The Privatization of Roads and Highways

6 Road Socialism1

What are the best institutional arrangements for roads, streets, highways, sidewalks and other such thoroughfares for human and vehicular traffic? The economics profession can be divided into two camps with regard to this issue.

On the one hand are the road socialists.2 They dominate.3 In their view, it is an unquestioned, and unquestionable fact that roads must inevitably and necessarily be managed by government. It is never explicit, but is rather implied by their mode of analysis. They believe that roads are a “public good.” Privatizing them is quickly brushed aside as preposterous. A private enterprise highway and street industry is viewed in much the same manner as was free-market agriculture by the planners during the heyday of Soviet collectivized agriculture—as inconceivable.

What is the job of the economic analyst under such assumptions? It is to serve as a sort of managerial consultant, much in the same manner that the economist in the U.S.S.R. would advise the Minister of Agriculture about crop rotation, fertilizers, etc.4 Only now the analysis concerns itself with such matters as road safety, congestion, planning for new clover leafs, etc.

On the other hand there are the road capitalists,5 or privatizers.6 In their view, streets and roads are no more a necessary part of the state apparatus than are cars, railroads, subways, baseball bats, lima beans or rubber bands. The former set of products can and should be analyzed along the lines everyone agrees are appropriate for the latter.

The purpose of this present chapter is to do just that, and to focus on one aspect of the overall analysis: that having to do with highway fatalities.

TWO ANALOGIES TO TRAFFIC SAFETY

Suppose that a gunman shot a person with a rifle. Hauled into court, his “defense” was that the bullet killed the victim—not he, the defendant. True, this man would concede, he aimed the gun and pulled the trigger, but he was two-hundred yards away from the victim when he died, so he couldn’t have been responsible for his death.

Our reaction to this “defense” would properly be one of dismissal, on the ground that the murderer was confusing proximate with ultimate cause. We would mete out to this murderer whatever penalties were accorded such behavior. The bullet was the proximate cause of the death. But the gunman, in aiming at the victim and pulling the trigger, was ultimately responsible for his demise and therefore should pay for this crime to the full extent of the law.

Now consider the case where a restaurant goes out of business. The proximate causes are badly cooked and cold food, surly service, dirty conditions, lack of personal safety, poor decor, etc. But the ultimate responsibility, surely, lies with management. It and it alone failed to hire good cooks, to ensure that the waitresses, busboys, cleaners, bouncers, interior decorators, exterior architects, etc., did their assigned tasks in a satisfactory way. A competent manager would either get his employees to change their behavior, or he would fire them, and hire proficient ones in their places. This all stems from the fact that the good manager can recognize talent, and has the motivation to insist upon it.

ROAD SOCIALISM

What is the point of all this discussion of restaurant failures and excuse-making killers? What does it have to do with road safety under socialism?

Simply this: The way the most economists approach this issue is akin to the “defense” of the murderer, or the advice of the restaurant consultant who ignores the manager. Instead of focusing on the real cause of traffic fatalities—government ownership and management of the nation’s highway network—many economists have instead concentrated on a plethora of proximate causes, preeminently vehicle speed, driver alcoholism, safety regulations and inspections.

The theoretical analysis of highway safety rests on some principles which are quite elementary, indeed distressingly so. They are so obvious that one would feel the greatest reluctance to repeat them on the pages of a professional journal were it not that a great public policy (road socialism) has been erected upon either ignorance or a repudiation of them.7

It is in order to rectify this great oversight that we must examine how neo-classical economists have been dealing with road fatalities.

MAINSTREAM ANALYSIS

Consider first Crandall, Gruenspechl, Keeler, and Lave. These authors intensively analyze automobile regulations for over two-hundred pages. They state at the outset:

It is now possible to look back over nearly two decades of experience to evaluate this strategy of regulating the undesirable by-products of the automobile and to determine whether some of the regulatory programs should be redesigned. This book is designed to provide a comprehensive examination.8

Although they do indeed subject a whole host of restrictions to great scrutiny, they never once mention the chief constraint on the market: public ownership and management.9 Thus, the concept of privatization completely eludes them.

With regard to the thousands of people slaughtered on the nation’s highways each year, Crandall, et al. adopt a rather cavalier and Pollyanna-ish perspective:

This program . . . (of federal automobile regulations) . . . has been the best planned and administered and the most successful in achieving its goals. Our estimates indicate that highway fatalities would be about 40 percent greater were it not for the safety features adopted since the beginning of this program.10

It cannot be denied that road fatalities have decreased somewhat over the last decade or so. But their assessment is overly optimistic, for it compares vehicular deaths on public highways, not with those on private ones, but with fatalities on public roads in previous years when there were fewer safety regulations in effect. The public managers may be improving on their dismal record of a decade or two ago, but this is hardly relevant to a public-private comparison. To extend the socialism analogy, it is as if Stalin were bragging that crop yields from his present five-year plan are greatly in excess of the results of collectivized agriculture from several years back when there were fewer “incentive” features in effect.

Loeb and Gilad criticize previous studies of the contribution of governmental vehicle inspection to safety, and promise to overcome the difficulties besetting them:

[They] have mostly been plagued with statistical or methodological problems which have made their conclusions far from definite.

Only relatively recently has regression analysis been used, and then only on the basis of cross-sectional data. Thus there have so far been no state-specific studies which have used econometric techniques to test the efficacy of inspection.

The present study employs, for the first time, a time series analysis of the efficacy of inspection in reducing fatalities, injuries and accidents.11

And what is the conclusion of their analysis? According to Loeb and Gilad, it

indicates that vehicle inspection in New Jersey reduces highway fatalities by 304 deaths per year. This result is obtained when other changes that also might affect fatalities are taken into account in the analysis.12

And indeed they are thorough in taking into account numerous other such variables. These include the number of motor vehicle registrations, number of drivers licensed, vehicle mileage, personal income, number of drunk driving revocations, population and gasoline consumption. All in all, a very careful job of eliminating alternative hypotheses to their own, except for one small detail, the one analyzed in this chapter.

Loeb is even more specific about the possible exclusion of variables. He singles out Sommers in this regard, charging that “if the model used by Sommers omits an important variable, biased estimates may result for the coefficients of the remaining variables.”13 And what are the specifics? Loeb uses “personal income, education, fuel consumption, density of population, precipitation, highway mileage, consumption of distilled spirits, and the age composition of the population.”14 But this is surely a case of the pot calling the kettle black, for Loeb himself omits an important variable, with a causal effect potentially greater than all of the variables he cites put together,15 if only because this one is responsible for affecting (virtually all of) the others.

Loeb again worries about the “omission of variables.”16 This time he employs “specification error tests” in an attempt to root out this scourge. Again he criticizes Sommers, asserting that, in contrast to that author, his “models do not omit the potentially important socio-economic and driving-related variables as in Sommers’ work.”17 Needless to say, he is again guilty of the same error, since he omits the crucial “socio-economic” variable of public or private-sector ownership, management and control.18 As for his “specification error tests,” they employ the usual litany of drinking age,19 alcohol consumption, speed,20 vehicle inspection,21 per capita fuel consumption, age of the population, but nary a mention of road socialism is made.

