You Say Toll Roads, I Say Privatize

Tasha Kheiriddin is out with a new piece in the National Post which endorses the switch from public highways to toll roads in Canada.  She cites a recent poll to rationalize this call:

Ask not for whom the road tolls: It tolls for thee. At least, that’s the preference of the 50% of Canadian online survey respondents who recently indicated that they’d “be willing to pay road tolls if it would ease gridlock and shorten their commute” (versus 43% against). The Leger Marketing poll, conducted for CBC News, found that in Toronto, Vancouver and Montreal, 76% of respondents said they would pay tolls in order to build new roads or bridges, and 56% would support tolls to repair existing structures.

The reason they’re willing to ante up is simple: According to Statistics Canada, the average commuting time for drivers rose again in 2010, to 30 minutes in Montreal, 29 minutes in Toronto and 25 minutes in Vancouver. According to a C.D. Howe report published in August, traffic congestion costs the Greater Toronto and Hamilton area, Montreal and Vancouver, respective losses in 2002 dollars of $2.5-billion, $1.4-billion and $927-million a year.

Basic economics teaches us a few things; namely the idea that when a service is in higher demand, its price should rise.  This reaction not only protects against shortages but incentivizes the use of substitutes.  According to the poll, most Canadians recognize this problem and are seeking to rectify what they see as an over-use of highways.  Admittedly, their logic is spot on when it comes to the issue of decreasing congestion by increasing the price of usage.

However, this simple economic phenomena isn’t so simple when it comes to “public” goods.  As Kheiriddin notes:

So why do most politicians speed away at the very mention of road tolls? For the same reason they shun user fees for health care and decry parents’ topping up funding for public schools. These are all imagined to be universal goods — paid for by all and equally accessible to all, even if some citizens make greater use of them than others.

What she classifies as “universal” goods are really “public” goods.  And the problem with “public” goods is that their costs aren’t always bared by those who make direct use of said goods.  Since today happens to be Thanksgiving, it would help to bring up the lesson on socialism that many early American colonists had to learn the hard way.  Though not mentioned nearly enough in the history curriculum of the U.S. public school system, the beginning years for the European settlers were anything but gravy (pardon the pun).  As Richard J. Maybury wrote:

In his History of Plymouth Plantation, the governor of the colony, William Bradford, reported that the colonists went hungry for years, because they refused to work in the fields. They preferred instead to steal food. He says the colony was riddled with “corruption,” and with “confusion and discontent.” The crops were small because “much was stolen both by night and day, before it became scarce eatable.”

In the harvest feasts of 1621 and 1622, “all had their hungry bellies filled,” but only briefly. The prevailing condition during those years was not the abundance the official story claims, it was famine and death. The first “Thanksgiving” was not so much a celebration as it was the last meal of condemned men.

So then how did the settlers finally obtain an abundant food supply? Capitalism of course!

After the poor harvest of 1622, writes Bradford, “they began to think how they might raise as much corn as they could, and obtain a better crop.” They began to question their form of economic organization.

This had required that “all profits & benefits that are got by trade, working, fishing, or any other means” were to be placed in the common stock of the colony, and that, “all such persons as are of this colony, are to have their meat, drink, apparel, and all provisions out of the common stock.” A person was to put into the common stock all he could, and take out only what he needed.

This “from each according to his ability, to each according to his need” was an early form of socialism, and it is why the Pilgrims were starving. Bradford writes that “young men that are most able and fit for labor and service” complained about being forced to “spend their time and strength to work for other men’s wives and children.” Also, “the strong, or man of parts, had no more in division of victuals and clothes, than he that was weak.” So the young and strong refused to work and the total amount of food produced was never adequate.

To rectify this situation, in 1623 Bradford abolished socialism. He gave each household a parcel of land and told them they could keep what they produced, or trade it away as they saw fit. In other words, he replaced socialism with a free market, and that was the end of famines.

The solution to all cases of public goods wrought with overuse and declining quality is to establish a new system of ownership that deals with both problems: privatize it!  Not only does private control enforce conservatism (what business sits idly by as its money generating asset declines in value?) but  it also internalizes costs as a means to prevent overuse and free riders.  This falls completely in line with Kheiriddin’s proposal:

Sorry folks, but at some point, the rubber will have to hit the road. On the highway, as in life, you get what you pay for — and if you use it, you should pick up part of the tab.

Now of course there are many objections to the privatization of roads but these seemingly obvious objections aren’t anything the marketplace can’t handle.  But I am not the best to refute them so I will leave it to the great Walter Block, author of “The Privatization of Roads and Highways,” who discusses not only the core issue surrounding government monopolistic control over any industry or good but also the common fallacies brought up as arguments against privatization:

Walter Block on Privatizing Roads

It’s only about 28 minutes long, but Block does a terrific job outlining the main points from his book.  In the end, Kheiriddin would do herself a great favor by taking a few lessons from this libertarian giant.

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8 Responses to “You Say Toll Roads, I Say Privatize”

  1. lemoutongris says:

    hum, I forgot about expropriation…

    and yes, public infrastructures are politically motivated (especially for road patching)

    so then, even if a government were to peacefully reach an agreement with someone, it would still be bad because of the taxes?

    • mstob says:

      Well, governments get all of their resources from theft so in any agreement in which a government agrees to hand over resources to build infrastructure theft has already taken place. Citizens of a small community may agree unamimously to have a city government pave over the roads in their neighborhood, but the resources of that city government have come from taxing other citizens.

  2. If infrastructure is funded strictly by "self paying," than what makes it different from any other service or good offered besides it being designated "public property?"

  3. lemoutongris says:

    adam smith did suggest the the state builds infrastructures, but mentionned they should be self-paying. would it be as efficient?

    • mstob says:

      If it were efficient there would be no need for the state to expropriate resources to build it in the first place.

      Look at the CPR. Even if it had made a profit after its establishment, entrepreneurs were not convinced ex ante that it was a wise investment. The only way to find out was to violate property rights.

      This overlooks the fact that infrastructure spending is never "neutral" as far as the market goes. It has definite political and economic implications. See this article.

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