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Source link: http://archive.mises.org/9796/a-future-of-private-road-ownership/

A Future of Private Road Ownership

April 16, 2009 by

I advocate the complete, total, and full privatization of all roads, streets, highways, byways, avenues, and other vehicular thoroughfares. And I am serious about this, deadly serious.This is so far off the radar of public-policy analysis and apart from the concerns of politicians, pundits, and commentators that few people will take it seriously. Do not be one of them. Your very life may be at stake. FULL ARTICLE

{ 41 comments }

Enjoy Every Sandwich April 16, 2009 at 7:48 am

“If the highways were now commercial ventures, as once in our history they were, and upward of 40,000 people were killed on them annually, you can bet your bottom dollar that Ted Kennedy and his ilk would be holding Senate hearings on the matter.”

That, right there, is one of the things that really scrapes me about statists: their blatant refusal to hold their precious State to the same standards that they hold freedom and free people to. No matter how badly Obama fouls up–wastes money, destroys wealth, gets people killed–the only people who will even hint that he should suffer any consequences will be political hacks from the opposite party who simply want him out of the way so that their favorite guy can be the one wasting money, destroying wealth, and getting people killed.

But I’m the one who’s a “kook”. Bizarre.

geniusiknowit April 16, 2009 at 7:48 am

But if the highways are privatized, I’ll lose the pleasure I get from flaunting the law by stomping down on the accelerator every chance I get!

Magnus April 16, 2009 at 8:16 am

The 40,000 annual deaths are outrageous, of course, and what’s even more disturbing is the fact that they happen every single year without people ever paying much attention to them. It’s as though they are invisible.

By way of perspective, 2800 people died on 9/11/01 and those deaths were used to sponsor two wars and re-write domestic security legislation. The Vietnam War killed 50,000 US soldiers, and it was a defining episode in world history. Nearly as many people die on US roads every year, and no one ever talks about it. It’s bizarre.

But even beyond the daily blood-bath, one of the main problems with roads is the fact that control over roads provides the State with control over a vast portion of everyone’s daily lives.

The basic, physical structure of all of our cities and towns, population distributions, the locations and types of businesses — all of these are determined in large part by the placement and design of roads. Sprawl, billboards, big-box retailers, pedestrian areas, housing patterns, suburbs, etc. All of these are phenomena of government-controlled road-building.

People seem to think that these housing and development patterns, all of which guide the course of everyone’s lives, just fall out of the sky, that we inherit them, as if from nowhere. People think that they just happen, and suggesting that they can be changed them is like pretending that we can change the weather.

J Cortez April 16, 2009 at 9:20 am

A slight digression, but an interesting thing to do is to take firearm homicide statistics and put them alongside the statistics for traffic deaths. The anti-gun crowd overlook that it is much more likely to die of a traffic accident than via firearm.

Getting back to roads, I often wonder about what Magnus said. What would cities look like under private roads? How would city planning change? Would people in places like Houston, the Bay Area or LA be tied to their cars and face hour long commutes as they do now? In current conditions it’s not feasible, but under private roads, would something like the Segway become the dominant mode of transportation?

Michael A. Clem April 16, 2009 at 10:50 am

J Cortez, while I imagine that there would be more Segways, they are comparatively expensive–bikes and scooters are more likely. Also, if roadways are expensive enough, passenger rail and trolleys would probably make a comeback.
It’s also important to consider how the transportation system affects where we live and work. If the full cost of transportation is taken into consideration, then we might see the re-urbanization of cities, a reverse of the flight to the suburbs. Imagine, for example, living in an apartment on the fifth floor of a building, working in an office on the second floor of the building, and eating lunch in the cafe on the first floor of the building. The elevator is your main transportation there.
On the other hand, it’s possible that government control of transportation is actually making us pay too much, and/or, without that government control, the market would develop cheaper, more efficient transportation systems that might really let humanity sprawl over the countryside.
Either way, we can’t know unless we can get the economic feedback that tells us what’s the most affordable and cost-effective solutions. And that’s what government control is preventing.

Austroglide April 16, 2009 at 10:55 am

Dr. Block’s work in these matters is to be highly admired and considered with the utmost regard. With all due respect, I disagree with the use of following:

“It is [the government] and they alone who are responsible for this carnage.”

“But it is the public authorities who are responsible for this slaughter of the innocents.”