Callahan employs no fewer than sixteen different highway safety program standards, and opines that,

auto officials and others assert that the nation is merely “holding its own” in the battle against highway accidents, and that this stagnation must be due to the failure to improve the drivers and roads since the cars have been substantially improved.22

That’s it. It is either the cars or the drivers. Since automobiles are implicitly of optimally (high) quality, the cause of all the fatalities must be the man behind the wheel. It does not seem to have occurred to him that there might be a better explanation.

Lave and Weber offer what at first glance seems to be a radical analysis of traffic fatalities. They state:

Government intervention is certainly one way to decrease the number of automobile accidents, but this accident reduction is not an economic justification for government intervention. Any sort of interference with the market has a cost which must be weighed against the possible benefits. The economic justification for government intervention is a substantial market failure. There is not sufficient evidence to conclude that various safety features ought to be mandatory. The judgment that government ought to require particular features, therefore, is a non-economic one based on an individual’s ideas about consumer sovereignty, the importance of particular market failures, and the social cost of injury and death.23

Here, at last, it might be supposed that we have analysts who, even though they reject the market, at least mention it as a possibility. Since, on this interpretation, these authors are the only ones cited so far to do so, they appear to earn high marks in this regard.

Alas, however, such an interpretation cannot be sustained. For what they mean by the market, amazingly enough, is the present situation where government owns and manages the roads, but refrains from mandating any safety devices! If that is the market, there is no doubt that it contains many failures indeed. But this, of course, is not the case. A true market in highway transportation would consist of private ownership and control not only of the vehicles, but of the actual traffic arteries as well.

Road socialism, unfortunately, has seeped out from the professional writings of economists to the textbooks, a sure sign of its widespread acceptance. Paul Heyne’s textbook The Economic Way of Thinking is a case in point.24 This is a text supposedly devoted to the idea that private property rights are an important linchpin of economics. Yet it starts out with rush hour traffic as an example of “social cooperation.” He claims, rather heroically, that “The dominant characteristic of rush hour traffic is not jam but movement.”25 Maybe in rural Idaho, but not on the streets ofthe typical metropolitan district.26

THEORETICAL INNOVATION

It cannot be denied that there is some innovation in the mainstream literature on this subject. In large part, it is due to the work of Lave. In that paper he explored the possibility that it is not really speed, per se, which is statistically associated with roadway deaths but rather the variance in speed.27 If true, the highway authorities should concentrate not necessarily on slowing things down as much as on reducing the tails of the speed distribution, whether at the high end or the low. In Lave’s opinion, “Variance kills, not speed.”28

This point was sharply criticized.29 But in none of this exchange was there ever any mention of omitted variable bias as it applied to private roads.30

Also included in the same volume with the others in this exchange is Graves, Lee, and Sexton who introduced the concept of accident externalities. Even more important, they bemoan “the absence of a controlled experiment,”31 one thing that is practically guaranteed to emerge from a private road system. This is because if each owner is able to set his own rules, concerning not only speed averages but speed variances,32 controlled experiments would be much easier to come by.

Unfortunately, all of this intellectual innovation is beside the point. No matter how clever,33 it is akin to rearranging the deck chairs on the Titanic in new ways; it is a useless effort to ward off the disaster of the iceberg. In similar manner, if the disaster of government road ownership is ignored, then no matter how imaginative and ingenious the discussion of how to solve the fatality problem, it is doomed to irrelevance.

OBJECTIONS

Let us now consider some possible objections34 to our thesis.

1. This chapter, thus far, takes it as axiomatic that privately provided highways would be safer than our existing highways.

There are two ways to test such an assertion or hypothesis. The first is to utilize actual empirical evidence. Unfortunately, there are no extant cases of roadways fully under private control, with which to contrast those in the public sector. Historically, of course, many turnpikes were privately built, maintained, owned and managed.35 But there are no studies of those epochs available, to the knowledge of the present author, which compared the safety records attained under the two very different institutional arrangements.

What about the possibility of comparing “toll roads with comparable public roads,” or “East Coast toll roads with California freeways,” or “French and Italian toll roads with public freeways in the same countries?” This, unfortunately, is not of relevance here, for all of these transportation arteries are under public sector control. In none of these cases are the roads managed by private profit (and loss) making business concerns. Just because government in some cases charges a fee (toll) for road use does not convert such an operation into a fully private one.

The second alternative is to cite theoretical reasons. Fortunately, here, we are on firmer ground. Why might we expect firms to be more assiduous in satisfying customers than we find civil servants and politicians in serving voters and taxpayers? To ask this question is practically to answer it, at least given the insights furnished us by the Public Choice School of thought.36 Simply, the market is more responsive to consumer wishes than is the government to the desire of the citizenry. The dollar vote occurs every day, the ballot box vote only every two or four years. The former may be applied narrowly, to a single product (e.g., the Edsel) while the latter is a “package deal,” an all or none proposition for one candidate or the other. That is, there was no way to register approval of Bush’s policies in areas 1, 3, 5 and 7, and for Clinton in 2, 4, 6, and 8. People were limited to choosing one or the other in the last presidential election. Further, there is rational ignorance in the political sphere, given the unlikeliness of one’s vote being a tie breaker. In contrast, in the private sector, the uninformed consumer is at a disadvantage. The bottom line is that private suppliers of any good or service face the prospect of loss of profits, and eventual bankruptcy, if they fail to satisfy customers. It cannot be maintained that public providers face no negative repercussions for poor service; neither can it reasonably be denied that these sanctions are of far less import. Otherwise, how can we explain the continued existence of such entities as the post office, the motor vehicle licensing bureau, and the passport service, which are notorious for lack of service to their clientele?

2. Perhaps the present public road providers have more incentive to offer an optimal level of safety. In fact, we know that there are many law suits against state and local highway providers alleging that a particular road was inherently unsafe, and we know that juries award big damages in such suits because of the deep pockets of the public highway providers. Isn’t it possible that the public providers have responded by constructing roads that are too safe? For example, public providers have placed safety rails or railroad crossing bars in situations where the cost per life saved is (excessive).

True, actual and threatened lawsuits provide some incentive for good behavior on the part of bureaucrats. The problem is, however, even if they are forced to pay damages, these monies do not come out of their own pockets. Rather, they are taken from general tax revenues. The incentive effects are thus greatly attenuated.

In contrast, lawsuits could play an analogous role in a fully private highway industry.37 Only here, the benefits would be far more salutary. For if a lawsuit was lost under such assumptions, the people ultimately responsible for poor highway management—the owners of the road—would pay out of their own pockets.

