The Privatization of Roads and Highways The Privatization of Roads and Highways Human and Economic Factors Walter Block LvMI MISES INSTITUTE This book is dedicated to my fellow Americans, some 40,000 of them per year who have died needlessly in traffic fatalities. It is my sincere hope and expectation that under a system of private roads and highways in the future, that this number may be radically reduced. © 2009 by the Ludwig von Mises Institute and published under the Creative Commons Attribution License 3.0. http://creativecommons.org/licenses/by/3.0/ Ludwig von Mises Institute 518 West Magnolia Avenue Auburn, Alabama 36832 www.mises.org ISBN: 978-1-933550-04-6 Contents Foreword by Brad Edmonds . vii Acknowledgments . xiii Introduction. xv PART I: THE THEORY 1. Free Market Transportation: Denationalizing the Roads . 1 2. Congestion and Road Pricing . 47 3. Public Goods and Externalities: The Case of Roads . 97 4. Theory of Highway Safety . 153 PART II: APPLICATIONS 5. Private Roads, Competition, Automobilite Insurance and Price Controls . 167 6. Road Socialism. 183 7. Compromising the Uncompromisable: Speed Limits, Parades, Cigarettes . 201 8. Roads and the Immigration Issue. 215 9. The Motor Vehicle Bureau . 223 PART III: PROCESS 10. Privatize the Public Highway System . 227 11. Homesteading City Streets. 233 v vi The Privatization of Roads and Highways 12. Overcoming Difficulties in Road Privatization. 255 13. Transition to Private Roads . 279 PART IV: CRITIQUES 14. Roads, Bridges, Sunlight and Private Property Rights . 291 15. Comment on Roads, Bridges, Sunlight and Private Property (Comment by Gordon Tullock) . 311 16. Roads, Bridges, Sunlight and Private Property: Reply to Tullock . 315 17. Who is Responsible for Traffic Deaths . 331 18. Open Letter to Mothers Against Drunk Driving . 347 19. Road Privatization: Rejoinder to Mohring. 355 20. Aiding and Abetting Road Socialism: The Case of Robert Poole and the Reason Foundation . 379 PART V: CONCLUSION 21. An Interview with Walter Block . 403 Appendices . 419 Bibliography . 427 Index . 469 Foreword Abolishing Government Improves the Roads ook on the back of your ATM or debit card. Check your credit card, too. Whoever your bank is, on the back of the Lcard you’ll see the logos of other firms—Cirrus, Plus, Star, maybe others. Cirrus is an ATM network management system owned by MasterCard, Plus is owned by Visa, and so on. There is cooperation between companies, and the network managers are somewhat independent. For example, Visa debit cards often have a Cirrus logo on the back. This means you can use your debit card, the one from your little, three-branch local bank, to get instant cash from an ATM clear across the country. Yes, each bank charges you a dollar or two. They should. A single ATM costs $100,000 to install, costs money to maintain and manage (people have to put money in it and take money out daily), and it costs participating banks to hire Cirrus to move the money around. More important is what we learn about the market’s capabil- ities. One of the objections to privatizing roads is that we’d have to stop at a toll booth at every intersection. A five-minute com- mute to the grocery store would require, for me, three toll booths, seventy-five cents, and become an eight-minute commute, according to this objection. But it’s not so, and here’s why: vii viii The Privatization of Roads and Highways Our time is worth a few pennies to us. Cirrus and Pulse would charge us, wild guess, three dollars a month or less to pro- vide magnetically encoded stickers for our cars. Machines scat- tered about the roads, or sensors under the pavement, would record our comings and goings. That information would go to Cirrus and Pulse, and from them to our road providers. We might get three or four monthly bills, or just one, depending on the wherewithal of road owners. Some road owners, out in the woods, would still have toll booths, which would work perfectly well—less traffic and a slower pace of life make it no big deal. I use a toll booth occasionally in Atlanta, and the delay is only a few seconds. Lest you think your money would be going up in exhaust fumes, remember that market firms, who must please customers to stay in business, provide everything better and less expen- sively than government, without that nasty moral hangover of forcing people to pay for things they may not use or want. Your gasoline price already includes forty to fifty cents per gallon in taxes for road building and maintenance. This means I’m paying twenty-five to thirty-three dollars per month for road use now. With privatization of roads, that cost would go down, probably considerably. It happens every time anything is moved from gov- ernment hands into private hands. There are other benefits that