I agree that the public authorities are indeed, as Dr. Block argues, the ultimate cause for the unnecessary degree of dangerous conditions on the nation’s roadways. However, one ought not argue, therefore, that government authorities are SOLELY responsible for ALL deaths which occur.

Making this argument is precisely like arguing that the Fed is solely responsible for the insolvency of numerous of the nation’s banks. Indeed, easy money is the ultimate cause in this, yet the bankers themselves cannot be absolved of responsibility for engaging in highly risky money management practices.

The distinction is important as a matter of presentation: On the one hand, it is illogical to argue that actors who are ultimately responsible are, indeed, solely responsible. On the other hand, it is also unnecessary. The fact that government provision and administration of roads leads to roads being much more dangerous than they would be otherwise is the sufficient condition for change.

Therefore, to readers unfamiliar with Dr. Block or with Mises.org, arguing such a thing may perhaps serve only to call into question either the intellectual probity of the author, or his intellectual ability. Either way, the argument is therefore counterproductive.

D Bennett April 16, 2009 at 10:55 am

I haven’t read the book so I do not know if these questions are answered.

How does the privatization of roads protect our right to freedom of movement? How far does privatization have to go before we become prisoners?

At present, I can still move freely without traveling toll roads and toll charges are legislated. What is to prevent excessive tolls under privatization?

Philip Dimon April 16, 2009 at 10:57 am

I think that were roadways all privatized, a roadway owner knowing that competition would drive down their profits would realize his real asset would not be the roadway itself but the right of way he acquired. This would then provide the owner new sources of revenue by being able to lease his road and the space above his roadway to other roadway builders. Maybe we would see 4 or 5 different highways all stacked on top of one another each owned by a different company and each offering different service to entice consumer to choose their roads over the alternates.

Michael A. Clem April 16, 2009 at 11:54 am

What is to prevent excessive tolls under privatization?
Wal-Mart is the largest retailer in the world. What stops them from charging outrageous prices? Competition, for one thing. If they charge too much, their customers would switch to other stores. But more importantly, Wal-Mart didn’t become the largest retailer in the world by charging high prices, but by doing whatever was possible to lower their prices and attract those customers in the first place.
It might seem that competition in the roadways would be more limited than Wal-Mart’s competition, but in fact, competition could spring forth in many ways. Not just in multiple road routes, but in alternative transportation, telecommunications, housing, etc. People factor in transportation costs when choosing where to live, for example, so developers and home sellers have to consider those factors, too. Retail businesses want their customers to be able to get to them, and work to make sure their business is accessible. Transportation costs also affect industry in various ways, so they, too, have an incentive to keep transportation costs under control. Without government control, business and industry would play a greater part in the development and maintenance of roads, so it’s not like road owners would be “road barons” operating in isolation or a vacuum. It also means that not all roads would be toll roads, as various organizations would simply incorporate the costs of road development and maintenance into their expenses, or offset those costs with advertising or offroad services.

dean April 16, 2009 at 12:11 pm

Lanyard, then book

Joe Stoutenburg April 16, 2009 at 12:20 pm

D Bennett:

Obviously, your questions may be best answered by reading the book. I think that it is instructive though to turn them around:

How does the socialization of roads protect our right to freedom of movement?

Government ownership of roads allows government officials to detain you whenever you travel.

How far does socialization have to go before we become prisoners?

People at this blog frequently consider this question.

At present, I can still move freely without traveling toll roads and toll charges are legislated.

Yes, the government grants you the privilege to move as you wish… at present.

What is to prevent excessive tolls under socialization?

Indeed, since market prices are absent under socialism, how is “excessive” to be defined? In a market economy, prices provide profit signals to entrepreneurs who compete by lowering costs to achieve the greatest profit.

greg April 16, 2009 at 12:47 pm

You can write about it all you want. But until you actually build a road, you don’t know anything about it.

In my building business, I have developed land and built roads. Believe it or not, there is two standards out in the world today. Roads built to private standards and those built to state standards. The requirements for the state roads are much better than any of the private. More excavation is required, higher gravel content and asphalt lifts are monitored to insure the proper compaction. You can over compact as well as under compact asphalt with the same disasterous results.

Say what you want, but subdivision with private roads will loose more value over time because the quality of the roads are less and the cost to maintain them is higher. But buyers flock to them because how they look at first and they love the idea about a “gated community”.

I would have to assume in your privatization of the roads that you would be against public control of the standards of construction. This would be a big mistake, because people like you would not understand what goes into making a proper road. You see what is good on the surface and buy what you see. But the true quality of the road is what goes on below the 1″ mark!

