Lee Friday – April 15, 2017
What kind of society considers theft to be a moral action? If we believe in the principle of ‘thou shalt not steal’, then this principle must be applied at all times, in all places, to all individuals, to all groups of individuals, without exception. If a principle is open to compromise, then it is not a principle. When theft occurs, the offender must always be held accountable. A society which makes exceptions is a society which has not yet attained a high degree of civilization, and never will until it evolves to the point where all are considered equal under the law. Clearly, we have fallen short.
Governments frequently take properties from their rightful owners, but they do not describe their actions as theft. In Canada, they use the word ‘expropriation’, in the U.S. it is referred to as ‘eminent domain.’ Changing the words does not alter the essence of the action. When you take something from someone without their voluntary consent, regardless of your reason for doing so, and regardless of whether you provide them with compensation, you have committed theft.
If I take your wallet in a back alley, give you something in return, and promise to give your money to other people who need it, I am pretty sure most people would say I am guilty of theft. However, when the government commits a similar act, we are taught that this does not constitute theft. The government’s act of ‘expropriation’ is considered a moral act because it serves the ‘common good’, it is in the ‘public interest.’
When the government attempts to justify its actions by resorting to these abstract, self-serving phrases, we should be very suspicious. There is no such thing as the ‘common good’ or the ‘public interest.’ What is ‘good’ for A is not necessarily good for B, especially if B has to pay for it. Likewise, something which serves my ‘interest’ may not be in your ‘interest.’
The City of London might expropriate Nan Finlayson’s house at 100 Stanley Street. The City might provide ‘compensation’ to Nan, ‘fair market value’ as they like to say. However, there is only one way to determine ‘fair market value’ and that is to put the property on the open market and wait for offers. But this is beside the point. The only issue that matters is that this property belongs to Nan. She is the owner! The level of compensation is immaterial. If Nan is not a voluntary participant in the transaction, then theft has surely occurred.
But what about the City’s reason for this potential expropriation? Traffic congestion on Wharncliffe Road is awful. Thus, the road must be widened, but Nan’s house is in the way. I will address this issue, but it saddens me that I feel compelled to do so. Think about it dear reader, what difference does it make what the City’s justification is for this theft? Theft is theft. It is wrong, pure and simple. It is immoral. Do not confuse legality with morality.
FACILITATING EFFICIENT TRANSPORTATION
True or false? – an important role for government is to create and maintain an efficient transportation network in order to promote economic growth and prosperity. It is true that public school textbooks teach this lesson, but this does not prove the government is effectively executing this mandate. The fact that governments arrange for the building and maintenance of roads does not mean they are doing so in the most efficient, cost effective manner. And if they are not building efficiently and economically, they should reduce taxes, step aside, and let private enterprise do the job.
“Say what? Private firms building, owning, and maintaining roads? That would be sheer lunacy!” Most people automatically reject this idea. As economist Walter Block writes, the typical objection goes something like this:
Why, that’s impossible. You just can’t do it. There would be millions of people killed in traffic accidents; traffic jams the likes of which have never been seen would be an everyday occurrence; motorists would have to stop every twenty-five feet and put one-hundredth of a penny in each little old lady’s toll box. Without eminent domain, there would be all sorts of obstructionists setting up roadblocks in the oddest places. Chaos, anarchy, would reign. Traffic would grind to a screeching halt, as the entire fabric of the economy fell about our ears.[1]
Such objections are understandable. It is often difficult to conceive of a different way of doing things, especially when a particular field is monopolized by the government. However, legally imposed monopolies are inefficient because they lack competition, which means they lack the incentive to maximize quality and minimize prices for the products and services they produce. Private versus public policing is a good example, which I have written about here.
In his book The Privatization of Roads & Highways, Block writes:
In advocating a free market in roads, on one level, we shall be merely arguing that there is nothing unique about transportation; that the economic principles we accept as a matter of course in practically every other arena of human experience are applicable here too.
The advantage enjoyed by the market is the automatic reward and penalty system imposed by profits and losses. When customers are pleased, they continue patronizing those merchants who have served them well. These businesses are thus allowed to earn a profit. They can prosper and expand. Entrepreneurs who fail to satisfy, on the other hand, are soon driven to bankruptcy.