But lawsuits are only of marginal concern. The reason McDonalds and Heinz and Toyota and Apple and Stradivarius and Moodys give us good products and services is not out of fear of litigation but due to the salutary effects of competition. There is no reason to conclude that the weeding out of the inefficient firms which works so well in all these other industries would somehow be inoperable in the case of transportation networks alone.

Compare fatalities with regard to airlines and traffic arteries. When U.S. Air suffers from a greater rate of loss of life per passenger mile than its rivals, its entire existence is placed in jeopardy due to the risk of its customers deserting it for alternatives. The same sanctions hardly apply to two different parallel roads, to take the easiest conceptual case for roads, where one has a better safety record than the other. Both are typically operated by the same authorities. Even if they are in different states, and motorists desert the one for the other, the financial implications for the abandoned one are so attenuated that they might as well not even exist.

On the other hand, there is one sound point in this objection. It is entirely possible, given the absence of profit-and-loss incentives, for public managers to render short stretches of road safe at excessive costs that would not be undertaken by their private counterparts. Thus, we may be faced with the paradox that the public thoroughfares—different ones of them—are both overoptimally safe and overoptimally unsafe.

3. Might there be underkill? Assume if only for the sake of argument that the foregoing is correct: private roads will be safer than governmentally managed ones. It is then possible that a private road builder might provide too high a level of safety? For example, imagine a private toll freeway that parallels a two-lane road with five stop signs and traffic lights per mile. Imagine that the toll road sets a speed limit of 35 mph, and strictly polices those who go less than 30 or more than 40 mph. It would be safer. People would use it, because even a 35 mph road beats the constant stop and go of the parallel, socialist road. But the high degree of safety on the toll road is suboptimal in the sense that most people would rather trade a little less safety for a lot more time savings.

Let us take even more of an exaggerated case. Suppose one private owner insisted upon a 3 mph speed limit, with traffic lights every fifteen feet. Is there any doubt that a competing parallel road would compete away all the customers of such a foolish firm?

To return to an earlier example, the analogous situation would be if a restaurant supplied a waitress, cook, busboy, bouncer, to each separate patron, and all of these employees got in each other’s way. The aphorism “too many cooks spoil the broth” applies in all contexts.

The bottom line is that the market tends to obviate both over-and under-optimal allocations of resources, whether in terms of safety, or weight, or quality, or any other dimension.

But what of the charge that our present38 number of highway fatalities (41,462), and nonfatal highway accidents (2,210,000), is really either underoptimal, or optimal. On the face of it, this is difficult to accept. The claim can be seriously offered, I maintain, only because, like death and taxes, highway fatalities seem inevitable. This, I claim, emanates from the mindset which sees road socialism as the only possible alternative. To place this in context, imagine that carnage of these proportions were to occur in any private industry: mining, air travel, sports, whatever. Under these conditions a hue and cry of vast proportions would arise. Senator Ted Kennedy would hold outraged hearings, determined to get to the bottom of how we can allow the selfish, greedy pursuit of the unholy buck to kill and maim so many people. The New York Times would call for the nationalization of such an enterprise.

In point of fact, however, this mutilation of the innocents occurs on public property. It is time, it is past time, to think in terms of privatization.

CONCLUSION

The present chapter has criticized numerous analysts of highway safety as “road socialists.” This is a charge that will amaze these authors. When they set out to do their work, ideology was, perhaps, the furthest thing from their minds. Yet, for all of that, it cannot be denied that the “shoe fits.” Their analyses presumes governmental ownership and control of transportation arteries; while they call into question every other variable which might conceivably affect traffic safety, and even some which do not, they take for granted these institutional arrangements. If that is not “socialism,” it will do very well until something better comes along.

 

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39This chapter first appeared as “Road Socialism,” International Journal of Value-Based Management 9 (1996): 195–207. The author wishes to thank the North American Editor of Transport Policy and an anonymous referee from the International Journal of Value-Based Management, for helpful suggestions and commentary on an earlier draft of this chapter.

40At first glance it might seem harsh to characterize such a position as “road socialism.” For none of the people criticized below as falling into this category would embrace such an appellation. Given that we are used to considering people as socialists only if they purposefully adopt such a viewpoint, and that the “road socialists” slide into their stance seemingly oblivious to the fact that this is precisely what their position amounts to, perhaps they should instead be called “inadvertent road socialists.”

But this will not do, either. For these are professional scholars, for the most part sophisticated economists of the first order. To make excuses for them in this manner would therefore amount to a condescending paternalism. They have made their bed; let them lie in it. I shall therefore continue to characterize them as in the title of this chapter above.

41See P.D. Loeb and B. Gilad, “The Efficacy and Cost Effectiveness of Vehicle Inspection—A State Specific Analysis Using Time Series Data,” Journal of Transport Economics and Policy 18 (May 1984) for a survey of this literature.

42The analogy is a reasonably good one. For just as the Soviet agricultural planners knew that farming had once been conducted on a private basis, negating all arguments concerning the necessity of public ownership, so are their modern counterparts acquainted with the fact that initially roads were owned by private turnpike companies. See Walter Block, “Free Market Transportation: Denationalizing the Roads,” Journal of Libertarian Studies 3, no. 2 (Summer, 1979); Gerald Gunderson, “Privatization and the 19th Century Turnpike,” Cato Journal 9, no. 1 (Spring/Summer, 1989); W.T. Jackman, The Development of Transportation in Modern England (Cambridge: Cambridge University Press, 1916); Daniel Klein, “The Voluntary Provision of Public Goods? The Turnpike Companies of Early America,” Economic Inquiry (October 1990); Daniel Klein, John Majewski, and Christopher Baer, “Economy, Community and the Law: The Turnpike Movement in New York, 1797–1845,” Journal of Economic History (March 1993); idem, Daniel Klein and G.J. Fielding, “Private Toll Roads: Learning from the Nineteenth Century,” Transportation Quarterly (July 1992). In each case, however, these historical antecedents play (played) no role in their analysis.

43Actually, the situation is somewhat more complicated as there is at least one commentator who is a road capitalist with regard to limited access highways, and a road socialist with regard to all else. See Gabriel Roth, A Self-Financing Road System (London: Institute of Economic Affairs, 1966); idem, Paying for Roads: The Economics of Traffic Congestion (Middlesex, England: Penguin, 1967); idem, The Private Provision of Public Services in Developing Countries (Oxford: Oxford University Press, 1987).

44Walter Block, “Free Market Transportation: Denationalizing the Roads,” Journal of Libertarian Studies 3, no. 2 (Summer, 1979); “Congestion and Road Pricing.” Journal of Libertarian Studies 4, no. 3 (Summer 1980); “Theories of Highway Safety,” Transportation Research Record no. 912 (1983); “Public Goods and Externalities: The Case of Roads,” Journal of Libertarian Studies 7, no. 1 (Spring, 1983); and “Road Socialism,” International Journal of Value-Based Management 9 (1966); Murray N. Rothbard, For a New Liberty (New York: Macmillan, 1973); William C. Wooldridge, Uncle Sam, The Monopoly Man (New Rochelle, N.Y.: Arlington House, 1970); Daniel Klein and G.J. Fielding, “How to Franchise Highways,” Journal of Transport Economics and Policy (May 1993); idem, “High Occupancy/Toll Lanes: Phasing in Congestion Pricing a Lane at a Time,” Policy Study 170 (November 1993).

