On the effectiveness of our current water laws; on the shortcomings of deterrence; How a Sunstein-type "nudge" would work in application; why fans of behavioral economics need a firm understanding of FDR's National Recovery Administration; why private enterprise might be the answer.

A neighbor¹⁾as in, near our Henderson office on south Stephanie has put me in a devil of a predicament. There is a nearby business flouting the water laws, for now I won't name, that I have seen first-hand watering their grass both during daytime morning and afternoon hours.

This would irritate me regardless, but in the context of Governor Sandoval standing on a dry lake bed last year (that was three feet deep a few years previous) declaring the seriousness of the drought, it should frustrate everyone. (Stay tuned, I have some fun planned today).

But what am I to do? Advocate that the city pass water laws?

..We already have water laws. As you will see below, each locality in the Valley has promulgated²⁾fancy law word for wrote a sufficient regulation: It's illegal to water your lawn, residential or commercial, from 11:00 a.m. to 7:00 p.m. everyday. No Exceptions. Please Stop Watering Your Grass During the Day. 

Thank you neighbor.

Ok then, as the common logic goes, if there still is a compliance issue, then the deterrence is not sufficient.

..Below is the fine schedule used by the Las Vegas Water District³⁾the utility for city of Las Vegas and unincorporated Clark County

As you can see, those amounts are not anything to scoff at. And yet? More Water Waste.

I know; it's frustrating.

Can We Do Better?

Perhaps! It's not going to be easy in the slightest (There's a reason the laws are the way they are!).

I have a few questions before we begin:

1. Why do you pay your taxes?
2. Why do you shop at Whole Foods?
3. What's the correct response to an increase in violent crime?

Keep those answers top of mind as we continue..

As with any good discussion of punishments, we must start with deterrence.

America Loves Deterrence!

And it's across the political spectrum! And there's a good reason why...it makes us feel good.

Hypothetical: There's been an increase in home robberies in the Las Vegas Valley. The most common refrain in response? "Increase the sentence!"

Now as to if this is the correct response? I have no idea⁴⁾I do actually, it's not. But I'm here to tease out the logic to see if this makes sense for public policy.

Deterrence is effective, at least to some degree, right? In reference to the tax question above, how did you answer? Likely some variation of "because I'll go to jail," right? And I'm sure I don't even need to ask if you turned them in on time.(Stick a pin in this, we'll be back in a moment).

Stipulated⁵⁾as in, we now all agree to the following: Deterrence is an effective means to get folks already inclined to pay taxes to do so. (Warning: we are nearing the edge of effectiveness for deterrence. Watch your step.) But this conversation isn't about you; I know you already follow the water laws, dear reader.

But what about those folks who didn't pay their taxes this year? That same deterrence that got you to pay by 15 April does not seem to be uniformly effective.

..If my preceding sentence is your only takeaway from today, okay by me!

The Drawbacks of Deterrence

Now the bad news: If some deterrence isn't effective, it is likely that more won't be either. Stay with me here, if we double the water fines above, what will be the effect on compliance? Very likely not twice as much compliance.

I would contend that double the fines would likely have no effect on compliance, which logically leads to a discussion of the effectiveness of deterrence.

In terms of public policy, this matters less with regards to water laws, but much more significantly to our criminal justice system, for example.

Back to the hypo, it is difficult then to morally justify increased punishment as a means of public policy if we are aware that deterrence is ineffective.

Why are we punishing people the way we are if deterrence isn't effective? What is it that we expect/desire of convicted criminals? Is it just plain vengeance then? What does that say about all of us?

Would a "Nudge" Be Sufficient?

Familiar with the term "libertarian paternalist"? Right, of course you're not because the term's ridiculous⁶⁾it's a prima facie oxymoron, no? Also, if the academic types want more people to listen, try using words real people use. You don't need to be, but I want to use Cass Sunstein's⁷⁾He is one of the country's leading behavioral economists/advisor to President Obama concept for our discussion.

In essence, the Nudgers think the government should encourage (nudge) folks into socially optimal behavior. A little more background on libertarian paternalism from the NY Times Magazine profile of Mr. Sunstein:

Libertarian paternalists would have school cafeterias put the fruit before the fried chicken, because students are more likely to grab the first food they see. They support a change in Illinois law that asks drivers renewing their licenses to choose whether they want to be organ donors. The simple act of having to choose meant that more people signed up. Ideas like these, taking human idiosyncrasies into account, might revive an old technocratic hope: that society could be understood so perfectly that it might be improved.⁸⁾Source

Interesting, right? Most of us prefer our children eat more fruit than fried chicken, and most people⁹⁾please don't overcomplicate this would agree that we would be collectively better off with more organ donors.

