Vampire economics

Written By: Guest post - Date published: 3:47 pm, March 21st, 2009 - 49 comments
Categories: economy - Tags: recession

key-and-nos Earlier this week the Prime Minister announced $2.5 million for tourism advertising in Australia. New Zealand is not alone in trying to increase tourism as a solution to the recession. Australia is trying to get tourists from here and other countries with wall-to-wall TV advertising on the back of that great flop of a movie Australia. The same day as Key’s announcement, the British High Commission put out a press release extolling Kiwis to head to the UK where tourism is cheaper thanks to the falling pound. So NZ is trying to get more tourists from Australia, the UK is trying to get more tourists from NZ, and Australia is trying to get more tourists from everyone. Countries all over the world are trying the same thing – calling out to people in other countries ‘don’t spend your money at home, come and spend it in our economy’.

Money an Aussie spends here is money they would have otherwise spent in Australia, if our economy benefits it is only at a cost to the Australian one. It’s a zero-sum game*. Clearly, that’s not a sustainable model for economic growth. We can’t all get richer by encouraging each other to come over for a visit.

Countries looking to tourism to save themselves from the pain of recession amounts to nothing more than vampire economics. The life-force is ebbing out of the world’s economies so they are desperately trying to suck some life out of each other to get as much as they can of what’s left for themselves.

Ultimately, wealth isn’t generated by gimmicks and quick tricks like advertising campaigns. It takes real effort, hard work, and innovation. If we want our economy to grow, that’s where we need to be putting our resources.

– the mathemagican

*Neoclassical economics (the mainstream of economics these days) would say there’s got to be some gain in net utility, because it presupposes that people are utility maximising. If they’re spending money as tourists that must create more utility for them than if they had stayed at home and spent the money there. It also presupposes, however, that people have perfect information and are perfectly rational, in which case advertising campaigns wouldn’t affect their decisions anyway. You’ve always got to take anything neoclassical economics says with a grain of salt when it’s talking about individuals’ decisions because it presupposes a number of things that are not only dumb but have been proven incorrect with experiments. The whole ideology is based on a cartoonishly simple and idealised view of humans that was created so that the maths is easier and is imbued with premises to the politically correct conclusions.

49 comments on “Vampire economics ”

Comments are now closed

Alex Great 1

21 March 2009 at 4:31 pm

So what do you suggest we all dig threnches (hard work) and forgo vacation.
We don’t live in Ricardo, Smith, Marx ages anymore.
Tourism, gambling, haricutting and health services are very much legitimate parts of the economy .
- the sprout 1.1
  
  21 March 2009 at 5:04 pm
  
  Umm yeah, and then there’s the problem that people like me can’t actually spare the cash to do any tourism at the moment, just lavishing my income on things like food, rent and petrol.
  
  Maybe nobody’s told John not everyone can afford to go away fro their holidays.
Snail 2

21 March 2009 at 4:33 pm

mathemagician â€” lovely!

Made me double take.. mind you, ‘gain’ did not and I’m not at all sure what political correctness is.. other than say a hand-me-down from those who decide..

Vampire economics beats vulture investors.. thank goodness.

tho I’ll add before heading back into algorithms for the weekend, that making maths easier lies firmly at the feet of computersâ€”real dumbers!
- Snail 2.1
  
  21 March 2009 at 4:34 pm
  
  addenda: oops! bad html.. sorry..
Draco T Bastard 3

21 March 2009 at 4:35 pm

Mercantalism, sometimes referred to as beggar thy neighbour economics. It’s the norm in capitalism and has been forever – we haven’t really moved away from it no matter what the economists say. It doesn’t work which we know because it’s been collapsing every few years for just as long.

I’m not really surprised that the NACT government would come up with such a failed policy as it’s how they believe and want the economy to work. The fact that they came up with it just proves that they haven’t got a clue.
mj 4

21 March 2009 at 5:38 pm

Alex Great. It’s not tourism that’s being criticised it’s the idea that you just get someone to spend money in your economy and not another one. Advertising for tourists to come here is not generating any more wealth it’s just trying to get what there is to New Zealand rather than another country.
the sprout 5

21 March 2009 at 5:48 pm

Come to think of it John’s picked a pretty bad time to take on the Tourism portfolio, good chance of record losses while it’s in his hands.
RedLogix 6

21 March 2009 at 5:51 pm

The latest article from JK Galbraith in the Washington Monthly is a required reading for anyone wanting to understand where things are headed. Titled No Return to Normal it challenges the assumptions that are being made by almost everyone.

