Who will build the roads? Every libertarian I know who has been one for 5 years or more has been asked this question. Our answer is typically that for-profit firms will build roads and that sometimes neighborhood associations will do so.
What I hadn’t known is that Karl Marx’s buddy Friedrich Engels answered the question with empirical evidence over a century and a half ago.
Here’s Engels:
The whole British Empire, and especially England, which, sixty years ago, had as bad roads as Germany or France then had, is now covered by a network of the finest roadways; and these, too, like almost everything else in England, are the work of private enterprise, the State having done very little in this direction.
Before 1755 England possessed almost no canals. … [But now in 1845:] In England alone, there are 2,200 miles of canals and 1,800 miles of navigable river. In Scotland, the Caledonian Canal was cut directly across the country, and in Ireland several canals were built. These improvements, too, like the railroads and roadways, are nearly all the work of private individuals and companies.
Philosophy professor Stephen R. Hicks quotes this in “Friedrich Engels answers: Who will build the roads?” October 13, 2019. Hicks is quoting from Engels 1845 “Condition of the Working Class in England.”
READER COMMENTS
nobody.really
Oct 14 2019 at 2:09am
What an intriguing account. Can anyone fill in details? How were these projects financed? In the absence of eminent domain, how did the project builders deal with “holdout” issues? Did these same forces build England’s current highway system–and if not, why not?
Matthias Görgens
Oct 14 2019 at 3:25am
Wikipedia has an article on the History of the British Canal System, that would be a good start. (Not giving a direct link, the spam filter doesn’t seem to like that.)
Phil H
Oct 14 2019 at 2:30am
I think telecom/data networks are a good modern equivalent. They’re mainly built by private companies, yet provide important public infrastructure.
There does seem to be a need for things like subsidies for hard-to-reach places, if you want to prevent large economic inequalities across different regions.
The problem today is that we go much faster, so tolls become unworkable in most places. But perhaps GPS and auto tolls can fix that.
Matthias Görgens
Oct 14 2019 at 3:29am
Automated tolls work really well in Singapore. No one has to stop.
I am not sure the subsidies you mention are a good idea. People make sacrifices when they cram together in cities. What right do the people enjoying remote areas have to demand city dwellers subsidise their lifestyle?
With the same logic we could demand transfers in the other direction. (Eg city dwellers usually have a smaller environmental impact.)
So let’s not open that can of worms.
nobody.really
Oct 14 2019 at 10:50am
And in Chicago!
Historically the argument against private roads was twofold: First, in the absence of eminent domain, hold-out behavior would needlessly increase costs, or cause routes to be inefficient. Second, the primary mechanism for financing them–tolls–was widely acknowledged as inefficient.
Today, the second rationale no longer applies: Road-owners can measure who is using the road via video and licence plate data, and road-users can compensate them beforehand (by buying an electronic transponder connected to a bank account) or after-the-fact (by typing credit card info into a website advertised along the route).
I still know of no non-statist remedy for the hold-out problem. But with the benefit of technological change (and, ok, a certain amount of statist quasi-contract mythology), we have solved the second problem, making libertarian policies a bit more plausible.
You can buy toll-paying mechanisms before you travel, or simply
Dylan
Oct 14 2019 at 11:37am
Seems your comment might have gotten cutoff, but travel by road starts to suck with higher proportion of automatic tolls, as you move from one jurisdiction to another where your toll responder doesn’t work. Also a good way for rental car agencies to add on hidden fees. A couple of years back I needed to rent a car to attend a friend’s wedding upstate. They asked me if I wanted to use their EZ-Pass, which was $10 a day, plus the cost of the tolls. Since I was going to have the car for 5 days, most of which would be in areas that had no tolls, I declined. The only toll I was going to have to pay was on the Triborough, and I figured I’d just pay cash like I always had. But they had switched to automatic only, so when I went through no option to pay and I got hit with a collection fee of $60 on top of the toll.
And I know I’m fighting a losing battle here, but I hate the privacy implications of having a record of everywhere you travel to.
David Henderson
Oct 14 2019 at 6:43pm
Dylan,
I agree with you that that sucks. My casual impression, though, is that that problem is being taken care of by technology.
Two anecdotes:
A few years ago, I gave a talk in central Florida and rented a car to get from Tampa to central Florida and then, after the talk, from central Florida to Miami. I didn’t pay for an EZ-Pass, not realizing that I would need it. When I got to South Florida and missed the lane that would have had me pay cash–it happened so quickly–it looked as if I would have to pay a fine of $100. I told Enterprise what had happened when I dropped the car off, and they assured me that it would just automatically charge. The charge on my credit card must have been so low that I’ve forgotten how much: it wasn’t close to $100.
