John Stossel says new roads should be built by private entities and paid for with tolls. He supports the privatization of existing roads as well. Subsidies to roads are small, but we don’t need to subsidize them at all and private owners would manage them better, says Stossel.
The Antiplanner spent Wednesday in New York City to participate in Stossel’s show on “Planes, Trains, and Automobiles.” We talked about congestion pricing, airline deregulation, and I enjoyed a debate over high-speed rail with Art Guzzetti, who is APTA‘s vice president in charge of policy.
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The show isn’t yet available on the web, but soon will be. In the meantime, if you get Fox Business News, you might be able to catch it tonight at 10 pm Eastern, tomorrow at 9 pm or midnight, or Sunday at 10 pm.
At what scale of road does the tolling start? Arterials, feeders, residential streets? All of the above? I don’t have cable and won’t be able to see the show.
“I don’t have cable…”
So you are the other one. 🙂 Should be available online somewhere soon. I think FOX usually posts these vids for a few days.
“At what scale of road does the tolling start?”
I’ve always wondered if it would be possible for property to be attached to roads. For instance, take the street in front of a house. Could it be included in the house property? Could the owner of the house be responsible for maintaining that patch of road? Certainly this is done indirectly through property taxes. If each section of street were privatized, couldn’t it collectively be managed in a way similar to HOAs? Couldn’t individuals or neighborhoods also determine parking rules and collect parking fees from individuals who want to use the space adjacent to their property?
Frank,
You raise a very interesting idea in suggesting that the parts of a street in front of a house could be privatized. I’m afraid that this would lead to numerous logistical and regulatory difficulties unless the laws that established the roads as private property were carefully laid out. Suppose that a neighborhood decided to let each individual determine the parking rules that governed the space in front of his or her property–I feel like this could lead to conflicting rules if each individual determined different time periods in which parking was permitted. This may not be a problem in a residential neighborhood where it’s unlikely that parking spaces would be in high demand (Fourth of July BBQs excepted), but if these rules were applied to a side street near a business, a school or other institution that draws large numbers of people, this could become a more significant problem. Also, if houses are located on either side of a two-lane street, would that mean that each house owns the lane located in front of it, raising the possibility of different rules on each side of the street?
Along those lines, does anyone know if different zoning laws can apply to different sides of a given street?
I’ve seen developers work out deals with local governments to do certain types of development not normally allowed in a particular area by building roads within and adjacent to the development site. The road are ultimately “public roads” but were built with private funds.
“Along those lines, does anyone know if different zoning laws can apply to different sides of a given street?”
They can in theory, but I can’t think of an example. Streets are often the boundary of zones (where one side of the street is commercial and the other residential), but I can’t think of an example of where the streetscape regulations are different on the east and west bound side of the lane due to zoning. I’m sure one exist.
@ Frank
Most people think that roads must either be public goods or private goods, but there are a couple of intermidate types of goods, namely club goods and common pool goods. Each category of goods is mangaged differently to achieve optimal results.
I see no reason why different elements of the road “system” couldn’t still be interconnected yet managed differently. Freeway, arterials, collectors, property access roads all have different characteristics and are currently managed by different levels of government agencies with overlapping responsibilities, including federal, state, county, city levels of governments.
Along those lines, does anyone know if different zoning laws can apply to different sides of a given street?
Sure. Very common, usu with residential density. As for design regs: overlay zone. Or even the transition from, say, industrial to commercial.
wrt to privatization & attachment, the reason why they are generally not is because of all the problems that arose in the early days of our colonies. Each individual had the chance to build something in the road and sometimes that impeded traffic, so a “right of Way” was declared to stop rational utility maximizing agents from acting in their own best interest and their actions being detrimental to the public/commonweal. Even in private developments where the roads are private the entity with the police power does not cede all rights and retains some power over roads – fire and police being the main reason.
So even though Stossel is just seemingly dog-whistling to attract viewers by trotting out the ‘privatization’ red meat, a more doable alternative is Pay As You Drive (PAYD) or insurance by mileage or some other similar scheme – in essence having to pay much extra for extra driving. Such market signals force agents to chain trips and drive more efficiently. Shoup makes such arguments in his parking papers.
