There's actually not much agreement among modern economists on whether market-type policies for allocating life-critical resources work well, and in which circumstances. It hardly requires hard-left 1960s views; see, for example, the contemporary debate among generally mainstream market economists in both Europe and the U.S. over how to provision health-care services (I'd hardly consider the German ordoliberals, architects of the post-war West German economy, to be commies!).
There is also a lot of work in the emerging subset of economics based on dynamical systems theory, which looks at markets from the perspective of feedback and stability. There's probably no agreement there, but it's a much more open question than in the old-style equilibrium analysis, where you just assume axiomatically that markets clear and respond smoothly, instantaneously, and with no system-internal dynamics to supply/demand changes. I.e., sort of like analyzing mechanical systems under the assumption that turbulent fluid flow is impossible, and catastrophic resonance doesn't happen. It's at least an open question whether a securitized market in water could increase volatility and failure modes, especially given that it's very time-critical (you can't generally go without water even for temporary periods of allocation shortage, so even a short-lived "financial crisis" in water could be devastating).
Health care is a bad example. It's a multiple edge case, and a uniquely terrible choice for market solutions. The time when a patient can best make a market decision is the time it's probably too late.
I don't see why a resource being "life-critical" should make something not work for market solutions. Food and housing are already market allocated, and you'll have a hard time finding an economist who wants to centrally plan those things.
"But the poor have poor access to food and housing." I'm not too worried about this as enough water is a lot cheaper, even at a market price. Anyway, it's not like we don't already allocate water when and where it is scarce--just in an unfair, inefficient, and broken way. And it's not like anyone wants to deregulate the pipes to your faucet. And it's not like it's free to use that faucet.
I agree few economists want to outright central-plan housing, but I believe many are skeptical of the degree of financialization it's ended up with: mortgage-backed securities in their various forms are looked suspiciously on by a significant proportion of economists (though perhaps a minority?), and some argue that they contribute to volatility in housing markets and severity of cyclical crises.
Though here in Denmark there is actually a significant degree of central planning of housing, via a strong state role in the overall urban-planning framework, and laws that encourage owner-occupation and cooperatives, while discouraging absentee real-estate investment. There are constant debates over it, but going to a fully liberalized market approach doesn't seem too popular.
The #1 seller of mortgage backed securities were, by far, the government through the GSEs Fannie Mae and Freddie Mac. The #1 money losers on the resulting disaster were--again--the GSEs to the tune of several hundred billion dollars. By contrast, the private market bailouts are actually above water.
Mortgage backed securities are not a very good example of free market distortions.
Edit: I noticed you've added something about the housing ownership structure in Denmark. I think this is not very relevant to the discussion, but I also think it would be nice in the US if the law were more encouraging to the sort of ownership structures you described. I also think that kind of thing would still be rare because US citizens are a lot more mobile than Europeans and happen to like it that way.
Mortgage-backed securities were put in place to fix the last problem with the mortgage market. Which was caused by the fix put in place to fix the problem before that.
EDIT probably too late to fix the downvotes, but Regulation Q limited the interest rate that banks could pay out. After banks had lent out their money, they couldn't raise any more, especially if interest rates were high, as happened more than once. But if they could sell off their loans to the GSE, they could get more capital back, and lend it out some more.
Of course, this led to problems. But if we don't understand the psychology that led to securitization as being the natural solution to the previous column, how do you know you are being any wiser about suggesting what is going to replace securitization?
(I simplify a bit, because securitization also allows banks to diversify geographically.)
The best way to induce conservation of something is to raise it's price. If the price is artificially low, than the existence of a "Market Price" for water will raise it, and result in conservation and the development of more water-efficient technology.
I do generally agree that the price of water should go up, and that can be done in part by reducing the special subsidies currently given to agriculture (e.g. in California, farmers pay much less than anyone else, and generally less than the cost of even maintaining the state-owned aqueducts). But that's a different question from whether thoroughly securitizing water and trading it on futures exchanges would improve the situation. We could at least try the less radical change of "reduce the massive subsidies" first and see how large water users respond to a ramp-up in prices.
I agree entirely. As long as we are still subsidizing something, removing subsidies should be the first thing we try when we decide to liberalize. Oil is a good example. Its production is subsidized and its consumption is taxed.
Until industries lobby government for subsidies, either individual or for the entire commodity (look at corn) so they can buy water at the "market" price and sell the resulting products below what should have been the market price.
There is also a lot of work in the emerging subset of economics based on dynamical systems theory, which looks at markets from the perspective of feedback and stability. There's probably no agreement there, but it's a much more open question than in the old-style equilibrium analysis, where you just assume axiomatically that markets clear and respond smoothly, instantaneously, and with no system-internal dynamics to supply/demand changes. I.e., sort of like analyzing mechanical systems under the assumption that turbulent fluid flow is impossible, and catastrophic resonance doesn't happen. It's at least an open question whether a securitized market in water could increase volatility and failure modes, especially given that it's very time-critical (you can't generally go without water even for temporary periods of allocation shortage, so even a short-lived "financial crisis" in water could be devastating).