Markets vs. Privacy

A libertarian named Henry Lamb paints a dire picture of what could happen if highways are universally tolled rather than funded out of gas taxes: loss of privacy, government knowing your every move, denial of mobility to those who haven’t paid their bills. “Government could control when and where people go simply by adjusting the tax rate,” warns Lamb.

The question of tolls puts libertarians in a dilemma. They know that gas taxes, though a user fee, are inefficient because they don’t give the right signals to either the users or the highway providers. Tolls are the free-market solution, but they also worry about privacy. They would like to see the roads privatized, but even a private road owner could have its records subpoenaed by the government.

Fortunately, there are several ways of designing electronic toll systems that preserve traveler privacy, two of which are described in this paper that the Antiplanner previously mentioned here. So why do writers like Lamb still freak out at the thought of toll roads?

The real issue is not the technological issue of preserving privacy but the institutional issue of designing an efficient transportation system. When Lamb frets that “Purchase of a vehicle will give the government a database containing the name and residence location of every automobile owner,” I shrug my shoulders and say, so what? The department of motor vehicles — which, last time I looked, was a part of the government — already has such a database.

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So what institutional designs will protect both privacy and personal choice? Privatization is one, and would probably be a good thing, but I don’t see that on the immediate horizon. Currently, most of our roads are owned by states, counties, and cities, and none of them have been particularly innovative or protective of the user fees they collect from highway users.

But one highway owner has been both: the regional or county toll road authority. While state and local highway bureaus are generally a part of broader transportation departments, toll road authorities tend to be narrowly focused on one thing: their toll roads. Being focused on that, and getting all of their revenues from user fees rather than from tax dollars, they are much more responsive to user needs and much less likely to divert a share of their revenues to light rail or other transit fantasies.

County toll road authorities in Florida, Texas, and other states have been very successful at building innovative highways at a low cost and paying for those highways out of their tolls. In contrast, state-run toll roads in New Jersey and Pennsylvania are better known for corruption and cronyism. Colorado recently built some tollroads in the Denver metro area that have not been financial successes. County or regional authorities would probably have avoided the state’s mistakes, which were due to various political pressures.

State legislators who are truly interested in reducing congestion and providing more efficient transportation without tax subsidies should enact laws that allow all counties in their states to set up quasi-independent toll road authorities. This won’t immediately solve the question of how to pay to maintain existing roads, but it will show how we can have efficient tolling systems that are immune from the manipulations of social engineers.