Lee Friday – February 6, 2019
I recently wrote an article about eminent domain, prompted by London Ontario City Council’s plan to expropriate Nan Finlayson’s property at 100 Stanley Street. The government’s justification for the seizure of this land is to widen a road in order to relieve traffic congestion. But why should this be a government responsibility? Would things be different if roads were owned and managed by the private sector?
Government Performance
Thousands of people are killed or seriously injured on Canadian roads and highways every year. Traffic congestion is common. Perpetual road construction/repairs. Cars lined up at a red light while non-existent cross traffic faces a green light. 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 and seize control of the roads in order to “ensure consumer safety.”
However, as we know, it is the politicians and bureaucrats who are responsible for this dismal, and deadly, performance record, so they unleash their propaganda: “Citizens have to be more patient”, “Commuters should car pool”, “Drivers have to slow down”, “More people should take public transit, or cycle, or walk”, “Employers should offer staggered shifts and allow some employees to work from home”, “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.”
Whenever the government attempts to provide a service, service is severed from payment, which means taxation guarantees the salaries of politicians and bureaucrats without incentivizing them to provide the services most highly preferred by taxpayers. A visible example of this in London are the many miles of empty cycling lanes adjacent to congested car lanes. For every cyclist, there are at least a thousand motorists. So much for majority rule. And, for a city government professing deep concern for the environment, this is indeed a curious outcome: environmental resources are wasted on the construction of largely vacant cycling lanes, which in turn increases the environmental impact of internal combustion engines due to increased traffic congestion directly attributable to less road space for cars.
Private Road Management
In contrast, private road companies do not have the powers of taxation and expropriation. Therefore, unlike the government, they are highly incentivized to minimize costs by allocating resources efficiently in order to satisfy consumers’ preferences to the fullest possible extent because that is the only way to earn revenue. In turn, the market’s price system allows consumers to express their preferences. If people don’t like a particular service, they don’t pay for it, and if enough people don’t pay for it, the service will disappear, or improve, or the price will drop. Moreover, if demand is insufficient to justify the cost of providing a particular service, then the service will not be provided, thereby conserving resources, which minimizes waste. Not to put too fine a point on it, but a constant reminder of municipal government waste are those miles of empty cycling lanes, a project unlikely to be duplicated in the private sector unless cyclists are willing to pay for it. And that is our lesson: when service is linked to payment, waste is minimized because resources are allocated according to consumers’ preferences, not according to arbitrary political edicts.
There are many examples today of efficient road management by the private sector. And if we are alert, we can always identify real world events which clearly illustrate the contrasting incentives of the public versus the private sector. In 2014, Mike Watts, a private citizen in the U.K., frustrated by the economic consequences of 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 2014 U.K. example reminds us that inefficient transportation hinders economic growth, as it has throughout history. As Murray Rothbard wrote:
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.[1]
Rothbard described 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.”[2]
Conclusion
Professor Walter Block wrote, “In advocating a free market in roads … 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.”[3]
In all likelihood, London’s traffic problems are a direct result of unavoidable planning errors at City Hall, due to the perverse incentives inherent to the government system. It is time to give private enterprise a chance. The likely result would be a more efficient transportation network, at lower cost, with less wasting of resources, thereby paving the way for lower taxes, a smaller government, and increased economic prosperity.
[Image source: Jess, through Wikimedia Commons]
[1] 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.]
[2] 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
[3] Walter Block The Privatization of Roads & Highways – Human and Economic Factors (Ludwig von Mises Institute, 2009) p 11
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