Privatizatizing Water: Another World Bank Disaster

DuncanK · February 8, 2003, 15:53

This is old news, but it's the first that I'm hearing about it.

In 1999, private water companies and the World Bank, convinced South Africa to stop water subsidies in an isolated area. The outcome was disaterous for the people who lived there. They couldn't afford the water so they had to get water out of polluted streams. It caused a cholera epidemic.

How the hell can these free market economists at the World Bank be soooo stupid?

Anyone else know about other dirt on the World Bank?

Are they stupid or just corrupt?

Static Universe · February 8, 2003, 16:00

Just corrupt.

Read these:

http://www.observer.co.uk/Print/0,3858,4177445,00.html
http://www.globalpolicy.org/socecon/...k/stigindx.htm

Ramo · February 8, 2003, 16:33

Agreed. The IMF and World Bank are morally bankrupt.

Wernazuma III · February 8, 2003, 16:43

There was an interview about this with our "economy minister" - one of Austria's finest lobbyist as$holes (one of very few persons I could punch in the face 24/7).
He sat there with a soft smile and just said, "privatizing water is not included in Austria's or EU offer" and then went on praising the fortunes of a completely privatized Education and Healthcare system. I'm sure that although the issue with water to him is "not in Austria's interest", it will be part of negotiations.

Man, everybody should be completely outraged, this is shameless!

Static Universe · February 8, 2003, 16:43

DuncanK: The private water companies you mention are also synonymous with multinational oil corporations. Same ownership.

Water privatization has been a disaster in every country it has been implemented. Bush wants to privatize water in the United States.

Oerdin · February 8, 2003, 16:47

Utilities should be privitized but regulated to prevent abuse.

Lawrence of Arabia · February 8, 2003, 17:21

Is this drinking water like Crystal Guyser?

DuncanK · February 8, 2003, 17:32

LoA,

No, its the water that comes out of the pipes. Normally its subsidized. The government removed the subsidies and allowed private companies to meter the water. The poor folks couldn't afford it, so they used the polluted river water.

Lawrence of Arabia · February 8, 2003, 17:36

Ah yes. Was there any tariffs or quotas against foreign competitors?

Static Universe · February 8, 2003, 17:39

Quote:

Originally posted by Lawrence of Arabia
Ah yes. Was there any tariffs or quotas against foreign competitors?

Exactly the opposite. In order to get World Bank loans, the IMF forces local governments to allow private competition in the utilities market. Foreign firms come in and under bid for the services, then jack up the prices.

Az · February 8, 2003, 18:02

Utilities, Utilities....

This is not a simple issue. I'll give you an opposite example. in Israel, Water, and Electricity are state corporations. But the Trade Unions hold the government by the balls because there is no competition. They have free elecricity. They made the cost of electricity rise once again. ( though this can be also blamed on fuel costs ). Monopolies' trade unions are just as bad as private monopolies' owners.

I don't know what's the best solution. This requires thinking.

Oerdin · February 8, 2003, 18:03

Let's face a brutal fact. Poor countries can't afford to give endless subsidies for things even if giving those subsidies create greater social acuity. Forcing them to live with in their means will create better conditions for long term growth and thus less poverty in the long run. No one said life was easy being poor but alleviating poverty is a long term problem which requires a long term solution not unsustainable temporary handouts.

Lawrence of Arabia · February 8, 2003, 18:17

Then they didnt privitize it correctly. If they didnt create enough competiting companies then the price will rise catastrophically.

Az · February 8, 2003, 18:23

Quote:

Let's face a brutal fact. Poor countries can't afford to give endless subsidies for things even if giving those subsidies create greater social acuity. Forcing them to live with in their means will create better conditions for long term growth and thus less poverty in the long run. No one said life was easy being poor but alleviating poverty is a long term problem which requires a long term solution not unsustainable temporary handouts.

supplying fresh water is not "unsustainable temporary handouts".

let the government stop funding road building and maitenance. These are unsustainable temporary handouts.

DuncanK · February 8, 2003, 18:26

There is a water shortage in S.A.. Instead of rationing they cut the poorest folks off basically by privitizing.

I don't think the people could have afforded evian either so basically they were just ass out.

Lawrence of Arabia · February 8, 2003, 18:55

What percentage of the people in SA live under the poverty line?

Oerdin · February 8, 2003, 19:13

Quote:

Originally posted by Azazel
supplying fresh water is not "unsustainable temporary handouts".

let the government stop funding road building and maitenance. These are unsustainable temporary handouts.

I wasn't talking about cutting off supply of water. What I was talking about is the common third world practice of subsidizing everything from gasoline to cigorettes so that poor people can afford them and thus politicians can get reelected. A great many African states pay large amounts of their annual budgets on these subsidies and can only afford them by taking out large foreign loans.

