts in which violations of property rights are punished, we can say that the government 'guarantees' people's property rights. It "gets their back" and says "If you mess with dude's property rights, we're going to come down on you. And that goes for everybody."
But, if the government is not just, if it declares that people do not in fact own their own bodies, lives, or property, then this doesn't change the underlying fact that they do still have those rights. The government says "nuh uh", but the correct answer is "yeah huh". And if there were no government at all, hard as that is to imagine, people would still have these natural rights (and many people would probably cooperate reasonably well and respect one another's rights, too). So government is in no way necessary for people to have rights, on my view. On the contrary, government exists for the purpose of defending the rights that the people do in fact have no matter what it thinks, or else it shouldn't exist at all.
"Xon's argument is idealist in that he believes that simply wishing something makes the world change ("Well, if this is not something that anyone would ever want to do...")."
Um, no that's not my argument. Simply wishing something does not make the world change. If that were so, then how could I argue for the law of supply and demand, which clearly imposes certain constraings upon people's wishes whether they like it or not?
However, in an economy in which people do whatever they want with the resources they have, in conformity with other people having the same ability (i.e., in a free market), then people don't do things with their money that they don't, in some sense, 'want' to do. I mean, I might now 'want' to spend 10k for a car. But if I feel like a car is an important thing for me to have, and I value it more than I value the 10k in my bank account, then I go ahead and buy the car even though of course if I were emperor of existence I would have simply taken the car for free. But I 'wanted' the car in the sense that I had the choice to buy the car or not (no coercive interference with my decision; no government using force to try to get me to do one thing or the other), and I chose to buy it. I chose to buy it because, faced with the choices that I had at that moment, this was my preference. That's what the Austrian free market is, and nothing more. It is only in that sense that I say that people 'do what they want' in a free market.
So, let's look back at your 'rich guy buys all the water' example. You've actually given two permutations of this, and they are subject to slightly different analyses. First you proposed a guy who would buy up all the water in the area simply to use it on his lawn. I said that this was a virtually unbelievable proposition; nobody would ever make the choice to do that in their right mind. Nobody who was faced with the option (so, they have enough money to buy all the water in an area), the option to either spend tons of money buying all the water in the area and then using that water on their lawn (that's it??) or to do something else with all that money (maybe buy some water, and some other things, maybe buy no water at all, etc.), would choose to buy all that water. Not for lawn watering.
Now, your second and different example is the aspiring monopolist, who wants to buy all the water in an area so that he can then turn around and re-sell it to others for huge profits. I do not deny that there might be people who want to do that, in the sense that they like the sound of the idea and they have the money to make a go of it.
But then the law of supply and demand kicks in again, and limits the would-be monopolist's ability to actually corner the water market in the area, and it certainly will hinder his ability to keep it cornered for long even if he pulls it off (and, again, even accomplishing the feat of 'cornering' the market, without government assistance, is an extraordinarily rare occurrence).
The simple realities of people living in economic community, exercising their own property rights, not government interference, is what makes things very difficult for the would-be monopolist. (And now watch my hands carefully on this next bit, because I'm actually giving an argument here. I am not just asserting that what I say is right because I say so.)
Mr. Monopolist buys the local reservoir that provides all the piped-in water for a community, as well as the water treatment plant and the water distribution business. He now owns the entire network of water distribution for the area as well as the source of water for that network of distribution (which, by the way, is what most local governments do in this country, and yet you don't seem to worry about the monopoly in that case, do you?). This may allow him to be the sole provider of water to the area for a time, but he is not a 'true' monopolist because there is still a lot of other water available. There are other lakes that are not currently on the system. There is water that can be trucked in. There is drinking water at Kroger. People can pump their own water from wells, etc. Now, if the monopolist starts charging really high prices (much higher then they used to be before he bought the water network), then people will be unhappy with the price change. Their own subjective evaluation of the choices that are available to them will cause many of them to say, "Hey, I really am not happy with paying this much money for piped-in water." Of course, as long as the monopolist is the only game in town, then they have little choice, except to go without piped-in water altogether (which is admittedly unlikely). But there will be some adjustment in the demand for water. More people will get at least some of their water from other sources--Kroger, wells, etc. But as long as the monopolist is happy with how much more profit he's making, he probably won't mind his customers cutting back a little on their volume.
