on my coffee at a local doughnut shop, I overhead some fellows having
a heated discussion about their water bills. They were saying that
the City of Cleveland was going to double the water rates over the
next 5 years. The City of Cleveland's Division of Water enjoys a
monopoly on water distribution in Cleveland and most of the surrounding
I later learned
that the Public Utilities Commission of Ohio (PUCO) and City Council
agreed to reduce the increase to 64% over the next 4 years, but
this is still quite an increase. I guess all Ohioans should be proud
that PUCO protects us from greedy utility companies.
As I listened
on, I was surprised to hear one of the guys employ some basic economics
to defend his position. He asked how there could be such a large
rate increase when there is clearly no shortage of water. Cleveland
lies on the south shore of Lake Erie and we have had record rainfall
this year. The other man replied that the city workers were to blame
as they are unionized and probably got a huge pay raise and expansive
benefits package. He asked: How much should they be paid for
digging a ditch and installing a water pipe? Of course, as long
as the workers are unionized, we will never know the answer to that
explanation is that the City of Cleveland needs to upgrade the water
system to modernize it and to add capacity. Nobody asked the Division
of Water why they waited so long before improving the system. Certainly
their engineers must have some idea as to the useful life of the
pipes and other components that make up the water works. Instead,
this issue is sprung on the public as a crisis that must be resolved
immediately and the only solution is to take more money from their
to the men go on and on about how city government is corrupt and
inefficient, I jumped into the conversation by asking a simple question:
Why does city government have a monopoly on delivering water?
The men stared
at me and then let out a loud laugh. One of the men said: Who
would provide us with water? Then they both continued laughing
as if this was the most ridiculous thing they had ever heard.
I replied that
there are many possible solutions to this problem and none of them
require the government to do anything. The obvious solution would
be to install a water tank and pump in your home and then contract
with a company to fill the tank. Perhaps the company would pay for
the tank and pump provided you signed a long-term contract with
them. Perhaps someone would invent an even better system for water
delivery. With a free market we would get many varied solutions
to the problem, with government, we only get one inefficient and
Well the guys
didn't buy it. It was like I was arguing that the sky was green.
After all their talk about how government is corrupt and inefficient,
they simply could not imagine a solution that did not involve government.
Well it turns
out that my ideas were not crazy after all. According
to the City of Cleveland's Division of Water, a man by the name
of Benhu Johnson started a water delivery company in 1810. He would
deliver 2 barrels of Lake Erie water to your home for 25 cents.
They go on to say that others started water companies but none were
able to handle the development of a water works for an entire city.
Therefore, government had to step in and fix the problem. This is
the classic "market failure" argument that is used to
justify government action.
Now since government
maintains a monopoly on water distribution, we will never see what
alternatives the free market can deliver. However, we can compare
it to another utility that is much less regulated: cellular telephone
I work for
a cellular service provider as a network engineer and I have seen
the cost of service decrease while the reliability and range of
services offered has increased. Nowadays, cell phones are capable
of much more than voice communications, they offer: text messaging,
email, high-speed internet access, driving directions, enhanced
911 services, and much more.
water department which waits until the system is falling apart before
making needed upgrades, we constantly maintain and upgrade the network.
Over the past few months we have been working hard to add capacity
to our networks so that they are ready to handle the increased traffic
that occurs over the holiday season.
When the blackout
of 2003 hit Cleveland, most of the pumping stations went down and
much of the city was without water for days on end. In contrast,
our network facilities are backed up by generators and so we remained
operational throughout the blackout with only a minor decrease in
and innovation are what enables us to do more for less. Fiber-optic
lines have replaced copper wires; digital technology has replaced
analog technology. It used to take several racks full of high-power
equipment to handle 100 phone calls. Today, a single rack of low-power
equipment can serve several hundred phone calls.
a modern water system look like if we applied the same level of
energy and innovation to it? Perhaps we would have separate water
systems in our homes. High quality water could be used for drinking
and cooking while cheaper, low quality water could be used for toilets
and washing machines. I am only speculating. I am sure there are
plenty of smart Civil Engineers who can offer creative solutions.
what others say, there are always alternatives to government action.
Unfortunately, Clevelanders will not be allowed to consider any
other alternative when it comes to their water bills. Instead, they
will be forced to cough up more money to support another inefficient
Taddeo [send him mail]
is a Professional Engineer who works in the Wireless Communications
Industry. He spends his mornings at the gym taking Spinning Classes
before heading off to the doughnut shop for coffee and conversation.