Privatization of Roads. Leonard Peikoff on his mid-90s radio show on KIEV in Los Angeles stated his belief that public roads should be privatized. While this view is entirely consistent with Objectivism's laissez-faire dogmatism, it does raise questions concerning Peikoff’s grasp of basic social realities.
The issue of road privatization illustrates some of the weaknesses of the laissez-faire position, particular on the issue of whether economic behavior can be effectively regulated by mere self-interest. There are basically two main issues: (1) whether the private sector would find it profitable to build roads into undeveloped or underdeveloped areas; and (2) whether private ownership of roads might lead to gross abuses that would greatly inconvenience consumers.
(1) Sometimes infrastructure (such as roads, canals, railroads) is required before a given locality becomes productive. It is not unlikely, for example, that if no road existed between Los Angeles and Las Vegas, private companies would be able to raise the capital necessary to build one. Yet if there had been no road between Las Vegas and Los Angeles to begin with, it’s not clear that Las Vegas would have become the glitzy mecca it has developed into. Hence, building the road before it is needed helps bring about the very development that would render the road profitable later on via private means.
(2) While it is entirely reasonable to think that many people (or maybe even most people) could be trusted to run private roads through self-interest alone, it is grossly implausible to believe that every individual owner of private roads can be trusted. There are always going to be at least a few people who will use their property in ways that seriously harm the so-called public interest. What if the road to my house, for example, was inherited by a radical leftist, or a white supremacist, or an extreme environmentalist? What would prevent such a person from discriminating against any individual he doesn’t like? What would prevent the radical leftist, for instance, from refusing to allow conservatives to use his road? Or the white supremacist from refusing to allow blacks to drive on his street? Or the extreme environmentalist from refusing anyone to drive a car on his property? How would you like to be unable to get to your place of residence because the owner of the road to your home doesn’t, for one reason or another, approve of you? “But the market punishes such irrational people,” advocates of private roads might say. “They will lose control of their road, eventually.” Eventually? How long is “eventually”? One month? One year? Ten years? In the meantime, you can’t access your own property. There’s a very good reason for making roads public property. They are too important to be placed in the hands of whimsical private interests. Rational self-interest cannot be assumed to work in all cases, because not all people are rational.
But what if the advocates of the privatization of roads are willing to make an exception for residential streets? Shouldn’t we at least have highways privately owned? Not at all, for the same logic holds. I live in one of the more isolated areas in the country, along the northern coast of California, in Humboldt County. On one side I am faced by a treacherous Pacific Ocean, a grave yard of many a ship, and all other sides, by steeped, rugged, mountainous terrain. There are only four roads leading out of western Humboldt County: one to the south, one to the north, and two to the east. Suppose these roads were private. In that case, they could be sold. What if some left-wing billionaire (a cross between, say, George Soros and Al Gore) got ahold of all four of those roads: what would prevent him from basically shutting the roads down? After all, they are his property: he may do with them as he pleases, the public be damned!
I haven’t even mentioned the very real possibility of monopoly abuses of roads. Given the immense costs of building the road (and the immense difficulties of acquiring the property for that road), many highways would constitute natural monopolies that could easily be used to exploit consumers.
Even though society may be little more than a collection of individuals, this doesn’t mean there aren’t broader interests shared by most of the individuals in that society. One of the interests that all rational individuals in a society share is to live in a society where roads aren’t at the mercy of the individual whims and eccentricities of private owners.
36 comments:
Greg,
You offer some compelling reasons to keep road ownership in government hands. However, I'm not entirely convinced that the market wouldn't punish such irrational owners.
The white supremacist would surely hear complaints and probably lose business from the employers, friends, and relatives of black people who could no longer use the roads. Lawsuits would make race-based exclusions very irritating and probably discourage other would-be racist owners.
Also, would a radical environmentalist really buy a road just to make the statement of banning vehicles from using it? I guess that could happen. But I have to figure he, too, would be despised by everyone in that area and probably offered irresistible sums of money by someone who would use the road to its full economic potential.