And you may say that it would be in the best interest for a road owner to build a higher quality of road for the long run. But the fact of the matter is that there will be people that build roads to sell and people that buy roads to run. Just like builders build houses, they do it to sell, not live in. And these road builders will build to the minimum standard and make the surface look great. Just like houses, people buy what they see on the surface and don’t have a clue what goes on under the paint.

If you are really serious about road safety, come up with ideas to get drivers off the road. Like raise the minimum age to drive to 18.

D. Frank Robinson April 16, 2009 at 12:50 pm

Michael A Clem: “…the market would develop cheaper, more efficient transportation systems that might really let humanity sprawl over the countryside.”

Exactly, Michael. Walter Block new book on roads leads me to muse on an long time speculative venture of my own: recovering airship transport. I am putting some of my thoughts in a novel I am writing. I omit most of the techo-babble here. The basic notion is that airships are an efficient and flexible mode of transportation. Much cheaper and safer to operate than helicopters. In fact airships can be remotely piloted quite effectively.

I contend that private roadways and private airship skyways would go and in hand. Roadway property use does not extend very far vertically – maybe only twenty feet above the roadway surface is used by vehicles. The airspace corridor from twenty to five hundred feet above the roadway is virtually barren (uncongested) territory. This airspace could be used by airships for transportation people and freight. Air traffic control of these corridors could be tightly automated and precisly managed.

An airship can carry the equivalent of several semi-trailers without being as big as the Hindenburg. Furthermore, an airship can deposit its cargo modules (pallets) very discretely while hovering.

Perhaps the most obvious objection to airship is that there is not enough helium to make it viable. True. So use hydrogen and hot air. Hydrogen is both more plentiful (cheaper) than helium and the most efficient lifting gas, but it is also a fuel unlike helium.

There are alternatives that government monopolies are foreclosing.

David Spellman April 16, 2009 at 12:54 pm

When something is free, the demand is unlimited. This is why we have congested, polluting highway systems. If there were a cost to using roads, then people would be calculating and optimizing the costs. We could predict that cheaper, more efficient ways to move people and goods would quickly be implemented, which would save money, time, energy, and pollution according to what people calculated was in their best interests.

Public roadways invert normal calculation. Once you have paid your taxes and the costs are sunk, you might as well use the public roads even if better alternate methods could exist given a reallocation of resources. Why not use the method provided by coercion that is available without further cost? So traffic is channeled into the state arteries beyond any reasonable capacity or rational thought.

Walter Block is doing a great service to provide both the theoretical argument and the practical implementation for a better world. We need exactly this kind of person promoting libertarian values. In the immediate future socialism will continue marching forward, but it is a death march. When the collapse comes, we need these pragmatic plans ready as the opportunity for change appears.

Jonathan Finegold Catalán April 16, 2009 at 1:13 pm

Greg: I would have to assume in your privatization of the roads that you would be against public control of the standards of construction. This would be a big mistake, because people like you would not understand what goes into making a proper road. You see what is good on the surface and buy what you see. But the true quality of the road is what goes on below the 1″ mark!

But it’s not the author who would necessarily be investing in the road (that is, he wouldn’t be directing the industry). Your argument is akin to saying that the petroleum refinement industry should be made public, because the private investor doesn’t know anything about quality. The argument is fallacious.

First of all, the company running the road would more likely than not have an idea on construction standards. It would be in the company’s best interests, as a road of poor standards will not reap profits (the consumer will shift demand for a better quality road). Second of all, consumer demand gives all companies a projection on what standards they need to meet to attract customers.

And you may say that it would be in the best interest for a road owner to build a higher quality of road for the long run. But the fact of the matter is that there will be people that build roads to sell and people that buy roads to run. Just like builders build houses, they do it to sell, not live in. And these road builders will build to the minimum standard and make the surface look great. Just like houses, people buy what they see on the surface and don’t have a clue what goes on under the paint.

As a homeowner, I don’t see how my house is built to a deficient standard. If it was, I probably wouldn’t purchase a house from McMillan again. It’s a long-run loss for the Realtor, because people will trust them less when they go buy another home (because their homes may have notoriously bad quality). So, McMillan will naturally choose another building company in order to garner an increase in quality, so that their long-run demand doesn’t suffer.