Well then, problem solved, let's go get an ice cream cone! Not so fast..We need to deal with the "How" and the "What."

How Would We Nudge Companies to Comply With the Water Laws?

Blue Eagle!¹⁰⁾Like shouting "War Eagle," but for fans of labor

We tried something like this during the Great Depression. Back in 1933, with 1 in 4 American laborers still unemployed, President Roosevelt pushed for significant legislation to put these folks back to work. His plan? The NRA (National Recovery Administration)¹¹⁾As John Oliver astutely pointed out, the more famous NRA isn't even that big..Apparently planet fitness has more members? Also, apparently that matters..

It was a common belief in the 1930s that the Great Depression was caused by the market being too cut-throat, and that it was the competition to the bottom (whether it be in terms of prices or wages) that destroyed the American economy¹²⁾There's good reason today to think this is incorrect. Any discussion of the Great Depression is incomplete unless debt crisis of the 1920s included.

President Roosevelt and his team of New Dealers thought the best approach would be to (What's the more extreme version of nudge? shove?) encourage industries to agree to certain supply controls to end the zero-sum¹³⁾game theory term for "race to the bottom" game of prices/wages.

Those companies that abided by the terms dictated by the Roosevelt administration would be given a Blue Eagle to display for their customers to see. The hope was that Americans would only shop at stores that displayed Blue Eagles, therefore pressuring businesses into accepting the price/labor controls.

Did it work? You tell me..

There were clear benefits: the industries agreed to minimum wages, capped the numbers of the hours worked per week by labor, and ended child labor. Ending child labor (which is still a thing in other countries!) is a fairly big accomplishment. Yet it came at quite a cost..

 For your viewing pleasure, I've embedded an NRA video produced by the MGM corporation in 1933¹⁴⁾Imagine living in an era where you had to go to the movies to watch the news so you can get a better feel of what a Roosevelt nudge really felt like.

Get ready for the Super Creepy!

Yikes..My gut instinct says even some¹⁵⁾not all! of Bernie's most ardent followers would be taken aback by that.

Talk about a nudge too far..

See, the thing about the law is, it really is only as effective so much as you can enforce it. To this point, the Wikipedia elucidates the effect of the many NRA regulations passed in the 1930s:

Journalist Raymond Clapper reported that between 4,000 and 5,000 business practices were prohibited by NRA orders that carried the force of law, which were contained in some 3,000 administrative orders running to over 10 million pages, and supplemented by what Clapper said were "innumerable opinions and directions from national, regional and code boards interpreting and enforcing provisions of the act." There were also "the rules of the code authorities, themselves, each having the force of law and affecting the lives and conduct of millions of persons." Clapper concluded: "It requires no imagination to appreciate the difficulty the business man has in keeping informed of these codes, supplemental codes, code amendments, executive orders, administrative orders, office orders, interpretations, rules, regulations and obiter dicta."

Even worse, the Roosevelt Administration found out they did not have the power to enforce these new rules.

From John T. Flynn:

The NRA was discovering it could not enforce its rules. Black markets grew up. Only the most violent police methods could procure enforcement. In Sidney Hillman’s garment industry the code authority employed enforcement police. They roamed through the garment district like storm troopers. They could enter a man’s factory, send him out, line up his employees, subject them to minute interrogation, take over his books on the instant. Night work was forbidden. Flying squadrons of these private coat-and-suit police went through the district at night, battering down doors with axes looking for men who were committing the crime of sewing together a pair of pants at night. But without these harsh methods many code authorities said there could be no compliance because the public was not back of it.¹⁶⁾The Roosevelt Myth via wikipedia

It is imperative for any governing structure, public or private, that they not have rules that are unenforced for the reasons discussed under the deterrence heading above. Deterrence doesn't work without enforcement! And given how exceedingly difficult enforcement is, this method of public policy should be avoided when possible.

Don't just nod at me; think about this in the context of the water laws. For our current regulatory framework to be effective, the Southern Nevada Water Authority would need to enlist an unknown number of enforcers¹⁷⁾hundreds? thousands? to roam the Valley each and every day looking for violators of the waters laws.

