Flint Water Crisis

Here's How to Fix Flint's Water System: Privatize It

A privately-run water system is more accountable to the people.

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Flint

Social media sites are awash in pictures of Flint's awful water. Local children exposed to lead will likely face long term health consequences—and it appears that kids suffer from high lead levels in many Michigan cities.

Amidst revelations that the state of Michigan made sure its Flint employees had clean water long before taking action on the rapidly declining tap water, maybe shame will at last lead state and local officials to look at how to fix the water utility. And maybe other localities can start thinking about how to best prevent the next mass water poisoning.

It isn't rocket science. There are more than 50,000 water utilities in the United States, and more than 50,000 of them are providing safe drinking water. When things go wrong—as they did in Flint—bad political and management decision are to blame. 

On the political side, it is clear that state and local officials papered over the crisis as long as they could, apparently hoping for some miracle to save them from facing the music. Paul Krugman blames stingy Republicans trying to save money, part of the left-wing narrative that presumes more spending would have prevented the crisis.

But as Reason's Shikha Dalmia has reported, Flint's water decisions were driven by dreams of economic stimulus. Officials knowingly chose a more expensive approach widely predicted to experience delays.  These delays left the city with nothing but nasty water.

Meanwhile, the utility managers who were supposed to ensure the water coming out of taps was safe, and the state regulators who oversaw them, botched the job. Improper testing protocols and practices, on top of bad political decisions, made it hard for consumers to discern the emerging problem and allowed the utility to provide toxic water to people's homes for months.

It is very unlikely any of this could have happened if Flint's water utility had been private.  Maybe with Walmart, Coca Cola, Pepsi, and other companies overcoming their greed to donate massive amounts of bottled water to Flint residents, suspicion of privatizing water utilities will lessen.

Nearly 75 million people in the U.S. get their water from a private utility: almost a quarter of the population. Most probably don't even know it. And about 1,000 cities in the country have hired a private company to operate their publicly-owned water utility.

This is a long running practice. Back in the 1990s, President Bill Clinton's Environmental Protection Agency said that privatizing water utilities "can be used by communities to provide needed environmental services more efficiently" and "can be used as a way to provide substantial benefits to both the public and private sectors, creating the classic 'win-win' situation." Indeed a number of communities privatized their water utilities in order to get them into compliance with EPA safe-drinking-water standards. Under government operation, they would have never gotten there.

Flint residents could learn from the example set by Milwaukee, Wisconsin. In 1993, Milwaukee's water supply suffered an outbreak of cryptosporidium and had to invest big bucks in new filtration. Since the most likely culprit was their own sewage going into Lake Michigan, they privatized their wastewater utility and required the private company to clean the water even more thoroughly than the EPA requires.  Over 20 years later, privatization is still going strong for Milwaukee.

This illustrates a key difference between public and private water utilities—oversight. If Flint's water utility had been private, it would not have been allowed by state regulators to provide toxic water to citizens. Workers would have been forced to make the investments to fix the problem in the most cost-effective manner.

But it probably would not even have come to that. Private utilities simply borrow the money to build new water supply pipelines or treatment plants when they need them, and they have every incentive to build them fast and keep costs down. In contrast, for a municipal utility it is a long and painful political process, fighting against other agencies and political priorities, to get approval to borrow money to build new facilities. And that process can be hijacked by all manner of politics, just as stimulus fever hijacked the Flint project. 

Private utilities are also much more accountable to the customers. The citizens of Flint cannot sue the government agencies that provided them toxic water (thanks a lot, sovereign immunity). But private utilities enjoy no such immunity, which means that avoiding liability from providing bad water is a high priority. 

It's true that privatization of water utilities has pros and cons, but consider that every year about 100 communities that have privatized their water system have the contract come up for renewal—or cancelation—and every year, more than 90 percent of those communities decide to stick with privatization. These folks are obviously much happier with their private water utility right now than Flint citizens are with their government-run one.

Dr. Adrian Moore is vice president of policy at the Reason Foundation.

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  1. Why was the short version tagged with a byline of “Reason Staff” when the full article has an author?

    1. Made you click on the story, didn’t it? It’s all about the page views.

      1. Uh, no, it didn’t make me click the story. I frequently comment, I’d have probably clicked through to the comments sooner or later.