The deepest belief of the modern economist is that the economy is a self-stabilizing system. This means that, even if nothing is done, normal rates of employment and production will someday return. Practically all modern economists believe this, often without thinking much about it. (Federal Reserve Chairman Ben Bernanke said it reflexively in a major speech in London in January: “The global economy will recover.” He did not say how he knew.) The difference between conservatives and liberals is over whether policy can usefully speed things up. Conservatives say no, liberals say yes, and on this point Obama’s economists lean left. Hence the priority they gave, in their first days, to the stimulus package.

Galbraith then goes on to demolish that presumption. The stimulus packages are far too small to work, and the banking bailouts amount to nothing more than propping up zombie institutions that actually died months ago.

Essentially the US economy total public and private debt (not including unfunded future Medicare and Social Security liabilities) is close to 300% of GDP. That means that if hypothetically all of the US GDP was spent paying it back, it would take 3 years. Of course that is impossible, at most only around 5% of GDP could be diverted to reduce the Debt/GDP ratio to a more tolerable 50-100%… but even then it would take 40 years to unwind this monster.

Clearly the neoclassical economists (of whom our Minister of Finance, Bill English is most definitely one) have been shown to be completely and utterly wrong. Worse still, the cures they offer to fix the disaster they have created are completely wrong as well.
- ben 6.1
  
  22 March 2009 at 3:31 pm
  
  Clearly the neoclassical economists (of whom our Minister of Finance, Bill English is most definitely one) have been shown to be completely and utterly wrong. Worse still, the cures they offer to fix the disaster they have created are completely wrong as well.
  
  Sorry – what does US debt to GDP being close to 300% have to do with neoclassical economics? Neither Bush nor Obama’s massive interventions which produced this debt have grounds in neoclassical economics. Neither do the distortions brought about by the Fed, Fannie and Freddie, or the low capital requirements the US government let banks get away with have anything to do with neoclassical economics.
  
  Those interventions are more consistent with a Keynesian view, or in most cases have no grounds in economics at all and have everything to do with a belief in central planning and politcial expediency. What the current experience shows is that those do not work.
  
  You’re right about one thing. The cures will make the disease worse not better, but again they have nothing at all to do with neoclassical economics. The one thing politicians are not assuming in their massive interventions is market self-correction and perfect information.
Paul Walker 7

21 March 2009 at 6:41 pm

I point out some errors in the last paragraph of the posting here.
Tom Mathews 8

21 March 2009 at 6:49 pm

Economists are well aware of limitations on people’s rationality and information. There are whole fields dedicated to the study of these issues within economics and their economic effects… Try looking up rational choice theory and information economics on wikipedia.
It frustrates me more than a little to see such blithe pronouncements by people who decry whole fields of work they clearly know nothing about, for presumably ideological reasons. It seems like people use their intuitions about the ‘pop economics’ they know as a means to sidestep rational debate.
I should note that the phenomena is not restricted to the left.
- RedLogix 8.1
  
  21 March 2009 at 7:16 pm
  
  Tom,
  
  In a sane world no-one in their right mind would ever buy Coco-Cola. Yet in this world the product is heavily advertised.. not to convey the slightest iota of actual information about the product… rather using manipulative emotional techniques carefully honed by decades of expensive psychometric testing.
  
  Result: a recent survey showed that 2L bottles of Coke are the number 1 item sold in NZ supermarkets. (Other diabetes inducing bottles of fizz water occupied at least 4-5 other places in the top 10 items.)
  
  Rational my arse.
  - Tom Mathews 8.1.1
    
    21 March 2009 at 7:27 pm
    
    Well firstly, it seems that you’re defining rationality as agreeing with you. People might be aware of all the negative health-effects of coke, but still feel that the sweet taste is worth it. They might even offset their consumption of coke with exercise and regular dental care, further minimising the costs. I don’t think this is obviously irrational.
    
