Anti-liberal NGOs like War on Want and the World Development Movement are using World Water Day (today) to campaign against private investment in water infrastructure. The World Development Movement says that water privatization is: “making it less likely that clean water will ever get to the poorest people.”
Unfortunately the World Development Movement is mistaken. As Global Growth’s development economist, Paul Staines, says (pdf file):
Practical and technological requirements for huge sanitation projects on a metropolis-wide scale require the resources of big enterprises to implement them, the private sector can not only provide the capability but also the capital required. 2 billion people thirst for clean water, Western antiglobalisation NGOs who arrogantly put their ideological interest ahead of the interests of the developing world are full of **it, and if they succeed in their campaign the fast growing cities of the developing world will be as well.
Private investment in water is expanding access to clean, running water. It contrasts strongly with nationalized water systems where politically-favoured groups receive below-cost water, starving off future investment so that unfavoured groups go without. Private investment offers the best plan for increasing access to water.
Crossposted from the Globalisation Institute Blog.
I agree that purely ideological opposition without any supporting evidence to any form of services provision is unacceptable. That’s why your claim that the private sector is always better is just as bad as the NGOs you’re criticising.
Actually, the evidence seems to be fairly mixed. For example, while this large-scale research in Latin America by the World Bank finds that while connection rates to piped water and sewerage improved in areas that privatised their services, it also improved in areas that didn’t, “suggesting that PSP [private sector provision] may not have been responsible for those improvements”.
Aaarggh! Another one! It’s like mosquitoes. Or fleas.
“Unfortunately the World Development Movement is mistaken.” You think?
Sometimes the market offers the best solution. Other times (less often) the state does. A dogmatic insistence on one over the other in all circumstances is silly.
EG
Alex:
Paul Staines’ piece seems to be about private sector “delivery” of State funded water, rather than true privatisation (i.e. complete withdrawal of the State from the sector); an entirely different and inferior thing.
Jim:
It is not a question of evidence. There are powerful theoretical arguments as to why State intervention is harmful. Why should nationalisation of water be any different to nationalisation of food, education or anything else?
EG:
You are wrong. Dogmatic insistence on the inferiority of the State to the market is entirely warranted until somebody refutes the libertarian case. And so far, nobody has done so.
Thanks Julius, that raised a laugh: “Forget the evidence, feel the powerful theoretical arguments!!!”. Priceless …
EG,
Careful, bliar could have said that…especially the ‘silly’ label.
Absolutely – thing is that private money voluntarily proferred impacts less detrimentally on the economy at large and ought really to be exhausted first, though.
Maybe this should be obvious but a commodity market for water would better control the supply (ie the aquifer, etc) by controlling demand through pricing. It would be controlled by price rather than bureaucrats, so that the supply wouldn’t quickly dwindle into nothing, like here in Arizona.
IN AZ, prices are kept very low so that COTTON farmers can continue to produce cotton cheaply in spite of the fact that cotton farming is highly wasteful of water. Also, few farmers use efficient irrigation — there is no reason to when the price is so low. And this in the middle of a dammed desert!
Yea, public control of water is a GRREAT idea. Tucson will cease to exist because the bureaucrats decided the farming lobby was too important to upset.
The same thing will happen in all water starved areas. The poor have nothing to gain from publicly controlled water. The rich don’t either. Only bureaucrats, politicians, and lobbies do.
Of course, it is quite acceptable to say this if you’re a libertarian. If you’re a Marxist and say the same thing, you are of course wrong. Forgive me if I have difficulty understanding the theological difference between libertarian arrogance and Marxist arrogance.
Perhaps if libertarians would put their money where their mouths are and actually start a libertarian society we would know whether it can be refuted or not. So far, nobody has done so. Why?
Dogma is very rarely justified in any matter. Dogmatic insistence on the superiority of collectivism resulted in 74 years of misery in Russia. Dogmatic insistence on the inferiority of the state to the market resulted in …. oh, of course, nobody has yet had the courage of their convictions sufficient to actually try it. It’s very easy to argue for the theoretical superiority of your proposed system when there is no real prospect of it ever being put into practice, and thus little chance of you being proved wrong in the real world.