When my wife and I drive to Marin County, we go toll-free. But on the way back, across the Golden Gate Bridge, there’s a toll. I don’t have an EZ-Pass. Instead, I get a bill in the mail a few days later and go on line to pay about $8.
Re the privacy implications, I don’t have a good answer for that one.
Dylan
Oct 14 2019 at 7:14pm
I hope you’re right that the problem is going away, if it’s right, my guess would either be competition or regulation that has brought the price down. The $60 fee was the rental car collection fee, not something imposed by the transit authority (or whoever it was collecting the tolls). I don’t rent cars that often, but even before this event, when they ask if I want an EZ-Pass (or equivalent) I’ve always asked for the rate, and the cost if I happen to get a toll without the right equipment. In Florida, my experience was that the day rate to use their equipment was pretty high, but they didn’t charge very much in the way of a “convenience fee” if you happened to go in a toll lane without one. New York has been pretty evenly high priced both for the daily fee, and the collection fee. Other places I’ve rented have been in the middle. I was just in Seattle a couple of weeks ago and rented a car, and they had a pretty high fee if you happened to get hit by a toll, $25 I think, but it was per toll, not per day. But in Seattle there are really only two places with tolls, and pretty easy to avoid them, so I still skipped the transponder rental.
Privacy is one of the reasons I’ve favored gas taxes over tolls for being pretty well correlated with road use/damage. However, with increasing electrification of the fleet, that option seems less viable as a long term solution.
John Alcorn
Oct 15 2019 at 8:09am
@nobody.really,
Re: “I still know of no non-statist remedy for the hold-out problem.”
Eric Posner & Glen Weyl propose a remedy in “Property is Monopoly,” chapter one of their book, Radical Markets (Princeton U. Press, 2018). In a nutshell, a property-holder must declare a value of her property for tax assessment; and must sell the property to anyone who would purchase the property at the declared value. Property-holders will balance tax liability and vulnerability to mandatory sale at the declared value.
(Of course, the State still plays an indirect role insofar as taxation is part of government.)
David Henderson criticizes Posner’s and Weyl’s proposal here.
nobody.really
Oct 15 2019 at 9:40am
I like it! Economist Steven Landsburg proposed something similar regarding patents.
robc
Oct 17 2019 at 11:39am
I dislike the Posner idea, but support a varient. If you turn down a valid offer of x for your property, the assessed value is raised to x+$1.
robc
Oct 17 2019 at 11:34am
The holdout problem isn’t a problem, at least if you value property rights.
There is no right to efficient routes.
Chris
Oct 23 2019 at 10:41am
I’m not even a libertarian and I agree. John Alcorn’s method sounds like the least libertarian method of property rights I could imagine, outside of outright government ownership. Not only is it relying heavily on regulation through a taxing body, it is also compelling people to sell their property, which would take the force of government to back.
Don Boudreaux
Oct 14 2019 at 10:12am
Here’s the late David Landes on the same matter.
David Henderson
Oct 14 2019 at 6:44pm
Nice, Don. Thanks.
Steve Fritzinger
Oct 14 2019 at 10:28am
In Sweden, 2/3 of road are built and maintained by private road associations.
I bring this up every time someone tells me we should be more like Sweden.
https://en.wikipedia.org/wiki/Private_road_association
nobody.really
Oct 14 2019 at 11:03am
The Wikipedia article states, “Dues to the associations are assessed based on a legal survey of property size and road use.”
And what of people who decline to pay the assessment? Or who would be willing to pay some amount, but regard the road administrators as unduly expensive? Or who object to paying money to administrators who espouse offensive political views, or practice offensive religions?
“Private” road associations seem like unions in closed shops: Wielding the power of taxation while providing a fraction of the safeguards.
Mark Z
Oct 15 2019 at 2:50am
Private association roads, according to the article, are relatively low volume, I’m guessing rural areas. I’m guessing something of a private response to a lack of roads in areas too sparsely populated for the state to have an interest in building roads there. They thus may not have the bargaining power to squeeze their customers (it seems most of them are nonprofit), especially if there tend to be multiple routes through the Swedish countryside owned by different associations.
Chris Elhardt
Oct 14 2019 at 5:11pm
I’m eliding some history here, but as I understand it, the League of American Wheelmen, an early bicycling organization convinced rural landowners to improve the roads on or bordering their lands as an efficiency matter. While it may have taken a team of four horses to pull a wagon of crops over an existing rutted, muddy track it would take fewer animals to move the loads over an improved road, fewer animals that wouldn’t need year round feeding and shoeing.
might have worked somewhere, probably not everywhere.
Pyrmonter
Oct 15 2019 at 2:58am
They might have been privately funded, but each canal had the imprimatur of the state; above all, the right to compulsorily acquire its route: no small assistance.
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