The Water Is Not Running

“The Water Is Not Running” is a short polemical economic essay, presented as a chapter in Rothbard’s broader critique of welfare-state socialism. Its scope is narrow—the New York City water shortage of 1985—but Rothbard uses that municipal episode to advance a general Austrian-libertarian argument about public ownership, administered prices, rationing, and the anti-consumer character of bureaucracy.

Rothbard opens by distinguishing government from private enterprise not merely by efficiency but by institutional attitude. Business must court buyers because profit and loss discipline its conduct; government, insulated from that discipline, treats users as burdens on its resources.

Governments are invariably at war with their consumers.

The essay’s conceptual move is to recast “shortage” not as a natural disaster but as a political-economic symptom. Rothbard grants that reservoir levels were low, but he denies that scarcity alone explains the crisis, pointing to New Jersey’s better water levels and to New York’s infrastructural choices. The real cause, in his account, is the municipal monopoly’s irrational pricing system: tenants do not pay per unit consumed, and landlords pay fixed fees regardless of use. Thus neither group receives a price signal encouraging conservation.

Water, as usual with government, is priced in an economically irrational manner.

From this point, the essay broadens from New York water policy to a theory of public provision. Private firms price goods to satisfy consumer demand while covering costs; governments, Rothbard argues, price according to political incentives. The resulting underpricing produces artificial shortages, which then justify regulation and coercion.

Government's incentive is to subsidize favored pressure groups or voting blocs; for government is pressured by its basic situation to price politically rather than economically.

Rothbard’s structure is deliberately escalating: first the contrast between firm and state, then the history of socialized water supply, then the technical mispricing of New York water, and finally the moral psychology of rationing. He argues that once government creates shortages through below-market pricing, it responds not by allowing prices to clear the market but by imposing behavioral commands—restricting lawn watering, car washing, showers, and air conditioning. Scarcity becomes an occasion for authority.

Morally, government can then have its cake and eat it too: have the fun of pushing people around, while wrapping itself in the cloak of solidarity and universal “sacrifice” in the face of the great new emergency.

The California anecdote, in which a drought bureaucracy becomes a flood-control office after rains arrive, functions as satire: emergencies, in Rothbard’s telling, are administratively elastic and politically useful. His discussion of Mayor Koch’s water controls and Carter-era air-conditioning rules extends the critique beyond water, portraying rationing as a recurring pattern of state puritanism toward comfort and consumption.

The relevance of the essay lies in its concise formulation of a market-clearing argument against public rationing. Rothbard does not propose moral exhortation or technocratic allocation; he proposes prices. Conservation, for him, should be decentralized through individual adjustment to higher costs rather than centralized through uniform prohibitions.

If the government wants to conserve water and lessen its use, all it need do is raise the price.

The essay culminates in privatization as both economic remedy and moral restoration. Water should be supplied like ordinary consumer goods, by firms seeking profit through service rather than by officials gaining power through crisis management. Rothbard’s final claim is therefore not only that markets allocate water better, but that markets preserve consumer sovereignty against bureaucratic command.

All it has to do is clear the market, and let people conserve each in his own way and at his own pace.