John Stuart Mill on London’s water supply
Ancient aqueducts spanning miles and miles of Mediterranean countryside show water supply into conurbations has a long track record. Roman cities were never left high and dry several millennia ago, but London’s water supply today is in a parlous state. Why is it that we have to worry about something that ancient Romans were able to take for granted? With the Prime Minister placing the future of Thames Water high on his agenda and Whitehall busy reviewing briefs on its travails, we ratepayers meanwhile may dust off expert advice available in the public domain.
Such advice was given by John Stuart Mill in 1851 to the Metropolitan Sanitary Association on The Regulation of the London Water Supply. Three years after Principles of Political Economy and eight years before On Liberty appeared, Mill set out three conduits for water supply: a private company, government, or local authority. He took these in turn.
He cautioned against putting water supply into the hands of a corporation: “the Directors of a Joint Stock Company are not acting for their own pecuniary interests, but for those of their constituents. The management of a company is representative management, as much as that of an elective public board, and experience shows that it is quite as liable to be corrupt or negligent.”
The particular risk with water supply is that “the article being one of indispensable necessity, the arrangement between the companies and the consumer is as much compulsory as if the rate were imposed by Government; and the only security for the efficient performance by the companies of what they undertake, is public opinion, a check which would operate much more effectually on a public board.”
Next, Mill assessed public oversight of water supply by government or by municipality.
Mill had little confidence in either: “In ordinary times such boards are apt to become indifferent and inactive; and little being required of them, those who appoint them soon think that anyone is good enough for the office, and it becomes a mere job for personal connections or Parliamentary adherents.”
Water supply presented a unique, nearly unresolvable proposition for an economist even of the stature of JS Mill. On the one hand, a private monopolist would promote his interest and his ease by making the article dear and bad, but at the same time the Government should not habitually conduct the operations for local purposes. Regardless of whether in public or in private hands, water supply encourages incentives that are nearly impossible to disentangle.
Mill shared the Liberal bias against the interference of public authority in operations which can be adequately performed by the free agency of individuals. Keeping this bias in mind makes reading his opinion all the more instructive, particularly his warning against putting private companies in charge.
Where in the end did Mill’s recommendation come out?
There was a least bad option, wrote JS Mill, which was for the government to appoint a Commissioner of Waterworks or of Drainage who would have no power of over-ruling the decisions of the local bodies, but he might recommend to Parliament to do so, if he saw need.
The Prime Minister, Andy Burnham, has announced that he will fix Thames Water’s problems and the public may look forward to all political factions seizing on the opportunity to test his mettle. Critics on the Left will blame the problem on privatisation, critics on the Right will discredit the use of government regulation. If the PM tries to satisfy both parties, he is liable to end up alienating everyone. Mill’s solution — the appointment of a government commissioner or “czar”, equipped with powers to intervene in corporate structure — might be a viable one.
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