Water Exposes Our Absurd Economic Logic & Priorities

By Jonathan Jenner

Today in America, there’s not water for everyone who needs it. At a rally last year in Detroit, two children held up signs connecting the city’s water shutoffs to convention medical wisdom: “kids need water to be healthy,” and “kids without water don’t brush their teeth.” Meanwhile Steve Yuhas, of El Rancho California, is also suffering and fuming:  “[people] should not be forced to live on property with brown lawns, golf on brown courses or apologize for wanting their gardens to be beautiful” and continues: “We pay significant property taxes based on where we live…and we’re not all equal when it comes to water.”

The context: most of California is in a long state of either ‘extreme’ or ‘exceptional’ drought.  And while a small sliver of Michigan, from the thumb to the wrist of the mitten, is in a short period of being ‘abnormally dry,’ Detroit is fine. But in both places authorities cutting back on water usage.  Across California, a series of measures has tried to cut back water usage by 25%, starting from advisories to more recent enforceable acts, including banning (home) car washing, eliminating surface water extraction rights from farmers, and advising that water only be served in restaurants “if people ask for it.”  In Detroit, utility companies and police show up to cut off water to residents and arrest thirsty people (businesses, who are also overdue on their water bills, have not been cut off), and up to 40% of the population has either had (or threatened to have) their water shut off.  Water Man Photomanipulation by Zenk01

California’s water crisis – which is a real, ecological water shortage – has several roots, both immediate and long term: an abnormally warm winter leaving a small snowpack in the Sierra Nevadas, growing almonds in a desert, and that guy from Mad Max watering his lawn. Detroit’s water crisis is quite different, because it’s dictated not by ecological limits but our society’s values and ideas. In Detroit, which has been hollowed out by the neoliberal assault on American manufacturing and seasoned with a racist and perverse dash of bootstraps ideology, the main cause of water shutoffs seems to be a citizenry that is too poor, too black, and bad at timing their birth. Water bills in Detroit don’t actually pay for water, which is basically free, but instead pay for the water infrastructure, so cutting off poor people to help finance a modern infrastructure is both cruel and inefficient.

To recap: California → extreme drought → light restrictions and advisories → Stevie Yuhas gets pissed right off about his lawn. Detroit → no drought at all → forceful cut offs, arrests, unrest → difficulty for children to be healthy, brush teeth, pursue happiness. It’s heartbreaking, terrifying, and insane.

And the insanity of such a system is matched only by the insanity of the system’s apologists (neoclassical economists) (and their friends).  They’ll tell you how you we got here, and how we can get out, using the Modern Economist’s Universal Diagnostic and Repair Kit™: property rights and markets.  Bad things happen when property rights are unclear and markets are interfered with; bad things can be fixed by enforcing property rights and freeing up markets to ‘get prices right.’  A few exhibits demonstrating this unwavering faith in markets and property rights from today’s economists, both to explain and solve water issues in California & Detroit:

Shikha Dalmia, of the libertarian Reason Foundation, blames government regulation, environmentalists who protect salmon, and farmers, for California’s water crisis in an editorial in The Week.  The problem, for Dalmia, is that those groups have subjectively valued water based on favoritism, and the market would efficiently and fairly  allocate water around. (Here, we must ignore the market’s obvious favoritism of people with money, even when we’re dealing with vital things like water).  Don’t tell people not to water their lawns! Let the market – that hivemind of values – decide where water goes, even in a drought!

Alex Tabarrok, George Mason University economist, in his post ‘The Misallocation Water,’: “One of the most remarkable discoveries of economics is that under the right conditions competitive markets allocate production across firms in just that way that minimizes the total costs of production.” He goes on to point out, correctly, that farmers pay less than urbanites for water in California (which is true, but it’s also a question of who owns the water in the first place, which dictates who can use it/sell it/pour it on plants, which is complicated, because if no one built the water, how can someone own it? This, and other weird questions about property rights are never really dealt with in mainstream economics – property is just assumed into existence).  Tabarrok writes that if everyone was faced with the same price that was determined by the amount of water available, people would only use the water they need/could afford, and Californians, urban and rural alike, would evolve efficient ways to use water, and needs would be met.

Hmm.  OK, interesting.  But should clean water, in 21st century America (or across the world), be a right, as many activists and normal thinking folks, in Detroit (and across the world) claim?  David Zetland, who wrote the book on living with water scarcity, called Living with Water Scarcity (free online), says: Nah. Even basic needs should be allocated on the market, because if something is a right, it requires a working, transparent state to deliver it. Zetland doesn’t dismiss rights outright, he raises that old, tired specter of corruption to blame poor countries and people in a global system that robs them for their failures: “good governance (a lack of corruption) separates civilized countries from their struggling, dysfunctional neighbors.” According to Zetland, what poor people need – especially the poor who can’t afford water in this insane world – are clearly outlined property rights that will give the poor incomes so that they can buy water on the market. Do we prioritize kids in Detroit brushing their teeth more than Stevie Yuhas watering his lawn? In Zetland’s world, people demonstrate that by paying for it, privately. When the poor are given clearly demarcated property rights for the crumbs from the table that they have, they’ll rely on open, democratic, and transparent institutions to oversee that system.  It won’t be the state, somehow.  And it won’t be corrupt, somehow.  It will just be there, somehow.  This, and other sorcery, features prominently in the Modern Economist’s Universal Diagnostic and Repair Kit™.

These arguments have some truth in them – it is crazy to grow almonds in California, for instance.  But the problem with them is their myopia and their inability to comprehend the complex modes of interaction in the real world: things like how instead of being the great equalizer, pro-market policies have led to growing inequality across the world as those with capital become richer and leave the rest of us to compete for a shrinking pie; things like the violent foundations of historical property claims; things like systemic, institutionalized racism that give different people different levels of access to the fruits of the system. Modern economics appeals to many people because the abstract world of property rights, markets, populated by the atomistic and self-interested homo economicus, is a watertight world where things make sense.  Problems are because of a lack of property rights and unfree markets, which represent some kind of natural state of affairs – an Eden, if you will.  And by the simple application of property rights and markets, we can return to Eden.  It’s an attractive sell to many folks.

But the abstract world of many professional economists has little correspondence with reality.  It’s a world bereft of history, of power, of institutional influence on peoples’ lives.  It’s a world that justifies the hollowing out of Detroit based on its blind faith in markets to reach optimal solutions, and then has the nerve to tell the people that have been left behind that they need to pay for the things they can’t afford (things that could easily be furnished by a state that spends $1.2 million a minute on its military).  It’s a world that refuses to ban opulent water waste in an extreme drought because that would interfere with markets, and a world that refuses to make access to clean drinking water a right because that would interfere with markets.  Our recent struggles with water across the country help to expose this insanity, and it’s no wonder that water scarcity and the insane power structures that sit behind it informs much of our storytelling imagination these days:

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