Comment by endo_bunker 18 hours ago
If only there were some method for allocating scarce resources (such as water), by which everyone could indicate their perception of the relative value and some sort of equilibrium could be found.
We should just create a World Government (like https://en.wikipedia.org/wiki/World_constitution) and be done with it, global focus on the most pressing issues like water, food and getting rid of nuclear weapons.
Free markets fail when allocating resources like water. The problem is that when someone needs something to survive, the market stops working because the value is infinite to them. Another reason it doesn't work is because you can have people who need it but are too poor to pay what others will pay for it. If someone with more money comes in and buys all the water, they can then charge what they want for it or just dump it into the ocean if they feel like it. It also doesn't work when the product is common use, like a road or a park, because their is no profit in providing something everyone benefits from but will not directly pay to use. Property rights and markets are not the ultimate way to allocate all resources.
I think people get emotional when they talk about water, but it's easier when it's broken down into more specific categories-
Every person should have the right to clean easily accessible drinking water in their homes. We know how to do that, it just costs money but it should be a basic responsibility of every government.
Beyond that if you want to use water for whatever then you should have to compete for it in a market. Maybe the only other exception might be growing sustenance food. But those systems (as they are currently implemented across the world) quickly get political- but no one should starve because water is too expensive either.
The thing is that almost all of the time that's not what's at stake when talking about things like data centers- it's a strawman.
> when someone needs something to survive, the market stops working because the value is infinite to them
No, that's precisely the situation where markets work best: when resources are scarce. A single gallon of water isn't worth much to a data center or a farmer; you can't water a field with just one gallon. But it's potentially worth a lot to someone who's thirsty. Prices will go up, demand will drop, and supply will increase to meet demand, unless you kneecap that process by imposing artificial price controls - then you'll have shortages.
> you can have people who need it but are too poor to pay what others will pay for it
You're right, markets are not charities; they're only concerned with efficiency. Caring for people who can't take care of themselves isn't efficient, but it is the right thing to do. Even in this situation though you're better off with markets than without them, because it's way easier for people, organizations, and governments with excess resources to provide for the needy when they're operating in an efficient environment than in an inefficient one.
> If someone [...] buys all the water
That's called a monopoly and I agree that's not good, because if one person owns/controls everything it's no longer a free market; you're essentially back to central planning. Individuals and data centers should be able to buy their water in a competitive market, not one dominated by a single supplier.
> It also doesn't work when the product is common use, like a road or a park
Markets are actually great at allocating things like road space. NYC's congestion pricing is doing wonders for the efficiency of their road system right now, and tolls have been a thing basically forever. But I agree in principle it's hard for markets to allocate resources that there's no practical mechanism of charging for. Thankfully, water generally doesn't fall into that category.
> No, that's precisely the situation where markets work best: when resources are scarce. A single gallon of water isn't worth much to a data center or a farmer; you can't water a field with just one gallon. But it's potentially worth a lot to someone who's thirsty.
1 gallon might be worth nothing to a datacenter, but the datacenter is built and a company invested in it and it can't go unused. They will pay more to keep that datacenter open than the local who needs it to drink. It doesn't matter how much the local needs or wants the water, if they don't have the money, how are they going to out bid a global corporation?
> You're right, markets are not charities; they're only concerned with efficiency.
Markets aren't concerned with anything, they are a means to an end. And they have appropriate uses and inappropriate uses. Not everything needs to be 'efficient' sometimes things should be 'just' or 'humane' rather than 'efficient'
> Markets are actually great at allocating things like road space. NYC's congestion pricing is doing wonders for the efficiency of their road system right now
That isn't a market, that is a tax.
Look, markets are great, but I don't get this quasi-religious adherence to one mechanism amongst many as the be-all-end-all of solutions. It is good at some things, bad at others. Ayn Rand was just an author.
> Not everything needs to be 'efficient' sometimes things should be 'just' or 'humane' rather than 'efficient'
You ignored the second part of my paragraph. It's far easier to be humane when operating in an efficient system than an inefficient one.
Even a multi-billion dollar datacenter can and will go unused if the price of water to cool it gets high enough. If keeping that datacenter running is somehow so important to larger society that it's actually more efficient to airlift in water from across the country to supply coolant than to shut down the datacenter (extremely doubtful), then that's exactly what should happen, and it's exactly what the market will make happen unless you interfere.
If unstable market prices result in temporary, unacceptably inhumane conditions for other people, then the most efficient solution is certainly going to be to work within the market-based system to help those people (e.g. subsidize the cost of water to residential homes until prices stabilize), not to override the system and prevent that (apparently extremely valuable) datacenter from being constructed in the first place.
> > NYC's congestion pricing
> That isn't a market, that is a tax.
People are freely choosing to exchange their money in return for a service. That's a market. Not a perfectly free market since NYC roads are a local monopoly, but closer to that ideal than the previous system of "free roads".
> Look, markets are great, but I don't get this quasi-religious adherence to one mechanism amongst many as the be-all-end-all of solutions.
Markets are more than just great, they've proven themselves time and time again to be nearly unbeatable in their ability to create wealth and allocate resources efficiently.
Markets are based on the collective decisions of millions of people taking billions of factors into account to create the most efficient outcome for everyone. None of us have any hope of beating that with our own naive takes on what "seems best". Anytime we interfere we're making everyone poorer in the service of whatever other goal we're trying to achieve, so we better be darned sure it's worth it.
Come now. Water prices for industry are often orders of magnitude cheaper than for residential use.