Stinker of the Day

No, Flint’s Water Crisis Does Not Prove We Should Privatize Clean Drinking Water

If you knew that one of these three bottles of water wasn't subject to government regulation, would you drink from any of them? (Image courtesy of nenetus at FreeDigitalPhotos.net.)

If you knew that one of these three bottles of water wasn’t subject to government regulation, would you drink from any of them? (Image courtesy of nenetus at FreeDigitalPhotos.net.)

Everyone agrees that the poisoned drinking water of Flint, Michigan represents a disastrous failure on the part of local government. After all, clean drinking water is the most essential ingredient for a functioning society—if you can’t get clean water, everything else collapses. This is why pretty much everyone agrees that clean water is a public good, that it’s the government’s responsibility to provide clean drinking water to its citizens.

Note that I said “pretty much” everyone agrees that clean drinking water is a public good? I had to make that distinction because conservative economists exist. And to conservative economists, basically any so-called “government intervention”—yes, including clean drinking water—is evil. And so our old friend Tim Worstall begins to quibble for Forbes

[A public good] is not something which is good for the public (which clean drinking water definitely is) nor a good that should be supplied to the public (which clean water definitively is). A public good is something that is non-rivalrous and non-excludable. That is, if I’m able to enjoy a supply of something that doesn’t diminish the amount of that same thing that someone else is able to enjoy or consume. And secondly, that there’s no real way to exclude people from being able to enjoy that. Obviously, neither of these are true about the supply of lead free drinking water. Don’t pay your water bills and you’ll quickly find out how quickly your supply can be excluded, and my drinking the water really does mean that you don’t have access to that particular portion of water: not until it’s been back through the treatment plant at least.

Interesting that Worstall bases his complaint on a semantic argument, and interesting that Worstall knows he’s fighting an unpopular battle. He continues:

It probably is true that the absence of pandemic disease through the existence of a decent sanitation system is a public good. But drinking water is not, not by the economists’ definition.

So Worstall is trying mightily to split hairs, here. The water is not a public good, he argues; the fact that the water is clean is a public good. Why does he care about this issue?

If something is a public good then it’s very difficult to make a profit from it. This means that private markets will undersupply it, or at least potentially will. So, intervention to get the amount we think would be societally useful is often a good idea. Please do note that I’m not banging an ideological drum here; this just is the simple economics of the matter. People often say that vaccination is a public good; it isn’t. It’s the end result of a successful vaccination program that is, the herd immunity.

Please note that while Tim Worstall promises that he’s not banging an ideological drum, people in Flint are literally dying from tainted water. He later even tries to clarify that “All of this is not a discussion of the state of the water supply in Flint, Michigan.” Except he wouldn’t be trying to launch this “discussion” if the disaster in Flint hadn’t happened. It’s almost like Worstall’s basic humanity tried (and failed) to intercede with the writing of this blog post; ultimately, as is always the case with Worstall and moral crises, the conservative in him won out.

Read this mincing paragraph and tell me Worstall doesn’t know he’s trying to spin a sweater out of a mound of bullshit:

Please don’t get me wrong here: the provision of clean drinking water is at the heart of civilization itself, and I don’t think anyone should be deprived of it because of poverty, political manipulation nor even bureaucratic incompetence… However, it is not a public good and thus the argument that government must spend more upon it does not apply, nor do any of the other public goods arguments.

So he thinks that water is necessary and should be provided to everyone regardless of their financial status, but he also thinks that it shouldn’t be supplied by the government? Let’s for a moment pretend that Tim Worstall is a real economist. And let’s take his premise seriously: say private business is in charge of all the water supplies in America, with maybe a very small government regulation office in charge of keeping them honest. How long do we wait until someone like Stewart Parnell knowingly endangers his customers by providing tainted product? Or until someone knowingly cheats the regulation system, like Volkwagen? Or until some company repeatedly fails at its attempts to provide a clean product, like Chipotle? Or until someone prices the product out of the hands of the poor, like Martin Shkreli?

