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Tuesday, July 19, 2005

Water supply systems and Marxism

Socialised water supply is inefficient, dangerous and costly

by StFerdIII

Socialised water supply is inefficient, dangerous and costly
July 20 2005



"Food and water are basic rights. But we pay for food. Why should we not pay for water?"
— Ismail Serageldin at the Second World Water Forum, The Hague

"Water should not be privatized, commodified, traded or exported in bulk for commercial purposes."
— Maude Barlow, International Forum on Globalization

There are plenty of smart Canadians but Maude Barlow is not one of them. Wrong on almost every single issue known to mankind, she continues to sell books, pop up on talk shows and enjoy acclamation by the left liberal media. Barlow’s Marxist analysis is wrong on water. Water supply and distribution, like energy systems, responds to market economics and efficiencies where suppliers and consumers interact through price points and access points. Ignoring the dynamic effects of markets upon water or energy systems is to consign them to the rot of government mismanagement endemic in all socialised sectors including health care. Any industry that ignores the efficiencies and competitive pressures of a market system is doomed to either failure, or never ending streams of subsidies. Further as Walkerton in
Canada and other tragedies with contaminated water illustrate, socialised water is not that safe. In sum water is just another example of bad Marxism.

So how does this Marxism look today in the post-modern, morally generous lands such as
Canada? In Canadaistan eschewing for the moment, quality, costs and distribution coverage, the water systems in a province like Ontario only cover 50 % of the systems cost. This means that consumers are only paying half of what the system costs. Across Canada the infrastructure upgrades for water systems will reach $90 billion over the next 20 years or a cool $4.5 Billion per annum. In Toronto alone the infrastructure needs are $5 billion in the next 5-10 years. Across other countries similar amounts per capita are needed. How will Marxist economics solve this infrastructure gap ?

In socialised economies the supply side never meets the demand side – ergo deficits, debts, and problems. On the demand side
Canada is a veritable pig of water consumption per capita, exploding the myth that Canadians are green-sensitive or more nature loving than other nations. In Canada the waste of water is typical of price capped systems. According to a recent report, 55 per cent of Canadians who receive water from municipalities are paying rates that discourage conservation. Some municipalities with volume-based rates do not encourage conservation because they apply a minimum charge that includes a volume of water greater than normal residential use. Flat-rate pricing results in higher water use than volume-based pricing, because once the monthly payment is made, customers may take as much water as they choose at no extra cost.

So the net result is that subsidized socialized water actually leads to inefficient water usage. Water use is 70 per cent higher in homes that don't have volume-based rates. Flat-rate customers in
Canada use 457 litres of water per day; volume-based consumers use 269 litres per day. In areas where volume pricing is in effect such as Germany, daily per capita water use is 128 litres, and in the United Kingdom, 149 litres. Over half of Canadians have flat rate fees and the other near half pay price capped rates which distorts and perverts the entire supply and value chain of the water system. So much for the myth of the tree hugging nature loving Canadian.

So we can agree that higher debts, and bad conservation are the results of socialized water systems. But, with tears in eyes and hands over hearts, politicians and socialists weep about the poor and the old and of course about safety ?!?! As if socialized systems like health care are safer than private systems. Walkerton in
Ontario was a publicly owned and managed utility which through gross neglect killed 7 people and caused 2000 more to be ill. But you will only hear the lie that Walkerton was privately owned – it wasn’t. Demagogic politicians will weep that a private water supply will destroy babies, leave the old without water, and benefit only the rich who will use, steal, consolidate or drink every drop of supply. Sorry but the evidence is that private water supply is cheaper, better distributed and actually reaches the poor and neglected that have not been served by government owned water supply systems. It is also safe. No evidence exists to contradict the efficacy of private water supply.

Regarding the poor it is necessary to keep in mind that almost 30 % of the world’s population has trouble accessing potable water. If socialised water systems were so great then we would not have such a mass of humanity crying for water access. Currently only 10 % of the world’s water supply is privatized. In areas where private participation came into water systems in the 1990s, there has been increased connections, improved reliability of water supply, duration of water supply, and quality. Case examples of successful privatisations range from the
UK to the Ivory Coast, to Guinea, through to several Colombian cities, Argentine cities and other needy third world areas. We need more private sector help not less to address the issue of potable water for the poor.

Yet even many of these so-called privatisations in either the first or third world’s, were limited and modest affairs. There are various forms of ‘privatisation’ ranging from real market privatisation to all sorts of socialist managed affairs such as ‘Public-Private Partnerships’, ‘Lease to Buy’, or ‘Management of Operations’ programs, where the government tells a minority interest of private sector participatory bodies what, when, how and why to do things. Yet these government owned initiatives are incomplete and unnecessary. A truly privatized water system brings technology, finance, management skill, and quality control systems to bear in a competitive environment. The consumer wins through price competition, service excellence and yes access. As well the infrastructure is updated and profits are reinvested in part to maintain and enhance competitive advantage – most of which in water economy – would be based on distribution and retail excellence.

There is no possibility that Marxist water management will solve the world’s potable water problem or the rich world’s water infrastructure needs. The World Bank estimates that the developing world will need over $60 billion per year for water infrastructure. In the
United States, the cost of upgrading and maintaining the existing drinking water system could be as high as $250 billion over the next 30 years, according to a study released by the American Water Works Association. Europe, like the United States, faces concerns over old water infrastructure and growing pollution that require, in some cases, extensive investment.

Throughout the developed world municipalities and other jurisdictions play political games and say the ‘right things’ to appear sensitive. But their message is mixed up and inaccurate. Buying votes with capping water prices has turned what could be a profitable and job creating industry, into a bad Marxist experiment. Needless to say that without private reforms increased taxation, and more debt, with tearful remonstrance’s of saving the poor and the old, will be the political policy of choice. One should not expect too much from political cowards.

Some sources:
1) World Health Organization. 2000. "Global Water Supply and Sanitation Assessment: 2000 Report." World Health Organization and United Nations Children's Fund. (Available in full.)
2) Brubaker, E. 2001. "The Promise of Privatization." Energy Probe Research Foundation,
Toronto, Ontario (April). (Available in full)
3) Gopinath, D. 2000. Blue Gold. Institutional Investor International Edition. February. Government.
4) Market Guide 2001.5
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