The market is the only mechanism that can allocate scarce resources equitably. And the only alternative is politics.
In California, those with influence have secured water for agriculture at below market rates, water delivered with infrastructure built by taxpayer dollars.
When people can get a resource for less than the cost of delivering it, they use it with less discretion. And the prices of the things they produce with it don't reflect the true value of the water, even if they did pay for all costs of delivery.
That's because water has value itself. Its not just the cost of delivering it that matters.
But when a resource is allocated with a political process, the only costs that are considered are the costs of delivery. Assuming the taxpayer's interests are represented at all.
The political process is notoriously shortsighted. But if someone owns a resource, they have an interest in preserving it. Its sale price represents the total future value of it, not just what can be extracted during a politicians term of office.
Private ownership is not the cause of all of the political wars over water. It is their solution.
If someone owns a resource they have an interest in extracting maximum value out of it, not in preserving it.
I've seen the case made for private ownership of air and water and I think it is utter rubbish. What we need instead is good stewardship of our natural resources, a way to extract tax on the depletion of natural resources instead of on production of value.
Privatization usually does not translate in to 'the people that use the resource will own it', it usually translates in to 'big-corp' in 'some other country' now owns a resource you depend on and will make you pay through the nose for it.
If the situation were such that each of us gets to be responsible for their little chunk of the planet then I wouldn't have a problem with it, in practice that is not how it works. Hence overfishing and all kinds of other issues that could have been avoided.
One of the major problems seems to be that there simply are too many of us, that's a very harsh thing to say according to plenty of folks but it may very well be that the only real long term solution leading to better stewardship of the environment is to reduce the number of people that consume resources. Not a very popular point of view, that's for sure.
More can be done with less and that sort of improvement is happening all of the time. freedom and innovation is the solution, not limiting people's freedom
when I see tiny, populated, resource-poor, rich countries, its clear to me that trade and the rule of law are the solution to a great many problems many insist are unsolvable in other places that lack freedom
The situation you describe where deals are made with foreign corporations for control of resources are typically made by governments that have such control themselves. when resources are controlled by individuals in a competitive market, its very difficult for corporations, foreign or domestic, to bribe officials to sell out for far less than a resource is actually worth
I think you both failed to make a distinction between resources necessary for life and optional resources.
When it comes to water, healthcare, minimum daily amount of food, leaving that up to the market (especially one where monopolies form over time, and I believe monopolies will form in any "free" market over time) is tantamount to a country abusing their own population and shows a disregard for human life.
When it comes to designer clothes, jewelry, eating out, entertainment, sure let the market work its "magic". When it comes to peoples' lives, the market will not put their interests first and a "free" market will end up producing lots of suffering for lots of people.
Also it is worth pointing out that a centrally planned economy is also not an option. The answer if probably somewhere in the middle.
Sorry if it came across like that, I thought we were discussing water, which is pretty much the example of resources necessary for life (the others being air and staple foods).
Trinkets and cell phone subscriptions are a different matter. (and in the case of cell phone subscriptions you could even wonder if the market is doing its work or not).
Oops didn't mean to derail the topic. You made a good point with which I agree. I just wanted to add how in one case government intervention is needed while in the other case it would be detrimental (think international tariffs on specific models and types of cars, etc.)
The same short term profit paradigm that seems to prevent most corporations from engaging in sustainable business practices. Only if you forget short term profits and look to enduring sustainable profits does any sort of sustainable business model work.
> The market is the only mechanism that can allocate scarce resources equitably.
The market allocates according to ability/willingness to pay. This is perfectly fine in general, but doesn't work so well when "ability" enters the picture for something considered a necessity.
I'd much rather pay for what I need from a competitive marketplace that is constantly driving down the cost of everything than leave it up to monopolistic government to hand out the privilege of drinking water.
The market works damn well for the vast majority of things with which government has not blessed with its involvement.
Water is no different than most things. In fact, it falls out of the sky in a lot of places.
Places where its difficult to obtain water usually have plenty of government managing the privileges.
The free market is people peacefully trading with each other. Most government is coercion. I don't see how more of it is a solution.
> The free market is people peacefully trading with each other.
Then few if any free markets actually exist.
Some traders are indeed "peaceful." The brute fact, though, is that that many market participants actively seek out ways:
A) to inhibit competition, or even prevent it completely, for example by anticompetitive business practices; and/or ...
B) to make the public pick up the tab for costs while keeping revenues for themselves -- think pollution costs and bank bailouts, to name just two examples; and/or ...
[EDIT:] C) in some cases, to flat-out lie, cheat, and steal.
FOOTNOTE: As I understand it, economists refer to B as privatizing profits while socializing costs, a.k.a. "externalities."