The effect would be seen at a much shorter time distance than it would be seen in the housing industry (buying a house is a much longer term investment than choosing what road you’re going to take to get from point A to point B). Deficient quality standards in the road might not be seen immediately by the company who sells the road to the consumer, but it will be seen by the consumer. As a result, the consumer will shift demand to another road. The road company losing money will be forced to invest in improving their roads, or their investment will liquidate and another company will come in and make a better investment. Aggregate quality standards will inevitably increase because road companies will equate a loss in business to the poor construction quality set forth by the construction company.

Construction companies will increase construction quality, because they don’t want to lose business.

Matt R. April 16, 2009 at 1:34 pm

Looks like the government has some more transportation pro

Obama Unveils Plan to Fund High-Speed Passenger Rail

http://online.wsj.com/article/SB123989461947625407.html

Michael A. Clem April 16, 2009 at 1:36 pm

Greg, ownership, as we’ve said all along, makes a big difference in the maintenance of the roads. Incentives and the economic calculation problem have to be factored in. And if the cost of road transportation is to truly be known to “ordinary people” who know nothing about the quality of the roads they drive on, there is no better solution than privatization. After all, it should be obvious that our politicians and bureaucrats haven’t had much incentive to inform the citizens about the quality of roads, or you wouldn’t be complaining about people not knowing. With privatization, people will indeed have a stronger incentive to understand, because they will have a better idea how much it costs, and yes, in some cases, higher transportation costs will keep some people off the roads. You’re stuck in “central control” mode, thinking that Somebody, Somewhere needs to be in charge of the roads, road quality, and who is allowed to drive on them. But if the economic feedback exists in the transportation sector, that’s not necessary, and the radical decentralization of the marketplace provides individuals with the information they need to make informed decisions.

eric April 16, 2009 at 1:59 pm

greg:

If US roads are an example of better road building, then you’ve never been on the autobahn or some of the better toll highways in this country. It’s like night and day. And this is just the highways. What standards were used that have left a 4 foot wide 6 inch deep pothole in my street for over a year now?

And if you think that reducing the load by prohibiting young drivers is the answer, why not go the limit and prohibit all drivers. That’s the socialistic answer; if you can’t provide a service, eliminate all the consumers. I’m sure Stalin would have approved.

However – in a private road system, raising the age limit for drivers would be permitted, and if this proved successful, it would spread. And then perhaps others might offer young drivers a solution. But if congestion is the real issue, all you’d probably have to do was to raise the prices. Either there’d be fewer cars, or you’d make enough profits to find a more innovative system. Who knows, maybe we’d finally see automatically driven vehicles on highways.

Or charge a rate that was determined by the time of day or any other such scheme. Just as with power delivery, the socialized system is incapable of any such innovations. Both of these socialized products seem unable to spread the load into the evening hours. What if a highway charged truckers 1/2 the rate if they traveled at off hours. There might be bargain nights, sales, etc.

Now consider what it would be like if your supermarket was run the same way. We’d all starve, like they did in the USSR.

If the true price of transportation was allowed to manifest itself, people would automatically adjust – maybe some people would prefer to live closer to wherever they needed to travel as well.

But your one size fits all solution is no solution at all. You should read this book; Block is a master at seeing what the rest of us fail to see – how something could be done that people like you say is impossible. But even the professor can’t see all the solutions – that’s what entrepreneurs do.

greg April 16, 2009 at 2:16 pm

Consumers buy with their eyes! If they really researched the construction process they would hold a high value to all aspects of construction. It is great that Jonathan found a good builder, but for every one of those, there is a large number of people that got screwed. Just talk to any person that has Chinese drywall in their house. And speaking of Chinese products, it is a good chance that you have PEX water lines in your house. PEX is manufactured by a Chinese company and there is growing lawsuits about MTBE leaching into the water supply of the homes. This will be the next big shoe to drop!

And anyone putting their real estate investment in the hands of a Realtor, well they really are heading down the wrong road. Really, it doesn’t take much to be a Realtor and they only tell you what they think you want to hear. When you buy a house and they line you up with a home inspector, it is someone they know will not throw a monkey wrench into the sale, because believe it or not, Realtors are interested in the sale today!

You really want to know why the marginal contractors stay in business? It is because they can offer consumers the lowest price and I am sorry to say, but price is what consumers tend to move to. And yes, over time these contractors tend to leave the market only to surface again under another name. In this business, they are always out there and always building!

