Dueling editorials: Capitalism vs. socialism in the distribution of water

Illustration with Dan Mitchell blog about the difference between capitalism and socialism.

It takes considerable coaxing to lure the rare and seldom seen gibberish-spewing, logic-contorting, drivel-drooling, full-throated Sun editorial from its secret lair.

But I believe I spotted one Sunday morning. At first I was not sure if it was real, but upon closer examination of its spots and stripes it was confirmed to be a classic Sun two-armed embrace of all-encompassing socialism.

What apparently drew it out from hiding was an editorial in the still-usually-conservative newspaper in which the Sun nestles like a parasite under the skin of its host, sucking sustenance from its anemic profits without providing any discernible benefit.

A week earlier the Review-Journal penned an editorial addressing the ongoing wrangling over just how to dole out water properly in this parched Colorado River basin.

The R-J editorial suggested:

That’s where the free market comes in. Entrepreneurs who invest not only in buying water rights themselves, but also companies that build water infrastructure (think pipes, pumping stations, water meters and the like) have an incentive to direct water to where it will bring the highest price.

As a result, waste is discouraged. A recent story in The Atlantic magazine by Abrahm Lustgarten and ProPublica notes that 80 percent of water in the west goes to farmers, who use it without regard to efficiency or conservation, but rather to preserve their rights to future allocations. Crops are grown regardless of whether they’re actually needed.

In Australia, where years of drought prompted experimentation with private water solutions, farmers temporarily stopped growing crops such as cotton or rice once the price of the water became higher than the price the crops would bring at market.

This of course caused the Sun to blanch and bluster and counter with indignation from atop its pedestal of self-anointed morality:

Everyone here has water — clean, safe, very affordable water.

So imagine our surprise when we saw the editorial in the newspaper that accompanies us on driveways and newsstands. It embraced the notion that we — or at least those with enough money — would be better served if our water was controlled and sold by private companies.

The editorial, beneath a sub-headline that read, “Capitalism could help solve West’s woes,” suggested entrepreneurs could buy the water rights from those who have them and then “have an incentive to direct water to where it will bring the highest price.” This would result in water conservation, the editorial posited, because water users couldn’t afford to waste it. But depending on market conditions and the capricious leanings and revenue scheming of the private water company, it could be that some people would have to pay inflated market prices just to have water for their basic needs. Where on Earth, literally, is water intentionally priced high as a business profit model? It is immoral.

Why, of course, socialist allocation to each according to his need has been working just fine and has been proven historically to fix what ails society.

That’s why the Southern Nevada Water Authority has been contemplating spending as much as $15 billion to bring ground water from counties to the north at a cost per acre-foot —  just for the capital expense — of $2,000. This would triple water bills in Las Vegas. That’s while Colorado River water is being sold to farmers in California and Arizona for well less than $20 per acre-foot.

There have been editorials in other papers around the state suggesting that the free market would work better than socialism.

One of those from this past October argues:

But just as water seeks its own level, so too free markets seek and find the fairest and lowest price and widest distribution for any commodity.

Murray Rothbard, one-time UNLV professor of economics, once wrote: “If the government wants to conserve water and lessen its use, all it need do is raise the price. It doesn’t have to order an end to this or that use, set priorities, or decide who should be allowed to drink more than three glasses a day. All it has to do is clear the market, and let people conserve each in his own way and at his own pace.

“In the longer run, what the government should do is privatize the water supply, and let water be supplied, like oil or Pepsi-Cola, by private firms trying to make a profit and to satisfy and court consumers, and not to gain power by making them suffer.”

This was echoed by newspaper columnist and economist Thomas Sowell in his book “Basic Economics”: “There is no need for government officials to decide arbitrarily — and categorically — whether it is a good thing or a bad thing for particular crops to be grown in California with water artificially supplied below cost from federal irrigation projects. Such questions can be decided incrementally, by those directly confronting the alternatives, through price competition in a free market.”

Creating a free market for water would encourage innovation and efficiency, allowing water to flow from low-value uses to high-value uses while providing both parties of the transaction a profit.

Public officials should resist the urge to “manage” the water supply and permit the free market to apply its “invisible hand.”

