Don’t Conserve – Use the Water You Need


If you live in a desert with a very limited water source and there are a lot of people around, ignore what I am about to say.  If you live in a place where water falls from the sky regularly, let me be a Green heretic and go against the common wisdom by saying:

Use all of the water you need.

Doing so makes the most sense financially, and really sets us up to be able to provide for future needs.  Here’s why:
A utility needs to maintain a certain amount of equipment.  They also need to do functions like billing and customer service.  All of these things require a certain number of people.  Once you get past a certain threshold of water production, the number of people needed does not change that much if you increase the amount of water needed.  You still need a certain number of people to maintain the equipment, and usually you’ll just buy the same numbers of larger equipment if you need more production, rather than buy more pumps, motors, etc….  The larger equipment in fact will usually be more efficient, meaning the cost to produce each gallon will decline as the utility produces more water.

 

              

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The other factor is that most of the cost is people, not electricity or other resources.  Sure, you will use more electricity cleaning and pumping more water, but again the cost per gallon produced will probably decline as you use bigger, more efficient equipment.  Unless the number of customers changes dramatically, you’ll also still need to be paying the same number of people to send out bills, maintain equipment, and do other administrative tasks.   In fact with modern computer tools, things like billing cost about the same whether you have a million customers or two million.  Customer interaction things like the service desk are the only areas where more employees may be needed.  If you cut the use per customer, you’ll save a little on electricity, but you’ll still have all of the other costs.  Since the utility will be producing fewer gallons, yet their costs will stay about the same, you’ll end up paying more for less water.

So lets say that you decide to turn off the water while you soap up in the shower, then just turn the water on briefly to quickly wash off, cutting your shower water usage from 20 gallons per shower to three gallons.  You might be able to cut your water bill by doing this.  But let’s now say that everyone in the town does so, such that the utility now sells 5 million gallons of water each year instead of 10 million.  They still have the same equipment, which they’re probably paying off on a 30-year bond or something.  They also still have the same number of customers, meaning they will still need to send out the same number of phone calls and send out the same number of bills.  They also have the same number of homes to supply, meaning they’ll need to do the same number of repairs and upgrades.  They might even discover that sewer line repairs will become more frequent since there will be less water mixed in with the sludge, causing pipes to clog.  The result will be that you’ll end up paying the same amount each month for your water bill as you were when you took a regular shower, yet you’ll have a miserable shower in the morning instead of a pleasant one.

 

 


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Utilities are also loath to cut employees, so they probably won’t slash staff even if they didn’t need as many people.  They’ll also still need to pay off the equipment they bought when there was more demand, so they’ll still need the same amount of money to operate.  They have no competitors so it isn’t like customers will transfer somewhere else if prices are raised, and the regulators aren’t likely to demand that they cut staff or swallow the costs of equipment they purchased when there was more demand, so the utilities can just say they need to raise prices due to cuts in usage and they’ll be able to do so.  You use half of the water, but your bill stays the same since the price per gallon doubles.

So instead of conserving and saving, use what you need.  This doesn’t mean that you should be wasteful with water.  Don’t leave a hose on, running water down the street all day for no reason.  Don’t leave the shower running through the night while you sleep.  It just means to use what you need to live a comfortable life so that the utility will set themselves up to produce that much water.

 


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But what about the power usage?  Shouldn’t we save the energy needed to make water?  The free markets have a great way of figuring out ways to meet needs.  If everyone cuts back to nothing, such that the amount of power we produce is easily made using existing technologies and infrastructure, we’ll never see improvements.  We want people to be building the infrastructure and developing the technologies we need to supply the power needed int he future.  If we use the amount we need (again, not being wasteful), we’ll see people come forward to build the needed infrastructure and make power more efficiently and with resources we don’t currently use extensively like biomass, solar, and wind.  So we can either conserve and be miserable, never providing entrepreneurs and industrialists with the incentive to improve things, eventually needing to cut back even further as populations expand, or we can use what we need and provide the funding and incentive to make cold fusion or cars that run on water.  I say use what you need.

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

A Bad Idea from Amazon


Amazon’s Socialist bent is showing with their announcement this week that those on EBT cards will be able to get Amazon Prime at half of the cost per month that they charge regular customers.   Their thinking is probably that they can get some people who don’t subscribe now to sign up and maybe help those in need get access to television shows and movies, as well as free shipping for head phones and iPhone accessories.  But you need to wonder what effect this will have on their regular customers who now will be charged twice as much as others who are already receiving money for food, housing, cell phones, and other things, especially when that money is coming from taxes those paying regular price for Amazon Prime are paying.  If I had an Amazon Prime account, I’d cancel immediately, or at least demand the discount.
If Amazon is unsuccessful in luring many EBT customers, which would be a good thing since if you can’t even manage to feed your family, you probably don’t need to be buying things on Amazon, this hopefully would just go down as another bad marketing idea.  If they are successful, however, and don’t see a big backlash from their regular customers, that would be a really bad thing for Capitalism and the standard of living in America in general.  Imagine if others then followed suit, charging customers based upon their income instead of the  value of the goods and services they were receiving.  One person would pay a dollar a gallon for gas, where the next person would need to pay ten.  The same would go for milk, and food in restaurants, and cars, and so on.

              

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As always happens when you start a Socialist program, the first thing that will happen as Amazon starts this program and it attracts a lot of people is that prices for regular users will go up.  Imagine if a lot of people start paying less than the cost of shipping and providing the TV shows – Amazon would need to raise the price of the standard service to make up the difference.  As prices rise, there will be fewer people paying full price as they dropped out of the program, which will make the price go up even more.  This will cause even more people to drop the service.

