A good discussion on NC Spin this week included the current water problems in North Carolina, and had several of the panelists favoring a flexible pricing system of some sort to deal with demand and allocation. That’s something I wrote about recently in the Free Market Minute. What I didn’t consider is the point that John Hood made about being able to using added revenues from a flex pricing scheme to build and maintain water delivery systems for North Carolina’s growing water needs.

That made me wonder how we would treat the higher prices and revenues that public utilities and public-private water systems collect if we actually allowed prices to fluctuate with conditions of scarcity. We know what happens when energy costs rise, when petroleum gets more scarce, and consumer prices go up—an immediate outcry against what must obviously be ‘price gouging’ and greedy profit-seeking.

If the outcome of flexible water pricing and profit-making in the water industry would be to entirely rethink the nonsensical notion of price gouging per se, and examine why government monopoly is really it’s only source, that would be fine. In fact, it would be great.

But suposing we aren’t wise enough to draw the obvious parallel, I wonder if the public agencies would be exempt from a ‘gouging’ charge, since they are after all in business to do good, and not to do well. It’s an interesting, if mainly hypothetical, question at this point.