45W.S. Grampp, “Some Effects of Rent Control,” Southern Economic Journal (April 1950): 425–26. Grampp speaks with regard to rent control; I have fashioned them so as to apply to the topic now under discussion.

46Robert Crandall, H.K. Gruenspechl, T.E. Keeler, and L.B. Lave, Regulating the Automobile (Washington, D.C.: Brookings Institution, 1986), pp. 1–2.

47Public ownership is really the key, not management. For suppose that the politicians or bureaucrats hired “private” managers. The minute they did so these managers would cease to be private. On the contrary, they would be public employees, as far removed from the vicissitudes of profit and loss as every other civil servant. See on this Ludwig von Mises, Human Action (Chicago: Henry Regnery, 1969) and Hans-Hermann Hoppe, A Theory of Socialism and Capitalism: Economics, Politics and Ethics (Boston: Dordrecht, 1989); idem, The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy (Boston: Kluwer, 1993).

48Ibid., p. 155.

49Loeb and Gilad, “The Efficacy and Cost Effectiveness of Vehicle Inspection,” p. 145.

50Ibid., p. 162; emphasis added.

51P.D. Loeb, “The Determinants of Motor Vehicle Accidents with Special Consideration to Policy Variables,” Journal of Transport Economics and Policy 21 (September 1985): 279.

52Paul Sommers, “Drinking Age and the 55 MPH Speed Limit,” Atlantic Economic Journal 13 (March 1985): 43, mentions “public concern over the staggering number of deaths and injuries caused each year by drunken drivers and speed violators,” a paradigm case of the confusion between proximate and underlying causes.

53Loeb, “The Determinants of Motor Vehicle Accidents with Special Consideration to Policy Variables,” pp. 279–87.

54P.D. Loeb, “The Determinants of Motor Vehicle Accidents—A Specification Error Analysis,” Logistics and Transportation Review 24 (March 1988): 33.

55Ibid., p. 34.

56Donald Snyder, “Speeding, Coordination and the 55-MPH Limit: Comment,” American Economic Review 79, no. 4 (September 1989): 922, also discusses the issue of omitted variables in the same unsatisfactory manner.

57Loeb, “The Determinants of Motor Vehicle Accidents—A Specification Error Analysis,” p. 40. Other studies which focus on this variable include P.J. Cook and G. Tauchen, “The Effect of Minimum Drinking Age Legislation on Youthful Auto Fatalities, 1970–1977,” Journal of Legal Studies 13 (1984): 169–90; P. Asch and D.T. Levy, “Does the Minimum Drinking Age Affect Traffic Fatalities?,” Journal of Policy Analysis and Management 6 (Winter, 1987); Williams, et al., “The Minimum Drinking Age and Fatal Motor Vehicle Crashes,” Journal of Legal Studies 4 (1975): 219; idem, “The Effect of Raising the Minimum Drinking Age on Involvement in Fatal Crashes,” Journal of Legal Studies 12 (1983): 169.

58Other studies which focus on speed include Dana Kamerud, “The 55 MPH.Speed Limit: Costs, Benefits and Implied Tradeoffs,” Transportation Research 17A (January 1983): 51–64; Gilbert Castle, “The 55 MPH Speed Limit: A Cost-Benefit Analysis,” Traffic Engineering 45 (January 1976); L. Egmose and T. Egmose, “Speed Limits Save Lives,” Journal of Traffic Medicine 14 (1986): 4–5; Thomas Forester, Robert F. McNown, and Larry D. Singell, “A Cost Benefit Analysis of the 55 mph Speed Limit,” Southern Economic Journal 50 (January 1984): 631–41; A. Hoskin, “Consequences of Raising the Speed Limit,” Journal of Safety Research 17 (1986): 179–82; James Jondrow, Marianne Bowes, and Robert Levy, “The Optimal Speed Limite,” Economic Inquiry 21 (July 1983): 325–36; D. Solomon, “Accidents on Main Rural Highways Related to Speed, Driver and Vehicle,” Federal Highway Administration, U.S. Department of Transportation (July 1964).

59Other studies which focus on vehicle inspection include R.G. Buxbaum and T. Colton, “Relationship of Motor Vehicle Inspection to Accident Mortality,” Journal of the American Medical Association (1966); M.W. Crain, Vehicle Safety Inspection Systems (Washington, D.C.: American Enterprise Institute for Public Policy Research, 1980); J.L. Duda, Program Evaluation Support for the Motor Vehicle Diagnostic Inspection Demonstration Projects, vol. 11: Costs and Benefits (Falls Church, Va.: Computer Sciences Corporation, 1977); V.R. Fuchs and I. Leveson, “Motor Accident Mortality and Compulsory Inspection of Vehicle,” Journal of the American Medical Association 201 (August 1967): 87–91; and Loeb, “The Efficacy and Cost Effectiveness of Motor Vehicle Inspection Using Cross-Sectional Date,” pp. 500–09.

60J.M. Callahan, “States Move Slowly on Safety Projects,” Traffic Digest and Review (March 1970).

61L.B. Lave. and W.E. Weber, “A Benefit Cost Analysis of Auto Safety Features,” Applied Economics 2 (1970): pp. 265.

62Paul Heyne, The Economic Way of Thinking, 6th ed. (New York: Macmillan, 1991), pp. 1–3.

63 Ibid.

64For an analysis of traffic congestion as due to a lack of peak load pricing, and this, in turn, as a result of road socialism, see Walter Block, “Congestion and Road Pricing,” Journal of Libertarian Studies 4, no. 3 (Summer, 1980).

65Charles Lave, “Speeding, Coordination and the 55-MPH Limit,” American Economic Review 75, no. 5 (September 1985): 1159–64. Others who have written on this include T.C. Schelling, Micromotives and Macrobehavior (New York: Norton, 1978); Nicholas J. Garber and Ravi Gadirau, Speed Variance and Its Influence on Accidents (unpublished manuscript; AAA Foundation for Traffic Safety, Washington, D.C., July 1988). Ezra Hauer, “Accidents, Overtaking, and Speed Control,” Accident Analysis and Prevention 3 (January 1971); and Walter Block, “Free Market Transportation: Denationalizing the Roads.”

66Lave, “Speeding, Coordination and the 55-MPH Limit,” p. 1159.

67See David T. Levy and Peter Asch “Speeding, Coordination and 55-MPH Limit: Comment,” American Economic Review 79, no. 4 (September 1989): 913–15; Richard Fowles and Peter D. Loeb, “Speeding, Coordination and the 55-MPH Limit: Comment,” American Economic Review 79, no. 4 (September 1989): 916–21; Snyder, “Speeding, Coordination and the 55-MPH Limit: Comment”; and replied to by Charles Lave “Speeding, Coordination and the 55-MPH Limit: Reply,” American Economic Review 79, no. 4 (September 1989): 926–36.

