Friday, April 10, 2015

How To Solve the California Water Crisis

The California water crisis is all over the national news, thanks to Gov. Jerry Brown's imposition last week of mandatory cuts in urban water use averaging 25%. This has resulted in a lot of finger-pointing, as people blame their pet peeves.

For example, we're told that, in the middle of a drought, fracking (the controversial new technique for oil and gas extraction) used up 70 million gallons of water last year. But when you do the math, this turns out to be about five millionths of California's water use. Then there's the attack on NestlĂ© for bottling and selling California's water. You can say, with some justification, that bottled water is a waste of money, plastic, and energy. What you can't say is that it's a waste of water-- I mean, people are drinking it. (OK, NestlĂ© may be shipping some of it out of state.)

To my surprise, though, a lot of the finger-pointing this time has focused on the real issue: Brown's restrictions apply only to urban water use, but that represents just 20% of California's water use (around 10% to households and 10% to business and industry). The other 80% goes to agriculture. So a 25% reduction in urban use, a pretty drastic reduction, saves about the same amount of water as a 6% reduction in agricultural use.

And the fingers are pointing pretty hard. Ten percent of California's water goes to almond farming-- in other words, as much as goes to all household use. A hundred billion gallons a year goes to alfalfa exported to China.

Here we come to the fork in the road that divides most people from people with some background in economics. The former say, "That's outrageous! Maybe we should ban almond growing in California. Maybe we should make people aware of how much water is going into those almonds they're eating." The latter say, "Boy, the farmers really aren't paying enough for water."

Enter the famous "miracle of the market." We don't need to decide whether growing almonds is worth it, where they should be grown instead,  and what crops, if any, should replace them. We raise the price farmers pay for water, charging them a price comparable to the wholesale price of water in Los Angeles, and let farmers figure that out. Maybe they should continue growing almonds but not alfalfa, or vice versa. Maybe they should raise vegetables. Maybe they should install more efficient irrigation systems. Maybe they should pack it in and move to Palm Springs. In any case, consumers don't have to decide whether or not to feel guilty about eating almonds.

Unfortunately, this particular miracle of the market leaves quite a bit of damage in its wake. Many farmers probably go out of business, and the ones who don't are a lot poorer than they used to be. A lot of people may not like that result, especially the farmers themselves. What then?

Suppose we keep the price of water to farmers where it is, but allow them to wholesale some of their water (or water rights) to the cities. What happens? Clearly the farmers are no worse off; they can always decide not to sell.  But now, for every gallon (or million gallons, or acre-foot) wasted through inefficient irrigation or overly thirsty crops, the farmer loses the opportunity to make serious money. Now farmers have the same incentive to conserve as if they had to pay a higher price, without being impoverished. Maybe they grow almonds, maybe alfalfa, maybe something else, maybe it's off to Palm Springs (which they'll now be able to afford). End of problem.

Of course it's a little trickier than that. To allow farmers to sell their water means untangling the complexities of Western water law, under which, for example, you can lose your right to water if you don't use it, and some farmers have rights that are senior to other farmers'. But most of this is state law, so California could fix it if the pressure gets intense enough. Also, you need a good regulatory system for groundwater, which California is just putting into place; otherwise farmers just pump the aquifers dry and sell the water. But basically, end of problem.

Wait! say the Greens. What about all those huge lawns in Los Angeles? Actually, per capita use in LA has been going down, as people install more low-flow bathroom fixtures, xeriscape their yards, and fill their pools with Pinot Grigio (well, in Beverly Hills). But maybe even with the farmers using less, we still need to cut back on urban use.

So we could go the Jerry Brown route and impose a mandatory cut, making everyone use only 75% as much as they do now. Or... consider this: Suppose we make the first 50% free. Then we triple the price of every gallon thereafter. Now people who use 75% pay the same as they would have with the mandatory cut. But those who feel they've just gotta have more water for their pet beluga whale can do it, at a steep price. And perhaps more important, people have an incentive to conserve below 75% if they can, because it saves them a lot of money. Those people come out ahead financially. In particular, poor people probably come out ahead.

It's remarkable how many problems can be fixed by getting the prices right. Like global warming. But let's not get into that.

Tuesday, April 7, 2015

The Israeli Elections I: What's With the Arabs?