I mean if we are talking about real deterrence, these enforcers would apply a "one strike/you're out" policy where they would just turn off the water of a consumer not abiding by the water laws¹⁸⁾I can see my conservative friends salivating..that is far too draconian. What if the business I am discussing is an apartment complex? Clearly the residents shouldn't have their water turned off; they don't control when the grass is watered/if their property management company abides by the water laws. It's not a terrible idea in theory..it's just that we don't live in theory. People need water.. Once we conclude, however, that the "one strike" method is overly harsh, we have to also concede the effectiveness of our friend, deterrence.

What Would a "Nudge" of the Water Laws Comprise of?

We are now wading into uncharted territory, so bear with me. Given that I navigated us this far, I have to take a crack at this.¹⁹⁾Hopefully we don't have any Starbucks[Just go read Moby Dick already] aboard

1. It's fair to say most sprinkler systems are automated²⁰⁾Correct?. Why not mandate that sprinkler systems must be programmed so that they cannot turn on until after 7 p.m.?²¹⁾I don't know this for sure, but I have seen sprinkler systems that can be set for months. This could be done just for Summer
2. Less extreme: Require sprinkler systems to configure a second switch to be pulled in order for the sprinklers to operate during daytime hours. This seems closer to Sunstein's "default everyone as organ donors."
3. Require a solar sensor on sprinkler systems. If the sprinkler system senses the sun, it doesn't turn on. Simple enough.

I'd say that's not a terrible attempt at the problem, given that my only background I have with water is consumption²²⁾Don't know about you, but I always preferred a good self evaluation. Please don't see those three items as some sort of comprehensive attempt to solve the issue²³⁾it's more like a demonstration.

Although I see those proposals as fairly benign, it is very likely many of you do not.  The idea of anyone from the government controlling your water (or any other) supply makes you crazy; I've lived in Nevada long enough to understand the sentiment²⁴⁾It's a principled stand based on liberty..I swear I'm listening.

In that NY Times Magazine article on Sunstein, it is emphasized a couple of times that Glenn Beck²⁵⁾Republican, cheetos is very creeped out by the work of Cass Sunstein (Unfortunately, the piece does not tell us why). Not sure if Beck has some background with Sunstein (the complaint seemed strangely personal), but I think I understand what Beck²⁶⁾Things I never thought I'd be doing on the Clear Counsel blog: defending Glenn Beck was getting at, and I believe that it's related to the liberty-minded sentiments we often hear in Nevada.

Sunstein seems like a nice enough guy (Don't know him either) with benevolent intentions, but if he takes this concept even one step beyond school lunches, people are going to be upset. Unfortunately²⁷⁾the appropriate adverb is debatable, we as a society have not stipulated what we consider to be moral behavior and there's a lot of disagreement out there.

And you know what? That's ok! We can have disagreements, and we can use our democracy to make collective choices.

It is just that we, collectively, just aren't ready to determine what behavior should be nudged by the government. I think it is fair to say, given the choice, that most Americans²⁸⁾given that many of our moral issues are still being debated would prefer the government stay impartial.

And those of us who want better compliance with the water laws need to respect this. An issue that is so morally clear cut for me (We only have one earth, last I checked), is not for my fellow Nevadans.

And because I respect and value the opinions of my neighbors, applying these techniques without a clear Supermajority just isn't the right thing to do.²⁹⁾A lot of my liberal friends disagree with me on this. It's not just about being right though. If I care about the water laws as much as I say I do, I should be attempting to persuade those with whom I disagree³⁰⁾reasonably, respectfully.

So Where Does That Leave Us?

You know what they say..A nudge is only as good as its nudger? It's something close to that³¹⁾No it isn't. Just making up cliches again..

Point being, the quality of output (that is, the nudge) is completely a product of its creator. And in order to institute "nudging" as public policy, we would need thousands upon thousands of people with the sufficient intellect and morality to specifically craft policy for each locality.

I don't know how many Cass Sunstein's³²⁾If you are looking for the conservative alternative, think Judge Posner of the 7th Circuit. How much fun would it be to live in a city where he was doing the nudging?? there are out there, but likely not enough for each of the nation's municipalities.

Whereas I would be open to some "nudging" legislation if it was to implemented by someone that much smarter (and hopefully moral) than me, I am completely against the concept if we are going to settle for a run-of-the-mill politician's half-arsed³³⁾#Brexit!! effort.

Like many other concepts/proposals in public policy, this concept needs to be implement completely correctly, or it should not be done at all.

