Coyote Blog

Every time one points out a historic failure of communism (most recently, for example, in Venezuela), Marxists will argue "well, that is not true communism."  Somehow they think that communism without heavy-handed exercise of state power is possible.  It is not.

Here is the latest example, from our own peoples' republic in California.  For reasons that are simply beyond me, no one in California wants to use market mechanisms and the power of prices to match supply and demand for water.  We use these market tools successfully in pretty much every other market, but not in water.  The result is that increasingly heavy-handed exercise of government power is necessary to match supply and demand.

Senate Bill 606 establishes a “governing body” to oversee all water suppliers, both private and public and will require extensive paperwork from those utility companies.

Assembly Bill 1668 is where it gets personal.  This establishes limits on indoor water usage for every person in California and the amount allowed will decrease even further over the next 12 years.

The bill, until January 1, 2025, would establish 55 gallons per capita daily as the standard for indoor residential water use, beginning January 1, 2025, would establish the greater of 52.5 gallons per capita daily or a standard recommended by the department and the board as the standard for indoor residential water use, and beginning January 1, 2030, would establish the greater of 50 gallons per capita daily or a standard recommended by the department and the board as the standard for indoor residential water use. The bill would impose civil liability for a violation of an order or regulation issued pursuant to these provisions, as specified.

If you’re wondering how the government would know how much water your family is using, the utility providers will be obligated to rat you out of face massive fines. And they’re encouraged to spy in all sorts of creative ways. They “shall use satellite imagery, site visits, or other best available technology to develop an accurate estimate of landscaped areas.”...

If you don’t plan to comply it’s going to be way cheaper to move. Here are the fines Californians will be looking at – and it’s not a typo – these fines are PER DAY.

(1) If the violation occurs in a critically dry year immediately preceded by two or more consecutive below normal, dry, or critically dry years or during a period for which the Governor has issued a proclamation of a state of emergency under the California Emergency Services Act (Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code) based on drought conditions, ten thousand dollars ($10,000) for each day in which the violation occurs.

(2) For all violations other than those described in paragraph (1), one thousand dollars ($1,000) for each day in which the violation occurs.

All of this could easily be replaced with the simple expedient of allowing the price of water to rise until supply and demand matched, a solution that works for everything else and would provide the added benefit of giving financial incentives to seek out new sources of water.  If they are worried about prices for the poor, then they can have a subsidized rate for the first X gallons and then a market rate above that.  There are at least two reasons I think politicians don't do this, beyond just their socialist assumptions and distrust in markets

1. The people who would most be hurt by market pricing for water -- farmers, golf course/resort owners, etc -- have a lot of political pull in the state and would prefer a regime where high-value uses are curtailed to save water for their potentially lower-value uses.  Just look at the carve-outs in the law for swimming pools, water features, and golf courses.
2. Politicians like rationing, or more accurately they like being the rationers.  You can't generate political contributions from market pricing of water. But if you are the person doing rationing, then everyone is going to come to you and try to curry favor.

The simplest way to explain why Marxism fails is "incentives and information" -- planned economies shift economic decision-making from individuals who have the information and incentives to make the proper tradeoffs for their own set of circumstances and preferences and on to politicians whose main incentive is to see who is willing to do the most to curry favor with them.

With every item or service we buy, supply and demand are matched via prices.  Except water.  Because, for a variety of populist and politically scheming motives, no one wants to suggest "raising prices to consumers" as the obvious solution to reducing California water use in a drought, despite the fact that it would reduce demand in -- by definition -- the lowest value uses as well as provide incentives new sources and alternatives.  So instead we get authoritarian stuff like this (press release from CA Senator Fran Pavely):

SACRAMENTO – Governor Jerry Brown signed Senate Bill 1281 by Senator Fran Pavley (D-Agoura Hills) on Thursday to require greater disclosure of water use in oil production.

Oil well operators use large amounts of water in processes such as water flooding, steam flooding and steam injection, which are designed to increase the flow of thicker oil from the ground. In 2013, these enhanced oil recovery operations used more than 80 billion gallons of water in California, the equivalent amount used by about 500,000 households and more than 800 times the amount used for hydraulic fracturing (“fracking”).

The impact of this use on domestic and agricultural water supplies is not known because oil companies are not required to disclose details about their water use

“At a time when families, business and farmers are suffering the effects of severe drought, all Californians need to do their part to use valuable water resources more wisely,” Senator Pavley said. “The public has the right to know about the oil industry’s use of limited fresh water supplies.”

Oil well operators have an available source of recycled water known as “produced water,” which is trapped deep underground and often comes to the surface during oil production. More than 130 billion gallons of produced water surfaced during oil production in California last year.

