Mises Wire

Walter Block On The Privatization of Roads

Walter Block On The Privatization of Roads

[The Chris Christie bridge scandal has highlighted some of the pitfalls of political control of the highway system. In this selection from Chapter 21 of The Privatization of Roads and Highways, Walter Block discusses some issues related to the privatization of roads. Block address the issue of traffic congestion throughout the book.]

Question: How would the private ownership of roads affect metropolitan commuters? Would the costs to use streets go up? Would congestion problems decrease, remain the same, or diminish?

Walter Block: Road privatization would help everyone, except for bureaucrats, politicians, “civil servants” employed by present statist road managers, etc. I claim that the cost of street use would decrease. See the “rule of two” mentioned above. Congestion problems would decrease, as peak-load pricing (charging more during rush hours than at 3 a.m., which irons out the variations in demand during the day) would become the order of the day. Right now, the government engages in anti-peak-load pricing, which exacerbates the problem. They commonly sell monthly tickets to bridges, tunnels, etc., at a cheaper price per trip than otherwise. But who uses such tickets? Employees, not casual shoppers, visitors. And when do they use these tickets? Precisely during rush hours.

Nor is this any accident. The principle holds true (congestion is a government failure) in many other cases too. Compare congestion during Christmas with the post office and private firms. The former tells you not to mail during the peak-load times; the latter roll up their sleeves, put on extra workers, and satisfy consumers.

Question: How can you reconcile burrowing under someone’s property with such issues as mineral rights? At what point above and below do property rights stop?

Walter Block: There are two theories on this. The first, the erroneous one, is called the ad coelum doctrine. Here, if you own an acre of land on the surface of the planet, you own territory right down to the center of the earth, in narrowing circles; e.g., your property comes to a point there (along with everyone else’s). In effect, you own a cone (think ice cream cone) of land, with the top, the acre on the surface of the earth, and the bottom point at its center. Also, your property extends into the heavens, in ever widening circles, again in a cone like formation. The problem with this, for the libertarian who bases property rights on the Locke-Rothbard-Hoppe theory of homesteading, is that you did nothing at all to mix your labor with the land 1,000 miles below the surface. As a practical matter, moreover, you would have the right to forbid airplanes from traveling over your acreage, even 30,000 feet above. Remember, according to this mischievous doctrine, your ownership extends from the core of the earth upward, to an indefinitely far distance. What this implies for ownership of other planets is just another reductio ad absurdum of this view.

In the latter, correct homesteading view, you own only that which you mix your labor with. If you farm, you own only as far down as the roots of your plants; maybe just a few feet more, to preclude anyone from doing something under your land that disturbs your crops. Say, ten feet down or so, depending upon the texture of the earth. If you build a house, then your property extends in a downward direction only so far as to preclude anyone else from caving in your house from below; again, the exact distance would depend upon how firm is the earth below your foundation. If your house extends downward for fifty feet, you might own, say, to one hundred feet below.

Merely farming or building a house, then, gives you no mineral rights whatsoever. Someone else could drill for oil, or mine tin, or whatever, five thousand feet below your property, if they were there first. Thus, there is no reason, in principle, that the hold out against the road developer could always preclude the latter from building a tunnel under, or a bridge over, this land.

Question: Would building a structure above someone’s land, effectively covering their home, be an invasion of their property rights?

Walter Block: It depends upon how high above. Yes, it would or might well be an invasion if you built ten or one hundred feet above, but maybe not if you did so two hundred feet above, and almost certainly not if you did so four hundred feet above.

Question: Can you elaborate on the hypothetical road privatization of one or more municipalities in Saskatchewan?

Walter Block: In rural Saskatchewan there is a good gravel road built to the doorstep of every farmhouse. Yet many highways are filled with potholes and are quite treacherous to travel. Currently, the municipalities create and upkeep local roads, and the province does so for the highways.

Municipal property taxes, which pay for roads and schools, among other things, are too high for the liking of most land owners. Tax revolts have recently ignited in southern Saskatchewan by farmers who were simply too pinched to pay land taxes.

One option to reduce taxes that has been suggested is for two or more municipal districts to combine and pool resources and share administration costs. This should, in theory, lower taxes. Another idea, which I would like to promote, is the privatization of all municipal services and the dismantling of this third level of government all together in rural areas.