For an example of this, look at the cost of college.  As more and more students get a break from tuition, the cost for everyone else goes up faster than inflation.  This results in fewer people paying the full rate, until now it might cost $40,000 in tuition alone to send your child to a four-year instate college if you don’t get some sort of discount.  This then provides an incentive for people to not do well economically since doing to leads to you paying more for the same goods and services.

 


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And this is where programs such as the one by Amazon will hurt the standard of living in America.  If you incentivize people to not work and not produce, there is less to go around.  This leads to scarcities and high prices.  You want everyone at least doing something to contribute to society. Right now we have it pretty good with lots of choices and easy access to low-cost goods through places like Amazon.  That may not be the case if Amazon changes the way prices are set in America through their actions.

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

What People Really Need – Freedom


This month I’m playing string bass in a play at the local civic center called “1976,” which is a musical about the drafting and signing of the US Declaration of Independence from England.  The play starts with John Adams talking about how the king has abused and “diddled” the colonies with his taxes, even going so far as to “spill their blood” at Lexington and Concorde.  Because New England is bearing the brunt of the king’s abuse, Adams has difficulty getting the other colonies such as Pennsylvania and the Carolinas to go along with him and start a rebellion.  The other colonies would rather keep things as they are since they, being the “gentlemen” who are granted special privileges by the king such as the ability to secure property, are doing just fine even though the colonies in general aren’t doing as well as they could due to the king’s interference.  Benjamin Franklin at one point talks about how the potential of the colonies is being wasted since the king is just taking their resources and not letting the people use their resourceful nature to build and create.
Really, the colonists in many cases were just barely surviving in the early colonies rather than thriving.  It wasn’t until they had what was initially lacking – freedom – that they were able to build the great empire that you see today.  Looking around the world, the universal resource that is missing in places where people are living in destitute poverty (not the US definition of poverty where you have sufficient food, clothing, clean water, and shelter, plus a car, a couple of TVs, and a smart phone) is the lack of freedom.  There is always some outside power keeping them from being able to build and prosper.   If you’re reading this post and you live in the United States, Great Britain, or some similar place are over 17-years old, and are feeling like you are disadvantaged and have been given the short straw in life, here’s three words for you:
Get over it.
If you didn’t get into a great college, there is someone who never went to college who made it big.  If you came from a poor family, there is someone who came from a poorer family who made it.  If you have one arm, there is someone who has no arms who made it.  Would you be better off with two working arms, coming from a rich, loving family, and starting with a Masters degree from Yale (all debt-free)?  Sure.  But there are also people with all of those things who end up under a bridge in Cambridge.  It is all a matter of the choices you make.
Now if you’re in a low caste in India, you have real issues.  If you’re living in a small village in Africa where rival tribes come through every year or two and kill half the people, you have serious issues.  If you’re living in Venezuela and not part of the ruling class, you have substantial issues.  (And if you’re one of the jealous squatters who help Hugo Chavez rise into power, you’re getting your due reward.)  If you want to say that it would be really difficult for you to become wealthy, or even find enough to eat each day, you have the right to complain.

What’s the difference?  Simple – freedom.  If you’re in a low caste in India or living under the Communists in Vietnam, you have little or no freedom of opportunity.  You can’t just decide to start a business or learn new skills and expect to get a better job.  If you tried, there are people who would prevent you or come and take what you have from you.  You might get arrested or beat for going outside of the place in society where someone else has decided you belong.  If you’re in a Communist society and not part of the party, those in the party may just decide to take what you have earned or give the job you want to a person who is clueless about the job but is loyal to the Party.  It is possible that you could improve your life substantially, but it might take a revolution to gain the freedom needed to do so.

Many people in America and other first-world countries think that what people need in remote villages in Africa is a well, or a latrine, or seeds to start a garden.    So they come in, build something, then leave feeling that they’ve just changed people’s lives.  Unless that well is maintained, or that latrine is used and cleaned, or that garden protected so that the next group of mercenaries doesn’t just burn it down or steal all of the crops, nothing will change.  With freedom and the drive to make their lives better, the people in those villages could dig the well, create a sewage system, or build great farms themselves.

What they are always missing is the freedom to do so.  What is always present is some dictator, socialist party, or warlord who keeps those people from being able to create and secure property.  Without the ability to do so, there is little desire to improve things.  Why build a great farm that produces lots of food if people just come and take it from you?  Who has time or the desire to dig a well when rival factions are coming through your village periodically and stealing your resources and perhaps your children?

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People living in that sort of situation, just like those living in the United Colonies of America back in 1774, have the choice to band together and fight for the freedom they need to prosper.  Without doing so there is little chance their lives will ever improve.  But that takes a great deal of courage and sacrifice by a large number of people.  One or two people can’t decide that they want freedom and expect to be successful in attaining it.  And for many peoples and cultures in the world, freedom is just not in their DNA.  Even in America, the large number of people who supported Bernie Sanders during the last election shows that people would be willing to give up their freedom in exchange for what they think is free goods and services.  Because they haven’t had the experience of the colonists in seeing what it is like living under the control of a tyrant, they think that they can just expect the government they install to take from others but not eventually take from them as well.

So if you were born into a place where you have freedom, and you are old enough to not have a parent or guardian who is keeping you from succeeding and not permitting you the freedom to improve your life, stop griping about the issues you face.  You have the ability to succeed – it is just a matter of the choices you make and the work you’re willing to put into making your life better.  And how do you make your life better?  You spend your time and efforts providing for others willing to do things for you in return.  The better the job you do of meeting other peoples’ needs and the more people whose needs you meet, the more wealthy you can become.

 


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Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.