Israeli Arabs were pretty excited about this election, but not because there were unusual issues. A change in the election law had raised the vote threshold for representation in the Knesset (Israel's parliament), threatening the elimination of the three small Arab parties. The result was that they overcame their differences and ran on the same ticket, which they called the Joint List. Arab voters were excited because for the first time it it seemed possible that there would be a large Arab party in the Knesset.

And so it turned out. Here's a chart from Wikipedia:

Zionist Union786,31318.6724+3
Joint List446,58310.6113+2
Yesh Atid371,6028.8211–8
The Jewish Home283,9106.748–4
Yisrael Beiteinu214,9065.106–7
United Torah Judaism210,1434.996–1

The Joint List ended up the third-largest group, with 13 seats out of 120. In testimony to the enthusiasm of the Arab electorate, they got two more seats than all three combined had in the last election.

So with this new big party, how much power will the Arabs have in the new Knesset? 

Well, basically... none.

You see, the right-wing Likud won the election, and now should be able to put together a coalition of the right and the ultra-Orthodox (everyone from Kulanu through United Torah Judaism in the chart above). As long as the coalition holds together, it doesn't need the Arabs. And the coalition includes some pretty anti-Arab people. As for a Palestinian state, forget it. 

Now let's imagine a different scenario: suppose all the Arabs vote for the Zionist Union. The ZU ends up with, conservatively, 35 seats. It has no trouble putting together 61 seats for a coalition. Arabs represent about a third of the votes for the largest party in the Knesset. Under which condition do Arabs have more power, that or the actual one?

So why didn't they do that? What's with them? First, in Israel there doesn't seem to be much concept of power within an existing party. Rather, if you have a political agenda, you form your own party. As a former colleague of mine at Haifa put it, Israel doesn't have interest groups, it has interest parties. If U.S. politics were like Israeli politics, we would have a party for Hispanics, a party for evangelical Christians, and so on.

Second, and probably more important, Arab leaders seem to prefer principles to power. The Arabs are against the idea of a Jewish state; they want "a state of all its citizens." The Arabs (or the Arab elite) are so attached this principle that they could never vote for any Zionist party, let alone one with "Zionist" in the name.

Indeed, the quest for purity of principle goes further than this: the Joint List said before the election that if the left won, they would support it, but wouldn't accept a cabinet position. One might think that if your goal is to improve the conditions of Israeli Arabs, it would be helpful to have a member of your party as, say, Minister of Housing and Construction. Or at least to have a vote at cabinet meetings. But no; apparently that would be too craven a compromise with the system.

Arabs are certainly entitled to try for a non-Jewish state if they want. They won't get it, because the overwhelming majority of Jews are against it, but they can try. The question is, does refusing to taint themselves with governing make it more likely that they will succeed? Not that I can see. It just makes them powerless in the meantime.

Sunday, December 28, 2014

The Thirdworldization of America Continues

As I remarked some time ago, the Republican vision for America seems to be to make it the world's richest Third World country. Consider, I said, these frequent characteristics of Third World countries:
  • Life is extremely pleasant for the rich, and extremely difficult for everyone else.
  • Economic growth is hampered by poor transportation systems and crumbling infrastructure.
  • Environmental regulation is minimal.
  • The only widely respected public institution is the military.
Now, it appears, we can add one more item to the Republican wish list:
  • The government tortures people.

Saturday, December 13, 2014

Dept. of Naming Things: Inequality

A story in today's New York Times about how people have lost faith in the American Dream has this interesting passage:
“I don’t know what you mean by an unequal distribution of wealth,” said Robert Monti, a 74-year-old retired social studies teacher from Niagara Falls, N.Y., who identified himself as “a registered Democrat but haven’t voted Democrat in years.” 
 He said, “It’s a proven fact that everybody can’t make the same amount of money, and it’s a ridiculous assumption that they can. You’ll never have economic equality. Ever.”
Well, he's got a point. If inequality is the problem, surely what we want is equality. And practically nobody believes in equality of wealth or income.

So people should stop talking about economic inequality as the problem. The problem is really (choose one or more):
  • the concentration of wealth and income at the top
  • the fact that wealth and income are so skewed
  • economic inequity
  • economic unfairness
  • the redistribution of income from the 99% to the 1%
There is one kind of equality, though, that Americans do believe in: political equality. Political inequality--the fact that the rich have so much political power--is at least as great a concern to Americans as the increasing concentration of wealth and income. And, of course, it will be hard to do much about the unfair income distribution without doing something about political inequality.

But the latter requires the Democrats to make a serious effort toward campaign finance reform.  So far, they've lacked the ganas for that. Or maybe the cojones.

