All Commentary
Wednesday, April 1, 1981

When Water Is Scarce

As I write this, New York City, Greenwich, Connecticut, and many towns in New Jersey, are faced with a water shortage. Universally their officials are ascribing this shortage to “lack of rain.”

That is certainly one cause. But there is another no less important. Water is distributed and consumed on socialistic principles. In New York City water metering is required for all commercial buildings, but not for residential buildings. Water is then paid for by the user not in proportion to what he consumes, but in his general tax bill.

So it is used wastefully. Any number of families let the water run freely, prolong their showers, never think twice before turning on their dishwashers, watering their lawns or washing their cars. They are worried even less about wasting the city water supply. On hot days fire hydrants are opened up, allowed to gush freely all day, so that an occasional urchin can wade and splash in an artificial river of water.

When it is suddenly announced that the water is in short supply, everybody is worried. A few token economies are suggested. But even a conscientious consumer may think something like this: “Of course I intend to economize. But what can my own picayune economies amount to compared with the total consumption? And how can I be confident that others will economize?” While the less conscientious may be tempted to think: “What difference will it make to the total consumption if I continue to use water as carelessly as I have been using it? And how will anybody else find out?”

None of these problems would arise under a metering system, in which the individual or family user pays for each gallon he uses, and saves on each gallon he doesn’t use. Then each family has a clear and direct incentive to economize. And in a serious water shortage, a city could raise the price it charged per gallon.

I am aware that this single proposed change doesn’t answer all questions. Meters are expensive. It takes time to make and install them. In ordinary circumstances the “free” common use of water may look like the cheapest and most sensible system.

But what happens when water use is socialized helps to explain what happens wherever the socialist principle is adopted.

  • Henry Hazlitt (1894-1993) was the great economic journalist of the 20th century. He is the author of Economics in One Lesson among 20 other books. See his complete bibliography. He was chief editorial writer for the New York Times, and wrote weekly for Newsweek. He served in an editorial capacity at The Freeman and was a board member of the Foundation for Economic Education.