Jerry Brown Condescendingly Tells Californians It's Raining
Who knew Governor Jerry Brown could, in the midst of California's water shortage, find enough to spit in the faces of his constituents and tell them it was raining? "We're in a new era", he said. "The idea of your nice little green grass getting lots of water every day, that's going to be a thing of the past." Brown's insulting comment wrongly claims the moral high ground while presumptuously questioning the ability of Californians to meet their water needs -- rather than the propriety or ability of central planning to do so. In fact, this crisis exposes central planning as an immoral and impractical approach that breeds short-range thinking.
In Brown's defense, providing water to 39 million people is hard. Even actions that may seem like common sense, such as state-wide use restrictions, are rife with pitfalls. For example, these restrictions would cause San Diego, which currently has no shortage, to endure pointless hardship while its water evaporates sitting unused in reservoirs. But such hazards result from the fact that humans are not omniscient. Every individual has to weigh his water needs against its availability, aided by pricing information from the free market. Under central planning, government coercion forcibly deprives us of this information or distorts it, cornering us into poor decisions. The economist George Reisman put it this way:
The overwhelming majority of people have not realized that all the thinking and planning about their economic activities that they perform in their capacity as individuals actually is economic planning. By the same token, the term "planning" has been reserved for the feeble efforts of a comparative handful of government officials, who, having prohibited the planning of everyone else, presume to substitute their knowledge and intelligence for the knowledge and intelligence of tens of millions, and to call that planning.
In a free market, prices reflect the balance between the difficulty of producing a good, like potable water, and the value consumers place on it. Prices inform customers and businessmen alike. Because of government planning, this is largely not the case for water in California, and widespread shortages are the predictable result.
The loss of vast amounts of information caused by central planning leads to short-sightedness by both planners and customers. Consider that artificially low water prices and a "use it or lose it" policy (in contrast to pricing that reflects scarcity) encourages farmers to use as much as they can. This goes a long way towards explaining why municipalities and farmers waste enormous amounts, or, like Sacramento, sell it on the cheap to middlemen who process and resell it at a big markup. Whatever the motive for giving water away (Hint, it isn't profit), this practice triggers a moral hazard and predictable results. High prices indicating scarcity would encourage thrift by customers and businessmen to search for alternatives. Instead, we get profligacy amid scarcity. The Placer County Water Agency unwittingly admitted this profound degree of ignorance in an especially creepy manner when it recently started giving customers a smartphone app to encourage them to photograph other customers "wasting" water. What might have been if California had availed itself of free market pricing information? Newer or better supplies now or at least personally-motivated thriftiness? Fewer people lured into the desert by false promises of cheap, plentiful water? Certainly not this app!
The absences of rational pricing and the profit motive lead to perverse incentives and stunt the imaginations of suppliers and consumers. Unimaginative certainly describes Brown's one-size-fits-all solution. Likewise, many Californians, accustomed to cheap, plentiful water without having to imagine where it comes from have been remarkably naive in their preferences regarding water policy. Some Californians have for decades opposed attempts to increase supplies, such as by expanding the Shasta Dam, and favored wasteful practices such as reservoir water diversion into rivers to help migratory fish. Some have even supported reducing the state's water reserve capacity by returning the vast Hetch Hetchy reservoir to its original state. The blame also lies with the environmentalist movement, but it was aided and abetted by a populace lulled into complacence by unrealistic expectations. All of this has also led to laws mandating reduced power consumption, threatening the obvious solution: desalination. Customers do not feel the squeeze until it's too late, even as activists who don't fear losing their water have had the ears of the planners all along.
Governor Brown's condescending words reminded me of what psychologist Michael Hurd once said about other obnoxious know-it-alls: They are, "not motivated by knowing the truth or figuring out what's right ... [but] ... with appearing superior." It would be unfair to blame this mess entirely on Governor Brown, but doubling down on central planning actually demonstrates the need for intelligence that only the free market can provide. California's water drought will end only when its freedom drought ends, unleashing the intelligence of its millions of inhabitants..