68There were some points made, however, that are worthy of note. Richard Fowles and Peter D. Loeb, “Speeding, Coordination and the 55-MPH Limit: Comment,” American Economic Review 79, no. 4 (September 1989): 917, are amongst the few researchers to incorporate a hospital access variable (closeness to medical care, operationally defined as hospitals per square mile) into their analysis; they also took account of the type of driver behind the wheel, professional vs. amateur (p. 924).

69See Philip E. Graves, Dwight R. Lee, and Robert L. Sexton, “Statutes Versus Enforcement: The Case of the Optimal Speed Limit,” American Economic Review 79, no. 4 (September 1989): 932.

70See Block, “Free Market Transportation: Denationalizing the Roads,” for a discussion of the limitations in how sharply the rules of different road entrepreneurs could diverge from each other.

71The strongest candidate for the cleverness sweepstakes is Sam Peltzman, “The Effects of Automobile Safety Regulation,” Journal of Political Economy 83, no. 4 (1975): 677–725, who probes the case for unintended negative consequences of safety regulation. Needless to say, privatization forms no part of his analysis, however.

72The author wishes to thank the anonymous referee for inspiring him to write this section of the paper. The specific objections arose from this source, as did a goodly part of the analysis. All otherwise uncited, direct quotes are from this referee’s report.

73See footnote 4, above.

74See James M. Buchanan “What Should Economists Do?” Southern Economics Journal 30, no. 3 (1964); idem, The Limits of Liberty (Chicago: University of Chicago Press, 1975); idem, “Public Choice and Public Finance,” What Should Economists Do? (Indianapolis: Liberty Press, 1979); idem, “The Contractarian Logic of Classical Liberalism,” in Liberty, Property, and the Future of Constitutional Development, Ellen Frankel Paul and Howard Dickman, eds. (Albany: State University of New York Press, 1990); James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy (Ann Arbor: University of Michigan Press, 1971), pp. 269–74; James M. Buchanan, Robert Tollison, and Gordon Tullock, eds., Toward a Theory of the Rent-Seeking Society (College Station: Texas A&M University, 1980).

75They need not do so, however. For under the market doctrines of strict liability and caveat emptor, the customer would enter this facility at his own risk, see Murray N. Rothbard, The Ethics of Liberty (Atlantic Highlands, N.J.: Humanities Press, 1982), pp. 54, 85–96.

76Statistical Abstract of the U.S., 1993, table 1030, p. 622, for the year 1991.

