Ending the Western Water Game

Last week, Senator McCain upset a lot of people in Colorado when he mused about renegotiating an agreement that allocates water usage from the Colorado River to various interests in the West.

The 86-year-old water compact says that Arizona, Nevada and California can take 7.5 million acre feet of water from the river annually. The rest is split among Colorado, Utah, New Mexico and Wyoming. The four up-river states worry that the more populous southerly trio would use a renegotiation to quench its ever-increasing thirst at their expense.

The intesity of feeling about water is strange to those of us from the eastern portion of the United States, where water is so abundant that a staggering number of dams are used simply to prevent downstream flooding. Pittsburgh, for example, receives 3.1 inches of precipitation per month on average with a July high average of 3.8 inches and a February low of 2.4 inches. Denver averages 1.3 inches and ranges from 0.5 to 2.4 inches. Other Colorado River users include Las Vegas (.37, 0.1-0.5) and Yuma (.28, 0.0-0.6). Water is scarce in the West, and scarcity breeds conflict, as Mr. McCain recently discovered.

As long as water resources are allocated by political methods, their allocation will be insecure and subject to intense feelings. But this compact was finalized in 1922, and water needs have clearly changed since my grandmother was born. Water is too expensive in some places and too cheap in others.

An ideal solution would not only allow water to flow (physically and metaphorically) to its highest-valued use, but it would also draw the political venom out of the issue. The answer seems obvious: convert historical water allocations into water rights that can be bought and sold in normal markets. The rights must granted to individuals and businesses, and state governments must be prohibited from owning them.

This system would not force anyone to give up their water, but if they decide they're better off selling or leasing all or part of their right, they would be free to do so. Nothing would prevent conservation groups from purchasing the quantities of water to ensure ecosystem preservation goals.

Waste and inefficiency would be greatly reduced, users would have true choices, and the issue would be much less contentious. Propose that, Senator McCain!

Alabama's Health Transformation

From the Associated Press last week:

Alabama, pushed to second in national obesity rankings by deep-fried Southern favorites, is cracking down on state workers who are too fat.

The state has given its 37,527 employees a year to start getting fit -- or they'll pay $25 a month for insurance that otherwise is free.

Alabama will be the first state to charge overweight state workers who don't work on slimming down, while a handful of other states reward employees who adopt healthy behaviors.

Alabama already charges workers who smoke -- and has seen some success in getting them to quit -- but now has turned its attention to a problem that plagues many in the Deep South: obesity.

There's nothing wrong with people having the incentives to be healthy, but this proposal is a rather crude attempt to go about it. It could be thought of as part of the employer-employee contract, but it misses the point of that relationship: to produce something of value for the employer. Being concerned with workers' health distracts from and takes resources away from fulfilling the mission of the organization. Employee health should be left to the individual.

Since health care costs are "free" to Alabama state employees, however, and at taxpayer expense, it's reasonable for the state to seek ways to manage its labor costs. If that includes charging more to cover additional projected expenses based on health indicators, that might be okay. But block fees for two particular unhealthy habits? Aside from the resources diverted to compliance, these fees are likely to undermine collegiality and trust at work.

A better, less intrusive approach to improving the health of state employees (and saving taxpayer money) is to empower them to take care of themselves. A possible first step would be to convert each person’s health benefit into a high-deductible insurance plan (like an HSA), where the monthly premiums are individually rated (underwritten) based on physical examinations of the covered persons. If a worker decides that higher premiums are worth paying to continue smoking, to avoid losing weight, or otherwise risking their health, individuals should be free to make that decision, but at their own expense.

How GPS Saved My Marriage ;)

I love reading maps. Sitting quietly perusing an atlas is an infrequent but fulfilling way to spend a rainy afternoon. My car has at least half a dozen fold-up maps in addition to a North American road atlas, and I literally have a stack of them in my desk at home.

So why would I ever want one of those new-fangled, electronic GPS units?

Shortly before Liz and I went on vacation in Canada, we spent about $150 on a TomTom One (the new version), which comes preloaded with maps of the U.S. and Canada. True to my gender, I consider myself a master of directions, so I thought it was unnecessary. Liz wanted it so we wouldn't waste time trying to figure out where we would be and how to get where we were going. And so no matter what, we'd be able to find our way back somewhere.

She proved to be the wiser. Not only did it guide our path and provide rapid reroute instructions when I made the inevitable wrong turns, but it also contains addresses for a variety of "Points Of Interest," such as restaurants, gas stations, beaches, police stations, movie theaters, etc.

And it made our trip more pleasant in other ways, especially by reducing stress levels. When you don't have to figure out where something is, there's no conflict over what the best way to get there is, leaving more brain capacity for conversation and having fun. And when you're really hungry and don't know where you are, you don't have to resort to the first convenience store you see. It also avoided the clutter of printed maps and provided dynamic information about time and distance to points along the way.

And the technology is cool. The unit receives position signals from satellites and triangulates your position anywhere on the surface of the Earth. As long as you have a clear view of the sky, that is. The signal is lost among tunnels and under a dense canopy of trees. Fortunately there aren't many turns in those places. Much better for on-the-go navigation.

Not that I'm giving up my maps. Maps contain a variety of rich detail about cultural, historical, and ecological amenities that GPS devices (or at least this one) lack, and paper has a certain aesthetic to it. But when it comes to going new places, I'll always bring the GPS too.