Perhaps More Government Isn't the Answer

Are you familiar with what Google's Trusted Store campaign? Perhaps our answer is here.

If you are unfamiliar, Google will allow certain vendors to display a badge that declare that a retailer is a "Trusted" by Google if the vendor is willing to meet certain requirements from Google. The standards are so rigorous that Google is willing to insure a purchase from a Google Trusted Store up to $1,0000. For an example, see Overstock.³⁴⁾Overstock doesn't pay me anything, just the first example I could find. Scroll to the bottom of the page

I think we sufficiently fleshed out why government nudging likely isn't our short-term answer above, but we neglected our friends in the private sector!

What's to stop two or three people with a passion for observance of the water laws from forming an organization to promote that idea? Now, I'm no expert on corporations, (if you need help in this arena, I recommend my boss Mr. Barlow.)³⁵⁾If you search our legal blog, he has discussed this topic extensively. Here is a good example but it might be worth your time to read about 501(c) Organizations.³⁶⁾501(c) refers to the tax code

These said two or three people could design their own version of the Blue Eagle, drum up public support³⁷⁾easier now than ever with social media, raise money³⁸⁾or self-fund. Again, many more options when you use private enterprize, and offer a large poster (in today's age, a badge to be displayed on the company's website/social media pages) to be displayed for all potential customers if these companies follow prescribed rules.

And the best part of these rules? They can be whatever you want them to be. These are private individuals doing business with private companies—no government/extra water laws needed!

Draft your own contacts with your own terms which, of course, can include provisions for if a company violates the terms.

The possibilities are endless. For a great example of the potential of benevolent citizen organization creating change, see this Politico discussion about Cincinnati.

We aren't the only one's nudging. Just today, The Washington Post published a proposal on how to get more people to vote³⁹⁾Pretty good idea if you ask me.

Thanks for reading.

Below is the relevant water laws from the City of Henderson (Just in case you don't believe me). Ordinance 24.34.020 (the second one) is very clear when folks are permitted to water their lawns.

14.14.020 - Water waste.
A. Water waste unlawful.
1. It shall be deemed unlawful for owner, occupant, or manager of real property served by the city to permit the excess use, loss or escape of water through breaks, leaks or malfunction in the water user's plumbing or distribution facilities for any period of time after such escape of water should have been reasonably discovered and corrected as determined by the director.

2. It shall be deemed unlawful for owner, occupant, or manager of real property served by the city to waste water after a notice has been issued. Water waste includes, but is not limited to the following:
a. Allowing water to flow or spray off private property onto a sidewalk, pavement, gutter, street, alley, right-of-way or drain.
b. Failure to repair a malfunction of an irrigation system or supply line within 48 hours of notification by the city. Such malfunctions may include, but are not limited to: pooling due to broken sprinkler head, geyser or jet of water caused by broken drip irrigation line, etc.
c. Failure to repair a water leak.
B. Responsibility for waste. Any waste of water as set forth in this chapter, together with proof that such waste originated at any residence or place of business, shall constitute a rebuttable presumption that the current owner, account holder, or manager of such property or residence or place of business was responsible for such waste.
(Ord. 2798, § 5, 1-20-2009)

 

24.34.020 - Limitation on irrigation.

From May 1st until October 1st of each calendar year from the hours of eleven a.m. until seven p.m. it is unlawful for any customer of a public water system to use water within the unincorporated areas of the county for the purpose of irrigating, regardless of method, exterior lawns, gardens, trees, grass, shrubbery, or other vegetation except as provided inSection 24.34.030.

(Ord. 2934 § 4, 2003: Ord. 1271 § 1 (part), 1991)

14.14.030 - Landscape watering restrictions.

A. Landscape watering schedules shall apply to all areas, both residential and commercial, including, but not limited to: single family residential properties, multi-family residential properties, commercial properties, common areas, medians, and private parks. Community use recreational turf shall be subject to the provisions outlined in section 14.14.040(E).

B. Beginning May 1 until September 30 of each calendar year, it is deemed unlawful to use water to spray irrigate turf, gardens, trees, shrubbery, or other vegetation between the hours of 11:00 a.m. and 7:00 p.m.

 

14.14.040 - Golf courses.

 A. Beginning May 1 until September 30 of each calendar year, it is deemed unlawful for golf courses to use water within the city to spray irrigate turf, trees, grass, shrubbery or other vegetation between the hours of 11:00 a.m. and 7:00 p.m.