Question: If a company bought up and operated as a business all of the roads in one or more municipalities, how would it best collect revenue from the users of these roads? Note that in an area perhaps one hundred miles squared there may be a few hundred points of entry from non-company territory. There will also be visitors, some frequent and some not. Perhaps these local roads will need to be paid for in full by locals?

Walter Block: It is hard to say how they would best collect revenue from the users of these roads. This is an entrepreneurial decision. It is like asking, before the advent of Disney World, would they charge by the ride or have an entrance fee? Would they make it cheaper if you purchased a week-, month-, year-long ticket?

Now that I’ve ducked your eminently reasonable question, let me speculate about it. One possibility would be a charge per mile, depending upon the time of day, day of the week. Another would be a fixed fee. A third would be some combination, thereof. Perhaps the road owner (likely to be a company the shares of which are owned by the local farmers) would allow choice in this regard to its customers. Those road companies that served consumers well would profit and be able to expand, those that did not would suffer losses, and would be more likely taken over by better managers. Probably, visitors would be charged more, unless the place was trying to attract tourists.

Let’s look at private roads in malls. Some allow you to park for free, if they want to encourage attendance. Others charge a fee, unless you make a purchase. Practices vary. So might they in Saskatchewan. All we can say is that if different pricing policies long endure, then they all satisfy consumer needs. If not, the efficient ones will out-compete the inefficient ones.

Question: Heavy trucks which haul grain and livestock down these gravel roads are responsible for much of the degradation. Perhaps the drivers of these trucks would need to pay more road access fees than would drivers of cars and pickup trucks?

Walter Block: Here I am on firmer ground. We once did have private roads, several centuries ago. They charged more for heavier wagons, horses, and more axles. They also charged based on the width of a wheel. A lot for thin wheels, which churned up the dirt roads (think ice skates), and less for wide wheels, which tamped them down (think steam rollers). I have little doubt that heavy trucks would pay more, lots more. Possibly, they would be charged inversely to the pressure in their tires.

On the other hand, if we had private roads, we would most likely have economic freedom all around. This means, in effect, no unions. But organized labor ruined the railroads. Without railroad unions, the railroads would likely carry most freight, and those big trucks would be far scarcer on the highways (confined to short hauls). So, this question might be moot.

Question: Many of these country roads come to a dead end at one farmers’ house. In effect, the road is a “driveway” which is primarily used by that one farm family. Would a farmer be able to buy his own road?

Walter Block: Sure. Why not? That is like asking, would someone be able to buy his own newspaper, restaurant, shoe store. Of course, anyone can bid for anything he wants in a free society. On the other hand, there is such a thing as specialization and the division of labor. It is likely that there will arise road specialists, who could take these tasks off the hands of the farmers (with the agreement of the latter). In similar manner, not every farmer is his own carpenter, plumber, roofer, restaurateur, etc.

Question: What if an individual bought a road that led to his farmyard but, in addition, was also used (during the era of state owned roads) by a neighbor to reach an otherwise cut-off piece of property? Now, for some reason (perhaps the two neighbors hate each other) the new owner of the road decides to deny passage to his neighbor. What are the likely resolutions to this problem?

Walter Block: I cover this question in chapter 1 of this book. Suppose you live on a street, and all of a sudden its owner says either you can’t get out onto the street at all, or he’ll charge you one million dollars each time you do so. Do you have to ride a helicopter, or become a great pole-vaulter, to get off your own property? Not at all! Under present institutional arrangements, before you buy a house or any piece of property, you get title insurance. You want to be protected against anyone else claiming he really owns the house you just bought. Well, in an era of private roads, you would also buy access insurance. You wouldn’t want to be trapped on your own property. No one would buy any real estate at all unless he were sure that this sort of entrapment couldn’t happen to him. Indeed, it is in the financial interest of the owner not to do this, since he wants to attract, not repel, people from living adjacent to his road, so that he can make more profit from them.

Question: If a man wants to live alone in a rural area where there currently is no road — would he likely bear the brunt of the cost of building and maintaining it? Once built will he own it?

Walter Block: Yes, he would bear the full brunt of making the road, just like he now bears the full brunt of carting bricks, plaster, cement, to this out-of-the-way place. And of course, he would then own the road, just like he now owns his house. There would be no government subsidy, such as provided by the post office, to deliver mail at out-of-the-way places for the same price as that which one obtains in the city, where it is cheaper to deliver mail, thanks to economies of scale.

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