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7668 sats \ 44 comments \ @Undisciplined 3 Jan libertarian

Privatizing Roads Solves the Problem of Road Closures By Benjamin Seevers

All of us have experienced government road closures and the traffic and safety nightmares they create. Private roads may be the answer to solving the problem.

We've all been victims of the devastating question "Who will build the roads?" And of course we're all well aware that no libertarian thinker has ever addressed it.

Sarcasm aside, I think a much more interesting question than "Who will build the roads?" is "How do we transition to private roads?"

I've lived places that have considered private road solutions to congestion problems and skyrocketing infrastructure costs. Implementation is tricky, because the road network is very valuable, but on the margin each road may have many substitutes.

If you sell the entire road network at once, there will be issues of monopoly pricing that will piss everyone off. However, if you auction of individual roads, potential buyers might not be able to earn the revenue needed for maintenance and liability, because drivers will shift to the still free state owned roads.

There are many solutions to those problems, of course. How do you all think the existing road network should be dealt with?

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2773 sats \ 10 replies \ @0xIlmari 3 Jan

I think a more important question is, do we privatise also the forests and rivers? The air that we breathe? How do we, as a whole, care for the global environment if doing so is against the economic interests? (Because it costs money to do so and thus means higher prices in aggregate and most consumers will choose cheaper products.)

1054 sats \ 6 replies \ @scottathan 3 Jan

That's a fantastic point, and a valid concern. Like you mention, we do have something akin to a collective duty to care for the environment.

Unfortunately, government is often the one who makes economic interests and environmental interests diverge.

For example, in the US, the government will only lease land out to extraction projects, even though conservationists are often willing to pay more for the land than oil companies.

In fact, economic growth and environmental protection would naturally go hand in hand if not for government intervention. As nations grow wealthier, communities develop a higher interest in environmental protection, so much so that individuals and businesses are willing to pay through the nose for carbon reduction. Yet, governments still pore hundreds of billions a year into subsidizing oil and gas.

You're right that consumers will chose cheaper products. Yet, cost reducing technologies that live lighter on the land are constantly blocked by regulation. In an economically freer and more privatized world, the environment would flourish far more than in our semi-privatized yet government directed system.

504 sats \ 4 replies \ @0xIlmari 3 Jan

I am generally an anti-statist, but I must contend that governments are so far the best way we know (due to lack of empiric data on decentralised societies) of actually aligning the economy against the incentives (such as, protecting the environment against the exploitative capitalism).

That's not to say it actually works in practice.

And the reason it doesn't is that the consumers are actually taken out of the equation. Corporations are in bed with the government, lobbying for laws to be passed that they can corrupt. They invent opaque bullshit like ESG to pretend to govern themselves and greenwash their business in the eyes of the unknowing public.

Corporations should not have a say about it in the first place. Why? Because they will pass on any costs to the consumers anyway. It is the consumers that can vote with their wallets to say what behaviour they want from the corporations.

If something like ESG should exist (for the benefit of consumers, not the corporations), it should be run by an "open source" international body, with open standards and open reporting.

0 sats \ 3 replies \ @Undisciplined OP 3 Jan

That mostly sounded like an argument against putting governments in charge of controlling pollution and I agree with the criticisms.

You also left out that governments are themselves enormous polluters and the most authoritarian governments protect the environment the worst.

503 sats \ 2 replies \ @0xIlmari 3 Jan

True, a "good government", even if there is such a thing, is a social-utilitarian compromise.

The State is:

violent, but we hope there is net less violence among the citizens,
invasive, but we hope it better protects us from machinations of bad agents,
polluting, but we hope that it keeps the corporations' pollution in check,
wasteful, but we hope that the organization it brings creates large-scale efficiencies (structured commerce, cohesive public projects, eminent domain).

For me, the questions I ask myself are:

Is the idea of a central government essentially bad?
Or has simply every implementation so far been bad?
Is a "good" implementation possible, then? (Here "good" means, its existence is a net positive force in society. How to measure "net positive" is another story entirely.)

0 sats \ 1 reply \ @Undisciplined OP 3 Jan

Is the idea of a central government essentially bad?

My answer is "yes", because of the items you listed above and my belief that those are all false hopes. However, I'm not a utilitarian, so I would still be anti-state even if those hopes could be realized.

You raised a good question though, that I don't know the answer to, about whether the incentives are better for a centralized state or decentralized localities wrt pollution. Here's the tension I see:

A centralized state is easier and more valuable for industry to corrupt.
Decentralized localities can more easily shift pollution costs onto their neighbors.

I think there's better potential for localities to cooperate in a repeated game type of environment, but there could also be lots of value in being the one defector.