        1. I always click on the comments link.

    2. That started happening a few days ago and I can’t figure out why. Maybe they found out people were avoiding the Chapman articles…

  2. Maybe with Walmart, Coca Cola, Pepsi, and other companies overcoming their greed to donate massive amounts of bottled water to Flint residents, suspicion of privatizing water utilities will lessen.

    You ain’t from around here, are ya? Those companies are donating water because they’re greedy, not in spite of their greed. See, they want to get you hooked on the idea of paying for clean safe water, which is a natural human right, and then, boom, you’re falling for the idea that corporations have a right to control the Earth’s natural resources which belong to all of us in common. Would you argue that corporations have the right to control the air we breathe or the food we put in our mouths, the clothes we wear on our backs, the roofs we keep over our heads? I think not! These are basic human needs the government provides, as it should because these things belong to all of us in the first place. You simply can’t be seriously suggesting private corporations should be able to profit by selling the necessities of life which government provides for free.

    1. I wish you were being overly sarcastic, but I know better.

      1. He’s not?

      2. *Overly* sarcastic?

        Right.

    2. The next thing you know, corporations will be forcing us to buy their products under threat of fine and when we don’t pay that, busting down our doors with battering rams and holding our families at gunpoint.

    3. “You simply can’t be seriously suggesting private corporations should be able to profit by selling the necessities of life which government provides for free.”

      Ah yes, government is the miraculous purveyor of free lunches that materialize out of thin air on command.

      1. Ah yes, government is the miraculous purveyor of free lunches that materialize out of thin air on command.

        No, that’s not true. Government pays for stuff with taxes that are fairly collected from everyone. Then it provides the necessities of life in a much more efficient and moral manner than corporations because it doesn’t waste money on profits to rich people. All that stuff we buy from corporations would be practically free if they didn’t waste all that money on salaries for rich do-nothing CEOs and other rich people.

        Just take health care for example. The only reason health care is so expensive is because of all the profits that insurance corporations take from us and give to rich people which are paid for by denying care to really sick people. It is immoral and unjust, and wouldn’t happen under a single payer system. With all the money saved from not giving profits to rich people, government would be able to provide health care for everyone at a much lower cost.

        All reality-based people understand this. Duh.

        1. This is what progressives actually believe.

        2. this episode is an excellent example of how government health care would work; the best of care for the connected and Dr. Nick for the proles.

          1. Better than no doctor

            1. Just like waiting in a bread line in Soviet Russia was better than having no bread at all, right?

              Obvious false choice is obvious.

            2. Hey, did you graduate from Hollywood Upstairs Medical College, too?

            3. Better than no doctor

              Is it?

              In practically every country that has “government health care”, it is very difficult if not impossible to get compensation for malpractice from the malpractitioner. Never mind pulling his license or otherwise penalizing him for it. Sure, you can (probably) enjoy the great comforts of being shuffled through a rotating series of malpractitioners for the rest of your life, perhaps occasionally lucking into a genuine doctor, but the individual who caused you harm will likely remain “practicing” on other people.

              Practicing medicine is not trivial; there is no such thing as a “basic level” of care; standards and expectations will always be in flux; mandating that everyone has “access” to a doctor basically guarantees that incompetence will be the norm.

              Is spending the rest of your life an invalid so great?

          2. And the wait to see Dr. Nick is 6-8 months.

        3. The reason health care is so expensive is that no one is paying for their own health care, they pay someone else to pay for their health care, which the government now mandates. And the majority of health care costs go to keeping people who would have died a natural death on their own alive artificially. I have a friend who smokes heavily, gets disability because he’s only got one leg, as if that keeps you from working, spends his days sitting in front of the tv and has a bad ticker. Medicare has spent hundreds of thousands of dollars keeping him alive heart attack after heart attack, complete with a satellite monitor on his pacemaker and he now lives (or actually is dying) in a 24 hour care facility. Let people die natural deaths (if they haven’t accumulated their own wealth to pay for staying alive) and the amount spent on health care would plummet.

          As far as rights, because you have the right to something doesn’t mean the government has a duty to supply it. I have the right to a firearm, that doesn’t mean the government has a duty to supply me with one. It means the government cannot prevent me from obtaining one.

