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Source link: http://archive.mises.org/17830/road-shortage-in-socialist-paradise/

Road Shortage in Socialist Paradise

July 23, 2011 by

I have written much before on the state of Sweden, the mythical land of “working” socialism. Here is another example of how it seems to not work at all as the global myth has it. The huge discount store of Gekås in the small, 9,000-population town of Ullared in southern Sweden attracts 28,000 customers daily. Obviously, most of the customers are from out-of-town or even drive from far away to buy the heavily discounted goods at Gekås.

The problem with all these travelers is that the roads to Ullared are not even close to sufficient for this kind of traffic. This causes traffic jams and customers consequently end up spending time in their cars instead of in the discount store. Meanwhile, the central government’s road authority Trafikverket has done nothing to improve the roads to Ullared for the last 15 years. And they are not planning on doing anything either.

As a solution to this problem, which of course affects Gekås as it affects the small town of Ullared and the whole region, Gekås are offering a SEK 100,000,000 loan (approx. $16,000,000) to the road authority to improve the roads – at a very favorable interest rate. Gekås have already invested in the infrastructure in Ullared to support visits by their numerous customers, and this is obviously the next step. The road authority has not responded, but it is likely they will turn Gekås offer down. Private interests are generally not allowed to participate in the provision of public welfare and service. Or, as in this case, the non-provision of it.

{ 25 comments }

Rory Carmichael July 23, 2011 at 10:55 am

Excuse me. Did you just offer the refusal of a government to subsidize a successful private venture as evidence of crushing socialism? “sweden is so socialist it wont fund access to a popular store, even when people ask!” doesnt exactly parse. Im sure there are many legitimate libertarian complaints about Sweden but this cant possibly be one of them.

Louis B. July 23, 2011 at 11:31 am

Bingo.

Shay July 23, 2011 at 11:50 am

Store visited by people from all over. Insufficient roads for 15 years. Store is even offering to fund the roads. Why haven’t roads been built?

Rory Carmichael July 23, 2011 at 12:06 pm

store is offering to loan them money. the store is offering to let the government pay them money to increase their profits… that isnt anything like offering to pay for the road

J. Murray July 24, 2011 at 7:02 am

If a private road operator was offered a loan at below market rates to expand on a service that brought that volume of customers, they wouldn’t even be holding a discussion. They would have road crews out and saying, “We start digging when that cash hits our accounts.”

Nielsio July 23, 2011 at 11:55 am

Structural traffic jams are a sign of a non-responsive system. The traffic that the store now gets, together with the interest of the business could easily, privately, fund a higher road capacity.

For example: if the 28,000 daily visitors pay 1 euro per trip, then that’s 10 million/year. In all likelihood, this would still make it profitable for them to shop at this store. But what if we take into account the cost of traffic jams? If you stand still for half an hour, you burn much more than 1 euro in gasoline. And the opportunity cost for all these travelers is also much higher than the cost to improve the road.

Yet instead of getting what they need, all these taxpayers are made to fund bankers, war on drugs, war on copying, etc ad infinitum; but nothing they would personally choose.

M.R. Orlowski July 23, 2011 at 1:03 pm

The retailer offered to loan the government money to build infrastructure leading to its store and the government has not responded as of yet, how is that being “subsidized?”

Rory Carmichael July 23, 2011 at 1:12 pm

the key aspect of a loan is that you pay it back. if the government takes a loan to do something, they still pay to do it eventually. government paying to do something for a business=subsidy

Captain Anarchy July 23, 2011 at 1:31 pm

The point is that if the building of roads were not monopolized by government, this would not be a problem. In a stateless free market society, there would be a multitude of competing road construction and operation firms willing to bargain with Gekås. Because they have to compete and they have pricing signals from the market, the price would necessarily be lower, and the road would have likely been built to appropriate size years prior.

Huebert July 23, 2011 at 1:23 pm

If the government is going to monopolize the creation of roads, it’s not unreasonable or unlibertarian to complain when those roads are inadequate. Am I not allowed to grumble when the streets where I live are full of potholes? Can I not be happy if they’re then fixed? I do pay taxes supposedly to fund these things, after all.

Also, I don’t favor subsidies to anyone, but here improving the road would not simply be a subsidy to the business; it would also be a subsidy to the consumers who want to go to that business. And while I know nothing of this particular business, it’s hard to imagine that it is not a net tax payer by a large margin, so it’s not so terribly outrageous to want a little something back, particularly something the government claims as one of its primary responsibilities.

Stan Kwiatkowski July 23, 2011 at 1:23 pm

no, the point is that what is happening in Sweden contradicts what is explicitly said about the wonders of the Swedish state.