535 sats \ 0 replies \ @0xIlmari 3 Jan

The environment is inherently a global/singular/central problem, because there's only one planet. I think that's why it's natural that people seek centralised solution.

It remains to be seen if we can:

align incentives in government frameworks such that corruption by corporations is not possible,
develop a decentralised solution with a global and cohesive reach - this may, honestly, require a Bitcoin-level invention to be unveiled.

0 sats \ 0 replies \ @Undisciplined OP 3 Jan

Great points.

I'm reminded of something I read about how there used to be much better recourse against polluters in the US, before the Progressive Era. That's when the government really started trying to advance industrial development and they removed liabilities from commercial interests who damaged nearby land.

21 sats \ 2 replies \ @Undisciplined OP 3 Jan

Economic interest is an abstract term for things people want. You demonstrate with your comment the well known value that people attach to nature. If we get the property rights framework correct, demand for a clean environment will balance with the cost of supplying it. If you value the environment more than others, then you might be disappointed that there isn't as much of it as you would like, but that's the same as my disappointment when a show I like gets cancelled.

525 sats \ 1 reply \ @0xIlmari 3 Jan

Yes, people do attach value to nature, as in, everyone would want to breathe clean air, drink clean water etc. But people also want the stuff they buy to be cheap. Those are opposing forces and every individual has a different heuristic to "solve" this.

In aggregate (billions of people), I believe we can treat people as stochastic functions. In this case, it becomes: "How much of my personal well-being am I willing to sacrifice to improve the environment?"

People will fall on a spectrum here. Most well-off people would probably be capable of sacrificing more. People living below the mean will have to make meaningful sacrifices. This opens up the following questions for consideration:

Would the resulting function (sum of all of humanity's pro-environment actions) produce an output that's sufficient to prevent further degradation of the planet?
Would transitioning to a Bitcoin standard mean that wealth inequality is reduced? Would that cause those lowest on the economic ladder to be able to contribute more (thus shifting the output)?
Would transitioning to a Bitcoin standard induce a phychological shift in humanity? Would people become low-time-preference in other areas of life, such as care for the environment (again, shifting the output)?

0 sats \ 0 replies \ @Undisciplined OP 3 Jan

Implementation is the big problem, but conceptually I think many environmental issues fit into standard ways of thinking about property rights. Users of unowned air and water establish easements on their use. If someone pollutes the air or water that you have such an easement on, then you can hold them liable or issue a cease and desist order.

As I mentioned in another recent comment, people use to use mechanisms like that against industry to prevent air and water pollution. The objection to that free market property rights approach was actually that it didn't allow enough pollution for the amount of industrialization that the government wanted.

There are some issues, like ocean pollution, that might not fit so cleanly into that framework. I worry about ocean pollution more than most of the other environmental stuff, because it's so out-of-sight out-of-mind for people and might hit some unobserved point of no return.

300 sats \ 1 reply \ @SpaceHodler 3 Jan

0 sats \ 0 replies \ @Undisciplined OP 3 Jan

When are they finally going to finish these damn things?

799 sats \ 2 replies \ @ek 3 Jan

As an European who is mostly used to "free" roads (I know, there are no free lunches), the experience with toll roads always sucked so hearing "private roads" immediately triggers something in me, lol

The experience sucked because it felt like the only choices you have is to either a) pay the toll (€20-70 iirc?) or b) drive a long way back to take another road that might not even exist or costs you 2x or 3x the time.

So you're kind of "forced" to pay the toll that might even surprise you if you didn't check your route for any tolls beforehand since you're not used to toll roads. They tend to be in bottlenecks though.

Maybe we're just spoiled.

btw, once we even had to pay the toll twice because we took a wrong turn and then had to reenter the toll road to drive all the way back.

823 sats \ 1 reply \ @Undisciplined OP 3 Jan

I grew up in a land with no toll roads and never really encountered them until I went to grad school, so I share your instinctual revulsion and urge to avoid them.

Tolls are only one option for road owners. A much less onerous method is a subscription service. Some also speculate that retailers might buy some of the road network near their stores and either have them be free or do something analogous to validated parking for their customers.

332 sats \ 0 replies \ @jgbtc 3 Jan

The only toll roads I've ever been on are state owned (Illinois and Pennsylvania).

503 sats \ 1 reply \ @0xIlmari 3 Jan

My main concern has always been that, from a design perspective, a centrally-planned road/railway/etc. is almost always more effective (I'd be happy to be proven wrong) - it doesn't bob and weave unnecessarily around uncooperative actors (eminent domain), connects places that would, on their own, maybe not have the economic power to join such a project, provides standarised quality and safety.