Many oil companies already recycle some of their produced water, but the amount is not known because of the lack of disclosure. Senate Bill 1281 requires oil well operators to report the amount and source of their water, including information on their use of recycled water.

The ONLY reason for such disclosure is because they want to impose some sort of autocratic command and control rules on oil industry water use -- not water quality mind you, but the amount of water they use.  Add this to all the other creepy Cuba-style water actions, like having neighbors spy on each other to monitor water use, and you will understand why folks like Milton Friedman argued that free markets were essential to free societies.

In honor of the California water situation, I have created the second in my series of Venn diagram on economic beliefs.

This is good news.  I hope it passes.  And the related law setting up stricter rules for eye-witness testimony may the first law named for a victim I can remember ever supporting

With more than 300 exonerations across the nation of people convicted and imprisoned for crimes they did not commit, we all have witnessed the limits of a criminal justice system flawed by human error — be that unintentional or intentional.

Nowhere more than in Texas has the weight of those imperfections been felt in cases that have tested public confidence in the criminal justice system and spurred big changes at the Legislature. That was true in the Timothy Cole case and is proving true in the Michael Morton case.

Morton’s testimony last week before the Texas Senate helped steer Senate Bill 825, prompted by his case, over a crucial hurdle. The bill aims to hold prosecutors accountable if they hide or suppress evidence from defendants. Morton’s lawyers claim prosecutors failed to turn over key evidence supporting Morton’s claim of innocence. Clearly, current laws are too lenient in punishing such practices, which not only are unethical, but illegal. The Legislature should pass the bill.

Don Boudreaux asks:

Here’s a quick question for anyone who takes seriously politicians’ pronouncements about what particular industries are “vital” or are “of the future” or are “crucial to meeting consumers’ needs”: Why do virtually none of these politicians, when they leave office, found their own non-political firms? Why do virtually none of these politicians, when they leave office, found their own non-political firms – firms that specialize neither in granting clients access to incumbent politicians nor in projects that depend upon getting subsidies or other favors from those same politicians?

This question occurred to me a few days ago upon hearing that former president Bill Clinton was off somewhere talking about something to some group concerned about some issue.  His career now is to make lots of money as a sort of high-brow social healer – to emit platitudes, attend state funerals, and (pardon my switch of imagery) be a show-pony for politically correct causes.  The post-Oval Office careers of every other recent president – to the extent that they haven’t simply retired to the golf course or the study – have been largely the same, with the groups and causes served by their attentions differing only as one former president’s political affiliations differ from those of another former president.

One guy comes to mind who had a sniff of the White House and then went on to run his own business:  George McGovern.  And though its just a small Inn that will never be even a blip on the economic radar screen, it has driven McGovern dangerously close to being a libertarian.  Actually, that might be a misnomer.  He probably is still a liberal, but from the days when liberals actually cared about individual freedom and saw aggregations of power in the government to be at least as scary as those in the private world.  Take this for example:

Under the guise of protecting us from ourselves, the right and the left are becoming ever more aggressive in regulating behavior. Much paternalist scrutiny has recently centered on personal economics...

Since leaving office I've written about public policy from a new perspective: outside looking in. I've come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society.

Why do we think we are helping adult consumers by taking away their options? We don't take away cars because we don't like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don't operate mindlessly in trying to smooth out every theoretical wrinkle in life.

The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

The only other place I have heard this recently on the Left was, perhaps not coincidentally, from that other child of 60's liberal politics, Jerry Brown

To the Members of the California State Senate:

I am returning Senate Bill 105 without my signature.

This measure would impose criminal penalties on a child under the age of 18 and his or her parents if the child skis or snowboards without a helmet.

While I appreciate the value of wearing a ski helmet, I am concerned about the continuing and seemingly inexorable transfer of authority from parents to the state. Not every human problem deserves a law.

I believe parents have the ability and responsibility to make good choices for their children.

Sincerely,
Edmund J. Brown

Postscript:  The answer to Don's question is one of two.  Either a)  They are not up to it.  And/or b) There is a hell of a lot more wealth that can be captured through the exercise of government power than through private enterprise.

On this blog, over the last couple of months, I have presented a pretty clear set of facts showing that, with the possible exception of some rural border regions beset by drug gangs, the vast majority of Arizona has experienced rapidly falling crime rates, in fact crime rates falling much faster than in the rest of the country.  The crime rates of even our key border towns has remained flat.

What to make, then, of these statements by our governor.

Gov. Jan Brewer on Friday reiterated her assertion that the majority of illegal immigrants are coming to the United States for reasons other than work, saying most are committing crimes and being used as drug mules by the cartels.

Brewer's remarks are an expansion of comments she made last week during a televised debate between the four Republican gubernatorial candidates....