• 1*This chapter first appeared as “Road Socialism,” International Journal of Value-Based Management 9 (1996): 195–207. The author wishes to thank the North American Editor of Transport Policy and an anonymous referee from the International Journal of Value-Based Management, for helpful suggestions and commentary on an earlier draft of this chapter.
• 2The number of people who were victims of motor vehicle accidents in 1976, in Accident Facts (Chicago: National Safety Council, 1977), p. 13.
• 3The number of road and highway deaths in the decade, 1967–1976, in ibid.
• 4Data for 1968, in ibid., p. 57.
• 5Data for 1969, in ibid., p. 60.
• 6Data for 1969, in ibid.
• 7Statement by Charles M. Noble, distinguished traffic engineer who served as director of the Ohio Department of Highways, chief engineer of the New Jersey Turnpike, and was recipient of the Matson Memorial Award for Outstanding Contributions to the Advancement of Traffic Engineering. Charles M. Noble, “Highway Design and Construction Related to Traffic Operations and Safety,” Traffic Quarterly (November 1971): 534; emphasis added.
• 8Accident Facts, p. 13.
• 9Sam Peltzman, Regulation and Automobile Safety (Washington, D.C.: American Enterprise Institute for Public Policy Research, 1975), pp. 8–9.
• 10David M. Winch, The Economics of Highway Planning (Toronto: University of Toronto Press, 1963), p. 87.
• 11Strictly speaking, this is far from the truth. Before the nineteenth century, most roads and bridges in England and the U.S. were built by quasi-private stock companies.
• 12William C. Wooldridge, Uncle Sam, The Monopoly Man (New Rochelle, N.Y.: Arlington House, 1970), pp. 7–9.
• 13Gabriel Roth, Paying for Roads: The Economics of Traffic Congestion (Middlesex, England: Penguin, 1967), p. 16; emphasis added. See also:
• 14The present author wishes to express a debt of gratitude to the two trailblazers into this subject: Jarret B. Wollstein, Public Services under Laissez Faire (New York: Arno Press, 1974), and Murray N. Rothbard, For a New Liberty (New York: Macmillan, 1973), pp. 202–18.
• 15William Vickrey, “Pricing and Resource Allocation in Transportation and Public Utilities,” American Economic Review (May 1963): 452; and “Breaking the Bottleneck by Sophisticated Pricing of Roadway Use,” General Motors Quarterly (Spring, 1974): 24.
• 16Says Rothbard:
• 17F.A. Hayek, The Constitution of Liberty (Chicago: University of Chicago Press, 1960), p. 160.
• 18I owe this point to David Ramsey Steele, of the Department of Sociology, University of Hull.
• 19We assume away here the presence of psychic income phenomena. See Walter Block “Coase and Demsetz on Private Property Rights,” Journal of Libertarian Studies 1, no. 2 (Spring, 1977): 111–15.
• 20George M. Smerk, Urban Transportation: The Federal Role (Bloomington: Indiana University Press, 1965), p. 228.
• 21Robert Haveman, The Economics of the Public Sector (New York: John Wiley and Sons, 1970), p. 23. For a telling criticism of the “control over price” confusion, see Murray N. Rothbard, Power and Market (Menlo Park, Calif.: Institute for Humane Studies, 1970), pp. 87–90.
• 22Cf. Israel Kirzner, Competition and Entrepreneurship (Chicago: University of Chicago Press, 1973).
• 23Alfred W. Stonier and Douglas C. Hague, A Textbook of Economic Theory, 3rd ed. (New York: John Wiley and Sons, 1964), p. 104.
• 24See Lionel Robbins, An Essay on the Nature and Significance of Economic Science (London: Macmillan, 1932).
• 25Kirzner, Competition and Entrepreneurship, pp. 122–23.
• 26Wilfred Owen, The Metropolitan Transportation Problem (Washington, D.C.: Brookings Institution, 1956), p. 119.
• 27John Burchard, “Design and Urban Beauty in the Central City,” in James Q. Wilson, ed., The Metropolitan Enigma (Garden City, N.Y.: Doubleday, 1970), p. 245; emphasis added.
• 28Noble, “Highway Design and Construction Related to Traffic Operations and Safety,” pp. 546–47.
• 29Z. Haritos, “Theory of Road Pricing,” 13 Transportation Journal (Spring, 1974): 57.
• 30Smerk, Urban Transportation, p. 228.
• 31Even if someone intends, for some reason, to purposefully invest in a “losing” proposition, we would still deny, ex ante, that he intends to worsen his position. That people act in order to benefit themselves is an axiom of economics. If a person intends to lose money through his investment, it could only be because, by so doing, he thinks he will increase his psychic income by enough to more than compensate himself for his loss of money. In short, he is engaging in charity.
• 32Roth, Paying for Roads, p. 61.
• 33Herbert D. Mohring, “Urban Highway Investments,” in Robert Dorfman, ed., Measuring Benefits of Government Investments (Washington, D.C.: Brookings Institution, 1965), p. 240.
• 34Haritos, “Theory of Road Pricing,” p. 56.
• 35Winch, The Economics of Highway Planning, p. 3.
• 36For an explanation of “monopoly as a government grant of exclusive privilege, see Rothbard (1971), pp. 586–619.
• 37James M. Buchanan, “The Pricing of Highway Services,” National Tax Journal 5, no. 2 (June 1952): 97. See also Smerk, Urban Transportation, p. 179; and Norman L. Cooper, Urban Transportation: An Answer (Bloomington: Bureau of Business Research, Indiana University, 1971), pp. 1, 15.
• 38Herbert Mohring, “Urban Highway Investments,” in Robert Dorfman, ed., Measuring Benefits of Government Investments (Washington, D.C.: Brookings Institution, 1965), p. 248.
• 39Road Socialism*
• 40Were a government to demand the sacrifice of 46,700 citizens each year, there is no doubt that an outraged public would revolt. If an organized religion were to plan the immolation of 523,335 of the faithful in a decade, there is no question that it would be toppled. Were there a Manson-type cult that murdered 790 people to celebrate Memorial Day, 770 to usher in the Fourth of July, 915 to commemorate Labor Day, 960 at Thanksgiving, and solemnized Christmas with 355 more deaths, surely the New York Times would wax eloquent about the carnage, calling for the greatest manhunt this nation has ever seen. If Dr. Spock were to learn of a disease that killed 2,077 children under the age of five each year, or were New York City’s Andrew Stein to uncover a nursing home that allowed 7,346 elderly people to die annually, there would be no stone unturned in their efforts to combat the enemy. To compound the horror, were private enterprise responsible for this butchery, a cataclysmic reaction would ensue: investigation panels would be appointed, the justice department would seek out antitrust violations, company executives would be jailed, and an outraged hue and cry for nationalization would follow.
• 41Were a government to demand the sacrifice of 46,700 citizens each year, there is no doubt that an outraged public would revolt. If an organized religion were to plan the immolation of 523,335 of the faithful in a decade, there is no question that it would be toppled. Were there a Manson-type cult that murdered 790 people to celebrate Memorial Day, 770 to usher in the Fourth of July, 915 to commemorate Labor Day, 960 at Thanksgiving, and solemnized Christmas with 355 more deaths, surely the New York Times would wax eloquent about the carnage, calling for the greatest manhunt this nation has ever seen. If Dr. Spock were to learn of a disease that killed 2,077 children under the age of five each year, or were New York City’s Andrew Stein to uncover a nursing home that allowed 7,346 elderly people to die annually, there would be no stone unturned in their efforts to combat the enemy. To compound the horror, were private enterprise responsible for this butchery, a cataclysmic reaction would ensue: investigation panels would be appointed, the justice department would seek out antitrust violations, company executives would be jailed, and an outraged hue and cry for nationalization would follow.
• 42Were a government to demand the sacrifice of 46,700 citizens each year, there is no doubt that an outraged public would revolt. If an organized religion were to plan the immolation of 523,335 of the faithful in a decade, there is no question that it would be toppled. Were there a Manson-type cult that murdered 790 people to celebrate Memorial Day, 770 to usher in the Fourth of July, 915 to commemorate Labor Day, 960 at Thanksgiving, and solemnized Christmas with 355 more deaths, surely the New York Times would wax eloquent about the carnage, calling for the greatest manhunt this nation has ever seen. If Dr. Spock were to learn of a disease that killed 2,077 children under the age of five each year, or were New York City’s Andrew Stein to uncover a nursing home that allowed 7,346 elderly people to die annually, there would be no stone unturned in their efforts to combat the enemy. To compound the horror, were private enterprise responsible for this butchery, a cataclysmic reaction would ensue: investigation panels would be appointed, the justice department would seek out antitrust violations, company executives would be jailed, and an outraged hue and cry for nationalization would follow.
• 43Were a government to demand the sacrifice of 46,700 citizens each year, there is no doubt that an outraged public would revolt. If an organized religion were to plan the immolation of 523,335 of the faithful in a decade, there is no question that it would be toppled. Were there a Manson-type cult that murdered 790 people to celebrate Memorial Day, 770 to usher in the Fourth of July, 915 to commemorate Labor Day, 960 at Thanksgiving, and solemnized Christmas with 355 more deaths, surely the New York Times would wax eloquent about the carnage, calling for the greatest manhunt this nation has ever seen. If Dr. Spock were to learn of a disease that killed 2,077 children under the age of five each year, or were New York City’s Andrew Stein to uncover a nursing home that allowed 7,346 elderly people to die annually, there would be no stone unturned in their efforts to combat the enemy. To compound the horror, were private enterprise responsible for this butchery, a cataclysmic reaction would ensue: investigation panels would be appointed, the justice department would seek out antitrust violations, company executives would be jailed, and an outraged hue and cry for nationalization would follow.