Friday, December 12, 2014

Republicans Parody Themselves

If you're a Republican politician, what's the stereotype you struggle against? That Republicans are out of touch with ordinary people and only care about rich people and corporations.

So when Republicans won control of the Senate, what are the two issues where future majority leader Mitch McConnell says they may be able to work with Democrats? (a) The Keystone XL pipeline and (b) repealing the medical-devices tax. Yes, Mitch, that's definitely what American voters gave you a mandate to do. The people who care about these things are (a) the Koch brothers, and (b) medical-device manufacturers.

And with the recent fight in the House over the government spending bill, what were the key issues? Republicans wanted to (a) extend government insurance to cover the riskiest trades made by banks, and (b) allow the rich to give more money to political parties. Just what the public was demanding, another bailout for the banks and more money in politics.

If the Republicans are willing to be this naked about their priorities, Democrats should make them pay for it. They need a Mocker-in-Chief. Normally that's a good role for the Vice President. Unfortunately, this time he was busy lobbying for the bill.

Thursday, December 11, 2014

If "the Democrats' Real Problem" Is Insoluble...What Then?

Writing shortly after the midterm elections, Josh Marshall had an article in TPM about "the Democrats' Real Problem." He agrees with those who say that the Democrats should have run on the economy, which is actually booming right now. But, he points out, this doesn't really resonate with voters, because wages haven't gone up. So it doesn't feel like a boom to voters. (Of course, gentle reader, you already knew that.) And that, he says is the Democrats' real problem:
[M]any Democrats look at all this and say... the party needs to embrace economic populism ... But I think this misses the point. The great political reality of our time is that Democrats don't know (and nobody else does either) how to get wage growth and ... economic growth ... back into sync...So find the policies, if there are any, build a political coalition around them. (Emphasis added.)
 And if there aren't any?

Let's consider that for a moment. The top 1% captured 95% of the income gains in the first three years of the recovery. Suppose that continues to be true, and wages in the US continue to stagnate while the economy grows. What then?

One alternative is to do nothing. (Philosophically, libertarian. This is just the result of individual decisions; no need for government intervention.) But we should understand that this means resigning ourselves to a permanent aristocracy. The rich would continue to get richer, and pass their wealth on to their children.

The other alternative is to say, "The growth in our economy should be shared widely across the population." (Philosophically, Rawlsian. If people didn't know whether they would end up among the 1% or the 99%, they would surely prefer  this alternative.) So we should take some of those income gains and spend them on things that benefit the 99%. For example:
  • Raise the minimum wage and expand the Earned Income Tax Credit. Contrary to what Marshall believes, raising the minimum wage doesn't benefit only the poor. At every income level except the very top, people benefit, on average, from an increase. Maybe that explains why it gets so much support.
  • Increase Pell grants, and cut the interest rate on student loans.  For the 70 percent of the class of 2014 that had student loan debt, the average debt was $33,000 (source). That's just a bit less than the national debt per person, but it has to be paid off in 25 years.
  • Spend more on repairing infrastructure, especially transportation.  Rather than step into the quagmire of  how many jobs this will create, just call it something we need, and something we owe to future generations. 
  • Mandate paid maternity leave.  We're one of about three or four countries in the entire world without it. Chad has paid maternity leave, for crying out loud. Nepal has paid maternity leave. Haiti has paid maternity leave.
All of these policies poll at more than seventy percent support. They're not as good, perhaps, as higher wages, but they would make the life of the middle class a lot easier. And the middle class knows it.

We can pay for them by increasing taxes at the top. There's plenty of room for increasing top marginal rates; in the booming sixties the top rate was 70%. But an easy sell on equity grounds is simply to tax dividends and capital gains at the same rate as wages and salaries.

(And while we're at it, how about raising the estate tax from 40% to 90% above, say, $50 million? This shouldn't be a great hardship--a billionaire can still leave his heirs more than $100 million, which should be enough to give the grandchildren a good start in life.)

So these policies end up looking a lot like the "economic populism" of the much-feared "Elizabeth Warren wing" of the Democratic Party. The assumption has been that these policies are extreme, and so will frighten moderates. The polling numbers don't support that assumption; quite the contrary.

Of course, policies like these would never get through a Republican-controlled Congress. That's the point: that's why Democrats should run on them. Although raising money may be a problem.

