Free-market roads

Free-market roads is the theory that a society should have entirely private and/or community owned roads.

Free-market roads and infrastructure are generally advocated by anarcho-capitalist works, including Murray Rothbard's For a New Liberty, Morris and Linda Tannehill's The Market for Liberty, David D. Friedman's The Machinery of Freedom, and David T. Beito's The Voluntary City.

Arguments for free market roads

Private roads can have no free riders, reducing congestion

The free rider problem has been cited by some proponents as a reason for privatizing roads: since traffic congestion is the result of excess demand for transportation infrastructure, it may be treated as any other economic shortage - in this case, a shortage of roads, lanes, exits, or other infrastructure. Seeing the pricing mechanism of a free market as a more efficient means of meeting demand than government planning (see Economic calculation problem), Peter Samuel, in his book Highway Aggravation: The Case For Privatizing The Highways, compares American traffic jams and Soviet grocery store lines:[1]

"In Russia communism's failure was epitomized by constant shortages in stores. Empty shelves in supermarkets and department stores and customers in line, wasting hours each week, became the face of the system's failure, as well as a source of huge personal frustration, even rage. Communism failed because prices were not flexible to match supply and demand; because stores were bureaucracies, not businesses; and because revenues went into a central treasury and did not fuel increased capacity and improved service. We in supposedly capitalistic America suffer communism--an unpriced service provided by an unresponsive monopolistic bureaucracy--on most of our highways. Our manifestation of shortage, our equivalent of Russian lines at stores, is daily highway backups. There is no price on rush-hour travel to clear the market. There is no revenue stream directly from road users to road managers to provide incentives either to manage existing capacity to maximum consumer advantage or to adjust capacity to demand."

Ronald F. Kirby, transportation director for the Metropolitan Washington Council of Governments, opined that private companies have more of an incentive to invest in infrastructure early, before a public outcry prompts construction. He noted, "Too often in the public sector, the easiest thing to do is let things sit unresolved. The private sector is motivated by self-interest to resolve things quickly".[2]


Privatization will encourage infrastructure construction

B. H. Meyer stated, "It is evident that the turnpike movement resulted in a very general betterment of roads."[3] The book Street Smart claims that Brazil has saved 20 percent and Columbia 50 percent through efforts to outsource road maintenance to the private sector.[4]


Private roads couldn't use eminent domain

In 2006, eminent domain authority was stripped from private highway developers in Colorado due to concerns over abuses.[5] Cato rebutted the potential for eminent domain abuse, noting that "In California the state highway agency approved private development of the Mid-State Tollway on the eastern fringe of the San Francisco-Oakland area. Bay area residents, however, strongly opposed the tollway and favored of a Bay Area Rapid Transit line built nearby to serve the area. As a result, the highway developer abandoned the northern leg of the project. Had a public agency been building the highway, it could have invoked eminent domain authority to build the road in spite of political opposition."[6]

Toll Road Investors Partnership II CEO E. Thomas, in testimony before the State Corporation Commission, said that the lack of eminent domain power required developers to "acquire necessary property through private means, which was a costly and time consuming exercise for the private investors in the Greenway."[7]

Free market roads will have less crime

Bruce L. Benson argues that when roads are privately owned, local residents will be better able to prevent crime by exercising their right to ask miscreants to leave.[8] He observes that avenues in the private places of St. Louis have been shown to have lower crime rates than adjacent public streets.[9] The Market for Liberty further argues that private roads will be better policed as the owners focus on serious crime rather than on victimless offenses:[10]

“ A private corporation which owned streets would make a point of keeping its streets free of drunks, hoodlums, and any other such annoying menaces, hiring private guards to do so if necessary. It might even advertise, "Thru-Way Corporation's streets are guaranteed safe at any hour of the day or night. Women may walk alone with perfect confidence on our thoroughfares." A criminal, forbidden to use any city street because all the street corporations knew of his bad reputation, would have a hard time even getting anywhere to commit a crime.