    But even if it is, that’s not the point I’m making. What I was saying is that modern economics is well aware of limitations to peoples rationality, insofar as they have any effect on economic outcomes.
    Here’s a starter for you.
    http://en.wikipedia.org/wiki/Behavioural_economics
    
    I was also expressing my frustration at the lazy intellectual attitude expressed in the post. It seems to be ‘well, the economic argument is this, but it’s based on the theory that people are rational, which is obviously false, therefore I can make up whatever economics I want’.
    
    I don’t think this is a productive way to argue, and I think you are a little guilty of it yourself.
  - Phil 8.1.2
    
    22 March 2009 at 5:35 am
    
    Next time you’re in a supermarket with the rest of us plebs in the real world, compare the price of Coke with…:
    
    …Milk
    …Orange Juice
    …Beer or Wine
    …Bottled Water
    
    Rational?
    Yes, absolutely
    - RedLogix 8.1.2.1
      
      22 March 2009 at 10:51 am
      
      Umm … how about tap water? The marginal price is effectively zero, and in most places in NZ equally as good as bottled water. 99.9% of the bottled water market is not so much irrational, as completely nuts.
      
      As for the other comparisons listed; you are making the mistake of confusing lowest price with best value.
      - ben 8.1.2.1.1
        
        22 March 2009 at 3:45 pm
        
        As for the other comparisons listed; you are making the mistake of confusing lowest price with best value.
        
        That is precisely the mistake you are making.
        
        I can only speak for myself, but I don’t touch tap water. I buy 20 litres of spring water at a time for $12 and haul it from the supermarket. Why? Because I can’t find a filter that works, I prefer not to put sodas and flavoured drinks into my body, and tap water I don’t enjoy or feel comfortable with. Like every single other consumer buying spring water, I imagine, I have weighed the alternatives. Doubtless I will discover a better way eventually and in my own time. Also doubtless, regulation would in no way help.
        
        As Tom Matthews so correctly said, you’re simply defining rationality as agreeing with you.
        
        Which is interesting in two ways. One, if I were to assume people making different consumption choices to me were being irrational I might think I could improve their lives by regulating those purchases. Is it this thinking that drives the Left?
        
        Two, it displays an incredible over-confidence in your own abilities an equally extraordinary disrespect for other people, and a failure to recognise that you cannot know other people’s circumstances. Those circumstances can affect consumption choices ways you might not expect. That does not make those choices irrational.
        
        Your arrogance is incredible.
- mj 8.2
  
  21 March 2009 at 7:18 pm
  
  yeah at the cutting edge mainstream economics is finally catching up with psychology, sociology, anthropology and heterodox economics and looking at people as complex beings but look at any of the economic models still in normal use from the simplest supply/demand graph through consumer theory and the entire notion of the impact of taxation on individual choice and it is founded on the old neoclassical concepts that don’t stack up with reality.
  1. People have rational preferences among outcomes that can be identified and associated with a value. (nearly always economists simplify this to monetary terms because it’s too hard to value other aspects of utility)
  2. Individuals maximize utility and firms maximize profits.
  3. People act independently on the basis of full and relevant information.
  
  These premises allow one to concoct wonderful fairy-worlds in which people are (for example) incentivized to work more hours because of marginal reductions in tax.
  
  You can whine about it if you like and point out that the neoclassical economics of today is evolved from the neoclassical economics of 1900. Call it ‘mainstream economics’ if you will but it is still the same in essence. It is derived from neoclassical ideology, constrained by it, and fatally flawed for it.
  - Paul Walker 8.2.1
    
    21 March 2009 at 7:33 pm
    
    As to 1) I’m not sure what a “rational preference” is. Or for that matter what an irrational preference would be. Economists, most of the time, assume that people have preferences, without saying whether they are rational or irrational. 2) most of the time it is assumed that people maximise utility but its not always the case. Herbert Simon put forward the idea of “satisficing”, for example. 3) no that is not always assumed. Asymmetric information is commonly assumed, as is choice under risk and uncertainty.
    
    For more on these issues see here.
    
    “These premises allow one to concoct wonderful fairy-worlds in which people are (for example) incentivized to work more hours because of marginal reductions in tax.”
    
    The labour supply curve is normally assumed to be backward bending, so the effects of increased effort due to things like cuts in marginal tax rate can be countered. That is to say, the income effect can overwhelm the substitution effect.
    - mj 8.2.1.1
      
      21 March 2009 at 7:43 pm
      
      funny because rather than writing the core premises myself I just took them from the same wikipedia page you used to attack this post.
      
