The Progress of Liberty

I offer the twenty-first part of my response to Mr. Jetton’s critique of my essay, “How to Privatize the Roads: The Mechanisms and Benefits of Road Privatization.”

Mr. Jetton writes that “the sort of blockage used in re-routes and widenings are barrels or even concrete barricades, not cones. My purpose is not to nit-pick, but trying to focus on the sort of work being done. In these cases it seems to me the segments must stay blocked off until all work is done. At least it would be impractical and costly to put a series of temporary re-entries to the traffic flow. Wouldn’t a private road owner also face such practical difficulties?”

While the private road owner would indeed face such difficulties, he also has more of an incentive to address them creatively. Here are a few possibilities for how he might do this. They do not apply to every conceivable case, and other creative solutions may be required in certain scenarios. However, discussing them alone can illustrate how a private system of road ownership might address practical difficulties in a manner that is much more convenient to road users.

1. The private road owner could use mobile barriers instead of stationary ones. Each small segment of a concrete barrier and each barrel could be made to have retractable wheels that could enable the barriers to be relocated much more conveniently. Perhaps the barriers’ wheels could even be remote-controlled and therefore not require the presence of actual workers during the time the barriers are being relocated. Electronic systems facilitating this would not be particularly expensive after they have had time to develop on the free market for a few years; virtually all devices of this sort – when they are marketed for mass usage – tend to plummet in price within months or years after they are released.

2. The private road owner could conduct all road work at night or during low-traffic times of day. This would at least get rid of blockages caused by the presence of construction vehicles or workers themselves. Currently, many construction workers are prevented from working during unusual hours because of labor union restrictions. Lifting these restrictions will go a long way toward ensuring that road users can drive conveniently.

3. The private road owner could conduct all road work within a smaller time interval by hiring more workers and equipment for a shorter amount of time. Assuming a constant cost per labor hour and a constant cost per hour of renting a machine, the road owner would incur the same costs if he hired a proportionally larger amount of labor and machine power for a proportionally smaller amount of time. However, hiring more labor and more machines has the benefit of getting the job done faster (maybe even within the same day!) and therefore gives the road owner the ability to only block off the road for extremely small amounts of time and remove the obstacles to traffic shortly thereafter. While the costs the private entrepreneur would incur from doing this are the same, he would get more revenue as a result, because traffic flow will be obstructed for a smaller amount of time time.

Mr. Jetton writes: “I’d expect that tolls would be much higher under a private system, at least for new roads, because the road owner would not have access to tax revenue (fuel taxes especially).”

While tolls for private roads may be higher in some cases than tolls for government roads under the current system, I disagree with the statement that they would be much higher under a private system. Moreover, I do not even believe that private road tolls would be higher than current government tolls in most cases.

Competition is the reason why tolls would be lower under a private system. With multiple competitors providing roads within the same area, each road owner will need to keep his prices sufficiently low so that his customer base does not abandon him in favor of the competition. All coercive monopolies keep prices at a much higher level than they would be under free competition. Monopolies are interested in collecting the “monopoly rent” that accrues from their special privilege and can charge a price that is just low enough to prevent customers from refusing to use the good altogether. When demand for the good is highly inelastic (as it would seem to be with transportation for many people), monopolies can charge prices many times the free-market price. Thus, in a truly competitive environment, for new roads and existing roads alike, I would expect tolls to decline substantially relative to the status quo.

Sincerely,
Gennady Stolyarov II

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