These human tendencies to do A, B, and C above appear to be fundamental facts of life. Left unchecked, they can have a corrosive effect on markets.
There's ample room for evidence-based debates about how best to deal with these tendencies. But it doesn't seem to have done much good to insist that free markets are a cure-all -- it's reminiscent of the old economist joke whose punch line is "we'll just assume we have a can opener."
> Most government is coercion. I don't see how more of it is a solution.
It's certainly true that when government regulation is driven by untested ideology, or by private interests, it can make things worse by discouraging private initiative and effort. (Some of the ways market predators try to do A and B above is by encouraging government actors to enact legislation and regulations that favor them.) We've certainly seen that happen at various times in various places.
But governmental regulation, selectively applied, can also be at least a partial solution, to the extent it can help keep market predators from doing A, B, and C above.
> But governmental regulation, selectively applied, can also be at
> least a partial solution, to the extent it can help keep market
> predators from doing A, B, and C above.
I would postulate that this is probably nigh impossible due to the human nature of the legistators/regulators themselves. In other words, it's impossible to prevent market predators for using government to their benefit.
Right, in reality, government regulation is the cheapest way to make he public pay for the costs while keeping the profits.
However, those who propose government regulation seem to not perceive government as anything other than an objective benevolent force, and when they are presented with evidence of government being corrupt, they blame the corporations for corrupting them.
Obviously the government does not 'become corrupt' because of the corporations, but for the most part the corporations are the people with the deepest pockets to lobby legislators/regulators. The more money there is to be made by being a stooge for a specific industry (or single corporation) the more likely there is that at least one legislator/regulator will become their champion.
I postulate that if there were less (or no) corporate lobbying of legislators/regulators, then there would be significantly less corruption. Blaming the corporations for corrupting the government, while naive, isn't that far from the mark.
The essence of a free market relies on the enforcement of property and contract laws, which requires government enforcement. The alternative is local fiefdoms run by robber barons, and we know that doesn't work.
Government is the worst way of regulating and enforcing a free market, except for everything else that's been tried.
"water is no different than most things" is precisely what this article (and the UN; the right to water and sanitation was added to the human rights awhile ago) disagrees with. Would you apply the same logic to oxygen instead of water?
Even accepting that water is no different than say cars, I disagree with the peacefulness of the free market. The free market is all about competition. In this case, competition drives the groundwater table down fast (a couple of meters a year, in some places), and forces everybody to play the game of drilling ever deeper holes.
> Would you apply the same logic to oxygen instead of water?
Markets are a means of managing scarcity. Oxygen is not scarce, at least not if you're at sea level and you don't mind it mixed about 5:1 with nitrogen and a bunch of other gases.
For use in places where oxygen is scarce — like on top of a tall mountain or in an unpressurized aircraft at high altitude — you'll find that the stuff is very commonly bought and sold.
I meant with regard to the fact that ability to pay determines whether you can buy something. Obviously everyone needs water to live, just as they need food, housing, transportation, recreation, sex and many other things to live which require you have something to trade.
Can you tell me a place where the free market rules where can't get the clean water you need to live for far less than an hour's worth of labor at the lowest paid job?
I can think of plenty where the use of force rules where its not even possible to get any clean water at all.
The UN's problem is hardly with countries where people are allowed to trade and keep what they earn.
The underlying problem with putting water on the world market is that the market value of your labor might be less than foreigners value the water you need to stay alive and fed and healthy. Strange that we don't view it as we do organ smuggling, because the moral calculus (others have the means and now the incentive to outbid you on your own continued survival) is almost the same.
Your comment seems to make the case that markets are competitive whereas governments are monopolistic. I feel reluctant to buy into that without an authoritative statistical study. My experience, though anecdotal, does not lean in that direction significantly enough.
On the other hand scholars[1] have argued that much of the first world have made the bulk of their progress in very protectionist environments and have opened their markets selectively when it was to their advantage. I havent seen those arguments debunked effectively. The notion of "free"ness of current markets is also debatable given that it is guarded strongly by international politics.
Mathematically speaking, I do not recollect that free markets guarantee equity as has been claimed in some comments here. They do guarantee an equilibrium, which however need not be a good/desirable one.(Think traffic flow without signals).
I am not against free markets, I think thats perhaps the best option available, but as long as it remains easy to externalize costs, it will continue to remain broken. Because what you are paying is only part of the cost and someone else is being forced to pick up the tab.
I believe free markets are competitive and hobbled markets are not and non-voluntary government is monopolistic.
When our activities impose costs on others, that should be remedied. If my making a buck creates a nickel's worth of pollution damage to you, I should be made to pay that nickel.
That doesn't make a market less free, as one has the right to be free of the pollution of others too. A "free" market recognizes the rights of all involved.