      I’m well aware that the labour supply curve is backward bending, it still makes plain dumb assumptions.
      
      It’s weird, Paul, how you’re so caught up in trying to show that one theorist here or there has countervailing views. The fact is that mainstream economics, the economics that the mainstream uses and informs political decisions (and this is a political website I’m pretty sure), does carry with it these premises about human behavior -that people are rational and utility maximizing and independent agents. Those premises are simply false but they are used because they are convenient and easy.
      - Paul Walker 8.2.1.1.1
        
        21 March 2009 at 8:08 pm
        
        What wikipedia page???? I haven’t referred to any wikipedia page.
        
        “t’s weird, Paul, how you’re so caught up in trying to show that one theorist here or there has countervailing views. The fact is that mainstream economics, the economics that the mainstream uses and informs political decisions (and this is a political website I’m pretty sure), does carry with it these premises about human behavior -that people are rational and utility maximizing and independent agents. Those premises are simply false but they are used because they are convenient and easy.”
        
        No, what I’m saying is that economics is more than just just the particular model you have come across. The stuff I have been writing about is very standard economics. The basic point is that the model you are talking about has been extended and refined. You say these assumption are false. On what basis? So how do people make decisions? If they are not, at least, partially rational, what decision methods do they use? Do they choose randomly? If not, and they are not rational, how do you explain their behaviour. For example, we know that, by and large, demand curves slope downwards. What non-rational model of decision making can explain this?
Quoth the Raven 9

21 March 2009 at 6:53 pm

Redlogix – I recommend this study, if you’ve got the time to read it, though it’s not that long: Industrial Policy: New Wine in Old Bottles. and the same writer has just put up an excellent commentary.
- RedLogix 9.1
  
  21 March 2009 at 7:19 pm
  
  QOT,
  
  Looks good …thanks.
  
  I offer you this chunky little number in return.
  - Travellerev 9.1.1
    
    22 March 2009 at 6:48 am
    
    Interesting stuff gentlemen.
    Thanks for the links
IrishBill 10

21 March 2009 at 8:29 pm

That picture is defamatory! Nosferatu wouldn’t been seen dead (undead?) with that man.
Irascible 11

22 March 2009 at 3:32 pm

That’s not Nosferatu – it’s Roger Douglas risen from the grave of discredited voodoo economics.
RedLogix 12

22 March 2009 at 5:05 pm

I can only speak for myself, but I don’t touch tap water.

You confuse my ‘arrogance’ for simply knowing what I am talking about. In this case you are arguing with someone on their own professional grounds.

In most large New Zealand towns and cities: Tap Water = Bottled Water.

You only think otherwise because you have been persuaded to by advertising, or some ideas that have some relevancy in other countries. Blind taste testing has repeatedly shown that most of the time most people have no idea of whether it is tap or bottled water they are drinking. Just because I challenge your perceived and manipulated preferences with some hard facts does not make me arrogant, just informed.

And that leads back to my original and relevant point; what most people think are their own rational choices, are actually mis-choices, based on emotionally manipulative advertising, or mis-information spread to suit someone else’s commercial agenda.
- ben 12.1
  
  22 March 2009 at 6:05 pm
  
  Are you saying that entire New Zealand industries for bottled water and Coca Cola exist because people don’t know what is good for themselves, but you do?
  
  Here’s another hypothesis: the model of rational behaviour that is in your head is wrong, there are hard-to-observe or unobserved variables that you are leaving out.
  
  I can think of a number of theories for why bottled water might be preferred to tap water. As a professional I’m sure you’ve looked at each so I’d like to see your data:
  
  1. Bottled water comes in a convenient package that makes refridgeration and mobility easy, tap water usually does not.
  
  2. Bottled water is often sold chilled. Tap water is not.
  
  3. Bottled water is consistent. The quality of tap water depends on where you are and it is uncertain. Consumers may care about consistency.
  
  3. Reputation. Branding on bottled water signals quality because consumers know poor quality water will quickly destroy a firm’s investment in branding. Monopoly public utilities, on the other hand, have low or no brand value to protect and will under invest in quality.
  
  4. Liability. Producers of privately bottled water that makes you sick can be sued for damages. Public utilities may be protected in NZ?
  
  5. Other quality differences. Bottled water frequently comes with added minerals and vitamins that may appeal to some consumers.
  
