Thursday, July 8, 2010

Why do they say that economists know the price of everything

and the value of nothing? MR provides an example:

One thing that does annoy me is the claim that these urinals "save" 40,000 thousand gallons of water a year. Water is not an endangered species. With local exceptions, water is a renewable resource and in plentiful supply. At the average U.S. price, you can buy 40,000 gallons of water for about $80.

Of course, as noted in the comments, water is subsidized but perhaps put succinctly is the following:

1. Government subsidizes water because of interest-group politics (for the benefit of farmers),
2. Government tries to mandates use of water-saving equipment to try to avoid waste created by #1.
3. Government reverses self and forbids use of equipment in #2 because of interest-group politics (for the benefit of plumbers).

Another source of discussion is perhaps from the Scientific American.

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