The Progress of Liberty

I was recently asked by an individual who was favorably inclined toward my position on road privatization about possible obstacles with regard to the privatization of large interstate highways. Would not this market be dominated by a few large firms, which would be able to easily collude with one another to the detriment of the consumer? I believe that this would not be a threat in a genuinely free market.

A historical parallel comes to mind: the railroads of the 19th century — which were competitively built by multiple companies. The railroads spanned up to the width of the American continent, and many railroads were built in parallel, ultimately getting passengers and cargo from the same initial city or town of departure to the same destination. With private competition in the construction of roads, I see no reason why interstate highways could not also be built in parallel by multiple companies, which would then bring about the well-known effects of competition on increasing product quality while lowering the price.

I would also like to note that a lack of capital would not be an issue, as railroads were just as capital-intensive in their time as today’s highways are — not to mention the cost of trains and the crew to operate them. And today, due to the economic growth of the past century, there is much more private capital available for constructing new highways. Moreover, any attempt at collusion by however many private road companies end up existing will be fraught by the well-known problems plaguing any cartel. Cartels that do not have a coercive backing behind them are inherently unstable, as each member has a financial incentive to defect and undercut the rest of the market in price or outdo fellow cartel members by offering a higher standard of quality than was agreed to. Moreover, a free-market cartel would not be able to keep out non-cartel newcomers, who, by charging lower prices or offering better goods, can undercut the entire cartel. Thus, our hypothetical private road companies would need to be worried not only about existing competition, but also about the potential competition that might arise if they were to offer unfavorable terms to the consumer.

Sincerely,

G. Stolyarov II

How can one succeed in life? How can one become extraordinarily accomplished, prosperous, safe, and happy? Contrary to what most people might think, it is not by following the conventional understandings and definitions of what one ought to do.

The orthodox paths in life have already been tried millions of times. If you want to make something of your life, pursue an unorthodox path. This is not sufficient for success, but it is necessary – so you are doing something right if your approach is unorthodox. I attribute virtually all of my success to date to my numerous departures from orthodoxy.

Not all departures from orthodoxy are created equal, however; some will destroy the individual pursuing them. Any departure from conventional ways must be done for a reason, with a thoroughly considered understanding of why it is superior to what most other people do.

Sincerely,

G. Stolyarov II