In the debate, Jette [a candidate running against Brewer] said that most people who cross illegally into Arizona are "just trying to feed their families." Brewer disputed that, saying, "They're coming here, and they're bringing drugs.

And they're doing drop houses, and they're extorting people and they're terrorizing the families." The governor, who has become a national media figure since signing Senate Bill 1070 into law on April 23, went further on Friday, saying that the "majority of the illegal trespassers that are coming (into) the state of Arizona are under the direction and control of organized drug cartels."

When pressed, Brewer said that even those who do come to the United States looking for work are often ensnared by the cartels.

"They are accosted, and they become subjects of the drug cartels."

Estimates are that there are 8-12 million illegal immigrants in the US (Brewer's hispano-phobic allies would put the number much higher).  They are mostly all drug dealers and criminals?  Really?

I try really hard not to try to guess at what motivates folks I disagree with by assuming they are driven by something dark and evil, but how else in this case can one describe opinions like this so contrary to facts as anything other than prejudice against a particular ethnic group?

Just look at the actions of our governor and folks like Joe Arpaio.  If it really were the case that illegal immigrants are all criminals uninterested in legal work, then why is so much recent legislation aimed at business owners that hire illegal immigrants?  Or at day labor centers?  Why are all of Sheriff Joe's immigration sweeps raiding lawful businesses rather than, say, crack houses?  After all, if illegal immigrants are all just drug dealers not looking for real work, why spend so much time looking for them, uh, doing real work?

Postscript: If Brewer is in fact correct, then there is a dead easy solution for the illegal immigration problem -- legalize drugs.  She and I both agree that the worst criminal elements of illegal immigrants would be much less of a problem without the illegal drug trade.  The only difference is that I think that segment makes up less than 1% of the population of illegal immigrants, and she thinks its everyone.

Further, to the extent that some illegal immigrants just trying to support their families are "ensnared" by drug cartels (whatever that means) it is because of their immigration status.  Make them legal residents of the country, and no one has any particular leverage over them.

Note to Commenters: Many, many of you have disagreed with me vociferously on immigration.  Please, I would love to see reasoned comments defending Brewer, particularly with data.  In particular, please use the laws of supply and demand to explain how the majority of 8-12 million people are able to earn a living in the illegal drug trade in the southwest.  To help you out, there are about 6.6 million people in Arizona.  Based on national rates of 8% of over age 12 being users, about 500,000 of those are illegal drug users.  One estimate is that there are 500,000 illegal immigrants in Arizona.

Update: Are she and I living in the same state?

Arizona GOP Gov. Jan Brewer claimed recently that law enforcement has been finding beheaded bodies in the desert "” but local agencies say they've never encountered such a case.

"Our law enforcement agencies have found bodies in the desert either buried or just lying out there that have been beheaded," Brewer said Sunday, suggesting that the beheadings were part of increased violence along the border.

But medical examiners from six of Arizona's counties "” four of which border Mexico "” tell the Arizona Guardian that they've never encountered an immigration-related crime in which the victim's head was cut off.

I am sure there are more landmines hidden in the Senate Bill, but the Heritage Foundation has parsed an implementation schedule from the most recent bill:

2010: Physician Medicare payments decrease 21% effective March 1, 2010

2011: "Annual Fee" tax on health insurance, allocated according to share of total premiums. Begins at $2 billion in 2011, then increases to $4 billion in 2012, $7 billion in 2013, $9 billion in the years 2014, 2015, and 2016, and eventually $10 billion for 2017 and every year thereafter. Two insurers in Nebraska and one in Michigan are exempt from this tax.

2012: Medicare payment penalties for hospitals with the highest readmission rates for selected conditions.

2013: Medicare tax increased from 2.9% to 3.8% for incomes over $250,000 (joint filers) or $200,000 (all others). (This is stated as an increase of 0.9 percentage points, to only the employee's share of the FICA tax.)

2014: Individual mandate begins: Tax penalties for not having insurance begin at $95 or 0.5% of income, whichever is higher, rising to $495 or 1% of income in 2015 and $750 or 2% of income thereafter (indexed for inflation after 2016). These penalties are per adult, half that amount per child, to a maximum of three times the per-adult amount per family. The penalty is capped at the national average premium for the "bronze" plan.

2015: Establishment of Independent Medicare Advisory Board (IMAB) to recommend cuts in Medicare benefits; these cuts will go into effect automatically unless Congress passes, and the President signs, an override bill.

2016: Individual mandate penalty rises to $750 per adult ($375 per child), maximum $2,250 per family, or 2% of family income, whichever is higher (capped at the national average premium for the "bronze" plan). After 2016, the penalty will be increased each year to adjust for inflation.

There is a link in the original to a more detailed timeline.  There is a lot more that is left out of this brief timeline, see it here.