• 44Were a government to demand the sacrifice of 46,700 citizens each year, there is no doubt that an outraged public would revolt. If an organized religion were to plan the immolation of 523,335 of the faithful in a decade, there is no question that it would be toppled. Were there a Manson-type cult that murdered 790 people to celebrate Memorial Day, 770 to usher in the Fourth of July, 915 to commemorate Labor Day, 960 at Thanksgiving, and solemnized Christmas with 355 more deaths, surely the New York Times would wax eloquent about the carnage, calling for the greatest manhunt this nation has ever seen. If Dr. Spock were to learn of a disease that killed 2,077 children under the age of five each year, or were New York City’s Andrew Stein to uncover a nursing home that allowed 7,346 elderly people to die annually, there would be no stone unturned in their efforts to combat the enemy. To compound the horror, were private enterprise responsible for this butchery, a cataclysmic reaction would ensue: investigation panels would be appointed, the justice department would seek out antitrust violations, company executives would be jailed, and an outraged hue and cry for nationalization would follow.
• 45The immediate need was to get the country out of the mud, to get a connected paved road system that would connect all county seats and population centers with mudless, dustless roads. These were the pioneering years. Safety, volume, and traffic operations were not considered a problem. But by the middle thirties there was an awakening and a recognition that these elements were vital to efficient and safe operation of the highway system.
• 46By the “middle thirties,” indeed, nearly one-half million people had fallen victim to traffic fatalities.
• 47Vehicle speed . . . alcohol consumption . . . the number of young drivers, changes in drivers’ incomes . . . the money costs of accidents. . the average age of cars . . . the ratio of new cars to all cars (because it has been suggested that while drivers familiarize themselves with their new cars, accident risk may increase) . . . traffic density . . . expenditures on traffic-law enforcement by state highway patrols . . . expenditures on roads . . . the ratio of imports to total cars (because there is evidence that small cars are more lethal than large cars if an accident occurs) . . . education of the population . . . and the availability of hospital care (which might reduce deaths if injury occurs).
• 48Further, David M. Winch cites another reason for public apathy: the belief that “[m]any persons killed on the roads are partly to blame for their death.” True, many victims of road accidents are partly responsible. But this in no way explains public apathy toward their deaths. For people killed in New York City’s Central Park during the late evening hours are also at least partially to blame for their own deaths; it takes a monumental indifference, feeling of omnipotence, absent-mindedness or ignorance to embark upon such a stroll. Yet the victims are pitied, more police are demanded, and protests are commonly made.
• 49We must realize that just because the government has always built and managed the roadway network, this is not necessarily inevitable, the most efficient procedure, nor even justifiable. On the contrary, the state of affairs that has characterized the past is, logically, almost entirely irrelevant. Just because “we have ‘always’ exorcised devils with broomsticks in order to cure disease” does not mean that this is the best way.
• 50Today, most Americans probably feel the telegraph naturally belongs within the private sphere, and few doubt the Post Office should naturally be a public monopoly. “Naturally,” however, in such a context means only that’s-the-way-it’s-been-for-as-long-as-we-can-remember, an Americanized version of Pope’s declaration that “Whatever is is right.” Yet few could think of a convincing a priori rationale for distinguishing the postal from the telegraphic mode of communication. At least one Postmaster General could not: in 1845 his Annual Report prophesied intolerable competition from the telegraph and suggested it might appropriately be committed to the government. At that early stage in its history, the telegraph might conceivably have become a government monopoly for the same reasons the Post Office already was, but the mere passage of time has obliterated any consideration of whether they were good reasons or bad reasons.
• 51[T]here is a[n] approach to the problem of traffic congestion—the economic approach—which offers a rational and practical solution. . . . The first step is to recognize that road space is a scarce resource. The second, to apply to it the economic principles that we find helpful in the manufacture and distribution of other scarce resources, such as electricity or motor cars or petrol. There is nothing new or unusual about these principles, nor are they particularly difficult. What is difficult is to apply them to roads, probably because we have all been brought up to regard roads as community assets freely available to all comers. The difficulty does not lie so much in the technicalities of the matter, but rather in the idea that roads can usefully be regarded as chunks of real estate.
• 52Let us now turn to a consideration of how a free market in roads might operate. Along the way, we will note and counter the intellectual objections to such a system. All transport thoroughfares would be privately owned: not only the vehicles, buses, trains, automobiles, trolleys, etc., that travel upon them, but the very roads, highways, byways, streets, sidewalks, bridges, tunnels, and crosswalks themselves upon which journeys take place. The transit corridors would be as privately owned as is our fast food industry.
• 53Consider now a road whose main function is to facilitate through traffic. If it is owned by one person or company, who either built it or bought the rights of passage from the previous owners, it would be foolish for him to install dozens of toll gates per mile. In fact, toll gates would probably not be the means of collection employed by a road owner at all. Now there exist highly inexpensive electrical devices which can register the passage of an automobile past any fixed point on a road. Were suitable identifying electronic tapes attached to the surface of each road vehicle, there would be no need for a time-wasting, labor-costly system of toll collection points. Rather, as the vehicle passes the check point, the electrical impulse set up can be transmitted to a computer which can produce one monthly bill for all roads used, and even mail it out automatically. Road payments could be facilitated in as unobtrusive a manner as utility bills are now.
• 54This does indeed appear frightening, but only because we are not accustomed to dealing with such a problem. It could not exist under the present system, so it is difficult to see how it could be solved by free-market institutions. Yet, the answer is simple: no one would buy any plot of land without first insuring that he had the right to enter and leave at will.
• 55For one thing, these are not the kinds of questions that can be answered in advance with any degree of precision, and not only in transportation. The same limitations would have faced early attempts to specify industrial setups in computers, televisions, or any other industry. It is impossible to foretell the future of industrial events because, given a free-market situation, they are the result of the actions of an entire, cooperating economy, even though these actions may not be intended by any individual actor. Each person bases his actions on the limited knowledge at his disposal.
• 56Just as private universities, athletic stadiums, etc., now enforce rules whose purpose is the smooth functioning of the facility, so might road owners levy fines to ensure obedience to rules. For example, automobiles stuck in an intersection could be registered by the road’s computer-monitoring system, and charged an extra amount for this driving infraction, on an itemized bill.
• 57A similar result would take place with two street owners, no matter what the property dispersal. It is easy to see this if the larger street company owns the intersections. The larger company would simply keep a high proportion (2/3, 3/4, or perhaps even 4/5) of green light time for itself, selling only the remaining small fraction to the intersecting side street. But much the same result would ensue if the smaller road owned the common intersections! Although the relatively lightly traveled road company might like to keep the lion’s share of the green lights for itself, it will find that it cannot afford to do so. The more heavily traveled street, representing a clientele willing and able in the aggregate to pay far more for green light privileges, will make it extremely tempting for the small street owner to accept a heavy payment, in order to relinquish most of its green light time. In other words, the customers of the main street, through indirect payments via the main street owner, will bid time away from the smaller number of customers using the minor street. This principle is well established in business, and is illustrated every time a firm sublets space, which it could have used to satisfy its own customers, because it receives more income subletting than retaining the premises for its own use.
• 58On the rare occasions when the feasibility of private road ownership has been considered by mainstream economists, it has been summarily rejected, based on the impossibility of competition among private road owners. Seeing this point as almost intuitively obvious, economists have not embarked on lengthy chains of reasoning in refutation. Thus, says Smerk, rather curtly, “Highways could not very well be supplied on a competitive basis, hence they are provided by the various levels of government.”
• 59A number of conditions must be met if the private sector of the economy—the market system—is to function efficiently. Indeed, these conditions are essential if the private sector is to perform in the public interest. . . . [I]t is the absence of these conditions which often gives rise to demands for public sector [government] action.