  I doubt you’ve even thought of these, let alone done the research required to rule each of them out.
  
  Deception is a poor explanation for the existence of this industry a) many forms of deception in advertising are illegal b) if the product is so poor, why are almost all consumers of bottled water repeat buyers – do you really think they are so stupid that it didn’t occur to them to turn the tap on rather than go to the supermarket and pay money for the same thing? Hello? Perhaps you’ve missed something? c) if consumers can be so easily confused then why is so little spent on advertising and so much spent on producing things and inventing new products?
  - RedLogix 12.1.1
    
    22 March 2009 at 7:25 pm
    
    1. Bottled water comes in a convenient package that makes refridgeration and mobility easy, tap water usually does not.
    
    Yup. A good enough rationale for a small fraction of the market that can be legitimately served for people who are away from home or travelling… but not for at least 90% of the market, such as yourself who hauls $12 bottles home, when it’s free in your tap.
    
    2. Bottled water is often sold chilled. Tap water is not.
    
    What’s wrong with re-filling one bottle and sticking it in the frig for an hour or two?
    
    3. Bottled water is consistent.
    
    Your tap water is very consistent too. It’s probably been more thoroughly tested than your bottled water.
    
    Monopoly public utilities, on the other hand, have low or no brand value to protect and will under invest in quality.
    
    Are you aware of the New Zealand Drinking Water Standard? It is a very comprehensive and thorough document issued and managed by the Ministry of Health. Compliance is taken extremely seriously by the industry.
    
    Liability. Producers of privately bottled water that makes you sick can be sued for damages. Public utilities may be protected in NZ?
    
    I suggest that you are many thousands of times more likely to get ill from eating chicken than drinking any major public water supply in NZ. I’ll worry about bigger things than this if it’s all the same to you.
    
    Other quality differences. Bottled water frequently comes with added minerals and vitamins that may appeal to some consumers.
    
    Maybe, but frankly I would prefer to buy supplements from actual supplement suppliers. YMMV.
    
    Deception is a poor explanation for the existence of this industry
    
    The bottled water industry did not exist here in NZ until about a decade ago. It was only AFTER it was extensively marketed , playing upon people’s out-of-date or irrelevant misinformation, that people started buying it. Most consumer marketing has nothing to do with conveying information about a product, upon which a rational choice might be based.
    
    In my book that is deception. The industry had every commercial incentive to propagate it, while the public water supply utilities had little to no reason to counter it, the actual amount of water that people drink being only a small fraction of what is supplied. In the meantime many large cities are have realised how much they are paying to grapple with the cost of disposing mountains of once-only used plastic bottles, and a classic capitalist externality… privatise the profit, socialise the cost.
    - RedLogix 12.1.1.1
      
      22 March 2009 at 7:46 pm
      
      Oh and I left out the big one:
      
      Reputation. Branding on bottled water signals quality because consumers know poor quality water will quickly destroy a firm’s investment in branding. Monopoly public utilities, on the other hand, have low or no brand value to protect and will under invest in quality.
      
      Care to think about the many, many products private enterprise has sold which are either downright poisonous (tobbaco), turn out to have dangerous consquences (asbestos, many pharamceuticals), or the industry makes the calculation that it’s cheaper to risk a few bad outcomes than fix a problem? (Many, many examples.)
      
      The bottled water you buy probably does not have to meet ANY particular standard or testing regime whatsoever, and indeed in the event of something going badly wrong (and I can readily think of exactly how this could happen to one of the major water bottlers right here in NZ… but for obvious reasons I will not detail..), you would only find out AFTER the damage had been done.
      
      By contrast your public water managers are held accountable by rigorous monitoring and regulation.
      - Paul Walker 12.1.1.1.1
        
        22 March 2009 at 8:00 pm
        
        “By contrast your public water managers are held accountable by rigorous monitoring and regulation.”
        
        I have my doubts. One reason for such doubts is explained at
        Water privatisation in poor countries.
      - Ianmac 12.1.1.1.2
        
        22 March 2009 at 8:22 pm
        
        Actually bottled water should be pretty safe. After all they just turn on the tap from a good town-supply, fill ‘er up, and sell it for a 1,000% mark-up. Market supply/demand.
      - ben 12.1.1.1.3
        
        23 March 2009 at 12:17 am
        
        Red, actually the big one is explaining how it is an industry which produces a product you allege is no different to tap water manages to pull punters and keep them coming back again and again. You could start with that. Your story in which all consumers of bottled water are too stupid to know what’s good for them is utter tosh. Your other story about the greatness of public managers in managing water supplies comes a close second. It took Paul Walker all of 14 minutes to find a counterexample to that idea.
        
