Privatising water

21 comments on “Privatising water ”

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1. tsmithfield 1

   11 November 2009 at 8:48 am

   “Water is a fundamental requirement of life and a basic human right. It should not be used to make a profit,”

   The same argument could be made for food. Should our food industry be nationalised then?
   • Roger Anderson 1.1

     11 November 2009 at 9:21 am

     There is competition in the food industry. Water supply on the other hand is a natural monopoly. The privatisation of water would likely lead to higher prices, antiquated systems, and poor response to consumers. We only have to look as far as telecom for an example of this.
     • Nick 1.1.1

       11 November 2009 at 12:47 pm

       So why did the Royal Commission into Akld recommend light regulation of Water and a removal of the current monopoly system?
       • Clarke 1.1.1.1

         11 November 2009 at 12:56 pm

         Because they took an ideological view. Remember, the Royal Commission was set up to assess governance structures, not debate the merits of the putative “efficiencies” of public vs private water supply.
         • Nick 1.1.1.1.1

           11 November 2009 at 12:58 pm

           You mean they took an ideological view that didn’t agree with yours. That ideological view was espoused by the excellent and highly respected David Shand.
           • Clarke 1.1.1.1.1.1

             11 November 2009 at 1:07 pm

             Irrespective of David Shand’s excellent credentials, the fact is that the terms of reference (PDF) for the Royal Commission do not include the subject of privatisation. The relevant portion:

             What ownership, governance, and institutional arrangements and funding responsibilities are required to ensure the effective, efficient, and sustainable provision of public infrastructure services

             Note the use of the words “public infrastructure” in that sentence. It seems a very long bow to draw that Shand and the Commissioners would somehow be able to consider full privatisation as aligned with the goals of public infrastructure services. In fact, it would probably require that you put ideology ahead of a literal reading of the ToR – which was my original point.
       • Draco T Bastard 1.1.1.2

         11 November 2009 at 1:04 pm

         Because they’re stupid.
       • Roger Anderson 1.1.1.3

         11 November 2009 at 2:05 pm

         Because they failed to understand the following reality about natural monopolies and water:

         A natural monopoly is a monopoly that exists because the cost of producing the product (i.e., a good or a service) is lower due to economies of scale if there is just a single producer than if there are several competing producers. The most commonly cited examples of natural monopolies are utilities such as railroads, pipelines, electric power transmission systems and water supply systems. Such industries are characterized by very large costs for their infrastructure (i.e., which are fixed costs), and it is thus often inefficient (i.e., detrimental to the economy as a whole) to have more than a single firm in a region because of the high cost of duplicating the facilities (e.g., parallel pipelines or parallel sets of electric wires to every home and business).
   • prism 1.2

     11 November 2009 at 9:37 am

     Food is of various types and there are numerous substitutes for those types, water is singular, essential and therefore capable of having the price ratcheted up for a commodity that could be sold in adulterated, deteriorated form. As for nationalisation of food, there has to be collective interest in its production and distribution.
     I remember a photo of starving, stick-like people in an African country. They had a drought, which was made worse by a contract to supply grain I think, to the British Army. The contract was fulfilled, but at the cost of many people’s suffering and death. NZ likes to export food too, and would be likely to put the poorest on short rations in a similar case.
   • So Bored 1.3

     11 November 2009 at 12:10 pm

     Hi TS, more “objectivism” I see, now lets maximise my own enjoyment of life in a rational way, investing in anything tradable…..even if this may dehydrate somebody else causing much unhappiness.

     You may not be (in fact probably are not) aware that the silliness of privatising water was tried in La Paz quite recently, the unhappy dehydrated types took to the streets intent on minimising the privatisers happiness.

     Poor old Ayn and her objectivist acolytes never quite got the cause and effect cycle, karma, yin / yang or that type of thing. My rule is simpler, if it pisses somebody off expect fireworks.
2. Robert Winter 2

   11 November 2009 at 8:52 am

   @tsmithfield: if some of the food security debates are shown to be correct, that may indeed be a possibility. Short-term profit motives may well not meet long-term food security requirements. It is prescient of you to propose the notion.
3. randal 3

   11 November 2009 at 11:04 am

   well the thing is National and its loony right want to privatise everything.
   their mindset is that every human being on the planet is fair prey for anyone else who has the power to lean on them.
   now they have the power they intend to do just that so they can enjoy the accumulated profits that will accrue to them and then they can waste it buying houses in the south of france.
   time to call a spade a spade.
   it might be POLICY but it has an objective and that is to screw as many people into some form of subjection and depency as possible.
4. Clarke 4

   11 November 2009 at 12:05 pm

   “Today, the signature of modern capitalism neither benign competition, nor class struggle, nor an inclusive middle-class utopia. Instead, predation has become the dominant feature – a system wherein the rich have come to feast on the decaying systems built for the middle class.

   “The predatory class is not the whole of the wealthy; it may be opposed by many others of similar wealth. But it is the defining feature, the leading force. And its agents are in full control of the government under which we live.”

   – J.K. Galbraith
   • So Bored 4.1

     11 November 2009 at 12:15 pm

     JK was onto it, funny thing is that he mirrors Adam Smith, who in the Wealth of Nations (much quoted by free marketeers) made the point strongly that if you put two competing capitalists in a room they would conspire and collude to raise prices in the market unless regulated….JKs addition is that they have corrupted the regulaters.
   • prism 4.2

     11 November 2009 at 12:15 pm

     Strong stuff. What year and what prompted Galbraith to say that?
     • Clarke 4.2.1

       11 November 2009 at 12:38 pm

       Galbraith was writing in 2006 about the Bush administration, and the quote comes from an op-ed article in Mother Jones. I highly recommend the entire article, as it seems very relevant to the John Key government:

       For in a predatory regime, nothing is done for public reasons. Indeed, the men in charge do not recognize that “public purposes’ exist. They have friends, and enemies, and as for the rest—we’re the prey.

       There’s no benefit that will come out of privatising water – it is transparent and cynical predation at its worst.
       • So Bored 4.2.1.1

         11 November 2009 at 1:21 pm

         Thanks for the link, must say the late JK Galbraith will be as much missed for his dry and witty language as much as for his wisdom, he is always a pleasure to read. Not sure but think he coined the phrase “conventional wisdom”.
         • Clarke 4.2.1.1.1

           11 November 2009 at 1:45 pm

           The quote is actually from the son, rather than the father – made more confusing by that wonderful American predilection for naming the child after the parent, as if names were nothing more than some cross-generational branding exercise!
5. So Bored 5

   11 November 2009 at 3:03 pm

   A brand of economists…maybe a dynasty!
6. prism 6

   11 November 2009 at 3:45 pm

   Some son, some father!

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1. Todd Inman: posted on 11 November 2009 at 4:17 am

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