This is a continual process repeated day in, day out. There is always a tendency in the market for the reward of the able and the deterrence of those who are not efficient. Nothing like perfection is ever reached, but the continual grinding down of the ineffective and rewarding of the competent, brings about a level of managerial skill unmatched by any other system. Whatever may be said of the political arena, it is one which completely lacks this market process. . . .
Because this is well known, even elementary, we have entrusted the market to produce the bulk of our consumer goods and capital equipment. What is difficult to see is that this analysis applies to the provision of roads no less than to fountain pens, frisbees, or fishsticks.[2]
Block is an excellent economist, and he has researched this topic exceedingly well. He provides detailed responses to the usual objections to privatization. His arguments are compelling. I recommend his book.
ARE YOU HAPPY WITH OUR ROADS AND HIGHWAYS ?
Thousands of people are killed or seriously injured on Canadian roads and highways every year. Traffic congestion is common. Road construction/repairs take an inordinate amount of time, adding to traffic congestion. Cars lined up at a red light, while nonexistent cross traffic has a green light, adds to traffic congestion. Idling cars, frayed nerves, road rage.
If this was the performance record of private firms who owned and managed the roads, politicians would go ballistic. We would be subjected to numerous political speeches, such as “Those greedy capitalists are killing and maiming innocent citizens”, and “It is unconscionable, detestable, and immoral that private road owners are sacrificing human lives in their pursuit of profit”, and “For decades, the profiteers have assured us that more, and more, and more road construction will relieve our traffic problems, yet we continue to wait as congestion worsens and our economy suffers”, and finally “It is sad and unfortunate that the government must intervene to seize control of the roads in order to ensure the safety of motorists, cyclists, and pedestrians.”
However, it is the government which bears direct responsibility for this dismal, and deadly, performance record, not private enterprise. So instead of howls of protest from politicians and bureaucrats, they play the blame game, make excuses, pass the buck, and spit out sound bites – “Citizens have to be more patient”, “Commuters should car pool”, “Drivers have to slow down”, “More people should take public transit”, “Higher taxes will solve the problem”, and, my personal favourite, “We need more traffic laws – no, no, we are sincerely concerned for your safety, not our revenue.”
PRIVATE ROADS – HISTORICAL EXAMPLES
Read Block’s book and you will understand why the market (private sector) is able to provide higher quality/lower priced goods and services as compared to the government (public sector). If you are a road socialist and you read this book, you might be cured.
Believe it or not, there was a time when roads were privately owned and efficiently managed. Economist-historian Murray Rothbard in For a New Liberty, writes:
In England before the eighteenth century, for example, roads, invariably owned and operated by local governments, were badly constructed and even more badly maintained. These public roads could never have supported the mighty Industrial Revolution that England experienced in the eighteenth century, the “revolution” that ushered in the modern age. The vital task of improving the almost impassable English roads was performed by private turnpike companies, which, beginning in 1706, organized and established the great network of roads which made England the envy of the world. The owners of these private turnpike companies were generally landowners, merchants, and industrialists in the area being served by the road, and they recouped their costs by charging tolls at selected tollgates. Often the collection of tolls was leased out for a year or more to individuals selected by competitive bids at auction. It was these private roads that developed an internal market in England, and that greatly lowered the costs of transport of coal and other bulky material. And since it was mutually beneficial for them to do so, the turnpike companies linked up with each other to form an interconnected road network throughout the land – all a result of private enterprise in action.[3]
In response to poor government construction and maintenance, private enterprise took over, thus encouraging economic growth. Rothbard goes on to describe similar circumstances in the United States in the early nineteenth century, where “Once again, private enterprise proved superior in road building and ownership to the backward operations of government.”[4]
More recently, in 2014, a private citizen in the U.K., frustrated by a lengthy detour because of government delayed road repairs, built his own bypass toll road which attracted many commuters and embarrassed the government. Read about it here, here, and here. The government delayed road repairs had a negative impact on the local economy.
‘Government road management’ promotes economic prosperity, says the government. Upon closer examination, such assertions appear to be nothing more than propaganda.
THE DIFFERENCE BETWEEN PUBLIC AND PRIVATE ECONOMIC ACTIVITY
How can we know whether the City of London is doing an effective job? The answer is they are probably not doing an effective job because they lack the proper incentives. Any good economist understands that the public and private sectors operate under a completely different incentive structure. Humans respond to incentives.