The market does a good job in many situations. This is a situation in which the market has never had a chance to operate, so I'm not ready to assume that it could not do a good job.
Then again, I could be wrong.
"Yet if there had been no road between Las Vegas and Los Angeles to begin with, it’s not clear that Las Vegas would have become the glitzy mecca it has developed into."
Isn't this post supposed to be against private roads? It strikes me that not having people burn millions of gallons of fuel and divert millions of gallons of water to build a metropolis in an ecologically sensitive desert would be a good thing. Especially since in a "laissez-faire" society, gambling and whores would presumably be available locally at much lower cost.
Also, it seems to me that this post assumes that roads will be expensive to build and a potentially valuable source of monopoly profits, but would at the same time be cheap enough that private individuals could buy them up to indulge their whims of excluding some or all customers. That seems an odd combination.
JayCross,
You wrote,
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The white supremacist would surely hear complaints and probably lose business from the employers, friends, and relatives of black people who could no longer use the roads. Lawsuits would make race-based exclusions very irritating and probably discourage other would-be racist owners.
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Would he necessarily care about the large number of complaints he might receive? Plus those who support absolute free markets with no restrictions often support getting rid of all anti discrimination laws, and it makes sense for them to do so. With no anti discrimination laws it would be hard to sue the guy.
You wrote,
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Also, would a radical environmentalist really buy a road just to make the statement of banning vehicles from using it? I guess that could happen. But I have to figure he, too, would be despised by everyone in that area and probably offered irresistible sums of money by someone who would use the road to its full economic potential.
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Its not impossible, it maybe unlikely that it would happen often, but could still happen. All he'd have to do would be to buy a small section of the road and refuse to allow anyone to use that and it would cause a problem.
Damien
Would he necessarily care about the large number of complaints he might receive?
Maybe not if they were just verbal complaints. But what if customers started defecting for other roads that didn't ban their black friends and co-workers?
JayCross,
He still might not care, if he didn't buy the road to make a profit in the first place. What if he only bought the road to keep people he deemed inferior off his property, or out of the town where he lived? Plus defecting to other roads that allowed black people, might not be much of an option, or it might not be an option at all. What if he owned the only road that lead to where they needed to go? What if the racist happened to own all the roads, or a section of all the roads that lead into that area? If the roads led into a town, the town's people could try to do something to get him to sell the roads, because his actions would hurt their business, they might refuse to sell to him until he changes his mind. But what happens if he successfully encourages other white supremacists to move into the area, because he won't allow blacks to move in?
He could eventually lose his property, somehow, or be pressured into changing his "no blacks on my roads" policy, but as Greg put it, how long would it take? Could someone end up dead because they needed to get to a hospital and the nearest one require using a road that he owned and he wouldn't let them use it? If you say he could just use another hospital, keep in mind two things. One, that's an argument many racist Southerners might have used to support segregation, two, the closest hospital that didn't require using one of the racist's roads might be too far away. It's also possible that this man might be such a fanatical racist that he might insist on inspecting ambulances to see that they are not carrying black patience. Even if there was a way around his blockade, it could use up vital time that could mean the deference between life and death for the sick or injured young boy. In that instance, should the government make an exception and force the man to let the ambulance carrying the young black patient to use his road? Would it be acceptable for government agents to engage in force under those circumstances in order to save the boys life? Even if you are willing to make that exception, it could take the state, too much time to act. The town's people might not be able to make the racist give up in time to save that innocent black boy's life.
As I said earlier, even if they found another way to the hospital, that just took more time or went to another hospital, the boy could still end up dead, because of the extra time it would take.
"Also, it seems to me that this post assumes that roads will be expensive to build and a potentially valuable source of monopoly profits, but would at the same time be cheap enough that private individuals could buy them up to indulge their whims of excluding some or all customers. That seems an odd combination."