Sure, private/local entities would cooperate to, for example, join two city-states together, but intuition tells me that a "grand plan" produces a more cohesive (and efficient) network.

Again, happy to be corrected by someone with experience (though I doubt there is a huge corpus of knowledge on decentralized infastructure planning).

100 sats \ 0 replies \ @Undisciplined OP 4 Jan

Here's the biggest book I'm aware of on the subject. I'm familiar with the case the author makes but I haven't read the book. I probably should.

This isn't the source I was hoping to find, but it's an article that touches on the economic difference between the privately built and operated Great Northern Railway and it's subsidized competitors.

A general point I'd make about your intuition for planning is that it ignores tradeoffs. Having an optimal transportation network is not the highest end in the world and it's not at all unreasonable to route around things that have higher marginal value than reducing transit times slightly. It's really no different than the case against centrally planning anything else.

503 sats \ 1 reply \ @Turdinthepunchbowl 3 Jan

Forgive me, I'll try and read the paper/article tonight when home from work, but can someone explain how this would be better for people? Initial reaction is this would end up like the city of Chicago and how they sold the Parking rights to a private company/investment fund and what instantly happened is the costs skyrocketed for people.

"There were steep rate hikes initially, including to park downtown, which went from $3 an hour in 2008 to $6.50 an hour in 2013."

Archive to get around paywall: https://archive.is/jYZJu

30 sats \ 0 replies \ @Undisciplined OP 3 Jan

It's something that could go awry quite easily, if implemented poorly. However, some of these things are actually much costlier than people realize and they might not exist if people actually had to pay for them directly.

City parking, particularly streetside, has an almost unfathomable opportunity cost. That real estate is very scarce and there are much more productive things that could be done with it than just having someone's car sitting there.

That said, there are all kinds of other regulations (zoning and the like) that prevent alternative uses and create monopoly situations.

The most straight forward answer to why it would be better to privatize roads is the same as for everything else: the state is a monopoly that produces things far more expensively and at lower quality than could be provided on an open market.

482 sats \ 3 replies \ @faithandcredit 3 Jan

if you owned a road how would you charge people who used it? how would you finance it?

Most likely the road would become free and open to use. And maybe the people who lived in the area paid for it. Maybe they were the ones that owned it. And since they already paid for the road to use it themselves they may as well just let others use it as well?

245 sats \ 2 replies \ @Undisciplined OP 3 Jan

I definitely think that would be a big part of it. I see two distinct groups who would be willing to take over road management and continue operating them at no expense to drivers: residential neighborhoods and retailers. I just finished a comment about it in an exchange with @ekzyis.

The sunk cost vs low marginal cost point you made is the key insight, I think. Roads are intended to facilitate commerce, they aren't an independent good. That means either there's a collection of people who would be willing to pay for their upkeep to get the advantages or those roads are not worth maintaining. The details are just an entrepreneurial problem.

I do think there will be toll roads, though, and my expectation is that they'd operate on something very much like EZ Pass. Major commuter routes come to mind, where there might just be too many parties to coordinate any sort of shared ownership.

279 sats \ 1 reply \ @faithandcredit 3 Jan

I for one dont think there will be toll roads (arent those a government invention anyway?). The market will certinaly attempt to route around them if given the oppertunity. No pun intended. For example on the internet, there is no such thing as "toll websites". with the exception of MSM websites? But they are notoriously unpopular. My point is that the network of roads in the absent of government, might not be too disimilar to the network of the internet. Its mostly free and open?

Maybe you paid a "Road service provider" x amount per month. Someone would allos unlimited miles, others would have limits on miles but be cheaper. I dont think its too far fetched to imagine "Road Service Providers" sort of like how an Internet Service Provider.

0 sats \ 0 replies \ @Undisciplined OP 3 Jan

That certainly might be right. I was going to point out that people use toll roads right now when there are free alternative routes. However, those alternative routes take much longer and no one's allowed to build a new road right next to the toll road.

279 sats \ 3 replies \ @tip_nz 3 Jan

Interesting case study: Sydney Harbour Tunnel

The Harbour Tunnel was a partnership between the New South Wales government and private investors by tender. Transfield and Kumagai Gumi formed a 50/50 joint venture company which constructed the tunnel under contract; with a 30-year operating contract, including revenue collection and maintenance, from 1992 until 2022. As a result of the 1997 separation of assets of Transfield and the creation of the Tenix group (owned by Olbia), the ongoing 30-year operating contract for management of the tunnel was split between Kumagai Gumi (50%), Transfield (25%) and Olbia (25%).