would follow road privatization. The private roads that exist now have fewer accidents than pub- lic roads, probably in part because they’re better maintained: If private road builders let potholes remain, get reputations for high accident rates, or do repairs during rush hour, they have to deal with complaints and with people choosing other roads. Pollution and pollution controls on automobiles would also be handled by road privatization. If auto pollution were to grow too thick, people living near the offending roads would sue the biggest, most obvious target: the road owners. Road owners would therefore charge higher fees for cars without up-to-date inspection stickers. Auto manufacturers would build pollution- control equipment into cars, and advertise how cleanly they run. Foreword ix Automakers do this already, but under the gun of a government that mandates pollution levels and what kind of pollution con- trols manufacturers use. Without government interference, engi- neers would be free to compete to provide different technologies to reduce costs and improve horsepower while providing cleaner burning engines. With the inspection stickers being coded to your automobile’s age, manufacturer, and model, there might be a sep- arate pollution rider on your monthly statement. Drivers of new Hondas might see a discount, while drivers of old belchers would pay fees that might be higher than the road tolls themselves. Isn’t the market grand? I’m just one person describing likely market solutions; imagine how efficient solutions would become with 280 million minds working on the issue. Reality continues to provide apparent (but not real) obstacles in the mind of the statist: What about new roads, and the thorny problem of eminent domain? Again, the market comes to the rescue. First, since roads are already there, getting started would involve nothing other than entrepreneurs bidding to take over. (Who would they pay when they buy the roads? U.S. government creditors. Once the government sells all its land, the government’s vote-buying debt might be paid off.) Even so, new roads are being built everywhere today, by developers who buy land and convert it to new uses. Land alongside interstates is cheap in some places, and expensive in others. Widening rural interstates wouldn’t be a problem. (There would be some correlation between road tolls and road quality/congestion.) Prices would be higher where road owners face little competition, such as in Alaska, but lower where people have alternatives. If prices for rural stretches of interstate get too high, people will use planes, trains, and buses, and road owners will be forced to lower their prices. If you think you’re getting the interstate for free, think again: Those gas taxes mean you’re paying one to two cents per mile now. Anyone who wanted to build a new interstate would face the huge task of buying up land crossing perhaps hundreds of miles. Widening existing highways would be more likely. In Los Ange- les and other large cities where traffic is consistently choked, x The Privatization of Roads and Highways road owners would have the incentive, and plenty of funds, to buy property along highways so they could widen them. Owners would also have incentives to improve interchanges, such as Spaghetti Junction in Atlanta. Roads would improve overall. (I interviewed a county road engineer years ago, and he told me they design circular entrance ramps deliberately with varying radii—experienced as odd changes in the curve, which force you to constantly readjust the steering wheel—to “keep drivers awake.” How many of us have trouble keeping focused for fif- teen seconds on a curving entrance ramp?) Without having had forcible government the last two hun- dred years, would the interstate system have come about? We can’t know, but we shouldn’t care. Without an interstate system, we would still have plenty of commerce; probably more than we have now (when railroads were built—largely with the help of government subsidies—much of the land between the coasts was unclaimed, and thus open to use. Much would still be unclaimed today without government.) We have what we have. Abolishing government is the way to improve what we have. And what about Cirrus et al. knowing your whereabouts? This possible privacy problem is already being solved by the market. First, most private roads likely would not even charge a toll. Streets in business districts would be maintained by local merchants, who would have incentive to keep the roads in good order and to allow free access. Residential streets, for their part, would not be so highly traveled that the residents would have an incentive to charge tolls. Hence, there would be no road sensors recording vehicles’ movements in business and residential areas.