It's only an odd combination because it's been spinned that way. Where did I say that they were "cheap enough" for private individuals to buy them? Of course they would be expensive; but even so, there are still a few individuals (billionaires, for example) who could buy stretches of them. Or a road could be inherited by a someone who has very different views than the previous owners. Or the road could be taken over by incompetents. In any of these outcomes, serious inconveniences would result for consumers, which would lead to frustration and annoyance with laissez-faire dogmatism.
Jay: "You offer some compelling reasons to keep road ownership in government hands. However, I'm not entirely convinced that the market wouldn't punish such irrational owners."
Actually, the problem with private roads is probably far worse than I represented it, primarily because they are in fact natural monopolies, so the usual market processes that weed out inefficiency and irrationality won't necessarily work. Wherever you have monopoly profits, the notion of the best competitor always coming out on top simply does not apply, because monopoly profits allow the monopolist to evade the usual market penalties.
Greg:
>Actually, the problem with private roads is probably far worse than I represented it, primarily because they are in fact natural monopolies, so the usual market processes that weed out inefficiency and irrationality won't necessarily work.
Yes. A perfectly realistic scenario would be say a vertical integration (perhaps by a transport company) that would overcharge or even prevent competitors using the best roads. It's the problem of keeping network infrastructure competitive. Other examples include electricity and phone networks. And there's not always a satisfactory way to do it. (Krugman says it's a question of which set of problems do you want?). If the shortest distance between two points is a straight line, and you physically own the line, there's little anyone can do about it.
"In any of these outcomes, serious inconveniences would result for consumers, which would lead to frustration and annoyance with laissez-faire dogmatism."
Seriously, this is the argument against private roads? That people might get bad customer service from an incompetent private owner, or a perverse billionaire might buy up a few roads to do weird stuff with them? For something as universal as government ownership of roads, there's got to be a better argument than that. The government doesn't own most electric utilities or phone companies, which are also "natural monopolies" that people rely on. (I have to put that in quotes, because phone companies aren't really monopolies anymore.) When was the last time a billionaire bought up an electric company so he could cut off all the black customers or something like that? Rich people have better things to do with their money.
I don't doubt that private companies can give bad customer service, so that's plausible. But the test of a proposal isn't whether it would be perfect. It's whether it would be better than the alternatives. Having driven on many roads, I can't say that the service now is that stellar. Unless you enjoy sitting in hour-long traffic jams in one lane while another lane is fractionally used for political reasons.
RottedOak: "Seriously, this is the argument against private roads?"
No, it's just one of many.
"The government doesn't own most electric utilities or phone companies, which are also 'natural monopolies' that people rely on."
Electric utilities are heavily regulated: for better or worse, they are not allowed to charge monopoly profit rates. Also, there are more viable substitutes for electricity than there are for roads. You can buy a generator, for example. But what are you going to do if an insane owner blocks won't let use his roads and sidewalks to get to your house? Strap on a jet pack? Acquire the services of a hot air balloon?
"When was the last time a billionaire bought up an electric company so he could cut off all the black customers or something like that?"
Well of course that has not happened because discrimination is illegal and electric utilities are heavily regulated. But it would not be illegal under laissez-faire, under which people can do whatever they like with their property.
"I can't say that the service now is that stellar."
Traffic problems exist largely for reasons that have nothing to do with who runs the roads. The problems usually depend on lack of space: more lanes can't be created without infringing on private property. Indeed, private property rights often prove an immense obstacle to the construction of roads, which is why governments sometimes have to resort to eminent domain—an option that would not exist for private roads under laissez-faire.
"But what are you going to do if an insane owner blocks won't let use his roads and sidewalks to get to your house? Strap on a jet pack?"
If I can't get to my property without crossing yours, then normally I get an easement granting me limited use of a small portion of your property. This secures my ability to exercise my own property rights. I can get this without your permission -- it's called easement by necessity. Local roads with no easements for adjoining property owners would be silly. Is someone actually proposing that?
"Traffic problems exist largely for reasons that have nothing to do with who runs the roads."
