The Current SA Water Crisis Has Been One of Those Easy Predictions

All over the news in the past two days has been the water crisis hitting Bloemfontein and now eMalahleni (i.e. Witbank) square on. This morning Barry Bateman tweets regarding the situation in Witbank:

This has been an easy prediction to make. The problem is not poor and incompetent management, as Barry pointed out in another tweet, it is the essential problem of socialism – that government does not have the tools to tell whether it is serving legitimate demand, and they are not forced to economise their resources to serve the public. Thus, crisis is very predictable wherever government is in charge (schools, police, healthcare, roads, traffic lights, rail, ports, currency, Eskom, you name it!) In SA it just happens quicker than in other countries like the US, but they also have this economic reality to deal with.

From the archives of

February 21, 2012. Water Crisis Bubbling Under the Surface.

A water crisis is bubbling just under the surface in South Africa. The government has not maintained –  never mind expanded – the capacity of other State Owned Enterprises such as Transnet, Portnet, Eskom, or the road network to deal with growing demand, and here’s more evidence the water catchment, purification, or distribution utilities have not been managed any better.

Municipal water tariffs are well below a level that would allow the state to maintain and reinvest in water infrastructure. Also,  prices are too low to ration demand for water. There is massive excess demand owing to the relatively low public water prices.

Water tariffs have not kept up with other commodity price increases in recent years. This is set to change in the coming decade or two. Expect a massive reallocation of capital into water catchment, purification, and distribution infrastructure in coming years.

March 15, 2012. Water Prices Are Too Low.

Whichever route this takes, the government will be extracting huge sums of money from the private sector to get their hands on the resources to patch the failing water infrastructure.

March 16. Have Another Glass of Crisis.

The government is going to suck massive amounts of resources from the private sector to pay for the mess it has created after a good 17 year party since the ANC took over. This is going to be a water price crisis, not so much a water shortage crisis. There is a mismatch of supply and demand because water prices are set too low by the government. The increase of water prices is going to be dramatic to make up for this. This has major implications for household spending and corporate factor prices. A big re-allocation of resources is on its way. Be ready for it.

Anyone who are familiar with the teachings of Ludwig von Mises and Murray Rothbard on the problems of socialism should not be surprised by the current water crisis. It was very predictable.

Water prices are going to climb dramatically because as the government provision of water fails, people will be forced to go out and buy water from private vendors, as is happening in other African countries such as Angola. We all know what private water will cost us a lot more.

The brightest opportunities in SA today are in providing services where government is involved, as government WILL fail.