Free-market roads

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Free-market roads is the theory that a society should have entirely private 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 proponents such as Murray Rothbard[1] 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:[2]

"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."

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 Colombia 50 percent through efforts to outsource road maintenance to the private sector.[4]

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.[5] He observes that avenues in the private places of St. Louis have been shown to have lower crime rates than adjacent public streets.[6] 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:[7]

Free market roads will encourage small business

Mutualist Kevin Carson argues that transportation is a natural diseconomy of scale.[8] 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.[9] Carson points out that in many cases, centralized industry did not develop until after the advent of taxpayer-funded roads and other transportation projects.[10]

Arguments against free market roads

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."[citation needed] 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.[11] 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.[12]

See also

References

  1. ^ Rothbard, Murray (1973). For a new liberty : the libertarian manifesto (epub ed.). 504/897: Ludwig von Mises Institute. ISBN 9781610162647. Retrieved 19 May 2017.
  2. ^ Samuel, Peter: Highway Aggravation: The Case for Privatizing the Highways, Cato Policy Analysis No. 231, June 27, 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. ^ Benson, Bruce L. (1998). To Serve and Protect: Privatization and Community in Criminal Justice. New York University Press. p. 159.
  6. ^ Benson (1998), p. 85
  7. ^ Tannehill, Linda and Morris. The Market for Liberty. p. 61.
  8. ^ http://members.tripod.com/kevin_carson/sitebuildercontent/sitebuilderfiles/Chapter2.pdf[self-published source][full citation needed]
  9. ^ http://www.thefreemanonline.org/featured/the-distorting-effects-of-transportation-subsidies/
  10. ^ http://members.tripod.com/kevin_carson/sitebuildercontent/sitebuilderfiles/Chapter3.pdf[self-published source][full citation needed]
  11. ^ Alexander, Doug. "CPP Investment Board to Buy 10% of 407 Toll Road for About $878 Million". bloomberg.com. Bloomberg. Retrieved 26 April 2013.
  12. ^ Block, Walter (2009). The Privatization of Roads and Highways: Human and Economic Factors. Ludwig von Mises Institute.
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