As my ol’ Pappy used to say: Great minds travel in the same plane. Fools just think alike.

USGS employee at well near the southern Snake Range, Nev.

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8 comments on “Dueling editorials: Capitalism vs. socialism in the distribution of water

  1. Thank you Tom, for reading the SUN so I don’t have to!

  2. Rez says:

    Even tho I’m mostly a libertarian, I disagree with the notion of privatizing infrastructure. I’ve seen it done, and more often than not the public suffers, especially when profits aren’t as high as expected and cutbacks in service commence. Or it fuels a travesty like the for-profit prison industry (with its incessant lobbying to criminalize everyday acts). Plus it neglects the fact that privatized infrastructure must not only cover costs (same as gov’t-run infrastructure), it must *also* make a profit (which when that proves difficult, results in either price increases or reduced services). Costs plus profit is always higher than just costs. Do you really expect that to result in lower utility rates? (I’ve seen this firsthand in the SoCal desert — plenty of private water companies, all with rates about double those of municipal water systems in the same area. In Los Angeles County, they have the right to force you off your private well, too.)

    OTOH, gov’t-run infranstructure still needs to conserve resources and cover costs, and that’s best done by fairly pricing it to users. If that means the rates go up now and again, you’re still ahead of the game and your services keep running.

    As to the whining about urban vs agricultural use, the average urbanite has absolutely NO notion how much water is required to grow the food he eats. He thinks because he can water a potted plant and a patch of lawngrass with a watering can and a hose, that farmers can do likewise. Sure, if you want all your crops to turn to dust and your food to come from China.

  3. nyp says:

    In other words, you are a libertarian except when it directly affects you.

  4. Patrick says:

    Libertarians love to live in imaginary world don’t they? Well, here’s what happens when you “privatize” water, the very Essenes of life, and allow the wealthiest people on earth to decide who gets to drink or not.
    https://www.citizen.org/documents/Bolivia_(PDF).PDF

    Set alongside an entire region of people, described as “the happiest people on earth” and well known for having socialist economies.

    http://www.bloombergview.com/articles/2015-04-24/why-north-europeans-are-the-happiest-people

  5. Essence of life … water, food, shelter, medicine, education, entertainment, safety, transportation, heating and cooling, lighting, whiskey … all meted out by central planners. Come to think of it, most of them are.

  6. Rincon says:

    Let’s see. Water: Most rural folks are on well and septic. Food: Seems like almost all of that is provided by private enterprise, except for those stalwart conservatives, the farmers, who are strongly Libertarian, except for those crop subsidies, of course. Shelter: I bought my house directly from the owner, who had a private contractor build it. Medicine: You’ve got me there. Free enterprise medicine is unworkable in this country and we haven’t had it for 70 years or so. Education: Although dominated by central planners, the private alternative is readily available to most. Entertainment: Hollywood is centrally planned? News to me. Heating and cooling: Private companies sold me my furnace and A/C and deliver my energy. Same with lighting. Whiskey: So Jim Beam is centrally planned now? Amazing what I’ve missed.

  7. Food subsidized and tariffs. Shelter highly regulated. Medicine, regulated and subsidized. Education, ditto. Power companies are monopolies. Whiskey, highly regulated and distribution controlled.

  8. Rincon says:

    You and I agree about food subsidies, although they are a minor force in all around pricing and competition. I never realized how liberal farmers are. Shelter is regulated, but hardly “meted out by central planners” in your words. Medicine’s primary regulations are licenses for health professionals and FDA approval for drugs. Are you for going back to snake oil and hanging out the shingle? Power companies are monopolies. Yes (in distribution, not generation), but hardly an indictment of central planning as power distribution is a natural monopoly. Is there a better way? Do you think 5 sets of wires serving each neighborhood makes sense? Whiskey’s distribution is indeed controlled. You want to remove the age requirement?

    I can understand your thought that these things are overregulated, but saying they are all meted out by central planners is a bit extreme. In a truly representative republic, regulations usually occur because lack of regulation produces poor results. Not so in a plutocracy, which, ironically, is a natural result of a lack of regulation. The strong have historically always dominated the weak.

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