Houston–where I live–has been under a severe drought. This year, we have received about one-third of our normal rainfall. In response, the city has enacted water rationing and citizens will be fined if they violate the restrictions. At the same time, the city reports that it has about six hundred leaks in water mains, a number that has remained relatively steady for the past several months.
Consider what this means. While the city is allowing water to needlessly flood roadways, I can’t water my lawn. The city can waste water, but I can’t use it for a purpose of my own choosing, even when I am paying for it.
Consider further: How long would a private company allow its assets to literally go down the sewer? How long would a private water company survive if it allowed water to be wasted while it was telling its customers to use less water? When a private company experiences a loss in its assets, it enacts measures to reduce that loss, like additional security or repairing broken water mains. When the city experiences a loss in its assets, it tells citizens to reduce their use, or else. And we know what “or else” means when uttered by government.
I have no choice in how I get my water. I have no choice in the rates I pay. The city has established a monopoly and I must accept their terms and conditions, even when they choose to raise their rates thirty percent, as they did in 2010. I can’t shop around, as I can for cell phone service or electricity. If my cellular company does a poor job, I can pick another one. If my water provider does a poor job, I must let my landscaping die.
As long as I have been alive, I have been told that certain services–such as telephones, electricity, sanitation, and water–are “natural monopolies.” The costs of infrastructure for such services are simply too expensive for competing companies to provide service in a given area. It is more efficient for government to establish monopolies and either operate that monopoly or regulate the “private” company providing the service.
The development of cellular phone technology has exposed this argument for what it is–a fallacy. Free individuals will find solutions to provide the products and services that we want and desire. There is nothing natural about monopolies; they are always the creation of government coercion, whether through licensing, prohibitions on competition (such as mail delivery), or other interventions in the market.
So, how would private companies compete in delivering water? To be honest, I have no idea. But I had no idea how phone companies could compete either. I’m not in the phone business or the water business. I am not an expert in either industry, and even if I were, my ideas may not work. However, just as grocery stores, oil companies, retail stores, and cellular phone companies find ways to deliver their products and services, so will private water companies. They don’t need ideas from some pundit. They just need the freedom to act on their ideas.