0 sats \ 2 replies \ @Undisciplined OP 3 Jan

Neat

279 sats \ 1 reply \ @tip_nz 3 Jan

Private investors and local govt could collab on roads and install mechanisms that automatically charges your car sats which are then split between the investors/govt.

And just like bitcoin, the fees increase when traffic is high and decrease when traffic is low.

0 sats \ 0 replies \ @Undisciplined OP 3 Jan

There are lots of ways to improve on the system we currently have. I don't know if we'll see bitcoin integration anytime soon, but it's an exciting possibility.

279 sats \ 8 replies \ @grayruby 3 Jan

When I get a chance I must take a picture of the signage in my town posted in a few areas to warn people they are entering private roadways not maintained by the town and then post side by side pics of what the private roads look like compared to the ones maintained by the town.

To be fair, these areas are new developments so the roads have only been "built" in the past 10 or so years but it's really comical when you see the signage, as you are standing on a cracked up, pot hole filled road maintained by the town and looking at the pristine private road they are warning you about using.

Also, to be fair, our town does a decent job maintaining the roads, parks, trails etc. Much better than the city where I felt like a race car driver trying to warm up my tires driving around pot holes on some major streets.

100 sats \ 7 replies \ @Undisciplined OP 3 Jan

Are the private roads part of an HOA?

279 sats \ 6 replies \ @grayruby 3 Jan

Yes definitely.

100 sats \ 5 replies \ @Undisciplined OP 3 Jan

Interesting. Do you get a break out of how much they cost to maintain?

482 sats \ 4 replies \ @grayruby 3 Jan

I don't live in those new developments so I couldn't tell you. I am not rich enough haha. Mostly occupied by people who lived in the city and now moved to our town to retire and have money either by success or dumb luck of buying a house 30 years ago for 200k that they sold for 2M because that's the going rate for a nice house in Toronto now.

All of those homes are over 1M. They are right by the lake and walking distance to the main street in town (walking distance for normal people who only want to walk for 5 minutes- everything in town is walking distance for me). I suppose I could find out what their total HOA costs are but wouldn't know exactly what is assigned for the community roads.

50 sats \ 3 replies \ @Undisciplined OP 3 Jan

There's a similar development near us, but I also don't know what they're paying for their private road. I was hoping for a nice middle class example of privately owned roads that would buck the stereotype.

482 sats \ 2 replies \ @grayruby 3 Jan

Closest thing I could find is info from a cottage association with private roads and it says road maintenance costs are 200-300 per year for each owner. But I don't know how many owners, roads, if these are winterized cottages or just summer only.

100 sats \ 1 reply \ @Undisciplined OP 3 Jan

That's probably a decently accurate magnitude for neighborhood roads. I think most of us would be willing to pay $300 to have roads in our neighborhood.

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279 sats \ 4 replies \ @ek 3 Jan

Here is my more thoughtful and less emotional response:

If you sell the entire road network at once, there will be issues of monopoly pricing that will piss everyone off. However, if you auction of individual roads, potential buyers might not be able to earn the revenue needed for maintenance and liability, because drivers will shift to the still free state owned roads.

The problem I see with this is that it seems to rely on the premise that roads are fungible. Please correct me if I am wrong. Assuming this premise is right, then I have following questions:

Are roads really fungible? Isn't it the case that some roads are way more important than other roads? Will there really be competition between buyers (once there are no "free state owned roads" as "alternatives" anymore)? Will one buyer just build another road next to another road to compete? Is this even what we want? Roads that are fungible because they are next to each other? Wouldn't that be a waste of space?

Isn't a road network something where a natural monopoly would arise?

A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors. Specifically, an industry is a natural monopoly if the total cost of one firm, producing the total output, is lower than the total cost of two or more firms producing the entire production. In that case, it is very probable that a company (monopoly) or minimal number of companies (oligopoly) will form, providing all or most relevant products and/or services. This frequently occurs in industries where capital costs predominate, creating large economies of scale about the size of the market; examples include public utilities such as water services, electricity, telecommunications, mail, etc. Natural monopolies were recognized as potential sources of market failure as early as the 19th century; John Stuart Mill advocated government regulation to make them serve the public good.

Imo, a great example of a natural monopoly is rail ways:

The costs of laying tracks and building networks coupled with that of buying or leasing the trains prohibits or deters the entry of any competitor. Rail transport also fits other characteristics of a natural monopoly because it is assumed to be an industry with significant long run economies of scale.

There are also other examples like anything logistics related or telecommunications.

So I think the same would happen with roads since a road network is probably similar enough to a rail way network, no?

Keep in mind that I am not saying that the current situation has no problems. I just want to say that I am currently not convinced that private roads will fix the current situation. So basically my answer to this ...