And it actually makes markets more efficient. If I am making a buck and it costs you $5 in pollution, an efficient market sends me a clear signal to stop.
But it seems to me that government is more in the business of shifting benefits to some for political purposes and shifting costs to its opponents. And that is not helping protect anybody's rights.
Apart from your first sentence, I completely agree with everything you said. My disagreement with your first is a partial one. What you describe is an ideal almost mythical free market. In such a market your arguments would hold true, if it existed.
The key here is as you said "I should be made to pay that nickel". Unfortunately free market forces alone will not make you do that. It will be in your interest to hold on to that nickel. It is here the free market proponents invoke goodness of human kind or some other force or argument external to the free market principles.
Another problem with the practice of free market is that corporations are typically structured to maximize, not the total value out of a resource, but the rate, i.e. the value extracted per unit time. It makes perfect sense for them because for several reasons (and also by way of force) they can keep the acquisition cost of a substitute resource very low.
Governments arent ideal either. But a (democratic) government is shaped by the amount of active interest a voter takes. So the control over it is much more direct in comparison.
Sans the two major loop-holes, free market is a damn good system.
The market is the only mechanism that can allocate scarce resources equitably.
The article is surprisingly good and mentions that the economic argument is not so clear cut because the demand is inelastic. People still need to drink whatever the price.
But if someone owns a resource, they have an interest in preserving it.
There is also anecdotal evidence given in the article that this doesn't automatically happen. Privatised water utilities have cut down on staff and maintenance in order to maximise profit (since maximising profit is their reason for existing).
> Private ownership is not the cause of all of the political wars over water. It is their solution.
Is as untrue as it can be. Currently water conflicts emerge around the situation that there where no (or only a traditional) market exists, a market for multinationals is created forcibly . IMF and World Bank connect loan conditions directly to water exploitation rights in developing countries. This looks very much like interventionism to me: creating a "market" and installing it's major players at the same time. I can't see the "invisible hand" here ...
it is not the well off that created conditions of scarcity. They've only figured out ways of remedying scarcity by innovating and trading.
Sure, the are many instances where people have been dispossessed of their land or resources. But this is hardly the free market. It is the ultimate expression of the idea that might makes right and that who gets what should be determined politically.
Buying and selling water is nothing new. Usually it is transported in agricultural products. (And pretty much any manufactured item, but the big use is agricultural products.)
This lets you do trivial substitution for a water deficit: import crops, grow less crops locally, drink the stuff you were about to pour on the crops you no longer have.
Of course, this is why insiders such as Dick Cheney have been investing heavily, personally, in water and encouraging water privatization as governmental policy worldwide. Not so recently, more like 6-8 years ago. It's the next resource to rake the working people of the world over the coals for.
Do your part to conserve water: Use plastic, not paper. Don't recycle. If you have a septic system replace it with a sewer. Do not buy local, but from wherever is able to most efficiently grow the crop.
Making paper uses tons of water. So does washing the plastic for recycling. Water is far more precious than energy/oil right now.
A septic system wastes all it's water, but a sewer system recycles almost all of it.
Growing things locally can use more water than if you plant things in the area they grow in best.
I'm not so sure about that: lots of water around means that your drinking water has a high risk of becoming polluted with industrial sewage (as now did happen in Hungary) or salty water in areas close to the sea. Abundance of water != drinking water.
What's funny about that is that it was based on a real case, and the real case was actually worse. The movie played things down a bit, to make them more believable.
So we have 1) governments that sell water at prices too low to match the reality of scarcity, 2) private corporations who would sacrifice the environment and consumers for profits, and 3) a populace that consumes too much and is resistant to change. Are we all fucked?
Desalination in general is expensive, and requires (obviously) that you've got coastline handy. I don't think solar desalination is a general answer, simply because of the energy densities involved.
The physics behind solar desalination means that you need at
least 10m^2 of solar collection per household, just to heat the
water if you're hoping to sustain people in this way alone, so
while it might be part of a bigger solution in some parts of the
world, it'll never be a solution in its own right.
In California, those with influence have secured water for agriculture at below market rates, water delivered with infrastructure built by taxpayer dollars.
When people can get a resource for less than the cost of delivering it, they use it with less discretion. And the prices of the things they produce with it don't reflect the true value of the water, even if they did pay for all costs of delivery.
That's because water has value itself. Its not just the cost of delivering it that matters.
But when a resource is allocated with a political process, the only costs that are considered are the costs of delivery. Assuming the taxpayer's interests are represented at all.
The political process is notoriously shortsighted. But if someone owns a resource, they have an interest in preserving it. Its sale price represents the total future value of it, not just what can be extracted during a politicians term of office.
Private ownership is not the cause of all of the political wars over water. It is their solution.