Selective Libertarians

There is an interesting piece on California water law in, of all places, the most recent online edition of Edible Sacramento. The piece, by someone named Mike Madison, is a pretty sane overview of the crazy state of the law in California. I still find it bizarre to hear California farmers pushing for unregulated markets in anything. Madison, to his credit, seems fine with some kinds of government involvement, but he draws the line at subsidies for thirsty crops like corn:

Most thoughtful farmers welcome government regulation of agriculture; that is, regulation of environmental protection, public health and safety, quality standards, accurate labeling, resource conservation, and fair employment practices. We know how crazy our neighbors are, and regulation protects us from their follies. It also gives the rest of the world confidence in California's agricultural products. What is inappropriate is government regulation of markets which, left alone, regulate themselves far more efficiently than any scheme hatched by a bureaucrat. Get rid of the corn and ethanol subsidies, which were created merely to purchase votes in Iowa, and we would quickly stop wasting California's precious water on corn.

It's hard to disagree with the gist of his argument. But I'm not sure if I really believe that any farmers, thoughtful or not, welcome government regulation of agriculture. I haven't seen a whole lot of farmers challenging the Farm Bureau when it clings to the notion the "nonpoint source" water pollution, the primary source of which is fertilizer and pesticide runoff from agricultural fields, should be exempt from regulation. Most farmers are content to continue to stonewall the state's efforts to gather even the most basic information about where these pollutants originate.

Furthermore, while I agree that corn and ethanol subsidies are a cynical boondoggle, it is striking to hear such free-market libertarian arguments leveled in the interest of farmers in a state so dependent on government subsidized water. Not surprisingly, Mr. Madison carves out an exception to his laissez faire philosophy for water:

If free markets are efficient for distributing crops, why not set up a free market for California water? This idea has zealous proponents, but it is inappropriate for a vital necessity such as water. Free markets are good at setting prices for discretionary items; they are less good at allocating resources; and they are dismal at allocating scarce, critical resources in a society with large inequalities of wealth.

Free markets are also dismal at permitting agriculture to flourish in semi-arid or desertlike climates in the Central Valley. The fallacy of a "free market" in water isn't simply a function of the fact that water is a "scarce, critical resource." The problem is that, from its very origin, the "commodity" of California water is a product of government subsidy, thanks to two major water projects sponsored by the state and federal governments. Without the highly regulated water system, you wouldn't just have inefficiency, you'd have little to no agriculture at all. All the asparagus in the world won't pay for the energy and management resources consumed by California's water projects.

State and national taxpayers have, wittingly or unwittingly, already decided to underwrite California agricultural production. With that support comes regulation, to ensure that the government's involvement doesn't inadvertently undermine the many other aspects of the "public interest" that we rely on government to protect. The notion of a "free market" in California water isn't just a bad idea; it's an impossible idea.