There is and always will be incentives for contractors to cut corners. That is reality! No matter how idealistic you are, this happens every day. And the easiest place to cut is the substructure. You would not know the effects of cutting 1″ of stone out of the base or using one of the lower grades of stone for 7 to 10 years (which happens to be the statute of limitation on contracts).

Before you start to redesigning the system, you really need to understand all aspects of the system! Don’t give me this invisiable hand solution, I would expect that from a Realtor.

Austroglide April 16, 2009 at 2:46 pm

Greg,

Pardon me for interjecting into your discussion, but I can’t help noticing the absence in your argument of a consideration for personal responsibility on the part of individual consumers. For example, if “price is what consumers tend to move to” – as you say – then certainly these consumers ought to appreciate the likelihood that the relatively low-cost items they wish to purchase are of relatively inferior quality.

To my reading, you suggest a market system in which individuals sign over their personal responsibilities to a paternalistic government. The underlying assumption of your argument is that government is capable of making better decisions than are individuals. I wish to suggest otherwise, while also acknowledging the fact – as you point out with your examples – that free markets aren’t perfect. In short, I argue that the solutions which arise from free markets, though again not perfect, are far superior than those which arise from government.

I wish also to suggest that, in principle, a system structured upon individual responsibility is morally superior – and by far; like not even close – to a system rooted in paternalism.

Magnus April 16, 2009 at 3:44 pm

Consumers buy with their eyes! If they really researched the construction process they would hold a high value to all aspects of construction. It is great that Jonathan found a good builder, but for every one of those, there is a large number of people that got screwed. Just talk to any person that has Chinese drywall in their house.

It’s clear, greg, that like anyone who is a purveyor of a commodity, you have the natural inclination to steer consumers toward the higher end of the market, toward the higher-priced goods.

I can build boats and chairs. Is a $1000 chair built to higher standards than a $50 chair? Yes. Is a $2 million boat built to higher standards than a $200,000 boat? Yes.

Why would a manufacturer prefer to build $1000 chairs and $2 million boats? Because the profit margins are better at that end of the scale.

Your affinity for higher-quality roads is understandable, considering your apparent position in the road-construction industry. But what you have said does not speak to the economic, systemic issues involved.

For example, it is rather commonplace that people in the construction industry want government-mandated construction standards. They are usually the ones who clamor for them. Why? Because these artificial rules lock the little guy — usually a start-up — out of the market. Artificial standards are just another form of the age-old barrier to entry. These rules lock out your competition. This has happened in dozens if not hundreds of industries. Licensing schemes are usually the next step in this progressive economic disease.

In terms of economics, the lower-quality, lower-cost item is usually preferable. This is not the result of ignorance, but is a very important economic process. The presence of disposable commodities is actually a major sign of economic vitality and progress.

As for Chinese drywall, do you know how that happened? The State of Florida (like most states) has a “price gouging” statute that kicks into effect after a disaster. It’s really a price-fixing rule — no one can increase prices to market levels. To the uneducated rube, this sounds like a great idea — all the stuff you need after a hurricane will be available at the same old, low prices! Yea!

Only, it doesn’t work that way. The market price of drywall shot up sharply after the hurricanes, since there were 6 of them in 2 years, and there was a sharp increase in drywall demand, for repairs. There was also a government-sponsored new-construction boom raging in Florida at that time, because of the Baby Boomer retirement wave. (Not coincidentally, Florida also has the most delinquencies on mortgage payments of any state in the US right now.)

What happens when the demand for drywall skyrockets but the price is held artificially low by the government? You get a shortage. Every time. Contractors and builders turned to Chinese drywall because the government created a shortage of American drywall.

Jonathan Finegold Catalán April 16, 2009 at 3:50 pm

@Greg

Consumers buy with their eyes!

We’re talking about industrial goods. A private construction company building for a company that wants to sell the road by means of tolls. That company, in order to ensure that the product will reap the rewards (profit), will have to have certain qualities which are set by consumer demands (consumers will demand safer roads).

I go back to my argument about the petrol refinery. The refinery knows how to judge quality, because the basis of the quality decides at what price the refined oil will sell at.

You’re saying that the company doesn’t know how to quantify quality, when this claim is completely baseless. If it was true, then no private company would succeed because they wouldn’t be able to judge the quality of industrial-goods.

It is great that Jonathan found a good builder, but for every one of those, there is a large number of people that got screwed.

