Ethics at Work: When the tap runs dry

Ethics at Work When the

January 7, 2010 22:52
4 minute read.

Water policy has placed a fascinating spotlight on a broad range of chronic Israeli policy illnesses and promising signs of convalescence. Debate over this issue has intensified in recent weeks. Water policy in Israel has become a symbol of everything that it is wrong with public policy. Sound water policy is not really very complicated. It's straightforward to calculate how much water falls each year and what the variance is: you choose a reservoir capacity and a price that will stabilize supply in the long term and make certain there are no severe temporary shortfalls in the medium term. The approximate demand curve for water is also pretty easy to calculate, so you have years to fine-tune setting the price to attain any particular demand level. However, government after government resisted pressure to set water prices at a level where demand would equal supply, with the inevitable result that reservoir levels declined year after year. When the Kinneret reached the red line, which by law forbids further pumping, they just drew a new line a little lower. Instead of managing water supply by the price, successive governments tried a simultaneous policy of supposedly discouraging water use by ridiculous propaganda urging us to be careful washing our hands, while at the same time actively encouraging waste by subsidizing agricultural through water allotments that guaranteed the subsidies could be realized only by wasting water. One piece of this policy picture has been improving for years: Subsidizing agriculture through water allotments has remained, but the size of the allotments has decreased markedly. However, this adjustment was not enough to allow water levels to rebound to a reasonable level. Last summer, policy makers did an about-face. Instead of subsidizing water use, they decided to penalize it and imposed a "drought tax" that imposed fines on water users. Instead of moving the price upward a bit to a fair market price, the fines reached a level several times the fair price. "Excessive" water use, where "excessive" was defined in an arbitrary way and applied only to households, was now a punishable offense. Ultimately, following public pressure, the government adopted a rational policy of a moderate and equitable price increase. That policy immediately came under attack from Knesset members who pointed out that poor families would bear a disproportionate share of the price raise. This is certainly true and is a valid policy consideration. But it somewhat contradicts the moralistic approach to water conservation that dominated official policy in past years. If all poor families would follow all the water-conservation rules recommended by government propaganda, I suspect their water bills would rise very little. In any case, this problem could be solved by instituting a progressive price schedule for water. Based on this reservation, a Knesset committee requested that State Comptroller Micha Lindenstrauss review the price-rise decision. The request was outrageous because the comptroller's mandate is to investigate irregularities, not policies that Knesset committees disagree with. There was absolutely nothing irregular about the decision or the way it was arrived at; it was not made hastily and not in opposition to some expert consensus. Lindenstrauss should really have come back and said there was nothing to comment about. But I suppose that given the political pressure, he can hardly be blamed for making a rather noncommittal recommendation that the price rise be reconsidered and in the meantime delayed. Appropriately, the government ignored his recommendations. After all, it is not the comptroller's job to second-guess the policy decisions of elected officials. Lindenstrauss's reaction was also outrageous. He attacked the government, saying it was "inconceivable" that it should ignore his recommendations. I think it is inconceivable that the government should consider them. If there were no substantive irregularities in the decision, then Lindenstrauss's criticisms are those of citizen Lindenstrauss, not comptroller Lindenstrauss, and they should be ignored. "If oversight involves itself in policy decisions, we will need someone to oversee the oversight," Finance Minister Yuval Steinitz said. The comptroller owes his effectiveness to his lack of power. If the role were given any substantive powers, then all investigations and remarks would have to be subject to an equitable process and his moral impact would be destroyed. To this mix we add another classic Israeli policy gremlin: the power of the public-sector unions. Just as the price hike was supposed to go into effect, unionized workers at the Water Commission went on strike. I cannot comment on the validity of their grievances, but they made a rather bizarre threat: that without the workers the price increase could not be implemented on time. Evidently they imagined that the technical expertise necessary to update the billing program was beyond the competence of the nonunionized managerial staff (or that management wouldn't dare to demonstrate how superfluous the workers really are). Their illusions were shattered when Water Commissioner Uri Shani announced that the necessary steps had been taken in time, without the need for the workers. A significant across-the-board increase in the marginal price of water is a critical policy decision that is decades overdue. I congratulate the government on overcoming the political obstacles and bringing this about. (If the policy makers conclude that it harms poor families disproportionately, making the price increase progressive is an effective remedy.) This is a rare and encouraging case where the appropriately constituted organs of government carried out their functions in exemplary fashion, despite the efforts of the unions and the judges to interfere. Asher Meir is research director at the Business Ethics Center of Jerusalem, an independent institute in the Jerusalem College of Technology (Machon Lev).

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