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Originally Posted by Thematic-Device
Cities could not exist under such a circumstance.
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Cities will be built where there is a water source. History shows us this. Many cities are built near rivers because this is where the water is.
You realize that the most efficient pricing is when supply equals demand correct?
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$1 isn't where supply equals demand but because a person needs water to live they'll be forced to pay it. When you hold the only means of the survival of the citizens of a city, it should be charged as if there was a competitive market, as a result of being allowed by the people to hold such a position.
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If people are paying for the water, and the market clears, the price
is where supply equals demand. Even if, as you say, the demand for tap water (that is, water comming through pipes) is inelastic.
But, as I said, I don't think demand is inelastic. When the price rises above a certain level, people will begin to look for alternitives. For example, they might have a well dug, or they migh have water delivered. Will these things cost more than the city supplied (or controled) water? Probably. But this is not, in any way, a failure of the market. People that live closer to water are going to enjoy lower prices for water. People that live far away from a source of water are going to have to pay more for a water. I don't see why this is such a market failure. And if this is a market failure, many other things are also market failures. Are we going to invite the state to regulate everything because some people must pay more for a particular good because they live far from where the good is produced?
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Tenure doesn't mean the guy isn't a hack. Many times hacks congregate together, surrounding themselves with more hacks so they can claim to be "economists" without having to be challenged on it.
Economics, while is may be a dismal science, is still a science. With no testing you don't have science you have theology. Which is useless for public policy.
Real economists can and do predict the future fairly accurately, and when they fail they reanalyze and fix there theory. the Mises Institute and the Austrian School of Economics simply repeat the same mantra regardless of the results.
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With which tenant of Austrian theory do you disagree?
And the Austrian School does not repeat the same mantra, they have changed and updated ideas several times.
If Austrians, as you say, are hacks that must group together in one school to protect eachother, how do you account for the fact that there are Austrians all over the world in colleges (tenured and not tenured)? Further, how do you account for the fact that F.A. Hayek, and Austrian Economist, won the Nobel Prize?