Rory Carmichael July 23, 2011 at 2:04 pm

an alternative free market solution to this “problem” would be to OPEN ANOTHER BRANCH. you know, somewhere where there are people. its entirely possible that the same solution would be the best one in a stateless society. that way libertarians dont have to argue that its appropriate for the government to step in in this situation. alternatively, we could consider a free market response where the store offers to pay for the road to be improved… you know, buying what it wants rather than asking for a handout, but that doesnt seem to be on the table. you shouldnt abandon your values because the world is imperfect. you should find ways to apply them in the imperfect world. i just offered two.

J. Murray July 24, 2011 at 7:05 am

The communities that people commute from are too small to support additional stores.

Rory Carmichael July 25, 2011 at 9:52 am

That doesn’t make a whole lot of sense to me. Presumably, if they are willing to commute through bad traffic to one remote store, they would be willing to commute through less bad traffic to another remote store.

Rory Carmichael July 23, 2011 at 2:47 pm

On a more productive line of inquiry, are there any places where road construction/management is largely privatized? this anecdote doesnt seem to point to anything particular to sweden, but rather a shared trait of every country i can think of. when villainizing swedish socialism, it might be proper to pick some aspect that is more… swedish

Per Bylund July 23, 2011 at 4:52 pm

Funny thing, Rory, the great majority of Swedish roads are actually private (!); I’ve heard it is between 80 and 90%. But the larger roads (which one would think “easier” to finance privately) are exclusively state-run and state-owned. So there is an interesting very Swedish twist to this.

Joe July 23, 2011 at 8:36 pm

Just as the skyway out of Chicago was privatized? These are as private as the electric or gas companies. Just because private companies are anointed property by the statist politicians just means someone is getting their hands greased… At least this is the case from my planet

Rory Carmichael July 23, 2011 at 5:05 pm

if the majority of swedish roads are private then the criticism seems even less relevant. there must be companies capable of building and maintaining roads. the store should hire them to build alternative routes… where is the issue? the more i see from the comments, the more this looks like someone trying to misappropriate libertarianism in favor of socialist handouts for a favored business.

Ben July 23, 2011 at 9:31 pm

The issue is that the state controls construction of the roads. I’m sure that the store would be willing to pay for it, but the state will have none of that. What do you think would happen if the store simply hired a large construction company to just expand the existing road? I can see it now, construction workers being arrested for improving the roads because the state refuses to.

V July 23, 2011 at 10:03 pm

If I start a business in Uganda, complaining about the lack of security and the government roads is BS. You know what you’re getting into ahead of time. I really don’t have sympathy for this store. They underestimated the rigidness of the local government. They made a poor business decision.

Business decisions should be made under the assumption of how government actually works not how it ought to work. If anything, the business should have negotiated the road contracts way before opening. This is just sloppy.

Furthermore, yes the state is responsible for building roads. But a business is responsible for its own decisions. Don’t start a business where you might have to rely on an unreliable government.

El Tonno July 24, 2011 at 7:11 am

With that state of mind, it would be impossible to complain about anything. Actually, you would need to have perfect knowledge of local, even future conditions at the moment you plan your business move. That is illusory.

In the Real World, businesses start, then maybe grow, then quite probably hit some problem along the road to success. This problem may be solvable [road gets improved] or it may not [refusal of the road monopolist to improve road], so at that point lateral thinking may be needed [move store, open branches].

ProfNickD July 24, 2011 at 2:27 pm

Rory,

I’m sure that the grocery store chain is paying highway-robber levels of taxation — should it not have these taxes refunded to it, thereby enabling it to build the road and avoiding the subsidy issue?

Daniel July 24, 2011 at 3:45 pm

That would be too “RSVP” for government.

Since when do they act according to people’s demand?

Anders Mikkelsen July 25, 2011 at 9:48 am

What I like is “Private interests are generally not allowed to participate in the provision of public welfare and service.” Who then could determine the provisioning? On what basis could they act.

The problem is that the store has no way to increase the road capacity in their area. They even tried loaning money. I am sure they would build the road too if allowed, it would increase the value of their land. In the US private people build the roads all the time (of course they’re taken over by the government.) It is true that getting the government to build the road is a subsidy.

A system where “Private interests are generally not allowed to participate in the provision of public welfare and service.” will be even more illogical than a system where they do determine provision of state services. Which is why the free market is the best system for provision of public welfare and service.

Rory Carmichael July 25, 2011 at 9:57 am

How come you’re sure they would build the road if allowed?

Their best offer has been a loan… a deal in which over time the government pays them for the privilege of increasing their business. I would love to loan you some money so that you can increase traffic to my website. I will give you 10 dollars now to promote my blog on ten other webpages. In exchange, I will allow you to give me 11 dollars on Friday. This is the kind of deal that the government is refusing. I would find this argument much more compelling if the store offered to pay for the road. If the government refused, then we might be showing a real point.

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