00:01
So here we're talking about a topical issue, the idea of water sources.
00:05
And we've got some answers.
00:06
Let me try to walk you through all the answers.
00:11
The four propositions that we've gotten are shortages can be easily alleviated if water can be easily moved.
00:22
B, if price is low enough, if price is low for all.
00:31
C, if government regulation, and d, if free market.
00:49
Now, this question drives me a little nuts because i think it's too, like, you know, this is, we're being too basic here.
01:00
Water shortages are a complicated problem and trying to boil them the solution down to one bullet point, i think is really silly.
01:07
But the easiest one to rule out is b.
01:10
If we have a shortage of water and we say that the price of water is low enough for everyone, all this is going to do is to encourage consumption, right? if we tell people that water is cheap, they will use more of it.
01:27
And using more of it will cause a bigger shortage.
01:30
So the clear reason answer here is wrong is that to keep the price low.
01:34
We need to keep the price high to actually convince people to conserve the water.
01:44
Now, this one, government regulation, i would like to say is too vague.
01:52
There are no details here, right, if government regulation occurs to regulate water usage.
01:59
But in general, the key thing is most efficiently.
02:10
In general, in general, this is not going to be right, right? because government does not know where the easiest savings are, right? when a society needs to cut back on water usage, there are many, many, many ways to do it.
02:34
And the way that economists like to do this is by leaving it up to the marketplace, by charging high prices for water and letting everyone figure out how much water they can save.
02:43
The government is going to pick and choose how much water usage is allowed, and that's what i think about regulation, in general, this is not going to go work.
02:55
But the alternative is, but what about market -based regulation? you may be familiar with carbon taxes or cap and trade.
03:04
Now, these are great regulations that solve the problem really well, right? they induce private actors to reveal their evaluations for water and allow the water to be routed to the best sources.
03:18
I totally agree with that.
03:20
Right.
03:21
So in general, i would say no, and i would say no for this question in particular because they haven't given you enough details.
03:28
But there are government interventions that work really well, right? that's really important.
03:33
These can be excellent, right? so not all government regulations are going to be good...