        You’re just making sh*t up. I don’t believe for one second you’re a professional in this field.
      - Felix 12.1.1.1.4
        
        23 March 2009 at 10:26 am
        
        It took Paul Walker all of 14 minutes to find a counterexample to that idea.
        
        Do you mean his 100-year-old U.S. example or his poverty-stricken-3rd-world examples?
        
        You and Paul should pay NZ a visit some time. You might actually like it here.
      - Draco T Bastard 12.1.1.1.5
        
        23 March 2009 at 10:56 am
        
        I have my doubts. One reason for such doubts is explained at Water privatisation in poor countries.
        
        Bechtel
        
        Privatisation of the necessities of life just makes things worse.
    - ben 12.1.1.2
      
      23 March 2009 at 12:50 am
      
      Red, you’re just making sh*t up. You’re simply imposing your tastes on everyone else and declaring and deviations irrational or meaningless. Where does the 90% come from? In point 2, what about people who aren’t at home? In point 3, what about people not in their local area? Point 4, what about compliance? Point 5 – YES, some may disagree. That’s the point. Nobody died and made you king.
      
      The bottled water industry did not exist here in NZ until about a decade ago. It was only AFTER it was extensively marketed
      
      You know, the Toyota Prius didn’t exist in NZ a decade ago either. Neither did CDMA cellular technology. That they do now is not because of some marketing trick. Same with water. I don’t doubt a series of innovations were required to get high quality water into supermarkets at an economic cost. I have never seen an ad for the brand of water I buy (Signature range). I keep buying it because my tap water is noticeably foul, the supermarket water is not, and I can’t find a better alternative at the moment. Its very simple.
  - lprent 12.1.2
    
    23 March 2009 at 8:52 am
    
    Are you saying that entire New Zealand industries for bottled water and Coca Cola exist because people don’t know what is good for themselves, but you do?
    
    Yes – if you’re talking about where the vast majority of it is drunk – at home. Costs a few bucks to get a multi-litre container to chill water in the fridge. Water quality is pretty consistent in NZ because we are an island and the river runs and aquifiers are short – unlike the states where water is routinely crap.
    
    Liability – bugger off – show me a case in NZ where someone has been sued over water quality who isn’t government. Because water is a public health issue and consequently has government imposed high standards, they’d sue the government for lax control. I think you swallowed a bottled water lines book from the US.
    
    Added stuff – mostly sugar and bugger all of any real use if you are not an athlete.
    
    In short a industry that is based almost entirely on hype, FUD, and copious waste where what you mainly pay for is the advertising..
RedLogix 13

22 March 2009 at 8:24 pm

Paul,

The reason why poor countries have very bad water supplies is BECAUSE they are poor countries. In such countries public utilities struggle to function well because they lack the underlying culture of a technically competent, well-resourced, capable public sector. It’s not too hard for some private enterprise to come along with nice new plant and do better; the bar they are hopping over is pretty low at the outset. Basing policy on the situation of desperately underdeveloped nations, with people who have no access to piped water supply at all, and hoping that it might be applicable in developed nation like NZ is not very useful.

Nor is using an historic example from the USA over 100 years ago a very relevant either. The USA has a tradition of ‘private prosperity and public poverty’. They have a long history of voting down taxes that might provide decent public services. Indeed the American Society of Engineers regularly publishes respected reports lammenting the woefully neglected state of much public infrastructure even to this day. Not a model I would aspire to.

Let’s cut to the nub of this.

Ben tells us that he happily shells out many hundreds of dollars a year for the privelege of purchasing the bottled water he likes. Good for him, it’s his discretionary income, he’s welcome to piss it up against a wall if he chooses.