The entrepreneur who invested in a poor road, to use it to charge people with tolls, ultimately lost. But, malinvestment is a reality in all industry, and is not an argument against private enterprise.

ust talk to any person that has Chinese drywall in their house. And speaking of Chinese products, it is a good chance that you have PEX water lines in your house. PEX is manufactured by a Chinese company and there is growing lawsuits about MTBE leaching into the water supply of the homes.

But you are only undermining your own argument. The lack of quality was seen, and now the company is paying for it. In the long-run, the lack of quality doesn’t benefit the constructor (as you yourself state in your example).

And anyone putting their real estate investment in the hands of a Realtor, well they really are heading down the wrong road. Really, it doesn’t take much to be a Realtor and they only tell you what they think you want to hear. When you buy a house and they line you up with a home inspector, it is someone they know will not throw a monkey wrench into the sale, because believe it or not, Realtors are interested in the sale today!

The Realtor is also interested in long-term profits, and whether or not the company will survive in the long-run.

It is because they can offer consumers the lowest price and I am sorry to say, but price is what consumers tend to move to.

Austroglide hits the nail on the head in regards to this. The consumer is mostly willingly accepting the lower quality product, for a lower price. It’s a voluntary exchange. But, historical evidence has also shown that products not only drop in price, but also improve – the automobile industry is a perfect example, where the average automobile has dropped in price radically (taking into account inflation and an increase in purchasing power), and so has the quality (there is no comparison between a Chrysler of today and a Model T of yesterday, despite the fact that Chrysler cars may be of lower quality relative to other cars on today’s markets).

Gil April 16, 2009 at 9:10 pm

“If the highways were now commercial ventures, as once in our history they were, and upward of 40,000 people were killed on them annually, you can bet your bottom dollar that Ted Kennedy and his ilk would be holding Senate hearings on the matter. Blamed would be “capitalism,” “markets,” “greed,” i.e., the usual suspects. But it is the public authorities who are responsible for this slaughter of the innocents.”

Would anyone explain this non-sequitor – people died on government roads therefore government is responsible for the ‘slaughter of innocents’? Who knows maybe W. Block could run for politics tugging on these heartstrings? What if the argument was – people died on private roads therefore private operators are responsible? The government is only responsible when the driver had an accident through no fault his own. Speeding, driving drunk, driving tired, ignoring warning signs, ignoring weather reports are fault of the driver. A driver who chooses to engage in dangerous driving is the one who responsible for his actions. If Libertarians want to say “the governments built the roads therefore they’re not off the hook regardless of the actions of the driver” then private road operators will liable when accident occurs on their roads. And if a judge says “it doesn’t matter how irresponsible a driver drove, the private road operator is still responsible and can’t hide behind disclaimers” then road costs will be prohibited and won’t be provided, period.

Ron April 16, 2009 at 9:57 pm

There’s one simple argument as to why private road owners would want to build higher-quality roads, and it’s nigh unto irrefutable. That is that a road that needs constant repair will be able to carry less traffic, as lanes have to be closed off during the repairs. Less traffic means less revenue in tolls, which means fewer profits. It’s as plain as that. Roads built for profit would be much more resilient and stable, as it’s more profitable to invest more up front and avoid repairs than to eat the cost of the repair itself along with the lost revenue from reducing traffic flow.

Justin April 16, 2009 at 10:28 pm

Why would any private company have an incentive to make a road safer? Are drivers suddenly going to care about traffic deaths or are we going to blame the owner of the road for any accident that takes place on their road? If the second, wouldn’t people just fake accidents?

And if we’re going to compare things on the number of preventable deaths then shouldn’t you be focusing on same way to eliminate smoking? “440,000 annual deaths each year are smoking-associated (CDC)”

And while its a matter of choice to smoke its a matter of choice to drive as well.

Ron April 16, 2009 at 10:48 pm

Justin,

Let’s ask your question with a slight modification:

Why would any private aircraft company have an incentive to make their airplanes safer? Are travelers suddenly going to care about airline passenger deaths or are we going to blame the aircraft manufacturer for any crashes involving their airplanes? If the second, wouldn’t people just fake crashes?

Again, you assume the status quo. How many people read Consumer Reports before buying a washing machine, cell phone, hair dryer, or car? In the case of cars, crash survivability ratings are often a factor for many buyers. So which do you think would collect more tolls…the highway with the good safety record, or the one famous for being a “death road”?

Ben Smith April 16, 2009 at 11:02 pm

Who would have the power of eminent domain?

KP April 17, 2009 at 6:21 am

I skimmed through most of the comments above and did not see a single topic of who would finance these roads.

