Sunday, February 16, 2014

My Confrontation This Morning with a Naked Man Over Supply and Demand

A couple of years ago I posted a story similar to this one, but this one is worth telling.

Early this morning I went for a workout at my gym. Following my workout, I headed to the men's locker room, where I proceeded to the sink area, started the water and began to shave.

A totally naked man approached me and told me to shut off the water and said I was wasting water. I told him I would do no such thing and asked him if he wanted a lesson in the supply and demand economics of water.

Before he had a chance to respond, I lit into him and said:
The concept of waste really has no meaning at an individual level when you talk about water because the government controls the water supply and the price isn't set by supply and demand, so we don't know what price would be set and what kind of price rationing would occur under private market conditions.

Further, most prices are set by supply and demand and that's how this gym knows how to set most prices and what resources to use. If the gym offered caviar after each workout, they would get more members, but probably not enough to pay for the caviar and still make a profit. Prices signal the club not to offer caviar after workouts. Furthermore, real estate is expensive and that's why the gym charges extra for those who want permanent lockers. The price rations the limited space.

If the gym spent money on caviar and started losing money, we would say the gym was wasting money. If the gym left the area open where they have installed permanent lockers, we would say they were wasting space.

None of these concepts can be used in the case of water because the government is providing distorted price signals.

The naked man responded:
It's more complicated than that.
I replied:
How is it more complicated?
His balls and his dick shriveled to almost nothing and he hurried away.


  1. Just tell him you're doing your part to fight sewer stench that has resulted from all the water "saving".

  2. Bob -

    I'm a little perturbed by this post. I agree with your supply and demand analysis but I also sympathise with the man who was asking you to shut the water. Of course there is no praxeological definition of waste with no price system, but what he's saying is nevertheless true. Water is still a scarce resource, and we should morally try to exert some effort in curtailing our use, especially BECAUSE of the fact that there is no price system and we therefore can't tell when we are using too much.

    I myself live in a desert climate in Israel and though the water is cartellized, I do my best to use as little as I can within reason. For example, I take short showers and bail bath water into the toilet tank, though it doesn't affect my water bill significantly. I care about the water here and I do what I can not to waste it, and that has nothing to do with supply and demand. It has to do with the actual amount of fresh water available and I am concerned about ecological damage if I use too much.

    1. Nonsense. Don't let government cramp your style. Take longer showers.

    2. \I am sorry but in your particular case there is a much serous misunderstanding
      if your country and why not yourself had been trading and following the non aggression principle with your neighbors you would be having whatever water needed in a market sttled prices...but within the last 70-80 years of the kind of waste investments into a military funding state sponsored society shaped or artificially modeled to one of the highest aggressiveness toward your neighbors including (and please don't try to deny this because the whole world is very much aware of)a currently working system to sock up the water from the northern Lebannon, where huge higher costs are effectively transmitted to your and non aggression principle are the ground root here and so turn yourself completely to the libertarian wing and help us to bring peace and real prosperity to the middle east by embracing these will find yourself welcomed as long as you lower your weapons.. don't try please, I exhort you, to point your fingers to others as guilty, saying that these are the ones that don't want that...this is plainly a lie that help your conscience to sleep at night...

  3. Understanding Austrian EconomicsFebruary 16, 2014 at 4:20 PM

    Stalin's government in the early 1930s gained control of the grain supply, therefore it would not have been wasteful for a starving peasant to use grain as fuel for a fire. Likewise, a person stranded on an island with little fresh water would not be wasting that water as by poisoning it with toxins, by chopping down all the coconut trees, etc.

    And so on we might go with examples about the folly of your concept of waste.

    Now, you weren't just wasting water, but also the energy needed to pump the water, to heat the water (assuming that you weren't shaving with cold water), and to process that water at a sewage treatment plant. Further, you were wasting the chemicals used in the processing of water and the energy to bring those chemicals to market. What you were not wasting, however, was an good opportunity to discredit Austrian economics, and for that I am grateful to you.

    1. Re: UAE,
      -- Now, you weren't just wasting water, but also the energy needed to pump the water, to heat the water (assuming that you weren't shaving with cold water), and to process that water at a sewage treatment plant. --

      How do you know that he was wasting water? How do you know he wasn't using the exact amount of water needed for a good shave? You are just assuming - i.e. guessing - he could require less water but without a market price, how can YOU pretend to know that? Since the supply of fresh tap water is managed through a de facto monopoly, the necessary market signals that serve to indicate the level of scarcity of water are not present save for the non-monetary signals of shortages. That is Bob's point, not that he isn't aware of the fact that fresh water is an economic good.

      -- What you were not wasting, however, was an good opportunity to discredit Austrian economics, and for that I am grateful to you. --

      That's quite an assertion for someone who can't even understand a simple economic point regarding goods that are practically given for free by the State.

    2. Re UAE:
      more non sense from typical illogical leftist thinking
      a person stranded in an island does not mean that the island is stranded from the rest of the universe(it is only occur in typical leftist hermetic experiment in abstract (platonic, the root cause of every anti liberty thinking) constructs which it is not the point to be argued here)so water would be delivered by natural phenomena called rain, monsoons the pricing still would be an open equation without any possible constant as Robert would be insisting to get passed through your thick thinking...
      second..there is a more deeper point.. the artificial heat(winter times) or freezing(summer times), the processing water, the chemical industry all are market solutions brought naturally by a foreseen demand that did not exist some time ago(let say 6 thousand years) still they evolved because despite your deepest desires on the opposite , were a plus sum game with benefits coming as profit rewarding by every supplier of goods cited by your ...done or not by the state as an economic(always very bad) actor whose exclusivity tend to mix the price signals and ultimately get entire societies bankrupted . still a demand was met and people was willing to pay for such sophisticated para natural(heat during winter, freeze during summer) all these facilities are there to give the pleasure to use water in such a manner(which cannot be "wasted" as its price is more than paid for ) that please you by obliging you to pay for it usually by your own sweat and income that most certainly comes because you meet another people demands in some way that ultimately would allow to process and deliver whatever water would be necessary...nature is not hermetic and bound to limits as life spam human beings .. this kind of closed and hermetic platonic mindset is typically a left communist thinking that resist the concept that liberty lead to infinite possibilities including your opposite assessment of the infinite universe that is nurturing you.. because it is not just closed as your wish would want it to be.. summing up ...the universe is OPEN and it has no walls or limit to itself going beyond those determined by our own human with it

  4. The naked man responded:

    It's more complicated than that.

    "I replied:

    How is it more complicated?

    His balls and his dick shriveled to almost nothing and he hurried away."

    Freakin hilarious, Bob! Thanks for the laugh....

    Clearly, you made an impression on the naked man, and hopefully he will consider your point. The types of folks that would take it upon themselves to approach a stranger with a smug request like that are not thinkers, however- they are feelers. So, I wouldn't hold my breath! He probably just muttered "...greedy capitalist..." on his way back to happy, utopian ignorance...