In a political climate dominated by debates about individual mandates and restrictions on religious freedoms, an issue like road privatization isn’t likely to be on the top of anyone’s list of major concerns. But the excellent post on “The Mirage of Free-Market Roads” by Timothy B. Lee, a writer with Ars Technica and the Cato Institute, is worth reading even if you don’t care about toll roads. Lee provides an intriguing example of why we need to think clearly about how we apply principles to policy:

While I’m generally sympathetic to the idea of privately-managed roads, I’ve become convinced that the broader vision of “free-market roads” is a conceptual confusion. In the abstract, the idea of competing, privately-owned roads has a lot of appeal. But the more I think about it, the less sense it makes. Roads are deeply intertwined with governments. They always have been and as far as I can see they always will be. This means that they’ll never be truly private in the sense that other private companies like restaurants or shoe factors can be.

Assembling the land needed for a long-distance road is prohibitively expensive without government assistance. Unsurprisingly, private roads almost never come into existence without extensive government assistance. And that means that the profitability of a “private” road depends crucially on how many competing roads the government allows to exist.

It’s unsurprising, then, that real-world privatization schemes are often explicitly protectionist. A 2004 GAO survey found that four of the five privately-funded toll road projects started or completed in the preceding 15 years included non-compete clauses that restricted the creation of competing freeways nearby. It’s much easier to turn a profit when would-be competitors are barred from entering the market.

[. . .]

To be clear, this isn’t to say libertarians should oppose road privatization. To the contrary, private road management can be an excellent way to bring private capital and technical expertise to the provision of a public service. But it is to say that private road operators should be viewed as providing a service to the government, rather than operating an ordinary private business. [emphasis added]

Lee touches on one of the disturbing ironies of modern politics: purportedly “free-market” approaches can sometimes lead to more government involvement and greater restrictions on freedom. Those of us on the right side of the political spectrum have always been wary of government. But it’s refreshing to see that many of us are also becoming more aware of the dangers of rent-seeking behavior by crony capitalists.


  • http://www.facebook.com/profile.php?id=19002050 Jameson Graber

    Roads are tricky to view as private property because they’re not *strictly* rivalrous. That is, a large number of people can use them successfully at the same time, simply by following certain rules. I basically agree with Adam Smith on the use of roads: the government should probably be responsible for them, and charge at a price-per-use policy. That’s more fair than, say, charging us all equally in taxes for roads we may not even need.

  • RogerMcKinney

    >

  • RogerMcKinney

    “The public has a right to freedom of movement along public roads…”

    So where did that right come from?

    Lee obviously hasn’t put much thought into the matter. Some things she should consider:

    Is the state doing such a great job at building and maintaining roads? Corruption is rampant, like the Florida land owner who gave a few thousand dollars to a senator’s campaign so that the senator would sponsor a bill to build entrance/exit ramps on his land. A great deal of highway money goes to repay campaign contributors and build bridges and highways to nowhere.

    Government road construction subsidizes car and truck travel and gives it an unfair advantage over more efficient rail travel. We face the consequences of that policy in our insatiable appetite for oil.

    Technology exists to make toll roads very easy to use. Most states now have systems that read a sticker as you drive by at 75 mph. Users prepay and the system deducts from your balance.

    Just because most existing toll roads have non-compete clauses doesn’t mean they’re necessary. Businessmen will always use the power of the state to reduce competition as long as voters give politicians that power. The capital costs alone would reduce competition significantly, and if the owners want less competition they should charge lower rates.

    Private roads isn’t just an ideological issue; it’s very practical. Privatizing transportation would allow cost/benefit to determine which method of transportation gets built in the future. The current system is totally corrupt, political and extremely wasteful. Private roads won’t be perfect; they don’t have to be. They just need to be better than the current system.

  • RogerMcKinney

    An honest comparison of private vs government owned roads would acknowledge the problems with government owned roads. They are numerous. The question is not would private roads be perfect, but would private roads have fewer problems than government roads. To do that, one has to enumerate the problems with state ownership of roads and there are quite a few, not the leas of which are massive corruption and waste.

    A good place to start would be “How Capitalism Saved America: The Untold History of Our Country, from the Pilgrims to the Present” by Thomas DiLorenzo. In the book DiLorenzo details the history of the development of rail in the 19th century. All of the government sponsored and subsidized railroads ended in disaster, while the only totally privately build railroad thrived. The same lessons apply to highways. 

  • RogerMcKinney

    Joe, have you had a chance to read  “Mere Libertarianism: Blending Hayek and Rothbard” by Daniel B. Klein. I would be very interested in your thoughts.

    • http://www.facebook.com/joe.p.carter Joe Carter

      I just heard about that book for the first time yesterday. I’ll have to check it out. 

  • http://profiles.google.com/kdhall61 Kenneth Hall

    “Roads are deeply intertwined with governments. They always have been and
    as far as I can see they always will be. This means that they’ll never
    be truly private in the sense that other private companies like
    restaurants or shoe factors can be.”

    That is some finest-kind handwaving right there.

  • http://www.facebook.com/housewar Matt Houseward

    If not for government ownership, neighborhood roads would probably be owned and maintained by home owner’s associations, which differs very little from governments, and their assessments are little different than property taxes.  Think about new developments.  Home builders typically build the roads, and home ownership associations are often put in place.  It wouldn’t be difficult to transfer ownership and responsibility to the HOA instead of the government, but again, the difference between HOA management and government management would be negligible to say the least, so village ownership is probably a pretty good estimate of what free market roads would look like.

    The real question is how the highway system might differ, and it’s a mistake to assume our current network of interstates is the best model, and find the free market a failure because it couldn’t replicate that model efficiently.  In my opinion, free markets would probably encourage denser population centers and more extensive mass transit networks.  The best case study for this is Tokyo, where the trains are privately run, profitable, and extremely prompt.  It’s a more efficient system that’s easier to monetize, so I would expect the free market would prefer it.  The same likely holds true for long-distance interstate transporation.  If not for heavy government road subsidies, more transportation would take place on rails.