Sunday, August 24, 2014

California: Water water everywhere, not a drop to drink.

Source: Bloomberg BusinessWeek
 by Richard Mellor
Afscme Local 444, retired

“It’s clearly a sellers market” is a phrase we are all familiar with.  But what does that mean?  It’s not hard to figure out.  It means that the demand for a product or commodity is greater than the supply. The owners of the commodity in short supply have the upper hand as competition in the buyers’ camp will be rampant and they will fight among each other for who can purchase the most.  The sellers will be at peace, competition between them very limited or nonexistent as they are careful to maintain unity and keep prices high although each seller would really like to drive their competitor from the marketplace entirely and be the “last man standing”. 

As Marx pointed out so very long ago; “In the same proportion in which this competition (between sellers) decreases, the competition among the buyers increases. It is well known that the opposite case, with the opposite result, happens more frequently. Great excess of supply over demand; desperate competition among the sellers, and a lack of buyers; forced sales of commodities at ridiculously low prices.” *

There are many different causes that would change the relationship between supply and demand. A157 years after Marx wrote on this subject, capitalism has traversed the globe, natural resources have been depleted through overconsumption or pollution etc. and this can be one cause of scarcity. Capitalists throughout the system’s history have tried to corner the market or have horded commodities or taken other measures to ensure the seller has the upper hand. During the 1990’s tech boom as profits reached a 40-year high the labor market was tight.  The price of labor power rose and many traditionally low waged employers were forced to pay above the minimum wage to attract and keep employees. Strikes, work stoppages, wars between nations as capitalists compete for global market share can interfere with production and change this relationship.

Here in California we are going through a severe drought. According to reports, 58% of the state is experiencing severe drought conditions.  If we don’t get a decent winter’s rain this year it is going to reach real crisis levels.

There are I’m sure many factors behind California’s drought, global climate conditions being one of them. California’s Central Valley is one of the most productive agricultural areas in the world although it is not naturally so. Water is gold, we have heard many times about the precious stuff that is diverted to maintain the agricultural industry and for urban centers. And let’s be honest6, there should not be a Las Vegas in the middle of a desert.  Las Vegas must consume more energy and water than entire countries.
The water wars never end here. In a democratic socialist society, where our use of natural resources, and production itself would be a rationally planned activity decided upon collectively, it would be entirely different, but where the market rules, chaos ensues.

There are numerous water rights holders in California, the most powerful of them huge landowners, agricultural concerns and other wealthy people that have made money in all sorts of parasitic ways and have chosen to invest it in agriculture or the production of food. There’s billionaires Stewart and Lynda Resnick for example,.  I wrote back in 2010, “These two ‘are the biggest pomegranate, almond, and pistachio growers in the US’ according to Business Week.** They also own their own processing plant so they also buy produce from other growers. The Paramount processing plant ‘cleans, roasts and packages 60% of the domestic pistachio crop, or about 30% of the pistachios in the world’ . It’s staggering when you think about it that a couple of billionaires control 30% of a global food source.”

Resnick’s farm at 188 square miles is one of California’s largest and he stores water on it. The severe drought has pitted the holders of what are referred to as “Senior Water Rights” against those farmers who have none and are forced to purchase water. Many of the senior holders rights date from the Gold Rush era Business Week magazine says, heirs of miners and ranchers like TV’s Cartwright’s who staked claims that still determine who gets California water and who doesn’t. The land that belonged to no one, was common land, became private property.

Obama’s friend and political ally Rahm Emanuel is famous for his statement that a good crisis shouldn’t be wasted and that market thinking applies to the effects of droughts as well. The drought has driven the price of California’s water up 800%, from around $250 an acre foot to as high as $2200. “It’s an outrage” says one farmer but it’s a boon for the big guys.  It’s a sellers market.

Business Week points out that prior to 1914, landowners, corporations like P G and E as well as municipalities gained water rights based on a first come first served basis titled, “First in time first in right.”  When California’s first statewide water commission was formed in 1914, these rights were made permanent. Along with folks like Resnick, the Hearst Corporation owns water rights.

California’s central Valley is one of the world’s most productive agricultural regions not simply due to advanced farming techniques, the use of pesticides, fertilizers etc. but because water has been brought in to it. The state’s agricultural industry is a $44.7 billion business, and that’s probably not including one of its largest crops, Marijuana.

So water scarcity is filling the coffers of California’s elite as the California Department of Water Resources that manages the water in our rivers is delivering only “5% of the 4 million acre feet requested this year by public water agencies.”  Meanwhile, the holders of senior water rights will get 65% to 75% of the water they are asking for.

Resnick himself describes exactly what the land means to him. When he flies over his land enjoying the view, he reminisces, “I first bought some land in the late 1970’s as a hedge against inflation,” he says, It could have been a suburban office park for all he cared. It is the private ownership of these resources and of the production of social main needs that causes poverty and the mass starvation and misery we see throughout the world. No society that claims the mantle of civilization, meaning in some way advanced, can do so when this situation dominates. We are not talking about the local barber shop, plumber or grocery store here.

Working class people need to think about the madness of this, that a natural resource like water, its use and distribution, is in private hands, is controlled by a few billionaires and subject to the whims of the market.  Even when the rights to such a human necessity is owned by a "public" utility, we must remember that the these public entities in a capitalist system are governed and regulated by politicians and legislators that represent the 1% and the maintenance of the capitalist mode of production.

In times of natural scarcity, the use of a natural resource has to be regulated and its distribution carefully planned; that should not be a for-profit decision.

There should be no “sellers market” for water

 * Wage Labor and Capital. Commodities and Prices       


Sean said...

another brilliant article Richard. Sean

Eric L. said...

If not through a market system, how then should limited water resources be allocated? Centralized planners? If we look to China we see their planners allocating resources to industrialization apparently without much concern for pollution or other environmental externalities. Agriculture clearly needs to be prioritized lest we run into food shortages, but capital driven industrialized agriculture is also having a devastating environmental impact through exploitation of limited resources of both water and soil.
It is indeed a very complex question, and in California, has an equally complex history. It could be an interesting topic to discuss here.