Unheralded Flavors of Socialism

The mantra of socialists, and the rallying cry that generates populist support for socialist movements, is the desire to make life better for ordinary citizens. The calls for a mandatory “living wage,” “universal health care,” housing and utilities as “human rights,” free education; the entire apparatus of the expanding welfare state are all manifestations of this goal.

The extent to which the state should provide services and entitlements to its citizens is an endless and necessary debate. It’s a debate that can’t be waged without also considering what citizenship means. What the state can afford for its own citizens is greater than what the state can afford if citizenship is secondary to mere residency. 

But lost in discussions of what the state should offer, and who should be the rightful recipients of what it offers, is a question that is too easily dismissed by partisans on both sides: When does state spending result in less authoritarian regulations and a lower cost-of-living?

If that is a potential outcome—and it is—then it might be possible to unite otherwise partisan factions behind certain projects that rely on state spending. This notion, anathema to libertarians and many conservatives, is in fact a way to fulfill libertarian and conservative goals. 

There is no better example than infrastructure.

In today’s political environment, of course, it is necessary to clarify the meaning of “infrastructure” because it has been corrupted beyond recognition. Infrastructure, properly defined, are the projects—primarily relating to delivering energy, water, and transportation services—where government funding pays for a significant portion of the construction costs to lower the burden on the consumers of these services.

To understand how government-funded infrastructure can actually result in less regulation and a lower cost of living, consider the case of water services. Government policymakers have two directions they can take. They can fund the construction of water supply and distribution infrastructure, or they can allow the private sector to take control of water supply and distribution. The typical reaction from conservatives and libertarians is predictable: Let the private sector do it. But it’s worth exploring the consequences of actually doing that.

The reality of water supply in any arid part of the United States—and that would include the entire southwest from Texas to California—is that amortization of construction costs constitutes 70 to 80 percent of the cost of delivered water, whether to farmers or households. Whether the construction price tag is for new storage reservoirs or desalination plants, or even upgraded wastewater treatment plants to enable water reuse, this financial reality applies.

When evaluating the cost of infrastructure proposals, the question of socializing the construction cost or privatizing it has tremendous relevance to the end users. If government funds pay for 50 percent of the construction costs of water projects, or more, that translates directly into permanently lower costs to the future consumers of that water. What happens if 100 percent of these costs are privatized instead?

The result of privatizing the cost of water infrastructure investment is that there will be less investment and less construction. Investors will not touch a water project if they can’t sell the water at a profit, and if consumers can’t afford the water, there will be no sales. Therefore two consequences apply.

First, the state will ration water. The state will accomplish this with smart meters that monitor every drop of household or agricultural water consumption. The state will mandate the sale of internet enabled water conserving appliances that in every qualitative sense are burdens on the users. Low flow shower heads that make it impossible to rinse shampoo out of long hair. Faucets that automatically turn off every 10 seconds. Washing machines that damage clothes, take an inordinately long time to complete a cycle, and don’t do a very good job of cleaning. Government micromanagement of water consumption is an inevitable consequence of privatizing water infrastructure.

The other consequence of privatizing water infrastructure, perhaps even more ironic, is that there will be an equal if not greater cost to the taxpayer. Because water rationing and higher water rates will accompany an unsubsidized, downscaled water system, the government would step in and offer financial assistance to low-income households to pay their water bills and to purchase water-conserving appliances. With tens of millions of households ultimately receiving what will be permanent subsidies to their water consumption, the tax impact of privatization vs. government-funded water infrastructure is likely to be a wash.

This is a crucial point for libertarians and conservatives to ponder before they reflexively condemn government funding of legitimate public infrastructure. Critical questions that have to be asked go beyond the basic question of whether the private sector will do a more efficient job. That’s almost a meaningless question anyway, since the same civil engineering firms will be contracted to perform most of these projects anyway; just in one case the payers include the government and in the other case the payers will only be private investors.

Instead, the crucial questions to ask include the following: Will privatizing these infrastructure projects lead to higher prices that will result in the government stepping in to ration and subsidize consumption? And if so, can our focus instead be on advocating for government spending on infrastructure that will create abundant and affordable supplies of water—or energy or transportation assets—so everyone can afford to pay for these essential services without subsidies, and so there will not be a necessity for the government to step in and micromanage our access to them?

Conservatives and libertarians who rightly prefer less government intrusion in the lives of American citizens should realize that when it comes to infrastructure, the socialist agenda aligns with the agenda of the corporate Left. When infrastructure investment is turned over to the private sector, the ultimate result can be more taxes and more regulations. They just come in the form of disbursed entitlements and subsidies to pay all the low-income households that cannot, without government assistance, afford to purchase rationed, scarce water and energy, or pay to use the toll roads.

Socialists, for that matter, at least the ones who genuinely care about the welfare of those on the lower economic rungs of society, should recognize the scam to which they have succumbed. In the name of saving the environment and protecting the underserved, underprivileged, and disadvantaged, they are making life unaffordable for everyone. They may like the idea of more government subsidies, but they must recognize that these subsidies are only necessary because they turned over America’s infrastructure to private corporations. Was that really what they had in mind, as they marched in the streets to demand equity?

About Edward Ring

Edward Ring is a senior fellow of the Center for American Greatness and co-founder in 2013 of the California Policy Center.

Photo: David McNew/Getty Images

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