07/05/2015 12:24 BST | Updated 05/05/2016 06:59 BST

Almonds and Other California Nuts

If you want to see what happens when politicians ignore basic rules of economics, look no further than California's water crisis.

The UK's Daily Mail newspaper has recently run an article entitled "How the great almond health fad has turned California into a dustbowl." Here are some of the mind-boggling statistics:

  • California supplies 84% of the world's almond production, using over a million acres of land to do so, much of it arid.
  • Almond growing consumes over 1 trillion gallons of water each year, 20% more than all of the indoor water usage of the 39 million Californians.
  • Most amazing of all, it has been calculated that it takes 1.1 gallons of water to produce each almond, or a total of about 23 gallons of water to produce a single glass of almond milk.

With these statistics in mind and with over two-thirds of California being classified in "extreme drought", how has Democratic Governor Jerry Brown responded? He has ordered cities and towns to cut their water usage by at least 25%, a target which they have attempted to reach by encouraging shorter showers - and why not showering with a friend? - and bans on watering lawns and filling swimming pools. Farmers, who apparently have a more effective lobby than pool boys, have been exempted from any water restrictions. A recent government survey finds that 77% of them intend to plant more trees.

Just when you think that this most liberal of states and its quadruple-elected "Governor Moonbeam" cannot be any more misguided, something like this comes along and they surprise you to the upside. The water crisis is a simple case of ignoring economic laws - in this case, something that is traditionally referred to as "the tragedy of the commons". California has clearly been undercharging for water for years, especially in the case of farmers, who actually pay lower rates. Instead of learning the correct lesson and raising prices until water reduction targets are met, Governor Brown and other officials are in the process of compounding the problem by rulemaking that will certainly produce injustices, inefficiencies, corruption and evasion - just as it has already created political favouritism. As I have commented before, all attempts to produce rational resource use that do not employ the price mechanism are doomed to failure.

But the most disheartening thing about all of this is that the liberal media and voters will come to exactly the wrong conclusion from this episode. In fact, the author of the Daily Mail article predictably makes this mistake, attributing the problem to the "stench of greed". Once again, the market economy will be blamed for moronic government policies that subvert its functioning, and the proposed solution for incompetent government will be more of the same.