Endless economic troubles happen when governments try to repeal supply&demand or deny its existence. A topical example is the drought in California mixed in with the political distribution of water rights.

Except the market doesn't let society prioritize. In CA, a big part of the water issue was what goes to humans vs farmers. That's not something that the market should be solving, that's for policy, because things like almonds being a status symbol in China cause major issues locally and distort the picture of supply & demand.

Even beyond that, lot of those farmers bought the right to access a certain amount of water when they bought their land. Taking it away from them is like taking property away from someone in SF because they didn't pay enough for it back in the 80s.

Eminent domain is a thing. When public good demands it (or when cronyism pushes it through), we do in fact take property from private citizens.

The idea that farmers' water rights are inalienable seems absurd to me. A state can be in a drought but farmers needn't curb their usage at all?

If each suburban plot of land in California hypothetically came with a guarantee of 100k gallons of water a month, there would be no doubt that this would be cut immediately when a drought hit. It's only farmers' lobbying power that stops their water rights from being restructured wholesale.

With that said, I do think agriculture rightfully gets a lot of water allocated. Much of it seems wasted, though.

Certainly eminent domain is sometimes necessary, and I agree some form of it will probably be necessary to solve California's problem, but I wouldn't exactly associate it with "letting prices rise" (the statement by the poster who started this line of thought).

The free market had its say when these water rights were sold, taking it back from them with eminent domain so we can charge more is not the free market.

Weren't these water rights sold a hundred years ago when the aggressive agriculture and population didn't exist?

When the government decides who gets water and how much and for what purpose, the inevitable result is inefficient use, gluts, and shortages, often at the same time.

Why is that inevitable? In fact most of CA's water allocation is driven by the free market (and local counties), not the government. Unfortunately it means that things like almonds get way too much water compared to what's useful by society or locals (since much is shipped abroad), and deregulation means farmers pump water from underground that can't be replaced for temporary gains. These are just some examples of where the market fails.

I suggest you watch this very informative talk by the water board director to the MIT alumni club last year to help clarify your POV: http://m.youtube.com/watch?v=rShYQVZvX-k

When people have pumps on their property that drain a common aquifer, it is a tragedy of the commons situation, not a free market one.

http://www.cnbc.com/2015/05/28/west-coast-drought-why-califo...

Doesn't look like a free market to me.

Demand curves are human idealizations. They are not real.