Diane Trout (alienghic) wrote,
Diane Trout

Water Markets

A few days ago I saw a copy of a book arguing how markets could solve the worlds water crises, my first reaction was "silly libertarian".

But then I thought a bit harder... One of the examples used by the pro-capitalism people is the agricultural water markets in California, for the farmers the water is being provided at a significant subsidy, which results in them not needing to install any water conservation devices. That doesn't seem good, there's a finite amount of water and we need to try to conserve wherever we can.

However the anti-capitalists use the example of Bechtel and the water privatization in Cochabamba, Bolivia. In that case an urban water system which was working, suddenly experienced a tripling a water rates once the corporation owned it. To add insult to industry they apparently also tried preventing competition by demanding payment for rain water. search through the wikipedia article for cochambamba.

It occurred to me that in both of these cases the problems were caused by distortions of the costs of providing the services--for california it is a government subsidy, for cochambamba it was the excessive profits that can be extracted by a monopoly.

I wonder how effective divorcing markets from for-profit corporations would be, for example modern china and cuba, and even the soviet special economic period all used limited markets. I wonder how efficient a market based socialist system where the economic units forwarded their excess profit back to the government which could then use profits to like venture capitalists.

To me it seems like much of the practical experience suggests that ideological pure economic systems don't work as well as hybrid systems. Sweden, with its high tax rate providing for a large swath of government support services is currently highly competitive in the global economy, and is also a nice place to live. While modern America, early 1900s america, and early 1800s britan, all instances of trying to be pure free market were wretched places to live (if you weren't really wealthy).

Perhaps the result of this is markets are effective tools as long as you have some system to limit the abuses caused by greedy people who are sliding toward the sociopathic personality type.

As an aside I do think that many, if not all, of the complaints raised by the anti-corporate protesters are the result of centralization of power in the hands of an ever shrinking set of corporations who are also using their power to put their officers into government positions. (Sometimes it seems like the entire Bush administration is comprised of the people who were the directories of various large military-industrial complex corporations)

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