But here is the truly weird thing. If his local TA was to announce that they were going to spend tens of millions of dollars upgrading his city’s public supply to the very highest conceivable standard, absolutely guaranteed as good as or better than anything you get in a bottle… but that Ben’s rates would have to increase by say … the same amount that he spends on bottled water each year… there would be screaming, wailing and much renting of sackcloth.
- Paul Walker 13.1
  
  22 March 2009 at 9:16 pm
  
  The basic and important point to come from that posting is that it cannot be assumed that “public water managers are held accountable by rigorous monitoring and regulation” since we have example of where this hasn’t happened and where private water managers have been able to do better.
  
  “If his local TA was to announce that they were going to spend tens of millions of dollars upgrading his city’s public supply to the very highest conceivable standard, absolutely guaranteed as good as or better than anything you get in a bottle but that Ben’s rates would have to increase by say the same amount that he spends on bottled water each year there would be screaming, wailing and much renting of sackcloth.”
  
  There would be a problem because once the water supply is paid for by rates Ben could never spend that money on anything else. If he spends it currently on bottled water he could, should he want to at sometime in the future, change his consumption and use that money to buy, say, bottles of coke. He looses that option with a rates increase.
  - RedLogix 13.1.1
    
    22 March 2009 at 9:45 pm
    
    There would be a problem because once the water supply is paid for by rates Ben could never spend that money on anything else.
    
    No you cannot wriggle out of it that easily. Ben has argued quite forcefully that he believe bottled water is better than tap water. He is so convinced of this, that he pays $1-2 for 1 litre of bottled water, that his TA could probably supply about 3000 litres for.
    
    Now if he truly believes this is so very worth it, then what possible moral objection could he have for withholding the same valuable benefit to be provided to ALL his fellow citizens?
    
    What would he care if this valuable benefit was provided universally via private or public means… if the price was the same? Yet if was provided by public means, the only difference would be that this magical water could be guaranteed to be made universally available to all with a minimum of fuss. What a wonderful outcome!
    
    Of course this is all a nonsense. The only real difference is that in Ben’s belief system, private = good, public = bad… therefore he’s quite happy to shell out 3000 times over the odds for water, in order to placate the great ‘free market’ god he is beholden to.
    
    “public water managers are held accountable by rigorous monitoring and regulation’ since we have example of where this hasn’t happened and where private water managers have been able to do better.
    
    Well no, I’ve been arguing that public water in NZ is pretty damn good and IS demonstrably delivered to a publically accountable standard. (NZDWS 2005).
    
    The examples in your blog entry are from far less developed nations, where indeed it probably is a good idea to drink bottled water.
    - ben 13.1.1.1
      
      23 March 2009 at 12:38 am
      
      Now if he truly believes this is so very worth it, then what possible moral objection could he have for withholding the same valuable benefit to be provided to ALL his fellow citizens?
      
      This is simply asking does freedom matter. If you really think there can be no moral objection to withholding gold plated water supplies to everyone, presumably you’d argue the same for everything.
      
      You’re asking, in other words, can there be any moral objection to collectivism.
      
      Well I can think of a couple.
      
      One answer is that resources are scarce, and for me personally the resources required to bottle and ship water are worth the cost. That is certainly not true for many people. It would quite simply be a waste of resources to force that on everyone and we’d all be poorer for it. Extend that line of thinking across all the economy, and we turn into Cuba or North Korea, where the highest value use of any resource is unknowable and as a result people are poor.
      
      A second answer is that subjugating the interests of the individual for the collective benefit has intrinsic danger and is historically a source of great evil. But whatever.
      - Pascal's bookie 13.1.1.1.1
        
        23 March 2009 at 7:34 am
        
        gLibertarianism!
        
        I’m being oppressed by the public supply of potable water! Send help!
      - Draco T Bastard 13.1.1.1.2
        
        23 March 2009 at 11:07 am
        
        One answer is that resources are scarce, and for me personally the resources required to bottle and ship water are worth the cost.
        
        But isn’t worth it to us – the extra cost you’re putting on the community with your stupidity isn’t something we wish to pay for. The cost of getting rid of all those plastic bottles is expensive.
    - Paul Walker 13.1.1.2
      
      23 March 2009 at 12:45 pm
      
      “Now if he truly believes this is so very worth it, then what possible moral objection could he have for withholding the same valuable benefit to be provided to ALL his fellow citizens?”
      
      Easy, because his fellow citizens have different preferences than he does. For example, I’m happy with the tap water as it is and would not want to pay for any “improvement” And why should I, just because Ben thinks its a good idea? The great thing about Ben buying his water is that both Ben and I get want we want rather than one of us being forced to have what the other wants.
      