DS
The economist Walter Block has made a life’s study out of road privatization. Google “Walter Block roads” and you will find essays and his books on the subject. The idea of free to use, non-tolled, state owned roadways is a 20th century invention. In the nineteenth and early twentieth century most states had statutes specifically prohibiting the use of public funds for streets and roads. Private funds, not public built most of the roadways until the 1920’s
Privatization would be great under the following conditions.
The expressways are formed into toll corporations and sold in initial public offerings, not handed over in shady backroom deals to foreign corporations. A limited number of shares should be reserved and granted to every taxpayer of a state since the roads in theory currently belong to them.
Parallel routes are sold as competing corporations to provide overall price competition to the public.
The roads are made liable to the same property tax laws as railroads, pipelines, and power line rights of way.
The private toll corporations can set their own speed limits and hire their own police force to patrol their property and ensure payment of tolls.
The toll corporations would be subject to regulation by the Surface Transportation Board regarding the building of new routes and to ensure fair open access to all users. Eminent domain powers would derive from STB decisions granting the right to build new roads or improve eisting ones where the work is congruent with the public convenience and necessity. The STB would set minimum levels of utility (speed, traffic fluidity) that the roads must be maintained to.
Toll corporations would be permitted to charge users what the traffic will bear in a free market condition.
User charges would be made through a universal electronic toll system like EZPass that works on all toll roads. The toll corporations would jointly own the corporation which collects and distributes the electronic payments.
Toll corporations would be required like a REIT to pay out profits in dividends to shareholders that are not used for retirement of outstanding debt, capital investment in existing physical plant, and capital expansion through construction of new roadways.
Get serious people. Once you get past thinking like a science fiction story, privatization of roads would end up:
1. A huge number of owners of roads which would make traveling impractical and road toll collection impractical.
2. Owners would band together into cooperatives or be bought out to form large corporations that could offer significant travel freedom.
3. Market forces would lead to city, county, and state-wide passes that facilitate freedom of travel.
4. Eventually the roads would be owned by either a (1) city, county and state-wide corporation that must be regulated as a monopoly; or (2) the city, county and state government will just take over the management of the roads.
New roads or a few key bridges and roads could be privatized for financing reasons. But there is no politically conceivable way that the US is going to revert back to a hodge podge of private road ownership.
Roads are not a pure government function, like national defense. But they are a function that naturally makes most sense as done collectively. It can either by done by various levels of government, or done privately with lots of government regulation. Experimentation with those options is great, but it is hardly a lot of difference.
Absolute privatization is one of those loony Libertarian values that will keep isolating the party and ideology from mainstream people. In the magical fairy land of Libertarians, everything works out because of markets. Once the rubber meets the road, one quickly finds out that theory — which many hard-core Libertarians are in a perpetual state of — does not make much sense in reality. There is no true Libertarian world anywhere in the world. At least Communism went from theory to practice, and it failed big time.
With that said, I think it’s also important to differentiate from streets from that of roads:
Streets should remain mostly public. They carry people, not just cars. They are a public amenity, like a park, even though Stosselites would love to make public parks private. Great idea…We’ll drain the Great Lakes for soda and make it Coca-Cola Lakes! A hyperbole, sure, but you get the picture.
Despite Libertard claims, you’re not a Sickel-and-Hammer-Commie because you want streets to remain a public good.
Roads are generally meant for cars and commerce. I think it’s okay to look into privatization of some roads, with acceptable regulations.
Regarding privatization of streets, gated neighborhoods, or cul-de-sacs without reason; any such development adjacent to them should pay an externalized costs of not allowing pass-through pedestrian, bike, transit, and auto movement because inevitably the congestion generated on these cut-off neighborhoods gets passed onto other local streets and roads, often times where other residents are adjacent to.
Here is Silicon Valley/San Jose we have several sewer districts. A group of six or seven elected local people run the districts. They run quie well and I do not even know who the members are but they do a good job.
My guess they could run road districts/systems just as well with less politics, better service at a more reasonable cost.
WS,
The electric power grid, water systems, gas delivery system and freight rail system are all either privately owned or charge a pro rata toll for their use. They deliver product 99.9 percent of the time without a hiccup. They do so because their use is rationed by price.
Roads are the same kind of system as the aforementioned. They serve an economic and utilitarian function. Yet we use a political process to allocate them(where they don’t need to be, just to support real estate developers) and we spend tax money to build them. Then we let everybody use as much of them as they want until they are filled to overflowing and they don’t function properly for hours at a time, everyday. That is the definition of lunacy. More of the same is lunacy.