Sunday, November 16, 2014

Note on Charlie Baker

All this nattering about how the Democrats lost so big that even Massachusetts elected a Republican governor... it's coming from people who don't know anything about Massachusetts. First, before the current governor, a Democrat, the previous four governors were all Republicans. Very moderate Republicans. Second, Charlie Baker, the Republican, was endorsed by the liberal Boston Globe. In fact, the Globe endorsement could easily have swung the election, as a shift of 20,000 votes would have changed the outcome. Whatever the Democrats' problems are, Massachusetts does not exemplify them.

Tuesday, November 11, 2014

Comment on the Agreement with China About Climate Change

This seems huge to me, at least five minutes after reading about it. What strikes me about it is how it cuts the legs out from under Sen. Inhofe, Rush Limbaugh and all the other "hoax!"-criers. I mean, you could believe, maybe, that Obama and the Democrats were trying to fool the American people about climate change, for their own nefarious purposes, but is anyone going to believe that they fooled the Chinese? Even if you believe that Obama secretly wants to destroy America, do you believe that the Chinese want to destroy China? I just don't see what Republicans are going to say about this. But no doubt they'll come up with something.

UPDATE: Here's one Times reader's online comment about the announcement of a tentative deal in Lima:
Burbank Burner Genoa, NV 1 minute ago 
Since there is no "Global Warming" nor is there any human caused "Climate Change" this accord is a complete fraud. China, India, and most of the underdeveloped countries will simply ignore it. Only liberals in the US are stupid enough to commit economic suicide for zero reason. What a colossal waste of time, money, The smaller countries are there to try to get their version of obamaphones. It is all about money. They don't believe the hoax.
Not sure what "obamaphones" are? Check here.

Thursday, November 6, 2014

Obama and Ebola

God, that guy irritates me!

We were recently treated to Republicans around the country running scare ads about Ebola and how it's some sort of failure by Obama. There was a failure of leadership by Obama, but it wasn't a management failure. It was a political failure. Once again, he doesn't talk to people, doesn't explain, doesn't lead.

Obama should have given a brief prime-time speech on TV. (And for Pete's sake, what is so hard about sitting at a desk in the Oval Office? It's reassuring.) Something like this:

" [......] First of all, you are not going to get Ebola, nor is anyone in your family. So far in America, there has been one death from Ebola, and one person is currently infected. Both of  them were infected in West Africa. What the Centers for Disease Control said was true: it's only transmitted by bodily fluids, and people are not infectious until they're showing  symptoms. The people at risk are the people caring for Ebola victims in the later stages of the disease, when it gets pretty messy.

"Unfortunately, some politicians are irresponsibly stirring  up panic about this, coming up with all sorts of ridiculous theories about how Ebola might be transmitted. Well, if there's something wrong with your car, who are you going to take it to, a mechanic or a politician? Similarly, when it comes to dealing with infectious diseases, I'd rather talk to an expert.

"There is no outbreak of Ebola in America. There is one in West Africa, and that's a problem for us, for a couple of reasons.

"First, it's a humanitarian crisis, just like an earthquake in Haiti or a tsunami in Asia. But also, we need to get the disease under control, before it starts spreading to other countries.

The medical workers who have gone to West Africa, at some personal risk, to fight Ebola are heroes, and we all owe them a debt of gratitude.

"We need to fight Ebola with determination, not panic. [........]"

A speech like that might have made a difference in close races.

UPDATE: OK, I owe Obama an apology. It appears it's not so easy these days for the President to give a speech on TV. Astonishingly, none of the major networks carried Obama's immigration speech, a major policy announcement on a highly controversial issue that was only 15 minutes long. Something about sweeps week, I think.

Wednesday, November 5, 2014

Ad for an Imaginary Democratic Candidate Who Wasn't Running From Obama

"By the numbers, the economy's doing really well.

"The unemployment rate is below 6% for the first time since before the crash. Even with the crash, the economy under Obama has created more jobs than in Bush's entire Presidency. In the last quarter, the economy grew at an annual rate of three and a half percent.

"So why doesn't it feel better?

"Because for the average family, it isn't  better. The income of the average family hasn't gone up at all. While the economy's been growing, 95% of the gains have gone to the top 1%. They've had a recovery, but the average family hasn't.

"Are Republican economic policies going to fix this? Don't hold your breath. To begin with, we need to increase the minimum wage. Then we need to get rid of some of the tax loopholes the favor the rich.

"The economy's growing. Now it's time for some of that growth to reach the rest of us."