The ‘fair’ price of water
There is one law that has applied in every society and almost throughout human history. The law of supply and demand. It is simple and does not need legislation. It creates what Austrian economist and academic Friedrich Hayek called “spontaneous order” and solves the problem of scarcity.
This law was “abolished” by force in the countries where communism prevailed. It was then decided that what used to be determined by countless human transactions should be centrally defined by the state. The “wise” bureaucracy of the Communist Party would know the needs of each home and would “fairly” distribute the products.
The system proved disastrous, and not only because it created massive corruption. During the 1930s, millions of people died of starvation in Ukraine (Holodomor), in a region that is Europe’s largest grain producer. Of course, in totalitarian regimes human lives do not count for much. These regimes collapse because the state spends more and more money to maintain the bureaucracy, which – even if it were not corrupt – has to do what millions of free people can do for no cost whatsoever, through their normal transactions.
The USSR eventually faded away, but not the ideologies that created it. These can be traced even to “liberal” governments like our own. The “new unified framework of rules (Government Gazette 5438/B) that should govern the pricing of water” provides the following earth-shattering provisions: “The pricing should be established in such a way that the total revenue covers the provider’s costs.” In other words, the government legislated what even the kiosk owner on Syntagma Square knows, that is, that revenues must be equal to or exceed costs. And if this provision is laughable, the pricing of irrigation water (where we have the greatest consumption of water at 85% of the total) is even more absurd. It is provided that “irrigation water will have a basic low charge per hectare and a variable one: To determine the variable fee, the type of cultivation and the comparative evaluation of similar cultivations may be taken into account to assess the rational use of water.”
How exactly will this work? Will farmers declare what they are going to plant so that the “fair” water price will be set? And if – as happens – they declare less to achieve the minimum price, what will the “wise men” of the state do? There will definitely be penalties for those breaking the law. Since these will not work either, the relevant ministers will start announcing “stricter” penalties every year. And how will the state check each farmer’s production to ensure he gets a “fair” price for water? It’s quite simple: The government will create yet another state entity, one of those we add on a long list after every bankruptcy. It will be called something like the “Farmers’ Fair Water Management and Environmental Footprint Organization” and its head will announce – every now and then – the organization’s awesome achievements: “After careful inspections by our organization, it was found that a farmer who said he would plant cucumbers sowed wheat, causing a loss of thousands of euros to the local water company.”
There is of course the simplest solution: For the state to become truly effective and let the municipalities do their job and assume their responsibilities. And if they go bankrupt, the government will impose a major fiscal tightening. The simplest solution will ultimately prevail: the Greek way of doing things. That is, the provision in question will become one more of the many pieces of legislation that end up in the wastebasket, while the problems worsen.