How do you all think the existing road network should be dealt with?

... is that I don't know. There might only be solutions that are less worse than others. But there are probably people in here (@Undisciplined included) that have thought way more about this than me.

Btw, thanks for this post. This is a topic I am very interested to hear different opinions on.

1053 sats \ 0 replies \ @BlokchainB 3 Jan

I like this take. Time is scarce having people compete to the price of zero for roads is dumb. Opportunity cost is the reason natural monopolies will always exist.

Roads are not as arbitrary as it may seem. You have all different types of asphalt/concrete mixes and subgrade designs for all different types of climates and use cases plus every road you build will need heavy machinery to finish the construction.

993 sats \ 2 replies \ @Undisciplined OP 3 Jan

Roads are definitely not fungible. I think it makes more sense to think of the different routes connecting two places as being imperfect substitutes for each other, with roads to all other locations in the network being imperfect complements. The problem with that framework is that the same two specific roads are complements for some people and substitutes for others.

I don't see the natural monopoly case, although there is definitely scope for rent seeking. Roads, rail, air, and sea are all in competition with each other, although one may have the technical advantage on a particular route. The nature of network effects also puts pressure on owners of particular networks to connect with other transportation networks, rather than to operate in silos.

An interesting historical note on private rail development, is that in19th century America, only the Great Northern Railroad rejected government subsidies and it was also the only profitable railroad in that era.

As for how I think privatization should proceed, I tend to be a gradualist. So, I would start with the easy stuff, like allowing home-owners associations and other neighborhood organizations to take ownership of their roads, as well as allowing private development of parallel routes where there's tons of traffic. At the same time, I would introduce mechanisms, like tolls, that introduce pay for use of state owned roads. That's where the incentive to reduce state inefficiency really starts playing a role. Retailers may want to buy some of the roads, since they may be willing to take over the costs in order to facilitate customer traffic.

279 sats \ 1 reply \ @ek 3 Jan

I don't see the natural monopoly case, although there is definitely scope for rent seeking. Roads, rail, air, and sea are all in competition with each other, although one may have the technical advantage on a particular route. The nature of network effects also puts pressure on owners of particular networks to connect with other transportation networks, rather than to operate in silos.

Ah, I see, interesting. I definitely saw these transportation networks more isolated. But my own experience shows that I do check how walking, cycling, taking the train or even driving myself even though I don't even own a car compare in time and money when I want to go somewhere.

An interesting historical note on private rail development, is that in 19th century America, only the Great Northern Railroad rejected government subsidies and it was also the only profitable railroad in that era.

Also interesting, didn't know that. But also didn't verify that yet ;)

As for how I think privatization should proceed, I tend to be a gradualist. So, I would start with the easy stuff, like allowing home-owners associations and other neighborhood organizations to take ownership of their roads, as well as allowing private development of parallel routes where there's tons of traffic. At the same time, I would introduce mechanisms, like tolls, that introduce pay for use of state owned roads. That's where the incentive to reduce state inefficiency really starts playing a role. Retailers may want to buy some of the roads, since they may be willing to take over the costs in order to facilitate customer traffic.

Yeah, I can definitely see how it makes more sense that the people who need the roads for their own personal reasons also maintain them. Else, the tragedy of the commons strikes which is kind of what we currently see with public funded roads:

Congestion on public roads that do not charge tolls is another example of a government-created tragedy of the commons. If roads were privately owned, owners would charge tolls and people would take the toll into account in deciding whether to use them. Owners of private roads would probably also engage in what is called peak-load pricing, charging higher prices during times of peak demand and lower prices at other times. But because governments own roads that they finance with tax dollars, they normally do not charge tolls. The government makes roads into a commons. The result is congestion.

823 sats \ 0 replies \ @Undisciplined OP 3 Jan

The tragedy of the commons is definitely applicable, but I think it's an interesting case here. We don't only value roads for our own direct use, but also so that others can use them in ways that benefit us. So, unlike a typical tragedy of the commons, part of the value is in the openness of the commons to others.

279 sats \ 1 reply \ @nullcount 3 Jan

The vehicle owner is a protected class in american law/culture.

https://stacker.com/society/how-driving-subsidized-america

Maybe a privatization of roads will somewhat weaken the incentive for the state to subsidize drivers.

0 sats \ 0 replies \ @Undisciplined OP 3 Jan

That would be a nice effect. I point that out whenever people talk about investing more in the rail system. If they just subsidized the roads less, more people and businesses would choose rail on their own.

There's a bit of a generational thing to this. Boomers just love their cars and as long as they're politically relevant, tons of tax money will continue flowing towards the roads.