We’re big fans of capitalism here at Civic Ventures. But after witnessing the kind of failures we’ve seen in recent years, you’d have to be outright dumb to argue that capitalism is the solution for everything. Government has its place, and one of those primary duties should be to protect and preserve the cornerstones of civilization. If you choose to let the market decide on the profitability of your safety, you’re making a bad bet.

Skunkworks Stinker of the Day: Donald Trump

Donald TrumpRepublican presidential frontrunner Donald Trump insists that his tax cut plan would increase tax revenues, because growth!

“Overall, it’s going to be a tremendous incentive to grow the economy and we’re going to take in the same or more money. And I think we’re going to have something that’s going to be spectacular,” Trump said. “We’re going to grow the economy so much.”

Which would be great. Except, this trickle-down fantasy never, ever works.

That said, it’s not luck Trump’s tax plan is any stupider than any of the other Republican tax plans. So there’s that.

Skunkworks Stinker of the Day: the American People

Game of Thrones

Anything to keep out the white walkers, I guess:

41 percent of Americans say that if a wall is built along the Mexican border, one should also be erected on the Canadian one. And yes, the same percentage favors a wall erected along the nation’s southern border.

Oy. I mean, oy.

As a Washingtonian, it makes me want to build a wall on our state’s southern border.

Skunkworks Stinker of the Day: Forbes’ Tim Worstall

Tim Worstall, bloggerThe only way Forbes blogger Tim Worstall seems to know how to win an argument is to argue with himself:

[T]he basic argument of a minimum wage, any level of minimum wage, is that there’s some moral right to a certain income from providing one’s labour.

Except, that’s not the basic argument in favor of a minimum wage—at least, not the argument that has been winning the minimum wage debate in Seattle, San Francisco, Los Angeles, New York and throughout the nation. No, our basic argument is that raising the minimum wage is good for the economy: that it increases consumer demand, increases worker productivity, and increases economic growth.

Sure, minimum wage workers may be making a moral argument in demanding a living wage—as they should—but Worstall and his free market cohort are sticking their heads in the sand if they believe that it’s the moral argument that’s been winning the day. There’s always been a moral argument to make in support of a living wage. What’s new is the powerful middle-out economic argument that comes from a more modern understanding of how a capitalist economy really works.

As for Worstall’s professed concern for working people, absolutely, he has my support for exempting the employee share of FICA on the first $15,000 or so of income—as long as their Social Security account gets credited for the exempt amount, and the revenue is replaced from somewhere else (say, by lifting the income cap). But this proposed reform and the minimum wage have nothing to do with each other.

Skunk Works Stinker of the Day: US Sen. Mitch McConnell!

Mitch McConnellCongratulations to US Senate Majority Leader Mitch McConnell for being chosen our first Skunkworks Stinker of the Day:

Asked about the improving economy, McConnell scoffed: Business leaders tell him they have “a hard time finding people to do the work because they’re doing too good with food stamps, Social Security and all the rest.”

Uh-huh. According to McConnell, what’s really holding back economic growth is that Americans aren’t poor enough. Oh please.

So, let’s take McConnell’s claim in order. The average monthly SNAP (food stamp) benefit in 2014 was only $140 for a single person (about $110 per person for a family of four). Social Security is only paid to people who are old, blind, disabled, or orphaned. And by “all the rest” I can only presume that McConnell is referring to the Professor and Mary Ann. Or something.

I suppose there’s unemployment insurance at an average of $306 a week, but with the benefit normally lasting only 26 weeks, that’s not going to get a family very far. Hell, even the working poor are struggling to get by these days, so I’m not exactly sure how McConnell figures people are “doing too good” to bother to go out and get a job?

So if the business leaders McConnell is talking to are really having “a hard time finding people to do the work,” they might want to consider raising wages. Or is the labor market the only market where supply and demand plays no role?