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Free-Market Weather Delivery

  • rain.jpg

Tags Philosophy and MethodologyProduction Theory

08/01/2002Adam Young

While watching the evening news the other day, I saw something I never expected to ever see anywhere, let alone on the CBC, Canada's official state broadcaster. I saw a news story in which the state advertised its failure to deal with the recurrent droughts on the Prairies, and, more important, I saw the success of private enterprise in stepping up to fill the empty shoes left by the state and its failure with the same tired old solutions.

The news story was about how bad the drought is on the Canadian Prairies, and how many farmers are so desperate for water that they are looking to an old idea: seeding the clouds with silver iodine to stimulate rain. Without rain, these farmers cannot grow enough hay to feed their cattle, and that forces them to liquidate their herds at fire-sale prices. One farmer spent 30 years in the business, only to have to sell his entire herd this season.

Cloud seeding is done by flying silver iodide flares through the clouds. These cause artificial ice crystals to form and, hopefully, rain to fall. From the mid-'60s until the mid-'80s, the Alberta Research Council carried out a cloud-seeding program--which, not atypical of the state's clumsiness, resulted in farmers' complaints that the cloud seeding was causing too much rain and ruining their hay. A farmer interviewed at the time complained: "Bingo, down it comes. It just drops it on us."

The complaints from farmers--a large constituency out on the Prairies--and the controversy over the government ruining agriculture were enough for the Alberta provincial government to eventually end its cloud-seeding experiments.

Where the government failed, leaving only frustration and despoiled property as its legacy, in rode the insurance industry to the rescue of the drought-stricken farmers. In Alberta, crop insurers hired an American company, Weather Modification Inc., to seed clouds--not to make rain this time, but instead to reduce the size of hail so as to lower crop insurance claims.

When hail damage is reduced, hay yields in even drought conditions can be increased. And with the insurance industry's track record of success, farmers are confident that these companies can make it rain where the government failed,  and they want them to try.

Farmers have this confidence in the insurance industry because, for the past seven years, Weather Modification Inc. has been tracking clouds over the Prairies and dispatching planes. And since the cloud-seeding contract started, payments for hail damage have dropped by 50 percent.

Of course, what would a news report from the state media be without a naysayer handpicked from the bodyguard of statism: the universities. Phil Austin is introduced as a cloud specialist at the University of British Columbia and says the problem with cloud seeding is that there isn't any proof it works.

"Anything is possible," he says. "It is possible the cloud seeding is working. What is difficult is to assess, as the seasons change, and as the years change, whether the effect we're seeing is just due to climate change, for example."

But is it really all that debatable that for seven years, insurers would foot the bill for an unproven process? After all, they only have their own property at risk. Unlike the bureaucracy that experimented on Alberta farmers' livelihoods for 20 years, the firms that place their capital at risk to insure their customers' crops expect to earn a return on their capital. They have every incentive that the state lacks.

Over the entire 20-year period of publicly funded cloud seeding, the bureaucrats in charge lacked the self-interest in the results that the market system provides by having property at stake in the entire process, fulfilling contractual obligations, and the desire for profit from satisfied customers in the present as well as the future.

Surely, after seven years, insurers must be convinced that the cost of seeding the clouds is worth the expenditure and that it isn't being wasted on some process that might, just possibly, be working the way they thought it would. But coming up with endless exceptions and qualifications on why the market is not what it seems is the standard stock in trade of the back flips statists must do to deny the simple reality: Statist solutions don't work.

And that insurance providers can succeed where the state has failed in aiding drought-stricken farmers not only is just a little bit more evidence that private enterprise is more productive than the central planning of any government program--not to mention the state itself--but it also shows that the vast coercive and wasteful system of failure of farm subsidies, guarantees, and bureaucracy is neither justified nor needed.


Image source: commons.wikimedia.org
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