Free-market roads is the theory that a society should have entirely privately owned roads.
Free-market roads are advocated by many classic anarcho-capitalist works, including Murray Rothbard's For a New Liberty, Morris and Linda Tannehill's The Market for Liberty, David D. Friedman's The Machinery of Freedom, and David T. Beito's The Voluntary City.
Some political theorists, such as Ayn Rand, have argued that any public property is immoral.
Proponents often cite the free rider problem as a reason for privatizing roads. Since traffic congestion is caused by there being more traffic than the highway can handle, one way to look at congestion is simply a shortage of roads, lanes, exits, or other infrastructure. Libertarian economists frequently cite the free market's pricing mechanism as a superior means of avoiding shortages than government planning (See Economic calculation problem). Peter Samuel's Highway Aggravation: The Case For Privatizing The Highways compares American traffic jams and Soviet grocery store lines:[1]
Ronald F. Kirby, transportation director for the Metropolitan Washington Council of Governments, opined that private companies have more of an incentive to invest in infrastructure early, before a public outcry prompts construction. He noted, "Too often in the public sector, the easiest thing to do is let things sit unresolved. The private sector is motivated by self-interest to resolve things quickly".[2]
Furthermore, if roads are privatized, only those who pay for roads will directly benefit from them. Otherwise, those who pay for roads must deal with traffic congestion caused by those who have not paid.
Proponents often cite competition among road providers as an advantage, as road companies would have an incentive to seek innovative ways of lowering prices and improving service to gain a competitive edge. For this reason, arterials (major highways) are often viewed as a prime candidate for privatization, since there are typically many possible routes one could take to get to a particular destination, which could facilitate competition among road companies. However, local neighborhood streets could also be provided by private road associations, in much the same way that common stairs, hallways, etc. are provided in a cooperative living arrangement, condominium, or gated community. The association might allow members to drive these streets for free and charge fees to motorists using them as cut-throughs to get to other places. Contractors would compete to provide good road service in much the same way as elevator companies compete for the business of office buildings, despite the fact that a typical building may only contract with one elevator provider at a time.
A company that owns a private road will typically want to at least recoup its earlier investment to construct the road. Furthermore, when construction is complete, the company wants to keep investing in the road to keep up its initial value, because roads deteriorate over time. Road maintenance needs to be quick and of high quality, to keep the road from becoming idle again in the future resulting in a capital loss for the company; road traffic needs to be maximized, because that will result in the most revenues to the company. A government does not seek to maximize traffic or reduce road maintenance, because it has no incentive to do so, claim supporters of private roads. These supporters also claim that road safety is increased by companies that own private roads. Those companies do not want to see people getting injured on their roads, as it will tarnish a company's reputation. The companies will seek active removal of unfit, drunk and other reckless drivers, if allowed to discriminate so by the state, and will want to see increased mechanical standards of vehicles, because a stalled vehicle means an idle road. The company itself needs to pay for its removal, or passes this cost on to the owner of the stalled vehicle, inciting the owner to upkeep the quality of one's property.
B. H. Meyer stated, "It is evident that the turnpike movement resulted in a very general betterment of roads."[3] The book Street Smart claims that Brazil has saved 20 percent and Columbia 50 percent through efforts to outsource road maintenance to the private sector.[4]
A private company can more easily be held accountable for negative effects of the highway than that if it is publicly owned. For example, residents living next to urban highways will benefit from noise barriers. However, campaigning for the city council to erect the walls is often ineffective and the process can take years, since the council needs to divert funding from other more pressing projects. A private highway will try to avoid court action and feel more obliged to cater for residents. The cost of erecting the walls will be passed on directly to the drivers (who are causing the noise), rather than the general public.
In 2006, eminent domain authority was stripped from private highway developers in Colorado due to concerns over abuses.[5] Cato rebuts the potential for eminent domain abuse by noting, "In California the state highway agency approved private development of the Mid-State Tollway on the eastern fringe of the San Francisco-Oakland area. Bay area residents, however, strongly opposed the tollway and favored of a Bay Area Rapid Transit line built nearby to serve the area. As a result, the highway developer abandoned the northern leg of the project. Had a public agency been building the highway, it could have invoked eminent domain authority to build the road in spite of political opposition."[6]
Toll Road Investors Partnership II CEO E. Thomas, in testimony before the State Corporation Commission, said that the lack of eminent domain power required developers to "acquire necessary property through private means, which was a costly and time consuming exercise for the private investors in the Greenway."[7]
Bruce L. Benson argues that when roads are privately owned, local residents will be better able to prevent crime by exercising their right to ask miscreants to leave.[8] He observes that avenues in the private places of St. Louis have been shown to have lower crime rates than adjacent public streets. The Market for Liberty further argues that private roads will be better policed as the owners focus on serious crime rather than on victimless offenses:[9]
| “ | A private corporation which owned streets would make a point of keeping its streets free of drunks, hoodlums, and any other such annoying menaces, hiring private guards to do so if necessary. It might even advertise, "Thru-Way Corporation's streets are guaranteed safe at any hour of the day or night. Women may walk alone with perfect confidence on our thoroughfares." A criminal, forbidden to use any city street because all the street corporations knew of his bad reputation, would have a hard time even getting anywhere to commit a crime.
On the other hand, the private street companies would have no interest in regulating the dress, "morals," habits, or lifestyle of the people who used their streets. For instance, they wouldn't want to drive away customers by arresting or badgering hippies, girls in see-thru blouses or topless bathing suits or any other non-aggressive deviation from the value standards of the majority. All they would ask is that each customer pay his dime-a-day and refrain from initiating force, obstructing traffic, and driving away other customers. Other than this, his life-style and moral code would be of no interest to them; they would treat him courteously and solicit his business. |
” |
Mutualist Kevin Carson argues that transportation is a natural diseconomy of scale.[10] The cost of transportation increases disproportionately with the size of a firm; in a free market, there would be strict upper limits to the size and power of corporations, and small businesses would have natural advantages. Government subsidies to transportation, however, make large, centralized corporations artificially profitable, contributing to corporate dominance of the economy.[11] Carson points out that in many cases, centralized industry did not develop until after the advent of taxpayer-funded roads and other transportation projects.[12]
In many parts of the world land use patterns mean that building two or more highways in parallel isn't practicable. Kroeger claims, "This would result in an incredibly inefficient use of land resources." When there is only one highway connecting A to B, the main advantage of privatization, competition, disappears. In absence of regulation a private highway operator is likely to charge an exorbitant monopoly price, resulting in huge profit margins and few benefits for drivers. The initial franchise fee and/or savings public capital costs can offset the resulting monopoly profits in terms of societal costs, however there are distribution issues in that the income is spread over an entire region while the burden falls on a small subset of that region's population who actually need to use the road. Also, it is difficult to predict the long term present value of a road, for example for 407 ETR was leased for 3 billion CDN and was subsequently valued at nearly 10 billion CDN. While alternate local roads and other forms of transportation may provide some competition, it is often impractical, especially for goods.
A counter-argument is that while a lone highway connecting A to B may not have any other competition from other highways, it would still have to compete with trains, planes, and other roads.
A Mother Jones article notes that toll revenues from privatized highways go to private corporate profits and shareholders, rather than the government.