The American Freedom Network

The Next Bubble, Part II

In an earlier post, I wrote about the Education Bubble, which will soon burst, as the weight of bloated tuition supporting fat university budgets, textbook price outrages, and the like become too much for cash-strapped Americans to bear.  Alternatives are available (like Excelsior College, my alma mater), and they will emerge from the rubble as the new American higher educational paradigm.
The next, next bubble is the Water Bubble.  The era of cheap oil meant cheap electricity to air-condition desert cities; cheap water, subsidized by the government, is even more vital to golf courses in the desert and the like.  Subsidies have made water traditionally cheaper for consumers in Phoenix than in Detroit.  This is about to change.  As the preceding link, to a Bloomberg.com story indicates, the drought in the American West is forcing the dawning of a new reality – the era of cheap water is over. 
It is no longer sustainable to have millions of people maintain an  American standard of living in a hot desert.  There is not enough water to go around; explosive growth (pre-housing bubble) and the decade-long drought bring the day of reckoning closer.  Choices will have to be made, and the stakes – survival – are high enough to make the clashes violent.  The end result is that the population of cities like Phoenix and Las Vegas will have to decline.  Political pull may help to stave off the inevitible, for a while, but as the fixes become more outlandish – New Mexico Gov. Bill Richardson is not the first Westerner to suggest tapping the Great Lakes – resistance will increase, until the pushback overcomes all the desperate political muscling of the water-seekers. 
In a free economy, some relief to this problem would come from the price mechanism.  If water 9and energy) prices rose in response to demand intersecting with a relatively inelastic supply, gthen some people would choose not to move there, and some residents and business would choose to leave for wetter climes.  Without considering other factors, a simple equation might be to weigh the cost of Michigan’s burdensome tax and regulatory environment against that of rising water prices and declining availability, and when the latter outweighs the former, then relocation to the Great Lake State would take place.  (Not to mention that policies can be changed more easily than wather can be found, in many cases.)
I write the above not from a sense of triumphalism, but from a sense of realism.  The world is in a cyclic dry spell, populations are expanding, and water is a magnet that will draw the desperate.  Such has been the case many times in history.  Drought was a player in driving the Huns, Mongols, Turks and others from the Asiatic steppes to the littoral civilizations and their water supplies.  Overgrazing resulting from population increase is not the only, or even necessarily the primary, cause of mass migration; that it was a driver of the movement of peoples is undeniable.  Empires have been shaken to their foundation, or have disappeared entirely, like Egypt (in the former case) and the Hittite Empire(in the latter)  before the Sea Peoples in the 12th Century, B.C. 
We are not exempt from from the laws of history.  The American West borders Mexico, politically unstable, growinmg in population, and drier than we are, in part because of the infrastructure that we have built up over decades to support a growing population.  Open borders mean that the influx of new water-users will continue, and thus the pressure on the system will rise.  The movement of peoples is already well-begun, and no one knows where it leads, but the draw of water, in a region already running short of it, may be what brings about political upheaval, on a level that few would care (or dare) to imagine. 
The time to act is now.  Our present course is unsustainable.  Letting market forces play out in the price of water, and in its’ availability, is a first step.  A second is deciding what is essential; do casinos in Vegas take precedence over ranches?  Do acres of green golf courses matter more than residential consumption?  Who, and what, stays?  How will the available water be divided?  The existing water compacts may have to be renegotiated to reflect an era radically different than the one that was them signed.  Finally, the policies that helped lead to the out-migration from East to West ought to be revisited, so that people desiring to relocate have more of an incentive than desperation to do so.