This is the shortest chapter of the book, just six pages long.  Rothbard makes a laundry list of what he calls “the major problem areas of our society” and argues that government is central to every one of them.  The list is uncharacteristically random, almost “ripped from the headlines”: high taxes, urban fiscal crisis, blackouts, pollution, public schools… 

When the government directly supplies a service, such as public schools, Rothbard’s assignment of blame is straightforward – government does it, and does it poorly.  He also goes out of his way to argue that government directly supplies more than it seems.  Take “crime in the streets”:

Consider: the crime in question is being committed, by definition, on the streets. The streets are owned, almost universally, by government, which thereby has a virtual monopoly of street-ownership. The police, who are supposed to guard us against this crime, are a compulsory monopoly of the government. And the courts, which are in the business of convicting and punishing criminals, are also a coercive monopoly of the government. So government has been in charge of every single aspect of the crime-in-the-streets problem. The failure here, just as the failure in Vietnam, must be chalked up solely to government.

In other cases, Rothbard just faults government for failing to protect property rights.  Take air pollution:

Again, the government, as owner of the public domain, “owns” the air. Furthermore, it has been the courts, owned solely by the government, which, as an act of deliberate policy, have for generations failed to protect our property rights in our bodies and orchards from the pollution generated by industry. Moreover, much of the direct pollution comes from government-owned plants.

The chapter ends on a high note, with amusing ridicule of Galbraith:

John Kenneth Galbraith, in his best-selling The Affluent Society, recognized that the government sector was the focus of our social failure–but drew instead the odd lesson that therefore still more funds and resources must be diverted from the private to the public sector. He thereby ignored the fact that the role of government in America–federal, state, and local–has expanded enormously, both absolutely and proportionately, in this century and especially in recent decades.  Unfortunately, Galbraith never once raised the question: Is there something inherent in government operation and activity, some thing which creates the very failures which we see abounding?

Critical Comments
This is the weakest chapter of the whole book; as written, I doubt it could persuade even a friendly critic.  The big questions:

1. How exactly does Rothbard identify “problem areas”? 

2.  When government and markets interact, why does government get blamed for all shortcomings? 

3.  What about all the things that were going right in the world when he was writing? 

Elsewhere in the book, Rothbard casually mentions that:

In 1976, after four decades of the greatest boom in American history… we had reached the status of having the highest standard of living in the history of the world with a relatively low level of unemployment…

If you evaluate the package of (four decades of boom + the chapter’s laundry list of “problem areas,”) isn’t the natural inference that overall, things are peachy?  No doubt Rothbard would retort that “It’s the free market that gave us that boom.”  I agree.  But if economic performance had been worse, isn’t it plain that Rothbard would have just blamed the government for “crippling” the economy?

From a slightly different perspective, my complaint about this chapter is that it pretends to be naively empirical (“Let’s just look at the problems and see if there’s a common cause”), when it’s actually heavily theory-driven.  But Rothbard doesn’t defend his theoretical presuppositions until chapter 10.

If I’d had been the editor for this book, I would have asked him to put chapter 10 before chapter 4 – or better yet, to seamlessly splice the two chapters together.  The new chapter 4 could then discuss the intrinsic failures of public ownership, and use the laundry list to illustrate Rothbard’s thesis.