Greg Mankiw — California should raise the price of water

Sometimes the market solution is the right solution to public goods and utilities like water provision. While privatizing water, which had been a free good and then a regulated public utility, would not be a good solution, putting a higher price on water for bulk users and subsidizing other users would increase efficient use.

For example, households could be allocated a free or very low cost monthly water allowance and this could be varied by household size. This is in place in some areas already. There could also be a differential cost between residential use and commercial use and also an incremental cost for commercial use.

This would probably be more successful in a water-deprived state like California than the across the board 25% reduction in use just imposed.

The advantage of the 25% cut is that it is universal and so no one can say that their ox is being selected politically to be gored. All oxen just get less of a ration to drink. But as critics have noted it's difficult to enforce and avoidance is likely. Price is much more difficult to avoid, but water is a necessity of life, so a purely market solution with a single price is too regressive.

Some may worry about the distributional effects of a higher price of a necessity. But the revenue from a higher price could be rebated to consumers on a lump-sum basis, making the whole system progressive. We would end up with more efficiency and more equality.

This involves political decisions in addition to economic factors, so implementing anything in California will be difficult, given a divisive political climate and the political strength of commercial interests.

This is an increasingly pressing that the whole world is facing and we had better get on it instead of imposing ad hoc solution, i.e., shooting from the hip, after facing an imminent crisis and not having prepared for it. The alternative is lose the use of a lot of land, which will displace a lot of people, which will then result in migration to more resource-rich areas, causing problems there.

This is a supply issue that can't be fixed by just throwing public money at it. Moreover, this is a problem that faces only certain states, and states are budget-constrained since they are currency users. The low hanging fruit in supply problems is efficiency, and with respect to natural resources, conservation and recycling. The opportunity here is private investment in solutions to inefficiencies and public investment and regulation to address relevant externalities.

Greg Mankiw's Blog
California should raise the price of water
Greg Mankiw | professor and chairman of the economics department at Harvard University

Stephen D — Fastest Internet in US? It's Chattanooga, TN, Thanks to Local and Fed $ (Ps. Big Cable Very Angry)

Yes, you read that right.  Internet speeds as fast as 1 gigabit gigabyte per second are the norm in the city of Chattanooga, Tennessee.…

Yes, these young groups of local tech entrepenuers are important, but they couldn't have created this turnaround alone. They are receiving help help from the city's Democratic Mayor, Andy Berke, but the real driver of the boom comes from the efforts of the city's municipally owned electrical provider, EFB, which decided to fast track a high speed fiber optics network, rather than settle for slower service from the big cable company internet providers….

Across the country, twenty states prohibit or restrict municipalities from doing what Chattanooga has done - create their own high speed broadband networks to compete with the big telecom and cable companies, who have a stranglehold on providing slower, crappier, more expensive internet service to most of us. So, it should come as no surprise that the big telecoms are concerned that other municipalities will see what Chattanooga has accomplished, and are taking legal steps to stop any further expansion of EFB's internet service.…

At present, they are practically printing money while we get internet service that is worse than thirty other countries, including, among others, Uruguay.

Yeah, let that sink in. Uraguayans have better internet service than citizens of the "greatest nation on earth." Pretty damn embarrassing, if not a big surprise. Ever since we began to glorify Big Business and denigrate government during the Reagan years, we've seen America go from being a leader in many fields to falling further and further behind even many third world countries, all so our multinational, tax dodging corporations can feed off ordinary Americans like so many parasites, slowly draining the lifeblood out of our nation even as they steal whatever is left in our pocketbooks.

Daly Kos
Fastest Internet in US? It's Chattanooga, TN, Thanks to Local and Fed $ (Ps. Big Cable Very Angry)
Stephen D

Thom Hartmann — One American City Enjoys a Hyperfast Internet -- Any Surprise Corporations Don't Control It?

Chattanooga?

AlterNet
One American City Enjoys a Hyperfast Internet -- Any Surprise Corporations Don't Control It?
The Thom Hartmann Show

Paul Buchheit — 6 Reasons Privatization Often Ends in Disaster

Generally comes down to necessary versus discretionary. Necessary goods are either public goods that are best treated through public control and responsibility or public utilities, which if private are highly regulated. Discretionary goods are best left to private enterprise.

In private investment and management, the aim is return on capital and expansion of capital. In public investment and management the aim is return on coordination and greater social (distributed) benefit.

AlterNet
6 Reasons Privatization Often Ends in Disaster

Paul Buchheit