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ROADS FOR CIVILIZATION

Yet another excuse that you may hear when talking to statists is that roads help civilization or society or people. It would seem that if there is a town in the middle of nowhere, created by people by their own choice, the “correct” (?) thing to do is to end their isolation by building a communicating road. We need to do so regardless of everybody else’s responsibility (or more precisely lack of thereof) in the decision. It is a question of “solidarity” (regardless of the fact that solidarity is voluntary while tax payments are not).

Or, you may hear the “country building” fairy tale, whereby we need to expand the country by building roads and hence people will spread throughout it (regardless of any economic un-feasibility issues).

Or they may tell you that expanding trade in general is good for everybody and hence we need to build roads. This is so regardless of the fact that roads expand trade only if there are trades to be made. Furthermore, many of us won’t be actually purchasing any good or service using that road, why should we pay for it? How are we actually benefiting? We know with 100% certainty that our taxes will pay for the road, but we have no idea if we will benefit at all!

UNFAIR ADVANTAGE

Yet another issue that can be found in government-sponsored highway construction is its unfair competition with railways. Mega highway construction has always been large targets for car and car-related companies. It is indeed a sweet deal Get the government to create highways for free so that they can sell their products! There are several problems with this process.

To begin with and again, political excuses (i.e. lobbying pressure) has been used to create roads instead of economic rationale. As such, the roads and highways are usually monstrously large and hyper-extended in relation to their economic use. Furthermore, all these mega building and maintenance projects are paid for and maintained by the taxpayer! This in essence means that you, us and everybody else is subsidizing car manufacturers! And you thought that only direct tax breaks or subsidies were happening.

The second issue is that these mega projects have killed the operation of trains, which are much more efficient and far less polluting. While the government was paying and it continues to pay for highways, train companies must pay for their own tracks.

The third issue is that by creating massive accesses to cities, they fostered massive traffic jams, pollution and parking issues. In cities where car traffic is restricted, most people take trains for longer distances, and then streetcars or subways within the city. This not only makes economic sense, but it actually speeds up the movement of people from point A to point B with maximum efficiency.

RETURNING TO SANITY

It is clear that the only purpose of roads is economic. Although we may consider some of them pretty, there isn’t a single company that we know of that ever built a road just because it was pretty. It may have done it to attract tourists, but this reason is still economic! In other words, roads are economic which may or may not be pretty.

This only makes sense. When governments strive away from this principle and begin to apply philosophical or metaphysical or even political reasons to them, is when they get into troubles… which will be passed on to us as either taxation or inflation.

Enough! We need to find our way back. How do we do this? Privatizing.

Privatization

This word alone strikes panic in many good but deluded people. This is so because throughout history there have been countless examples of privatizations gone wrong. Or to be more precise, no privatization is perfect and perfection was expected. In the end, it is a matter of expectations, not privatization.

Privatizing simply means transferring government ownership into private hands. Roads and highways can be privatized quite easily through shard ownership. For example, a specific municipality or town creates a private company who from now on owns all the roads within its limits and people receive shares of this company in the proportion that they were paying taxes or square footage property or some other proportional measurement. Presto! Instant privatization.

Again, this is not academic wishful thinking. This was done at a massive scale when Communism collapsed in the East. There is plenty of real-world experience as to how to do this in real life. It is very feasible indeed.

Privatization is only a problem when people mis-understands how it operates and/or a free market is not allowed to operate. People believe that if something is privatized it will continue to operate as usual. This only happens if the property was financially viable before the privatization. If it was heavily subsidized by the government, then it will collapse. This is precisely the objective. To get rid of all unsustainable financial and economic dead weight allowing for a new re-balancing of means and wants. This process is painful, but the only other option is continue as today, which is not an option at all.

Companies operate

How would these companies operate? Like any other company, for profit. Shareholders will pay the company to maintain roads. In turn, the company will collect tolls from non-shareholder users. If there are profits, they will be distributed among shareholders.

But what about rights of way? What will prevent a company from blocking my house and preventing me from leaving? Contractual arrangements containing standard rights of way. Contractually, the company will be bound not to block my house.

But what about non-payment of fees? Just like any other company, they will initiate mediation proceedings to recover their money. They won’t be able to prevent me from using the road, but they will seize my property to the full extent of my debt.

How would this be different from today? Simple. Financially unsustainable roads will be closed down or abandoned or targeted for economic development or re-development. Today a government does not care is a road is sustainable or not, hence the gigantic cumulative debt in their treasuries. Under a private system, all roads will be self-sustainable or abandoned.

Furthermore, the size and maintenance state of roads will be directly responsive to the wishes of their owners. If a town prefers lower fees and lower quality, they can get it. If a different town prefers higher quality with the intention of attract traffic, they can get it. The quality and size of roads become “good enough” to satisfy owners instead of one-size-fits-all government economic debauchery.

Additionally, these companies could have any possible size. They may be town or city-sized down to block-size. They would operate in the same manner, although we strongly suspect that economies of scale would prevail.

Neighborhoods go bankrupt

Let’s take a look at the worst case scenario. Let’s assume that there is an economic debacle and entire neighborhoods go bankrupt. People cannot afford to maintain streets and street companies go bankrupt with them. Then what? Then nothing. Eventually a buyer or a set of buyers will purchase these properties and re-develop them or make them productive in some other manner.

This is no different from what it happens today. In the cities where neighborhoods have gone bankrupt, people have simply either left or sold their properties. However, the city is still obligated to maintain the streets! And since now the taxpayer base (i.e. the number of suckers that pay taxes) has dropped, taxes have gone up! This means that if your finances are OK, you have no choice but to pay for other peoples’ mistakes!

Does this sound like common sense?

Private roads

New neighborhoods may decide that every property owner may own the road accessing the property, with contractually established rights of way. As the value of the property is related to the state of the road, property owners will be well motivated to maintain their section in good standing. In the event of financial difficulties, the owner may sell his section of the street to a different person or may sell the property or rent a section of it or may leave that section of the street to decay. In this case, the owners of the remaining properties will be motivated to pay for the maintenance to prevent their properties from devaluating. Or when property owners purchase a property, they may be required to pay a road maintenance insurance should they get into financial troubles. The number of possible solutions is only limited by the entrepreneurial imagination.

Note: please see the Glossary if you are unfamiliar with certain words.

Continue to Planes, trains and automobiles - Part 4

 

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