When the government involves itself in any sector of the economy, service is severed from payment. This means we must pay (taxes) for the service even if we are unhappy with the service. Coercive extraction of revenue – taxes – means that the salaries of politicians and bureaucrats are guaranteed. Thus, they have little incentive to actually please the paying customer. This is contrary to the way private enterprise operates.
Free market firms cannot coercively extract revenue. Service is linked to payment, which means these firms must persuade consumers to part with their hard-earned money by offering products and services valued by the consumers. Consumers are in control. If consumers are not happy, businesses lose customers. Therefore, private road companies are incentivized to satisfy motorists to the fullest possible extent because this is the only way to generate revenue.
A common objection from road socialists is that free market firms will not build roads if toll fees do not cover the costs. Therefore, the government, unconstrained by the quest for profit, must fill the void in order to provide roads for the people. These road socialists fail to understand the economic principles involved in the policies they promote. If a road cannot be built and operated profitably, this indicates that the use of resources in this manner is not consistent with the preferences of consumers. In contrast, when revenues exceed costs, this indicates that consumers approve of the manner in which resources have been deployed. I have written about this basic economic concept here.
Most people focus only on what they can see, and it is difficult to imagine what is not seen. When the government operates roads, significant road traffic is not an indication that resources have been deployed in the most efficient manner. Road traffic simply indicates that consumers are using the ‘free’ product offered. It does not tell us whether consumers would prefer these resources to be utilized in the production of different products and services which the consumers would value more highly. Only the market system of profits and losses can make this determination, which means service must be linked to payment.
Private firms would charge user fees, but they would not charge additional fees for violations of the ‘rules of the road’ established by these firms. However, they would likely ban specific drivers for such violations. The path to profitability is not through added fees (fines – sound familiar?), but through the enticement of consumers to patronize roads which offer safe and fast travel. Therefore, these firms will be incentivized to use, or create, a technological solution which allows them to enforce a ban of careless and dangerous drivers.
At intersections, private firms would likely install smart lights to monitor and improve traffic flow, whereas the government prefers to install cameras to enhance its revenue.
In the winter, it takes an inordinate amount of time for the government to clear snow off all the roads. Private firms would get the job done much more quickly, just as we see today in condominium developments.
This short discussion merely scratches the surface. The stark difference between public and private road management is like that between night and day. Read Block’s book – the pdf is free.
EXPROPRIATION (EMINENT DOMAIN)
In his magnum opus, Man, Economy, and State with Power and Market, Murray Rothbard wrote:
. . . when the government confers a privilege of eminent domain . . . it has virtually granted a license for theft.
. . . the fact that the government can despoil any property holder at will is evidence that, in current society, the right to private property is only flimsily established. Certainly no one can say that the inviolability of private property is protected by the government.
Many advocates of eminent domain contend that “society,” in the last analysis, has the right to use any land for “its” purposes. . . . Actually, however, since “society” does not exist as an entity, it is impossible for each individual to translate his theoretical aliquot right into real ownership. Therefore, the ownership of the property devolves, not on “everybody,” but on the government, or on those individuals whom it specially privileges.[5]
In The Trouble With Canada . . . Still!, William Gairdner writes:
What is the point of having a right to own property – books, shoes, a home, or anything whatsoever that could be considered “ours” – if we cannot freely decide what to do with them?
This understanding is the reason so many Canadians were upset when this ancient and hallowed common law right to own private property was intentionally left out of Canada’s Charter in 1982 by Trudeau and all the first ministers. They left it out because the most socialist of them all, NDP leader Ed Broadbent, insisted they do so as his price for signing. He worried that a right to private property would hamper the government’s ability to expropriate private property. Precisely. If Trudeau had not been so socialist himself, he would never have agreed.[6]
If we want to achieve the highest possible level of peace and prosperity for all individuals in society, the right to own property must be protected. This means I must have full ownership of property which I have peacefully acquired, and that I may use this property however I wish, without seeking permission from anyone, so long as I do no harm to others, or to the property of others. I have written about this here.
CONCLUSION
‘Government road management’ is about exercising political power, not economic development. In all likelihood, traffic problems on Wharncliffe road and elsewhere in the city are a direct result of previous planning errors at City Hall. It is important to get at the root cause of things. When you get causation wrong, you will likely get the solution wrong, and the problem grows.