But, the fact alluded to above that these customers are not happy with the price means that they will gladly accept a lower price if it were made available to them. If someone else could provide piped-in water for a cheaper cost (or provide non-piped-in water at sufficient volume for a cheaper cost), then that person would be sitting on an entrepeneurial goldmine. What can the monopolist do at this point? And you can't say it's not possible for the new competitor to buy up water, because the monopolist was able to do it per your own premise! The competitor can either buy up water in the area other from sources other than the resrvoir owned by the monopolist, or he can bring water in from other places, or he can desalinate seawater, etc. He can do anything that he thinks can be done cheaply enough so that he can still sell his water for less money than the monopolist but still turn a profit. People who are upset with the monopolist's prices will flock to this competitor, and the monopolist will have no choice but to lower his price to compete with the newcomer.
What else is the monopolist going to do? Try to preempt all newcomers by buying up all the water in the area, not just the water in that one reservoir? Buy all the lakes, ponds, and streams? Collect all the rain? Buy all the water that is outside the area but close enough to be trucked in? Buy rights to all the seawater that might be desalinated?
The common refrain among market interventionists is that market dominators will 'underprice' their stuff for a while, even taking a loss for a while, in order to drive out competition. Then they will raise the price up really high after the competition is gone. There are multiple problems with this:
1. It doesn't actually happen. The Sherman Anti-Trust people, to use just one example, claimed that this is what Standard Oil did, but they didn't. No proof whatsoever, and in fact the more dominant Standard Oil became in the market the lower prices went.
2. It is insane business practice. To willingly take a loss in the hopes that later on you can raise your profits back up is not a likely strategy. As soon as you raise the prices back up again you've just created the incentive all over again for a new competitor to come into the field. So you could very well be setting yourself up for an up-down roller coaster.
Now, if the government comes in and says "We will use violence to make sure that nobody can compete with you," or if the corporation decides to use violence against competitors and the government just passively says "that's okay with us," then you've got a disaster on wheels. But violent coersion is not the free market.
On a local level, Wal-Mart is a good example. It routinely drives out competition by creating short-term losses in order to offer products at untenably low prices. When competitors go out of business, the prices go up.
Where has this happened, Nicki? I don't see prices at Wal-Mart going up in any significant way. Prices bounce up and down, but they do that at all stores. (The Wal-Marts in Athens still, after five years of us living there, could not find a consistent price for Propel water. Just an example my wife and I noticed.) Sometimes Wal-Mart is more expensive than local competitors, (in all things caveat emptor) but that means they are not a monopoly after all.
I assume we're talking about small towns where the only store they end up with is Wal-Mart. (Although in this day and age, a lot of folks will drive a few towns over to go to competitors. Hardly anyone is that isolated anymore to where they literally have only one store they can choose to shop at.) But I'd like to see the data that Wal-Mart's prices end up being higher than what the 'local' store had charged before Wal-Mart outcompeted them.
http://en.wikipedia.org/wiki/Criticism_of_Wal-Mart
I guess I'm a victim of close association, since Xon and I have shared similar though divergent philosophical developments since high school, but I don't see Xon as saying that it is just one's wishes that change the world. I take him as arguing that our actions have their causes in us, ultimately. von Mises wrote much on praxeology, not just on psychology, didn't he? I think Xon takes a close line with that, in that he analyses behaviors, or actions-in-the-world, in terms of their subjective content.
I can accept an analogy to something similar to a Kantian architectonics, but I'd have to disagree with a reading of Xon, Kant, and Hegel (!) as working in terms of changing the world through thought. I admit, though, I have a more leftist reading of Hegel, and as such I don't get along with Kant.
As for the claim that he's being somewhat postmodern when it comes to claiming there are reasons for our actions, I don't think that's anymore postmodern than Pascal's "the heart has its reasons," but perhaps I'm misconstruing your criticism of it. Incidentally, I don't think Xon is as terrorized at the charge of being postmodern as he would have been, say, four years ago.
Although, yeah, he's not a Kantian. No ardent defender of the free market could be, I reckon.
Thanks for the link, Nicki! That wiki article didn't give any actual examples of Wal-Mart using "predatory pricing" temporarily and then driving its prices back up, though. In fact, even on the charge of 'predatory pricing' itself, the article provided no evidence of wrong-doing on Wal-Mart's part.
Not true, Xon. It proves that what they did was not illegal in those states -- not that they didn't do it.