I can tell you that I work for one of the largest if not the largest engineering firm in the country rated by ENR. We have many road projects, spanning different states across the US.

Private industry such as engineering, architectural, and construction companies do not have the resources to build and maintain roads. In fact, if you look at the general profit of these EAC companies like mine, the profit margin is relatively small compared to other industries.

So for the most part, whoever finances the engineering and construction project has to do so at a premium price because of cost attributed to hiring a construction agency and engineering company, such as overhead, insurance ect…

We now have to analyze who has the capital to finance these companies and most likely it will be the banking industry. Now having family who work as investment bankers (ibanking) at large firms and hedge funds; there is a typical profit margin that they normally try to attain.

Even, with competition would building a multi-billion dollar project(yes it costs that much), and having to continuously maintain that project which will cost hundreds of millions of dollars(yes its that much) receive a profit margin of 5-10% that would not affect the consumer? I do not think so, in fact I do not think any financial company(ie banking, hedge funds, ect..) will even consider the idea of buying the roads because of the high cost of upkeep and not to mention the negative publicity attributed to raising toll costs.

And finally, nobody talks about what the reason for nationalization of the roads(though I do not agree with any government spending, you have to understand the reasoning why such a system is in place) is due to defense. The construction of our highway system is directly related to our defense initiative. The privatization of roads will not happen, for this reason and this reason alone.

fundamentalist April 17, 2009 at 8:30 am

KP: “…did not see a single topic of who would finance these roads.”

If I remember correctly, the chunnel was financed privately. The investors eventually went bankrupt, but not until after they finished it. Projects much larger than highways are financed regularly. You can sell stock and bonds directly to the public or large institutions. Revenue would come from tolls and user fees either directly from vehicle owneers or through gasoline sales. The highway owners would have to charge enough to pay for construction, maintenance and profit, but the state has to collect taxes to cover the same as well as the enormous amount of waste it causes. I’m confident the profit would be much smaller than the waste. Of course, the highway owners would have to keep prices low enough that people won’t switch to other forms of transportation, such as rail and flight, or take alternate routes over a competitor’s highways.

I agree with you that it won’t happen in the US, at least not in the near future, but not because it’s not feasible or not better, but because of state worship. The American people are guilty of Old Testament style idolotry.

As far as the defense issue, you’re right that Eisenhower built the interstate system as his vision of national defense. That doesn’t mean that private highways could not have been built and the state pay a fee to maintain the capacity the military needs. Besides, is that strategy really needed in the nuclear/missile age? Eisenhower was fighting WWII all over again when he built the highway system.

KP April 17, 2009 at 9:15 am

The chunnel is a small stretch of road construction, lets take something on a larger scale with many more problems.

Even if private industry financing a portion of a highway or some road construction, the majority of the bill will be from the state. I do not think this is right but that is the state of where we are at in this country.

“Revenue would come from tolls and user fees either directly from vehicle owneers or through gasoline sales. The highway owners would have to charge enough to pay for construction, maintenance and profit, but the state has to collect taxes to cover the same as well as the enormous amount of waste it causes. I’m confident the profit would be much smaller than the waste. Of course, the highway owners would have to keep prices low enough that people won’t switch to other forms of transportation, such as rail and flight, or take alternate routes over a competitor’s highways.”

There are many roads in NJ that are financed by the state and still have taxes and tolls, this double dipping only hurts the consumer in the end and if private financing happens it may not be localized in jersey and a few states but all states; where states will tax for highway repairs on top of tolls provided by private industry.

As for the comment on “Old Testament style idolotry” is a little far fetched but the reliance on the government in the sense of road and construction has been with us since Roman times. It will never change, sadly indeed.

Magnus April 17, 2009 at 10:27 am

Who would have the power of eminent domain?

In a remotely just society, no one.

Do you have the power to force your neighbor, at the point of a gun, to sell you his land? You may try to justify such a thing on the grounds that you are paying him for the land you stole, but part of the concept of owning something means you don’t have to sell it of you don’t want to, at any price.

If you can’t do that to your neighbor, then you can’t delegate the power to do it to someone else. You can’t authorize an agent to do something for you that you were not first authorized to do yourself.

laukarlueng April 17, 2009 at 1:54 pm

KP: “…did not see a single topic of who would finance these roads.”

Read about James J. Hill and his Great Northern, a transcontinental railroad built without public financing.