This article strongly suggests the superiority of the private sector over the public sector in the provision and maintenance of roads. Does this provide sufficient justification for the government to stand down and allow for the transition of ownership into private hands? Yes it does, absolutely. However, whether you agree or disagree (read Block’s book!), let us not forget the issue which prompted this discussion.
The City is preparing to steal, oops sorry, ‘expropriate’ Nan Finlayson’s house. When a government takes action which it claims to be legal, yet claims the same act to be illegal when initiated by an ordinary citizen, we find ourselves on a very slippery slope. Frederic Bastiat warned us about this pernicious ideology. Bastiat (1801 – 1850) was a French economist, author, and member of the French National Assembly. His essay The Law continues to be widely read today, and rightly so, as the message is timeless. Bastiat wrote:
Nature, or rather God, has bestowed upon every one of us the right to defend his person, his liberty, and his property, since these are the three constituent or preserving elements of life . . .
. . . Collective right, then, has its principle, its reason for existing, its lawfulness, in individual right; and the common force cannot rationally have any other end, or any other mission, than that of the isolated forces for which it is substituted. Thus, as the force of an individual cannot lawfully touch the person, the liberty, or the property of another individual – for the same reason, the common force cannot lawfully be used to destroy the person, the liberty, or the property of individuals or of classes.
For this perversion of force would be, in one case as in the other, in contradiction to our premises. For who will dare to say that force has been given to us, not to defend our rights, but to annihilate the equal rights of our brethren? And if this be not true of every individual force, acting independently, how can it be true of the collective force, which is only the organized union of isolated forces?
Nothing, therefore, can be more evident than this: The law is the organization of the natural right of lawful defense . . .
. . . When law and morality are in contradiction to each other, the citizen finds himself in the cruel alternative of either losing his moral sense, or of losing his respect for the law – two evils of equal magnitude, between which it would be difficult to choose.
It is so much in the nature of law to support justice that in the minds of the masses they are one and the same. There is in all of us a strong disposition to regard what is lawful as legitimate, so much so that many falsely derive all justice from law.
. . . Unhappily, law is by no means confined to its own sphere. . . . It has acted in direct opposition to its proper end . . . it has been employed in annihilating that justice which it ought to have established . . . it has placed the collective force in the service of those who wish to traffic, without risk and without scruple, in the persons, the liberty, and the property of others; it has converted plunder into a right, that it may protect it, and lawful defense into a crime, that it may punish it. . .
. . . as long as it is admitted that the law may be diverted from its true mission, that it may violate property instead of securing it, everybody will be wanting to manufacture law, either to defend himself against plunder, or to organize it for his own profit. [7]
Bastiat would be aghast at the extent to which legalized plunder has permeated our so-called modern society.
I have met Nan Finlayson. She is a very nice person, healthy, fit, pleasant, easy to talk to, and sharp as a tack. She has done an excellent job maintaining a wonderful old house. She gardens frequently, encouraging a natural environment around the house. However, if she was a mean old person living in a run-down shack, our principle would still apply. We must oppose the expropriation of Nan Finlayson’s house at 100 Stanley Street, as we must oppose all property expropriations. We must oppose it because it is theft, for which there can be no justification.
[1] Walter Block The Privatization of Roads & Highways – Human and Economic Factors (Ludwig von Mises Institute, 2009) pp 7 – 8
[2] Ibid., pp 11 – 13
[3] Murray N. Rothbard For a New Liberty (Ludwig von Mises Institute, Auburn, Alabama, 2006) p 264 [additional source provided by Rothbard: T. S. Ashton An Economic History of England: The 18th Century (New York: Barnes and Noble, 1955), pp 78 – 90. See the same source, pp 72 – 90, for the mighty network of private canals built throughout England during the same period.]
[4] Ibid., p 265 [additional sources provided by Rothbard: George Rogers Taylor, The Transportation Revolution, 1815 – 1860 (New York: Rinehart, 1951), pp 22 – 28; W. C. Wooldridge, Uncle Sam the Monopoly Man, pp 128 – 36
[5] Murray N. Rothbard Man, Economy, and State, with Power and Market, Scholar’s Edition (Ludwig von Mises Institute, 2009) pp 1,139 – 1,141
[6] William D. Gairdner The Trouble With Canada . . . Still! (Key Porter Books Limited, Toronto, 2010) p 81
[7] Frederic Bastiat The Law (Ludwig von Mises Institute, Auburn, Alabama, 2007) pp 2-4, 7-8, 11-12