That's partially true. Traffic problems today exist mostly because there are no usage fees for most roads, so everyone piles on with no incentive to do otherwise until the backup is so bad that they can't bear the lost time and frustration. I doubt any government would have the will to charge market rates. If they did, a lot of our current traffic problems would disappear.
You're right that utilities are regulated with regard to things like pricing and discrimination. But if the concerns are monopoly pricing and discriminatory owners, then it seems that private roads would be just fine with basic regulations that are no more (maybe even less) than what currently applies to hundreds of businesses. Sounds like your objections don't apply to private roads as much as they apply to privatizing roads under a specific set of rules.
I agree with the possibility of proposed negative outcomes that could be created by road privatization.
Although I am interested in discerning whether or not privatizing roads would bring the typical positive benefits we associate with privatization.
Is road building a high risk / high profit venture? No, although potential for considerable profits do exist. But those profits are not proportional to the risk a high risk venture which we would typically see thrive on the speculative environment of the market. The interests of a road builder are linear and long term, congruent with society; they are not fueled by quick technological change and risky investment. So benefits from the stock market are not relevant. Although a road builder could offer bonds, but so could the government. In British Columbia our ferry service underwent quasi-privatization and offered corporate bonds.
The innovation spurned on by competition? Barely even a concern for road building. How much has road building technology changed over the years? The building of the USA interstate began in the late 1930's and still continues today, although at a greatly reduced rate after the first 35 years. Road building is hardly riding the waves of Shumpeters creative destruction.
Creating something for society with a unified long term vision, only to turn it over to short term profit motivated entities, when we don't need any of the possible benefits that would entail, only seems mistaken to me.
Misfortunes caused to SOME people by those who would refuse to act reasonably (and they will of course exist and cause such misfortunes) do NOT justify enslaving EVERYONE under the slogan of making sure that no one suffers from such misfortunes.
This is the same type of argument that is being offered by those who do not believe that people are capable of governing themselves (but yet are capable of choosing the "right" people who would govern them from the mass of people incapable of governing themselves).
Compare this argument to today's: some schoolchildren choose to eat crappy food and their parents are OK with it. Crappy food causes health problems. Let's ban crappy food from schools and deprive EVERYONE of the right to make their own decisions.
Granted, there will be cases where some people would need to relocate to live in the neighborhoods more suited to their principles and views. But if done in the circumstances of patent injustice, should we really believe that there will be not a single soul who would be willing to help the person who's being blocked from the only hospital by their neighbors to relocate?
Even all of Soros' money cannot buy every single square inch of land on the planet. Wealth is not the end of the analysis. One cannot eat his money. That money is only worth anything when it can buy real stuff. That real stuff is produced by real people. Consummation of the stuff produced by people is what allows the people (both the producers and consumers) to get by.
"Misfortunes caused to SOME people by those who would refuse to act reasonably (and they will of course exist and cause such misfortunes) do NOT justify enslaving EVERYONE under the slogan of making sure that no one suffers from such misfortunes."
So "everyone" is enslaved merely because we have public roads? Even if we were to buy into the tacit assumption behind this assertion (i.e., involuntary taxation = slavery), it's not clear this is true. After all, nearly everyone supports public roads, meaning they don't mind being taxed to support them. Yet this point merely scratches the surface of what is wrong here. To regard public roads as equivalent to slavery trivializes the horror of slavery. Suppose you have two choices: to live in a society like America with public roads, or as a slave on a tobacco planation in the old South. Which would you choose?
Obviously, the notion that American citizens are slaves because they have to pay for public roads is absurd.
"Suppose you have two choices...": to have your right arm cut off by a chainsaw or to have your left leg cut off by a scalpel. Which would you choose?
I refuse to reduce my options to various degrees of slavery.
Obviously, the notion that people whose property the government considers its own and whose income is at the mercy of a majority vote are not slaves, is absurd.
That "nearly everyone supports public roads, meaning they don't mind being taxed to support them", regardless of whether they will ever be using the particular roads, does not give the government a right to force those who do not support public roads to part with their property.