  3. And say goodbye to those public pensions? Are you nuts?

    1. See, this is why nobody takes libertarians seriously. Between this and “school choice” it seems you think the stated goal of the system is the same as the intended goal. A government water system isn’t designed to deliver safe clean water as efficiently as possible any more than a government school system is designed to deliver education as efficiently as possible. The constraint is delivering the goods while milking the public for as much power and pelf as possible.

      Read your Adam Smith re: the benevolence of the baker, brewer and the butcher. You don’t expect Walmart to deliver goods for less than “whatever the market will bear”, competition results in “whatever the market will bear” being roughly equal to “the lowest possible price”. Government, too, wants to get the highest price possible for their goods but the prohibitive cost of market entry, substitution of goods and price inelasticity means there’s not a strong check on their greed. And their profits aren’t measured in dollars, there’s power and patronage in the mix.

      Unless and until you deal with the fact that government acts as both a gate builder and a gatekeeper – building gates to justify the keepers and hiring keepers to justify the gates, simply a band of highwaymen erecting a tollbooth on the thoroughfares of commerce – and figure out how to deal with the perverse incentives of government these “common-sense” policy proposals ain’t going nowhere.

  4. Private utilities are also much more accountable to the customers.

    No need for “much more” in that sentence.

  5. BTW, if you’re drinking tap water out of a Jiffy Lube employee bathroom, like the guy(?) in picture, you have worse problems than lead in the water.

    1. He needs it to wash down the convenience store sushi he got for lunch.

      1. OK, that made me laugh. And gag.

      2. Conbini sushi is awesome. This is my lunch every Friday.

        1. What are you, some kind of vegan? Where is the fish?

    2. You make it sound like guys piss in the sink in public bathrooms. Good grief.

      1. They do. Well, not all of us. But even one is enough.

    3. It’s got to be a woman, righ? What guy would get a blotchy looking star thing tattooed on his wrist?

  6. I like how the standard photo for the Flint water crisis is someone with an awful wrist tattoo filling a beer mug at a nasty looking sink, with a water-stained wall behind it. It really ups the empathy level.

    1. The water looked fine out of the faucet. Use some of that Gain and wash the damn mug.

      1. ::spits in mug. Rubs it with filthy rag::

        Here you go, Your Majesty.

      2. Tap water is vile. I never drink the stuff. Tastes like bleach.

  7. ROFL. Or they could go back to the source they once used to use.

    1. If Detroit will take them back without jacking up the rates again. Flint is caught between a rock (Detroit) and a hard place of their own creation. Either way they are going to have to spend a bunch of money that they don’t have to fix this problem.

    2. The Flint river is not the problem.

      The problem is they didn’t add phosphates.

      So the lead pipes leached.

      And now, whoever’s water you use, the lead crystal lining is now gone, so it will still have lead.

    3. Or they could go back to the source they once used to use.

      … they didn’t end up where they are because they were such good decision makers. There wouldn’t have been an “emergency manager” in Flint if there wasn’t a (fiscal) emergency to begin with.

  8. Practical question – how do you have competition in a system like this? Otherwise it seems like a government granted monopoly, and that isn’t a very good recipe for accountability and efficiency. I just don’t know enough about how these types of things are structured, but it seems like competition is key.

    1. The highwayman takes solely upon himself the responsibility, danger, and crime of his own act. He does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit. He does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a “protector,” and that he takes men’s money against their will, merely to enable him to “protect” those infatuated travellers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection. He is too sensible a man to make such professions as these. Furthermore, having taken your money, he leaves you, as you wish him to do. He does not persist in following you on the road, against your will; assuming to be your rightful “sovereign,” on account of the “protection” he affords you. He does not keep “protecting” you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands. He is too much of a gentleman to be guilty of such impostures, and insults, and villanies as these. In short, he does not, in addition to robbing you, attempt to make you either his dupe or his slave.

    2. Practically… I don’t know. It’s hard for a second company to come in and provide competition because they’d probably have to construct their own infrastructure, which is a huge start-up cost. I guess, alternatively, you could have individual property owners build their own infrastructure and charge others for right of way on it. Then the actual water provider just sends the pressure and measures how much each customer takes.

      But the great thing about the market is that it will figure out the best way to this so that you and I don’t have to.