Getting back to the issue, it is of course fact that water privatisation has been successful in many cases. In other cases, it has failed. One cannot, therefore, justify dogmatic insistence on the superiority of the market.
EG
I would add that it is impossible to refute the “libertarian case” until someone decides what that actually is. Since some libertarians seem to think this is either counter-productive or meaningless, then this is unlikely to happen.
However, a lack of refutation on this basis does not mean libertarianism has not been or cannot be refuted – it means libertarians cannot or will not define what they are. This is a problem for libertarians, not for anyone else, of course.
EG
I’m always bemused by those who say that only the state has enough resources to do something, whether it’s go to the Moon or provide safe drinking water. Where do they think the state gets its money? Mightn’t it come from taxes on the profits of private enterprise, who therefore could pool those resources and do anything that the state could do? All the state has to offer is the power to do things by force that its citizens wouldn’t get together and do voluntarily.
EG:
The difference between socialism and libertarianism is that socialism has been refuted.
It is false to say that the libertarian case is immune from refutation because nobody has tried it. Mises refuted socialism in the 1930’s, long before it collapsed and even before its horrors were widely known. His argument would have been just as valid even if socialism had never been tried. If there is a valid refutation of libertarianism, the same would be true of it.
“Could” does not necessarily imply “would.”
This is rather the point.
EG
EG:
“I would add that it is impossible to refute the “libertarian case” until someone decides what that actually is.”
Come off it! Libertarians may disagree about the fine detail, but it is hardly difficult to identify the core ideas and to criticise them if you think they are wrong.
This doubtless explains why they say “but that’s not what I mean by libertarianism” I suppose.
People using the self-description of libertarian can belong to any one of a large number of groups:
Are your economics Austrian, or minimally regulated capitalism, or do you accept some small role for the state in the economy?
Do you propose no government, minimal government, or larger but limited government?
Are you propertarian or not?
Do you recognise a collectivist tendency in some aspects of human nature or not?
Do you say the state has the right to provide national defence and the amdinistration of justice or not? If so, how should it collect the money to pay for this? What does it do if somebody doesn’t want to pay his share?
You see the problem?
“Libertarian” as a self-description doesn’t mean very much, or at least it doesn’t mean enough in any commonly accepted sense for non-libertarians to have sufficient information to criticise. The best one can do is try to decide what a specific individual thinks, and then criticise that if appropriate. But that won’t necessarily apply to anyone else.
EG
EG:
The debates between minimal Statists and anarchists or between Austrians and Chicago-ites have no bearing upon the question of whether water is best supplied by the State or the market.
I imagine that libertarians of all flavours would agree that there is no relevant distinction between water and other commodities. Therefore the well-known arguments against State interference in the market apply here as elsewhere. What is special about the supply of water that puts it into a different category?
Don’t try to evade. You know perfectly well the question I was answering concerned “what is a libertarian.” Address the issue.
People die if they don’t get it.
EG
Then define libertarianism and let’s have a crack at it.
EG
I’d define the most libertarian privatisation as the government simply rescinding control and ownership of a utility, leaving it to be taken over by staff or nearby householders. How well would that work?
Water is different from other commodities in that one dies in a couple of days without it, and contamination of small quantities can cause death or permanent disability.
The market can allocate capital most productively, but this may mean not providing water to costly areas, where dehydration and disease may become endemic.
Hence a regulatory agency of some sort needs to induce some waste, no?
If you mean just abandon it and walk away without selling, then I doubt it would work at all well. People tend not to value things they don’t pay for (whether cash or labour). What would be more likely in a situation like this would be asset stripping and sale.
On the other hand, sell it at a market valuation to the householders or staff and this might work.
EG
EG:
“Q: What is special about the supply of water that puts it into a different category?
A: People die if they don’t get it.”
Ok, let’s put the Government in charge of food, too.
Since in almost every country in the western capitalist world the state does make regulations concerning food quality and safety, one can argue that this has already been done to an extent. If you want to know WHY this was done, you might care to review the history of food and drug purity law and the abuses that led to their introduction. I don’t imagine you’ll actually do that, of course, since it doesn’t match with the “powerful theological arguments” which support your case. Oops, of course I meant theoretical.
Now, are you going to address the issue of what libertarianism actually is, or are you going to keep on evading it?
EG
Thought not.
EG