If you are so confident that "nearly everyone" prefers to have the government expropriate a portion of their property and pay an exorbitant number of union workers in a location you will never visit to build crappy roads (as compared to paying for the roads they actually use and through their money have at least some degree of control over their quality and cost), even better. No one will prevent this mythical "nearly everyone" from continuing to part with their money without a gun to their heads, right?
I refuse to reduce my options to various degrees of slavery.
Which is why you are pusillanimously venting at ARCHN, as opposed to teaching Obama how he should run the country? Puh-lease! Some of us live in the real world, not a fictional one in which we can "refuse to reduce our options to various degrees of slavery." Of course, we can imagine a world in which people behave the way we would like them to or in ways we think are right. In the real world, you have to deal with competing interests and obligations as reasonably as you can. And if it is unreasonable to deal with "degree(s) of slavery" when there is no serious alternative, then fine. Jump off a cliff. Liberty or death, right? No in-betweens, is it not?
But of course, the only dream a slave is permitted to have is that of a good master, right?
As for teaching Obama how to run the country, he's too busy listening to his communist and social justice friends, I'm afraid.
But of course, the only dream a slave is permitted to have is that of a good master, right?
But if you admit you are dreaming, then why do you want us to take you seriously?
By your logic, children are slaves of their parents, right? Or renters are slaves of landlords?
Something I've also noticed about economic libertarians is that while they acknowledge the corrutping influence of political power, they rarely acknowledge the same for financial power. So do you think that the ability to own a road should be for the highest bidder? If not, how would you go about it?
Renters are not slaves to landlords as long as they voluntarily agree to the conditions of the rent.
The children-parents analogy is EXACTLY the case to be made AGAINST today's governments that consider themselves in the position to parent and reprimand their citizens as their children. The government does not have such an authority, even if it claims that it does and the vast majority of people agree with it. But even then the analogy does not really work because children's liberty is limited by lack of their ability to sustain themselves. As soon as a child is capable of making enough to support himself, it is really hard for the parent to make a case for telling the kid how to live his life.
Everyone has the "right" to own the road. The road gets sold to someone who offers conditions most beneficial to the seller. It does not necessarily have to be the highest bidder, but in many cases it will be the highest bidder. And there is nothing wrong with that.
Renters are not slaves to landlords as long as they voluntarily agree to the conditions of the rent.
Who defines "voluntary"? The same person who defines taxation as "slavery"?
The children-parents analogy is EXACTLY the case to be made AGAINST today's governments that consider themselves in the position to parent and reprimand their citizens as their children. The government does not have such an authority, even if it claims that it does and the vast majority of people agree with it. But even then the analogy does not really work because children's liberty is limited by lack of their ability to sustain themselves.
So you think that most people can sustain themselves in a society without a government? I know we all have good imaginations, but many of us admit that governments have problems, but that they also have advantages. What you call "degrees of slavery" is really what many other people would call an exaggeration of a disadvantage while ignoring other advantages.
Everyone has the "right" to own the road. The road gets sold to someone who offers conditions most beneficial to the seller. It does not necessarily have to be the highest bidder, but in many cases it will be the highest bidder. And there is nothing wrong with that.
There is nothing wrong with that only in the same sense that there is nothing wrong with traffic jams - some people may be ok with it while some people may not be. The real question is whether there are disadvantages to private ownership of roads that can outweigh public ownership. I can't pretend to answer such questions with your confidence, but I can say that your confidence doesn't address the real problem - your volubility cannot mask your impotence to do diddly squat about it.
Definition of voluntary is very simple: not coerced by law or violence or threat thereof. Whether it is your only viable option is irrelevant, as long as you are free to refuse.
Are you making a case for involuntary foster care for all children who do not have anybody to take care of them?
That someone in the society cannot sustain themselves, does not mean that someone else must be forced to do it for them.
And yes, I do think that most people will be able to sustain themselves without a government. I don't have a single doubt about that.