Warren April 17, 2009 at 3:19 pm

First let me say If I could get government out of my life but it meant horrible roads I would take that deal every time. So nothing I write here should taken as me saying that there is a role for gov to play in a just roads system.

Back in the olden days roads were funded by subscription, returns were not great but yet people continued to invest in them. The reason was the road was a way to get people to your town and to get your products out.

So at a minimum that will be a reason for people to invest.

I think Greg does make a point about quality, I would expect any given company to want to spend the least they could, however if they are liable if you are injured while using their road to due a defect of the road it won’t take but a few lost lawsuits for road companies to decide to spend a little more to have a good road now rather than spend less and a bad case later.

There is one point that buzzes about my head when it comes to private roads and it is the fact that we almost all drive on at least one everyday.

Parking lots are a type of road are they not? And parking lots….suck. I’m talking about the death-ground that is in between a variety of buildings not parking structures which are better, because they are set off to one side and usually have only one entrance and exit.

The only good lot I can recall was at Disneyland. They kept a tight rein on that and did a great job of keeping everything orderly.

The average parking lot has no effective controls can be entered from numerous points, has some blind spots, suffers from poor flow-through and is the one place where cars and pedestrians use the same space. There isn’t one in my town that I would call well designed.

While I do know that private roads are the desirable option and can be done let’s have an informal agreement to not let parking lot designers be involved in creating the new private road system.

Brent April 17, 2009 at 5:19 pm

Having studied driving and roads for many years I have come to believe that government management of roads isn’t mismanagement from their point of view. What I mean by that is that the state has an entirely different set of goals they aim to achieve.

As road users we want to get where we are going comfortably, safe, and in the least amount of time possible, the state however cares for none of that. The state is interested in power and money. The road system therefore is managed to extract as much money out of the people as possible while aiming to make travel a privilege that is granted by the state. If we travel by road we become subject to whim’s of the government’s enforcers, a target of their theft or worse.

What cemented that view in my mind is the red light camera. 30+ years ago traffic engineers could solve red light running with longer yellow signal times. Today, governments shorten the yellow signal or look for lights that have sub-standard yellow signal length and install RLCs to rake in the cash. Intentionally safety negative actions to steal from us. They even went so far as to change the MUTCD and ITE guidelines for shorter yellow signals to cover their tracks.

Safety, fighting congestion, and so merely offer excuses for the latest scheme to steal from us with traffic tickets, taxes, or road building contracts for the politically connected.

JO April 19, 2009 at 12:21 pm

Greetings from Ontario. This is an interesting argument. We have a toll highway in Ontario called the 407ETR and it is private. It is expensive, but in much better condition and faster compared to our public highways (401/410/403/404). I have not seen official data on accidents/deaths but Mr.Block could consider doing an analysis on the 407ETR compared to the our public highways. From day to day observation of traffic reports, I rarely here about problems on the 407ETR, let alone major accidents and deaths. People have to factor in the time savings / greater productivity of using the private toll road, and the safety record is probably much better. Just a suggestion as a look here at the 407 ETR road could help Mr. Block make his argument more palpable to the masses.
JO

Fred Mann April 19, 2009 at 2:54 pm

Every time the government builds a road, it delays the arrival of the next better/safer/faster mode of transportation.
As always, government promotes stagnation.

gene April 22, 2009 at 12:10 am

Good point Fred!
Also, government roads are a huge subsidy of shipping and out of area trade. Like airports subsidize out of area and country trade, etc. We would have much more regional economies if the government would have let the people demand transportation rather than demand the people transport in a certain prechosen way.
We would also have more access to our resources because we wouldn’t have gifted the railroad corporations millions of acres of common land for promising to lay some track.
Another example of the folly of “Say’s Law” and old Kevin Costner movies!

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ccdan June 18, 2010 at 11:35 am

One has to be extremely retarded to believe that such a thing could be good or desirable, or that it would less!
If all roads were private, those who can’t afford to pay for their use would find themselves prisoners.
Also, even among those who pay, certain categories might be refused based on arbitrary criteria: religion, dress code, behavior, crime history (mind you, many crimes are crimes because some idiots don’t like certain behaviors, not because there’s some objective harm) and so on… finally people would revolt and would take the street by force, and the owners and eventually employees/subcontractors/security agents would be killed…

When it comes to roads, the key issue is the total freedom of movement! if there are no alternatives to private roads, those roads become not only a monopoly but a form of oppression and abuse! And that’s not going to last!

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