• 60Therefore, the objection to private roads on the ground that they are inconsistent with perfect competition cannot be sustained. It is true that this industry could not maintain the rigid standards required for perfect competition, but neither can most. In pointing out that perfect competition cannot apply to roads, we have by no means conceded that competition between the various road owners would not be a vigorous, rivalrous process. On the contrary, were we to allow that perfect competition could apply to roads, we would then have to retract our claim that vigorous competition could also ensue. For perfect competition and competition in the ordinary sense of that word (implying rivalry, attempts to entice customers away from one another) are opposites, and inconsistent with each other.
• 61The shape of the average revenue curve [demand curve] of the individual firm will depend on conditions in the market in which the firm sells its product. Broadly speaking, the keener the competition of its rivals and the greater the number of fairly close substitutes for its product, the more elastic will a firm’s average revenue curve be. As usual, it is possible to be precise about limiting cases. One limiting case will occur when there are so many competitors producing such close substitutes [the perfectly competitive model] that the demand for the product of each individual firm is infinitely elastic and its average revenue curve is a horizontal straight line. This will mean that the firm can sell as much of its product as it wishes at the ruling market price. If the firm raises its price, then, owing to the ease with which the same, or a very similar, product can be bought from competitors, it will lose all its customers. If the firm were to lower its price, it would be swamped by orders from customers wishing to take advantage of its price reduction. The demand—and the elasticity of demand—for its product would be infinite.
• 62Instead of concentrating on the maximization of ends, assuming given scarce means, as does the Robbinsian notion of perfect competition, the market-process view makes the realistic assumption that the means, although scarce, are in no way given; rather, knowledge of them must actively be sought out. The allocation of scarce means among competing ends is a passive procedure when the means and the ends are known. All that need be done can be accomplished by a suitably programmed computer. But the active seeking out of the ends and the means in the first place is a task that can be accomplished only by entrepreneurial talent: active, not passive. The entrepreneur, denied his crucial role in the perfectly competitive world view, takes center stage in the market-process conception.
• 63We have seen that the market proceeds through entrepreneurial competition. In this process market participants become aware of opportunities for profit: they perceive price discrepancies (either between the prices offered and asked by buyers and sellers of the same good or between the price offered by buyers for a product and that asked by sellers for the necessary resources) and move to capture the difference for themselves through their entrepreneurial buying and selling. Competition, in this process, consists of perceiving possibilities of offering opportunities to other market participants which are more attractive than those currently being made available. It is an essentially rivalrous process . . . (which) . . . consists not so much in the regards decision-makers have for the likely future reactions of their competitors as in their awareness that in making their present decisions they themselves are in a position to do better for the market than their rivals are prepared to do; it consists not of market participants’ reacting passively to given conditions, but of their actively grasping profit opportunities by positively changing the existing conditions.
• 64The Port of New York Authority Bus Terminal helps relieve mid-Manhattan traffic congestion. Approximately 90% of intercity bus departures and intercity bus passengers from mid-Manhattan originate at this terminal. The diversion of this traffic on overhead ramps from the terminal to the Lincoln Tunnel has been equivalent to adding three cross-town streets.
• 65On one short span of East River Drive [in New York City] there are grassed terraces carried over the traffic lanes right out to the edge of the East River, a special boon for nearby apartment dwellers. The solution was perhaps triggered by the fact that space between the established building lines and the river was so narrow as to force the superposition of the north and south lanes. But this did not do more than suggest the opportunity. Applause goes to those who grasped it, but none to those who with the good example in view so consistently ignored it thereafter.
• 66It seems clear that, ultimately, many urban freeways will become double or triple-deck facilities, with upper decks carrying the longer distance volumes, possibly with reversible lanes, and probably operating with new interchanges to avoid flooding of existing interchanges and connecting streets.
• 67There is joint road consumption by consumers with different demand functions. The road is not as good as steel which may be produced to different specifications of quality and dimensions. The economic characteristics necessitate the production of one kind of road for all users at any given place.
• 68Another objection charges that competition among roadway entrepreneurs would involve wasteful duplication. Says George M. Smerk: “[C]ompetition between public transport companies, particularly public transit firms with fixed facilities, would require an expensive and undesirable duplication of plant.”
• 69We must first of all distinguish between investment ex ante and ex post. In the ex ante sense, all investment is undertaken with the purpose of earning a profit. Wasteful overbuilding or needless duplication cannot exist in the ex ante sense; no one intends, at the outset of his investment, that it should be wasteful or unprofitable. Ex ante investment must of necessity, be non-wasteful.
• 70while it is possible to envisage competition in the provision of roads connecting points at great distances apart—as occurred on the railways in the early days—it is not possible to envisage competition in the provision of access roads in towns and villages, for most places are served by one road only. A highway authority is in practice in a monopoly position. If any of its roads were to make large profits, we could not expect other road suppliers to rush in to fill the gap. If losses are made on some roads, there are no road suppliers to close them down and transfer their resources to other sectors of the economy.
• 71Says Mohring, “But indivisibilities do exist in the provision of transportation facilities. Each railroad track must have two rails, and each highway or country road must be at least as wide as the vehicles that use it.” In similar vein, says Haritos, “To get from A to B, you need a whole lane, not just half, for the full distance, not half of it.” And, in the words of Peter Winch, “indivisibility of highways makes it impractical to have competing systems of roads, and the responsible authority must therefore be a monopoly.”
• 72Says Mohring, “But indivisibilities do exist in the provision of transportation facilities. Each railroad track must have two rails, and each highway or country road must be at least as wide as the vehicles that use it.” In similar vein, says Haritos, “To get from A to B, you need a whole lane, not just half, for the full distance, not half of it.” And, in the words of Peter Winch, “indivisibility of highways makes it impractical to have competing systems of roads, and the responsible authority must therefore be a monopoly.”
• 73Says Mohring, “But indivisibilities do exist in the provision of transportation facilities. Each railroad track must have two rails, and each highway or country road must be at least as wide as the vehicles that use it.” In similar vein, says Haritos, “To get from A to B, you need a whole lane, not just half, for the full distance, not half of it.” And, in the words of Peter Winch, “indivisibility of highways makes it impractical to have competing systems of roads, and the responsible authority must therefore be a monopoly.”
• 74We do not believe that the existence of indivisibilities is enough to guarantee monopoly, defined by many as a situation in which there is a single seller of a commodity. There are indivisibilities in every industry, and in all walks of life. Hammers and nails, bicycles and wheelbarrows, locomotives and elevators, tractors and steel mills, professors and podiatrists, ballet dancers and bricklayers, musicians and motorists, ships and slippers, buckets and broomsticks, none of them can be chopped in half (costlessly) and be expected to produce just half of what they had been producing before. A railroad needs two rails (with the exception, of course, of the monorail), not one, or any fraction thereof. Also, in order to connect points A and B, it must stretch completely from one point to the other. It may not end halfway between them, and offer the likelihood of transportation between the two points.
• 75(e) Expanding roads. One of the most popular antidotes to congestion is to build more roads. This solution, benefiting from the seeming presence of common sense, has attracted widespread attention and praise. As Buchanan reports, “the recommended solutions usually take the form of expansion and reconstruction of the highway system, all of which involve considerable additional investment of resources in highways and streets.” Mohring goes even further. In his view,
• 76Currently, the only technique being employed to an appreciable extent to alleviate urban traffic congestion is investment in additional highway capacity. Some of these additions to capacity have involved widening or otherwise altering existing arterial streets, but most of them have involved the construction of entirely new, high-speed, limited-access expressways.