Any first grader can tell you $1 in and $2 out is not a recipe for long term financial success. I'm sorry these countries followed the path to economic ruination but asterity programs are the only way to get themselves out of the hole they've dug.

Adam Smith · February 9, 2003, 02:42

Quote:

Originally posted by Static23
DuncanK: The private water companies you mention are also synonymous with multinational oil corporations. Same ownership.

Water privatization has been a disaster in every country it has been implemented. Bush wants to privatize water in the United States.

Sources for any of this? Enron had a unit that was looking into water-based securities, but came up dry on it, and securities is not the same as privitization. (AS avoids temptation of obvious "watered stock" joke).

The World Bank and IMF push for pirvitization is based on a studies which show that developing countires produce much less than they should be able to given the amount and quality of labor, capital, energy, etc they have at their disposal. This is probably because they are not using these inputs efficiently, hence the push for privitization and other policies to eliminate subsidies. It is clear, however, that elimination of somem policies does not come without a cost.

DanS · February 9, 2003, 02:48

IIRC, the biggest water privatization company is Vivendi Universal, a French company. Don't think they have any interests in oil.

Water privitization much of the time in the developed world. Atlanta just took back its water system, though.

DuncanK · February 9, 2003, 03:02

LoA,

56% of the people live below the poverty line. Not all of those were subject to the unsubsidized water. It was an isolated experiment.

AS,

I don't know where they ****ed up, but any idiot should have known what was going to happen. It's just irresponsible to privatize things like water anyway. But the are free market wackos so they think privatizing everything is the answer. Either that or they had some interest in the water companies.

Master Zen · February 9, 2003, 03:04

I don't think it's just a thing being stupid or corrupt, these World Bank and IMF idiotic economists do nothing but work in shiny offices in opulent Washington DC, go to conferences in high-class universities, etc. AND NOT ONCE DO THEY ACTUALLY BOTHER TO STEP INTO THE SHOES OF THE PEOPLE THEY SUPPOSEDLY TRY TO HELP.

And I know this because in my university, the teachers who specialize in development economics are the most elitist and arrogant, miles away from the reality of poverty which can be found just a few km away.

chequita guevara · February 9, 2003, 03:08

Quote:

Originally posted by Master Zen
. . . miles away from the reality of poverty which can be found just a few km away.

Perhaps you want to work on this metaphor some more.

Berzerker · February 9, 2003, 06:03

The reason these "3rd world" countries are in trouble is because of quasi-socialist programs without the production to sustain them, socialism is an expensive ideology. They borrow money to keep up the subsidies and then leftists demand the debts be forgiven.

Well, that's like a drug addict who keeps getting drugs fronted to them only for the dealer to forgive the loans. Then we wonder why conditions remain so lousy?

molly bloom · February 9, 2003, 19:35

Quote:

Originally posted by Berzerker
The reason these "3rd world" countries are in trouble is because of quasi-socialist programs without the production to sustain them, socialism is an expensive ideology. They borrow money to keep up the subsidies and then leftists demand the debts be forgiven.

Well, that's like a drug addict who keeps getting drugs fronted to them only for the dealer to forgive the loans. Then we wonder why conditions remain so lousy?

Please list these third world countries running 'quasi-socialist' welfare programmes. I would be interested to see which ones you mention.

Sava · February 9, 2003, 19:37

Privatization is evil... especially privatization of a resource essential to life like water.

Az · February 9, 2003, 19:48

Quote:

I wasn't talking about cutting off supply of water. What I was talking about is the common third world practice of subsidizing everything from gasoline to cigorettes so that poor people can afford them and thus politicians can get reelected. A great many African states pay large amounts of their annual budgets on these subsidies and can only afford them by taking out large foreign loans.

I wasn't aware of that.
Still, this has nothing to do with water.

DuncanK · February 9, 2003, 19:50

Berzerker,

I would also like to see that list.

Imran Siddiqui · February 9, 2003, 19:53

Duncan, look at basically the entirety of Africa. They promise things, but that just sucks their country down further.

DuncanK · February 9, 2003, 20:09

Africa is tough, but you can't just starve the poor people out.

DuncanK · February 9, 2003, 20:16

I'll say something about the third world. When you give them aid you want them to do something with it to solve the problems with their economy. You want them to invest that money. The problem is if they invest that money they might as well slaughter their children because their children wont eat. What has to be done is they need to get enough aid to feed their children and to invest in their future. It's the same way with social welfare. Just throwing a little bit of money at the problem isn't going to do anything to make the problem go away. It takes large investments.