On the other hand, the private street companies would have no interest in regulating the dress, "morals," habits, or lifestyle of the people who used their streets. For instance, they wouldn't want to drive away customers by arresting or badgering hippies, girls in see-thru blouses or topless bathing suits or any other non-aggressive deviation from the value standards of the majority. All they would ask is that each customer pay his dime-a-day and refrain from initiating force, obstructing traffic, and driving away other customers. Other than this, his life-style and moral code would be of no interest to them; they would treat him courteously and solicit his business.

 ”

Free market roads will encourage small business

Mutualist Kevin Carson argues that transportation is a natural diseconomy of scale.[11] The cost of transportation increases disproportionately with the size of a firm; in a free market, there would be strict upper limits to the size and power of corporations, and small businesses would have natural advantages. Government subsidies to transportation, however, make large, centralized corporations artificially profitable, contributing to corporate dominance of the economy.[12] Carson points out that in many cases, centralized industry did not develop until after the advent of taxpayer-funded roads and other transportation projects.[13]

Arguments against free market roads

Highways are natural monopolies

In many parts of the world land use patterns mean that building two or more highways in parallel isn't practicable, thus making highways a natural monopoly. Kroeger claims, "This would result in an incredibly inefficient use of land resources." When there is only one highway connecting points A and B, the main advantage of privatization, competition, disappears. In the absence of regulation, a private highway operator is likely to charge an exorbitant monopoly price, resulting in huge profit margins and few benefits for drivers. An initial franchise fee (in the case of franchised publicly owned roads) and/or savings of public capital costs, can offset the resulting monopoly profits in terms of societal costs, but there are distributional issues in that the income is spread over an entire region while the burden falls on a small subset of that region's population who actually need to use the road. Also, it is difficult to predict the long term present value of a road. For example, the 407 ETR (an express toll highway near Toronto originally built with public funds) was leased for three billion CDN and was subsequently valued at nearly ten billion CDN. [14] While alternate local roads and other forms of transportation may provide some competition, it is often impractical, especially for goods.

A counter-argument is that while a lone highway connecting A to B may not have any other competition from other highways, it would still have to compete with trains, planes, and other roads.[15]

See also

References

  1. ↑ Samuel, Peter: Highway Aggravation: The Case For Privatizing The Highways, Cato Policy Analysis No. 231, June 27, 1995.
  2. ↑ Fehr, Stephen C.: Highway Links Loudoun to Region's Growing Pains, The Washington Post, Sep. 24, 1995.
  3. ↑ Klein, David (January 1998). Libertarian Solutions: Private highways: A solution whose time has come (again)?. Archived December 15, 2006 at the Wayback Machine
  4. ↑ STREET SMART | National Center for Policy Analysis
  5. ↑ Colorado Hwys: Major Non-State
  6. ↑ How Government Highway Policy Encourages Sprawl
  7. ↑ Direct Testimony Of E. Thomas Sines On Behalf Of Toll Road Investors Partnership II, L.P. State Corporation Commission Of Virginia Before The Case No. Pue-2006-00081
  8. ↑ Benson, Bruce L. To Serve and Protect: Privatization and Community in Criminal Justice. p. 159.
  9. ↑ Benson, Bruce L. To Serve and Protect: Privatization and Community in Criminal Justice. p. 85.
  10. ↑ Tannehill, Linda and Morris. The Market for Liberty. p. 61.
  11. ↑ http://members.tripod.com/kevin_carson/sitebuildercontent/sitebuilderfiles/Chapter2.pdf[][]
  12. ↑ http://www.thefreemanonline.org/featured/the-distorting-effects-of-transportation-subsidies/
  13. ↑ http://members.tripod.com/kevin_carson/sitebuildercontent/sitebuilderfiles/Chapter3.pdf[][]
  14. ↑ Alexander, Doug. "CPP Investment Board to Buy 10% of 407 Toll Road for About $878 Million". bloomberg.com. Bloomberg. Retrieved 26 April 2013.
  15. ↑ Block, Walter (2009). The Privatization of Roads and Highways: Human and Economic Factors. Ludwig von Mises Institute.
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