      But my argument still hold. If Ben should at some time in the future change his view of bottled water and then thinks that coke is better, under a private system he can use the money he was spending on water to buy coke but under a public system he can not use the money he spends on rates to buy coke. The private system has an “options value”.
      
      “Well no, I’ve been arguing that public water in NZ is pretty damn good and IS demonstrably delivered to a publically accountable standard. (NZDWS 2005).”
      
      But you could write a contract with a private provider that says they are accountable to the same standard.
      - Felix 13.1.1.2.1
        
        23 March 2009 at 1:23 pm
        
        But you could write a contract with a private provider that says they are accountable to the same standard.
        
        And why would you?
        
        As you’ve pointed out, in very poor countries without decent public infrastructure or in very poorly managed systems you could possibly improve the quality of the water and/or the quality of the delivery by privatisation.
        
        However neither of these scenarios apply in NZ – our public water utilities are held to high standards and they do provide water efficiently.
        
        Without providing any actual argument for privatisation of NZ’s water supply you and ben are starting to look like a solution desperately searching for a problem.
        
        Keep it relevant, please. NZ specific. Present day.
  - lprent 13.1.2
    
    23 March 2009 at 9:01 am
    
    that “public water managers are held accountable by rigorous monitoring and regulation’ since we have example of where this hasn’t happened…
    
    Bullshit. That is an unsubstantiated assertion with no basis in reality. Show where that has actually happened in NZ in the last 50 years or so.
    
    You’d have to show it to the stage of a criminal liability rather than the usual mass hysteria (like Auckland getting water from the Waikato).
    
    As to the second point – most bottled water including the various fizzy drinks has as its main component – town water.
    
    ben just chooses to buy advertising.
RedLogix 14

22 March 2009 at 8:26 pm

Ian,

After all they just turn on the tap from a good town-supply,

You are actually 100% correct… I kind of alluded to it in a comment above.
Ianmac 15

23 March 2009 at 10:06 am

My understanding is that Christchurch water is pure and untreated. There is no taste or smell which makes it indistinguishable from bottled water. The town I live in also has untreated water and it is also tasteless which is what pure water is. On the other hand the water at my son’s house on the North Shore was smelly and tasted unpleasant. Therefore it follows that I could bottle tap-water down here and sell it as pure to those poor northern souls. Why would anyone buy bottled water in Ch Ch????
It was also believed that you had to sip often to supply optimum brain-power. Great marketing! But totally unscientific and untrue, but the mugs believe that it is so.
- RedLogix 15.1
  
  23 March 2009 at 3:05 pm
  
  On the other hand the water at my son’s house on the North Shore was smelly and tasted unpleasant.
  
  There are a range of substances that cause smells and tastes. The worst offenders are usually trace quantities of sulphur and iron bound up in organic complexes. Usually this is the result of source from aquifers in contact with sand and peats. Most suppliers avoid these sources if at all possible. Kapiti Coast DC tried such a wellfield a few years back, but had to virtually abandon it due to complaints.
  
  North Shore’s water is sourced by Water Care Services, much of it probably sourced from the Waitakere dam. There is no special reason why it should be different to the rest of Auckland. What does happen is that people get very ‘accustomed’ to the exact chemistry of their particular home supply and even the tiniest variations are initially perceived as ‘unpleasant’. It’s probably an old bit of survival genetics at work here.
  
  The other common complaint is ‘chlorine smell’. The actual chlorine in your tap water is tasteless in itself. What you are actually tasting is the by-product result of the clhorine acting upon organics that have made their way into the system and have been sterilised by the clhorine . These molecules are unfortunately exceedingly ‘smelly’, the human nose detects even the slightest trace of them. Fortunately they are also fairly volatile; just letting the water sit in the open for a little while will reduce any taste/odour markedly.
  
  Bottled water has no added clhhorine, so avoids this effect. On the other hand for the same reason, ironically enough, it cannot be guaranteed sterile and safe to drink.
  
  captcha = ‘thread trim’.
  Hehe… maybe I should take the hint.
Glenn 16

24 March 2009 at 6:28 am

This is simply asking does freedom matter. If you really think there can be no moral objection to withholding gold plated water supplies to everyone, presumably you’d argue the same for everything.