If you ask any student who took a course in introductory microeconomics about a “shortage,” well, one who was paying attention, you’ll get the same answer: this means that demand is greater than supply. And if the student had any love for this subject, you would not be able to shut him up at this point. Rather, he would wax eloquent about what would happen next: prices would tend to rise, as many buyers fought against each other in a bidding war to get “their share” of the good or service now in short supply. And, as the price rose, there would be less and less of a shortage
These lessons seem to be beyond the scope of the U.S. government and major media, members of which, presumably, never took economics 101. Or, if they did, slept through it, or were then and now still are, politically correct “woke” social justice warriors who reject the teachings of the dismal science as a matter of principle.
Suppose we asked even a “C” student to explain the persistence of shortages, despite the tendency of price rises to cure them. Faculty would be bitterly disappointed if he failed to mention not only price controls, but, further, price ceilings. If he were yearning for a “B” he would go on to aver that if our society were serious about ridding itself of shortages, it would repeal all price ceilings and/or not impose them in the first place.
Would he apply this knowledge to rent controls? This would take quite a bit of courage, insight and wisdom. For to apply economic understanding to “home and hearth” is dangerous in this epoch when free speech is under attack on all sides. Would he apply it to water prices? Probably not, since people will die without H2O and it seems callous to apply the teachings of this discipline to so important a factor of production. (Imagine if physical scientists refused to utilize their learning in an attempt to cure disease, and you will better appreciate the plight of economists).
But we shall press on. The reason there is a water shortage at Lake Mead has little to do with “global warming” or “long-term drought.” These are the explanations of the economically illiterate. If this were the real cause, there would be shortages of all sorts of other things that are heavily water based: orange juice, milk, apple juice, lemonade, not to mention fruits which suck up water, such as oranges, apples, etc. There are simply no shortages of these inputs. Why not? That is due to the fact that, at least at present, there are no price ceilings on any of these items. Institute them, and as easy as falling off a log, shortages will rear their ugly heads, global warming or no global warming.
In sharp contrast, how are the authorities dealing with this water shortage? What are the views of the pundits of the major media on this topic?
It is to weep. (Better not; tears, too, contain water).
The main “solution” is to cut water to the local users, mainly farmers. In the view of Sharon B. Megdal, director of the Water Resources Research Center at the University of Arizona, we should “focus on the dire state of the river (which) would lead to more efforts in the region to use less water.” She continued: “I think we’re going to see some adaptation. But I don’t know if we can do that much to avoid further cuts.”
Well, yes. When supply is less than demand, something has got to give. Not all the demands at a zero price can be met. It does not have seemed to occur to anyone in authority that the way to equate supply and demand is to allow prices to rise. That is the only way to cure a shortage.
The prevailing attitude seems to be: “What?! Have prices for water, let alone raise them? You must be out of your mind.
Yes, water is precious. Without it, we’d be up a dry creek, with no paddle. But that is all the more reason to apply what we know of basic economics to the problem, instead of burrowing our heads into the parched sand like the proverbial ostrich.
