Take a Long Shower

As I have written in the past, water is just like any other commodity, if you price it below market clearing levels, you will have shortages.

If you allow market prices, shortages disappear. When you have market prices, incentive is provided for development of new sources of water and the price acts as a disciplinary force against “waste.”

Most officials in government jurisdictions through out the globe fail to get this and will attempt to impose rationing when their below market price schemes on various commodities result in major shortages. (SEE: Venezuela Turns Into a Socialist Nightmare and Toilet Paper: The US vs. Venezuela)

But I live in California, where the very unpredictable Jerry Brown is governor. And I do mean unpredictable.

Brown once dated the superstar singer Linda Ronstadt. He also once attended a Jesuit seminary and planned to become a priest. During his seminary period he engaged in a practice called “taking the discipline,” which involved wrapping wire around a leg to produce discomfort that was thought to increase spiritual awareness and penitience.

Chuck McFadden in his biography of Brown, Trailblazer, wrote “Brown on occasion wrapped the wire so tightly  that he limped, according to fellow novitiates.”

Early in his political career. he was a trustee for the Los Angeles Community College Board. While in that position, according to McFadden, he suggested “an airborne campus strike force to curb violence” that would employ “no-nonsense tactics” against student protesters. “It would have a fleet of jets, and members of the strike force would be equipped with crowd-control devices such as tranquilizer guns, wood pellet guns and [this was before the water ‘shortage’ ] water cannons.”

Like I said, with Brown, you never know what you are going to get. And so, with water being priced below market levels, and to make things worse, controlled by local governments, rather than the private sector, water levels have been falling in the state during the current dry years.

Yesterday, Brown, as Governor acted, and declared the “first ever statewide mandatory water reductions.” “Hello, Venezuela,” I thought to myself. But when I turned to the governor’s press release, it said this:

The Governor’s order calls on local water agencies to adjust their rate structures to implement conservation pricing, recognized as an effective way to realize water reductions and discourage water waste.

Yes, there was a lot of  nonsense in the release and the water sector should be privatized, but that said, it is quite impressive that Brown recognizes the problem as a pricing problem.

Jerry Brown for President of Venezuela! I say.

Reprinted with permission from Economic Policy Journal.