Government: Trafficking in Failure
Economists of an Austrian bent just can't take off their analytical spectacles, even when undertaking simple life activities like driving from here to there. Fortunately, this unusual way of looking at events and institutions yields fascinating results, as with a recent commute that nicely illustrated the universal truth that government cause problems whereas markets solve them. [Full Article]
Comments (11)
"Roads won't get built", even after the poor deluded individual has been shown that public schools are a failure, is the one thing I have never been able to overcome.
People cling to this "roads" idea, that only government can provide them, that they are the end-all be-all of transportation, that without forced taxes to pay for them they would not exist and we'd all die AAAAAAAAAAAAAAAAAAAA!
Published: October 28, 2004 10:24 AM
Government has created an infrastructure of dependency. Roadways are in a state of perpetual construction to ensure maximum long-term government employment of road workers. There is an incentive to ensure the potholes that are repaired today need to be repaired as soon as possible.
Shopping for energy is not the same competitive marketplace that shopping for batteries is. Both office and home buildings are chained to the local monopoly powerplant rather than a state of competition whereby power plants the world over are competing to provide the energy necessary to furnish the needs of electricity and heating/cooling in forms that can be bulk purchased from your local Home Depot, or the way gas is competitively purchased at service stations.
Thus, not only are we susceptible to traffic jams on our roadways but also traffic jams on the power grids that result in wide area blackouts, high infrastructure costs of building those chains of dependency, and large scale area security risks from terrorists attacks.
Published: October 28, 2004 4:01 PM
TEST
Published: October 28, 2004 4:38 PM
I agree with all your observations on the sorry state of our roads and the reasons therefore. Here in Missouri, our Department of Transportation ranks somewhere between trial lawers and the mob in public admiration. But in a practical sense, how can you have real competition in roads? How many highways between St. Louis and Chicago can there be? Mark had alternate routes to choose from not because of anything like competition providing multiple options for getting from point A to point B, but because there is a network of roads connecting many different points. How would we have room for completely separate road providers? I may have missed something here (it happens regularly), but it seems a most instructive comparison can be made between the level of service provided by the government in roads (very poor) and the level of service provided by my rural electric cooperative (very good). The coop is no less a monopoly than the government, but the board of directors is elected by and thus responsible to the members, as well as being unpaid and having extremely limited powers, thus attracting people who mainly want to do a good job, not have their ego stroked.
Published: October 28, 2004 6:48 PM
But every major road has competition - from airlines, railroads, canals, etc. And around urban centers there are almost always two or more possible routes to get home. Unfortunately all those different routes are part of the same inefficient government monopoly.
Maybe this is why private commuter airlines are so popular - the government-monopoly roads in the average congested urban corridor are so congested and inefficient, it becomes worthwhile to travel to the airport and go through all that parking and security hassle, just to travel a couple of hundred miles.
And why are roads so congested and terrible to travel on in and around big cities? Private airlines and railroads don't get into traffic jams and gridlock on a regular basis. It seems that the for-profit sector will always find a way to serve the public, and the non-profit sector couldn't think its way out of a wet tissue-paper box.
Published: October 28, 2004 7:52 PM
Yes, there would be competition in the roads. Yes, it is a bit more difficult, but not impossible to have multiple roads. Because of this difficulty, there would also be a reverse effect--land values would be affected by road accessibility.
This means that homes and businesses would be located differently than they have been in the past, reflecting the value placed upon accessibility. Road congestion and other such problems would be easier to manage not just because the roads are privately-owned, but also because homes and businesses would locate accordingly. The very layout of cities, as well as shopping centers, business districts, and other land usages would be affected. Transportation is so fundamental to society that our very way of life would be changed (for the better, I think).
Published: October 28, 2004 9:14 PM
Love the title of this article, by the way! :-)
Published: October 28, 2004 9:18 PM
Those who need an example of what a private road system might resemble need look no further than American history. Private enterprise built most of the original roads that connected America throughout the 19th century, and did so at a profit until they were taxed out of the market by state governments.
See this excellent short article by Dan Klein: http://www.lp.org/lpn/9801-highways.html
Another good comparison of free enterprise transportation vs. state-run is the Great Northern and Union-Pacific railroads. The former was a private business venture by a capitalist mastermind; the latter a "great work" of the state in the tradition of Clay. The cost overruns, treatment of both Native Americans and propertyowners, documented corruption and graft by contractors, etc. that was seen in the building of the UP is nowhere to be found in the GN.
Pellinore
Published: October 29, 2004 8:43 AM
Why would anyone ever build a road? How would they go about doing this?
The answer to the first question is easy: to facilitate trade. People build roads to facilitate the transportation of good or themselves to another location. The transportation of goods and people to other locations only occurs when it increases the subjective wealth of all of those parties. Before the assumption that locations are privately owned is established, it should probably be noted that the first roads were neither privately nor government owned. They were likely paths not owned by anyone.