If roads were privatized or tolled they would not be constructed the way they are now. Roads and bridges would probably be narrower and expensive to use. The only vehicles on them would be commercial vehicles and mass transit vehicles. There would be far fewer private autos and urban layouts would necessarily be denser.
Streets also serve an important civic function as a commons.
Even O’Toole himself has said in the past that roads are there regardless of economic conditions.
If there’s a downturn in the economy, you’re not going to rip out the road from in front of your house.
The electric power grid, water systems, gas delivery system and freight rail system are all either privately owned or charge a pro rata toll for their use. They deliver product 99.9 percent of the time without a hiccup. They do so because their use is rationed by price.
And much of this infra is in disrepair. This is part of the reason why ideologues advocate privatization, as the funding for infra maintenance and repair has been deferred for decades on end. Add the fact that the distracted and underinformed electorate is slowly being hoodwinked into believing all taxes are bad, and you have further delays in maintenance and repair.
DS
Dan,
You miss the point that it is the pro rata charge for use that keeps the other grids running smoothly.
Imagine what would happen to the power grid if it was run like the roadways where everyone could just tap as much as they wanted, whenever they wanted with no consideration of cost or efficiency. People would leave their lights on all day and their windows open with the AC turned on.
There are grids in third world countries(Iraq was one) that are run that way and they suffer constant blackouts from overloaded grids. Yet we run our roads that way and people wonder why they just fill up again after we widen them for the umpteenth time.
Dan said: Much of this infra is in disrepair. This is part of the reason why ideologues advocate privatization, as the funding for infra maintenance and repair has been deferred for decades on end. Add the fact that the distracted and underinformed electorate is slowly being hoodwinked into believing all taxes are bad, and you have further delays in maintenance and repair.
THWM: Roads can remain public, but motorists can pay some thing like 25 cents+ for every mile that they drive. This would be like a taxi meter in every vehicle.
This would help take some burden off of property tax payers too.
Jardinero, I’m actually in agreement with what you wrote and don’t have a problem with it.
The issue – taking your argument – is that the pricing signals are divorced from the activity, and that gas is so heavily subsidized that the true cost is obscured to the user. There are actually pricing signals, but they are distorted and obscured. Using your argument again, I mentioned a couple ways to undistort the signals way upthread in #7. See the auto lobby’s reaction to such ideas and you see the issue here.
The issue – taking my argument – is that there are clear instances when privatizing the provisioning of public goods has had very bad outcomes recently – Bechtel and Enron. It is true there was insufficient oversight to control greed, but I’m not sure how to offer the ‘increase oversight’ requirement on this site when seemingly every third word is akin to ‘kill government’.
I’d also point out the fractious power grid – aging and rapidly approaching obsolescence – is resisting upgrading precisely due to the conditions Mr Grattan brings up in 12.
DS
There is no true Libertarian world anywhere in the world.
Is that the fault of theory or a lack of practice?
“Is that the fault of theory or a lack of practice?”
Both. There is no “true” world of any ideology in existence (Cuba ain’t communist, America ain’t capitalist… in a “true” way).
Apparently, Russia decided to privatize forest maintenance (and firefighting in those areas), esp in many areas that are burning now.
DS
“…125,000 hectares of Russia’s forest have been destroyed…”
Fires don’t destroy forests; fire alters forests. Forest succession, and fire’s role in the cycle, is elementary biology. Media typically uses sensational terms like “destruction” and “devastation”, and Eastern European writing overuses hyperbole and flowery prose.
“In developed countries, citizens don’t perish in fires. …People don’t die this way in Europe or the United States.”
Right. In the US in ’08, there were almost 1.5 million fires that caused 3,320 deaths. Of these, “700,500 were outside and other fires … causing 55 civilian fire deaths [and] 680 civilian fire injuries”. Russia also has a higher percentage of its population living outside of cities, where wildfires occur.
This article was written by a journalist notorious for hand flapping who also wrote that “Viktor Yanukovych’s victory in the presidential election once again raises doubt about the basic premise of democracy: that the people are capable of choosing their own leader. Unfortunately, only wealthy people are truly capable of electing their leaders in a responsible manner.”
Drought and record heat was responsible for these record fires, not privatization. (And government giving corporations land is corporatism, not privatization.)