Militant Canadians?

During a recent vacation to Canada, my wife and I were struck by the level of patriotism (or whatever connotative term you prefer) our neighbors to the north display. Our route (yes, we drove) took us past Niagra Falls, around Lake Ontario, and through western Toronto on our way to Horseshoe Valley, which lies between Barrie and Orillia.

Crossing the Rainbow Bridge between the U.S. and Canada right at Niagra Falls, one can't help but notice more Canadian flags in Niagra Falls, Ontario, than U.S. flags in Niagra Falls, New York. There are also more U.S. flags in Canada than Canadian flags in the U.S., but that's probably to attract U.S. tourist dollars. Or maybe Canadians just generally like flags more.

Travelling deeper into Ontario, we observed that Canadians seem to display their flag on their homes and businesses roughly as frequently as we 'Americans' do. (I somewhat dislike describing U.S. citizens as "Americans," since, technically, all inhabitants of North and South America can claim that title, although I consider the founding principles of the United States to be far more "American" than the populist socialism of some of our southern neighbors.)

My treetop trekking tour guide--a businessman retraining as a pilot who's having a last 'fun' summer before entering flight school--was generally supportive of the Afghanistan mission and the Canadian efforts there, despite reservations about Iraq. And while on a jog around Horseshoe Valley, I noticed a bumper sticker stating "If You Don't Stand Behind Our Troops, Please Feel Free to Stand in Front of Them." And the truck had Ontario plates and a Canadian flag, so it wasn't a visiting U.S. citizen.

It's worth nothing that my non-U.S. basis for comparison is the time I've spent in Germany (2 weeks in Bavaria, 4 months mostly in Trier) and Austria (3 weeks in Vienna), where the inhabitants are more cautious about nationalism for historical and geographic reasons.

Overall, however, U.S. citizens still seem to express their patriotism more fervently than Canadians. Perhaps there are deeper cultural reasons, but maybe it's simply because of greater U.S. commitments abroad. Or maybe we weren't their long enough or in the right context (we didn't visit Ottawa or watch the Canadian version of C-SPAN).

In any case, it's good to see that love for country does not require excessive entanglements abroad.

Congress Misdiagnoses Housing Sickness

Last week, Congress passed and the President signed a bill to deal with the so-called housing crisis. My wife and I--first-time homebuyers--are (hopefully) in the final stages of purchasing a foreclosed townhouse. One would think I'd be happy about the housing bill, since it contains a $7,500 first-time-homebuyers tax credit, and that incentive hasn't been capitalized into the value of homes yet. It has to be repaid over 15 years, so it works out to a 15-year 0% loan (actually negative when you factor in inflation). But I'm far from

Anyway, this bill is a disaster. Instead of fixing the problems that caused the housing bubble in the first place, Congress has made things worse. One policy change ends Freddie Mac and Fannie Mae's free riding on the American taxpayer; to continue their special line of credit with the U.S. Treasury, they now face greater regulation and scrutiny. Unfortunately, it would have been far better to remove their special preferences, shrink them down, and spin them off as fully privatized companies. Alas, such a remedy will have to wait. Incidentally, The Cato Institute has warned about this for years (just do a quick search on their website).

Yet even as these companies get bailed out at taxpayer expense, the legislation also taxes them to create an "Affordable Housing Trust Fund," which is essentially a slush fund for big-government special interests. It also provides funds to the states for buying, fixing, and reselling distressed properties. It's a band-aid solution to the symptoms of two major underlying problems: unfocused monetary policy and land use restrictions. Both are more than sufficient for their own post, so I'll abstain from carrying on now.

Congress should have eliminated special preferences for Freddie and Fannie, focused the Federal Reserve's mandate to only target inflation (and not concern itself with variations in employment or output), and ended transfers to the states to fund planning offices that usually do more harm than good.

J. Craig Venter's Energy Confusion

In a recent interview with Popular Mechanics, geneticist J. Craig Venter offers his thoughts on energy and climate change. He displays an interesting contradiction.

On the one hand, he claims that "Had we followed intellectually where we were back in the Carter era, we wouldn't have a lot of the problems we do today. We've had a lot of short-term thinking from administrations that basically trades off the health of the planet for economic gain for the business community—and for their own re-election. We don't reward our leaders for making long-term beneficial decisions for society. It's like the stock market—all that matters is the next quarter, not where you are 10 years from now."

In practically the next breath when asked about a sort of "X-Prize" for advanced batteries, Venter responds, "Industry is very motivated to make new batteries. Whoever makes a better battery is going to make a fortune, and having a government incentive to do that doesn't necessarily move it along. In fact, if it's like the human genome project, it could just slow it down."

Indeed. But should policymakers incentivize alternative fuels? It would seem that researchers in the private sector and the academic community have every incentive to find and develop market-competitive alternatives, as an MIT team may have just done with solar.

The current energy situation is unlike the supply shocks of the 1970s. True, political forces unnaturally constrain supply and subsidize demand and monetary policy exacerbates the effects for Americans, but growing demand as the developing world exits poverty and the exhaustion of many low-cost sources of traditional fuels means that high prices are likely to persist.

When government action distracts intelligent, creative, productive people from their activities, it hinders progress and makes us all poorer.