Trade only occurs because both parties to the exchange increase their subjective wealth by trading. Thus, only roads that increase the subjective wealth of trade will be built. This is true for not only the exchange of "life-sustaining" goods like food and water but just as true for the exchange of renting beach-front resort tourism pleasure. So there's an economic incentive for all parties that benefit from exchange (all of society) to have the most economical beneficial transportation network that maximizes the value of that exchange.
An argument that private owned roads would be monopolies that would charge exorbitant tolls and hinder the free movement of goods and people is an argument that those same people would build 100 foot high brick walls around themselves with no doors. A road owner is like any other business owner. He wants to maximize profits/revenues. This does not occur if the road owner were to set the toll to such a price that nobody could afford to exchange. This occurs by setting the tolls to the market price whereby the most economical exchange occurs, where supply meets demand.
You would expect that demand for the use of roads would vary according to the time of day it was (how busy the road was). Thus, prices would possibly likely vary according to whether it was morning rush hour or 2am in the morning in some instances of busy “highways�.
Roads in subdivisions, or residential areas, would likely be owned by the corporations that built those residential areas. People would not buy houses in areas from which they could not travel if other corporate subdivisions were available with roads. The renters/owners (as if there are private laws governing such mundane things as fence regulations total absolute ownership has not been purchased) of these homes would voluntarily agree to yearly/monthly maintenance fees of their local roads or some kind of toll. Or, there would just be designated un-kept up or non-paved paths. Everyone has an incentive for this basic network of trade to exist. Thus, it is established the basic way in which neighbors visit and trade with each other. Neighbors only visit and trade with each other because the act of visiting and trading with each other increases the subjective wealth of all parties concerned.
Now Best Buy at Point B wants to sell stuff to people living in the homes in subdivision Point A and vice versa. Note: this may be an absurd assumption as there is no reason to a priori assume that there is not the same residential/commercial mix all along the path between Point A and Point B. At least that is the way population and society evolves. Assume an uninhabited vast expanse between two societies the members of which wish to increase their subjective wealth by outsourcing with each other. It must be economically worthwhile for someone to undertake the project of acquiring the land and building the road between the two societies. This road will *only* be used if the people trading for the use of the road to trade goods with others are better off, subjectively wealthier, by doing so. In no circumstances whatsoever, could anyone be said to be worse off after the construction of the road (unless one maintained the road builder wasted his money, which in that case he bore all the risk of undertaking the project and not society or "government").
Everybody along the road who benefits from the trade it facilitates has an incentive to maintain the maximum benefit of its economic purpose of trade facilitation. Thus, business districts containing Best Buy have an incentive to voluntarily either individually or in a pool with other privately owned businesses to use their private resources to upkeep the roads in their privately owned land area. This is true for everyone who is connected everywhere else. So some sections of roadway may literally be paved with gold while other sections are dusty paths. The pouring of concrete between any two points will only be done when it benefits (*increases the subjective wealth*) of all parties who use the road whether it is used with the payment of tolls, the assessment of voluntarily paid fees, or completely privately underwritten in the exact same manner that the floors of stores are not mud dirt but various “attractive� hard material surfaces.
So it seems likely that in the evolution of trade facilitating roadways the business model of taxed long stretches along an expanse of relatively uninhabited land connecting areas of relatively highly populated areas of road is constantly being replaced by local “free� private ownership. This is why you don’t pay a direct escalator fee going from the 1st to the 3rd floor of a department store or a floor toll going from linens to men’s clothing.
Thus, the answer to the second question is they go about it the same way they go about trading any goods whatsoever including trading themselves to others in what is regarded as "institutions" of marriage.
If there is no necessity of government public taxation to build floors in houses or businesses then there is no necessity of government public taxation to build other hard surfaces made from various materials classified as and labeled as “roads�. In fact, the forceful theft through taxation for the purpose of constructing roads that are not privately undertaken in the free market is by definition a misallocation/mal-investment of resources. The forceful prevention of private roads and usurpation by government drastically increases the costs of trade facilitation and society is worse off/poorer in the long run from such government aggression. This is contrary to the claims made by advocates of government/public owned and financed roads.
Published: October 29, 2004 2:15 PM
Roads in England were awful so long as they were built & maintained by conscript labour - men from the parishes through which the road passed were forced to work on the roads as part of their tax payments. Then under pressure from merchants & carriers - private companies were allowed (in the late 18th century) to 'turnpike'the roads - invest in improving them & then charge fees to users to cover the costs (including returns to shareholders who put up the capital.) The roads not only improved immeasurably in quality,innovations were regularly adopted - eg, 'macadamising'[tarring] the road surface & the like. Turnpike companies even built & maintained networks of small feeder roads - with no fees - to increase traffic & feed it into their main turnpikes.Alternative turnpikes were available between major cities. Everything was resumed by the state in the early Victorian period.
Published: October 30, 2004 5:51 AM
Thank you, rtr, for your commentary. I learned a lot!
Published: November 1, 2004 2:31 PM