Those states have laws against 'predatory pricing,' Nicki. What is your definition of pp? Maybe we are just debating air here.
And, also, the article never says that Wal-Mart did any of that stuff. It says they were accused of doing so. Where is the evidence that they did it?
Depending on the how we define 'predatory pricing,' I don't have a problem with it anyway. So there's that. I'm just saying that I don't see it happening.
"Both cases were settled out of court with no fine and no admission of wrongdoing. In the Wisconsin case, Wal-Mart was so confident of its innocence they agreed that Wisconsin could double or triple fine them should Wal-Mart ever violate the predatory pricing law."
a) The german court found them guilty because they have a predator pricing law that is sufficiently defined to allow for that. wal-mart closed all its german stores as a result, probably because they realized they would be unable to engage in their routine business practices.
b) it doesn't matter what your opinion is of pricing mechanisms -- you asked for some proof of someone dumping to put others out of business. And that is it.
An older example would be National Dairy/Raymond Wise. And there are quite a few examples of businesses charged in violation of the Robinson-Patman and Clayton Acts, which are among the federal anti-trust laws.
P.S. The "heck, people can drive to other towns" comment is pure "let them eat cake."
And, of course, in terms of dumping there are all those Japanese and S. Korean companies that the US and EU govts and businesses are perennially complaining about.
Fine. Germany made Wal-Mart raise its prices. Which I find hilarious, except that it's pathetic. Poor consumers in Germany, whose government looked out for them by making prices higher.
But again we need to define what 'predatory pricing' actually is. Simply saying that some country, somewhere, decided that Wal-Mart was doing it, with no details provided as to what Wal-Mart was actually doing that was considered 'predatory', kinda leaves us short here.
For instance, is simply charging lower prices than your competitors 'predatory?' What are we actually complaining about here?
And business charged in violation of antitrust laws is not the same as businesses actually being a monopoly. Microsoft was charged, but wasn't a monopoly in any way shape or form and the charges were later dropped.
I'm not in all-out denial here; with all the companies that have existed in the last 100+ years, I would be surprised if we couldn't find someone who had done something fishy and monpolistic. But I'm asking for details. Not just the simple fact that "companies have been charged".
Because the factors that go into a company getting paraded before the public and charged with being a 'monopoly' is not a political boondoggle at all, no sir! :-) Let's look behind the curtain.
I don't think the issue was predatory pricing so much as dumping, which has a pretty clear definition --selling goods at below cost to put competitors out of business and then raising the prices when they were expelled from the market. Again, myriad Japanese, Korean, and Chinese firms have done this.
But again we need to define what 'predatory pricing' actually is.
No, we do not, because it's already defined within the legal system and has been since 1936. Which is pretty good proof in and of itself that such a thing exists. Ditto the details of the german case, and of the law in general. You, too, have google.
I'm not in all-out denial here;
Look in the mirror. Look hard.
Anonymous, my understanding of 'pred pricing' is that what you just described as 'dumping.' But 'dumping', I thought, is something else. But no matter, I don't care about what we call it.
This (predatory pricing/dumping; lowering prices to drive out competition then raising prices extravagantly when competition is removed) is what I am denying happens on any wide scale. While I am most concerned with the history of American companies, I'll consider any Japanese, Korean, or Chinese companies you want to bring up as well. But you still haven't given any details. An example of a company that has done this, perhaps? And what exactly did they do? And to what extent was the government involved?
Also, I'd be interested if we find a genuine case of this sort of behavior to know what the longer-term outcome was for the business in question. Did they actualy 'corner' the market? Or did they just end up pissing consumers off? Or something in between?
Nicki, perhaps I am familiar with the federal guidlelines and definitions, but I actually want to have a conversation that goes deeper than just saying "gov't charged some companies with being bad, so they must be bad." 'Predatory pricing' has a fairly common definition, and on that definition it is historically much ado about little, especially in the United States (which was what my original comment was about, Sherman antitrust and its history, which is an American law). The fact that people have been charged with it does not prove that they did it. So, besides telling me that some companies have been charged, tell me what they actually did.
And, again, the fact that I'm being cordial (inviting you to interact with me in conversationby asking what it is exactly you have in mind) need not be read as evidence that I am ignorant of these things myself, that I don't know how to google, or that I haven't already done so (or that I didn't already have a knowledge of such things without the need to google).
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