      1. If a market was actually allowed to form I suspect it would come up with innovative solutions. But I doubt a market is truly being allowed to form here. Instead it sounds like the city is simply contracting out it’s services to a private company working on the city’s behalf.

        1. Instead it sounds like the city is simply contracting out it’s services to a private company working on the city’s behalf

          That’s exactly what is happening. But I’m still not surprised that this is better than the city trying to provide those same services, provided the city doesn’t put too many requirements in the contract (like minimum wages, pensions, unionization, etc.)

          1. The one thing worth noting about contracting out “public work” is that, as corrupt as it may tend to be, there are enforceable contractual obligations at play.

            Contractors are easier to fire and easier to sue than government employees and government agencies.

    3. LynchPin, great question. I was wondering the same thing. Water systems seem to lend themselves to natural monopolies due to the cost of water supply infrastructure. Why trade a public utility for a monopoly that’s enforced by local government?

      There could be regulatory barriers to competition. In a lot of cities, there are prohibitions on well water and on reclaimed water systems. If the ground water is fairly safe (not a sure thing in Flint) then lifting the ban on private wells could allow private companies and individuals to install wells and private water treatment systems.

      Most places have plumbing codes that ban reclaimed, or “grey-water” systems. You can cut household potable water use considerably with a residential reclaimed water system.

    4. There is no competition, but the city can easily fire the contractor if they perform poorly.

      You cannot so easily fire your union city employees when they perform poorly.

      This alone provides and incentive for accountability and better service.

      Sure, it could be a crony deal, but isn’t that what you get with unionized employee unions?

  9. “There are more than 50,000 water utilities in the United States, and more than 50,000 of them are providing safe drinking water.”

    “Nearly 75 million people in the U.S. get their water from a private utility: almost a quarter of the population.”

    Following these two pieces of information, roughly 150 million people (~75%) get their water from a public utility. And virtually 100% of water utilities are safe.

    Not the strongest privatization argument that I’ve ever read.

    1. If 25% = 75 million then 75% = 225 million not 150 million

      As far as the underlying argument is concerned, to privatize or not is about costs and capital. If the public utility can’t do it cheaply and/or can’t acquire the necessary capital, then you privatize. More importantly, with safety being an expression of exploitable capital, the national statistical aggregates are irrelevant for a single municipality.

  10. Eh, there’s privatizing in theory and then there’s really privatizing. Having the government pick a winner or having a private monopoly has few of the advantages (and some big problems). If there’s no real consumer choice or evaluation, you lose many of the benefits of privatization. This may be a utility that’s pretty difficult to truly privatize.

    1. They just contract out the running of operations. They don’t actually hand over the water system.

      So, when the contractor doesn’t add the phosphates, they lose the contract.

      Under the current system, do you think any of the unionized city employees who made that big boo boo will be fired?

    2. The key word here is monopsony. There’s a difference between “fully” privatizing, i.e. selling the existing infrastructure and handing all operations over to one or more private enterprises, and “partially” privatizing, i.e. keeping some portion of the operations “in-house” and only contracting out some of the responsibilities. The latter option retains the government as a single buyer, which means that the competition is constrained to what the government wants.

    3. Yeah, privatization without marketization is not necessarily an improvement; about the only good side is that the utility is less likely to get professional courtesy from government regulators (but even then, regulatory capture is a thing, if the utility is large enough to influence state or federal regulators).

  11. Having trouble understanding how anyone gives that water to their kids to drink.

    So, Flint set its own house on fire. In the process of getting things straightened out, Detroit chose to be an asshole and terminated the contract to supply clean water. Plan B was fcked up when they failed to treat the acidic water before sending it through lead pipes.

    But at the end of the day, thousands of kids were poisoned when mom saw that crap coming out of the pipes and said, “good enough for my kids!”

    Would have been better for them to drink coca cola.

    1. That’s why I’m skeptical of those photos. No sane person would drink water that looked like it, let alone give it to their kids.

  12. This entire disaster was caused by an attempt at privatizing their water system.

    1. No, it was caused by Detroit cutting off their water supply out of spite.

      1. don’t forget the decades of fiscal mismanagement in general by Flint.

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  14. This started as privatization: to build parallel pipeline to the one from Detroit to make money. So how are privatized utilities superior to the government-run ones? Why has the EPA allowed to become so weak?

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