I can't pretend to answer such questions with your confidence, but I can say that your confidence doesn't address the real problem - your volubility cannot mask your impotence to do diddly squat about it.
So suddenly inability to right a wrong makes you wrong, eh? Slavery is a good thing because you see, if it wasn't a good thing, why would we have it in the first place, and also, because no one slave's words should be able to change anything, it should also prove that the current state of affairs is, if not ideal, better than any other one.
Great logic.
"As for teaching Obama how to run the country, he's too busy listening to his communist and social justice friends, I'm afraid."
This is shock jock tea party BS of the highest order.
But go on, gives the names of these people, how long he spends listening to them and how this has changed his policy.
Now doubt he is just waiting for his 'socialist' buddies to get elected so he can centralize power and turn the USA into the USSR.
Give him another 4 years and everyone in America will either be in a gulag or a paddy field. Wearing overalls.
Good grief, here in the UK we laugh at people in America who think Obama is a socialist. I mean, right it's liberal US comedians making us laugh. There aren't really people in America who believe Obama is a commie? Are there?
P.S. If you want to see how private roads worked in my country, type turnpike trusts in wikipedia. Do we really want to return to those days?
- Steven Johnston
UK
"That someone in the society cannot sustain themselves, does not mean that someone else must be forced to do it for them."
In point of fact, if someone cannot sustain themselves, someone else will be "forced" to do something about it, one way or the other. It's not as if individuals who can't sustain themselves will, as kind of courtesy to libertarians, merely crawl in a hole and die. They will make nuissance of themselves first by begging, and then by stealing. If they are allowed to steal, someone will be forced to sustain them (i.e., the someone victimized by the stealing). If the "authorities" step in to stop the thievery, well, then someone will be "forced" to pay for these authorities, and for putting the thief in the hoosegow, and trying him in a court of law.
Such matters fall under what could vaguely be called the "facts of life." Such facts are part of the human condition. To rail against them is about as efficacious (or wise) as railing against the common cold or bullies on the playground. They are all part of the warp and woof of being human animals living in a social order.
In point of fact, if someone cannot sustain themselves, someone else will be "forced" to do something about it, one way or the other. It's not as if individuals who can't sustain themselves will, as kind of courtesy to libertarians, merely crawl in a hole and die. They will make nuissance of themselves first by begging, and then by stealing. If they are allowed to steal, someone will be forced to sustain them (i.e., the someone victimized by the stealing). If the "authorities" step in to stop the thievery, well, then someone will be "forced" to pay for these authorities, and for putting the thief in the hoosegow, and trying him in a court of law.
How many people would prefer to die in jail if their other option was to work? I don't have any evidence that there'd be that many.
And in any case, the costs of running the courts, the police and the jails would be substantially less than today's level of taxation.
And no, we cannot have the debate without casting the debate in terms of moral absolutes, because moral absolute is what this debate is about.
When you grow up, let me know. People who cast public policy issues in a democracy moral absolutes had better hope that public opinion is on their side. Otherwise, they are just preparing themselves for heavy sedation after lots of hot air is wasted on empty dreams!
"You mean Karl Marx and John Keynes?"
Yes to the former, as a serious thinker, and no to the later.
We had laissez-faire in the 1800's in the UK, the workers hated it and formed unions out of that came the labour party to reform capitalism. Now, neither the unions of the Labour party are socialist and you cannot run capitalism in the interests of the majority...but laissez-faire had it's day here in the UK and nobody wanted it.
- Steven Johnston
UK
Karl Marx is as much a serious thinker as Arnold Schwarzenegger a serious actor.
"Karl Marx is as much a serious thinker as Arnold Schwarzenegger a serious actor."
Andrei, do you have any other 'jokes' as that was wasn't very funny.
Sure Arnie is a dreadful actor...yet who could fault him as the Terminator? Yul Bryner was great in Westworld but as murderous cyborgs go give me Arnie any day.
- Steven Johnston
UK
This was exactly my point, comrade Johnston
For such a dreadful actor he has made an awful lot of films and money. It's a poor joke and a poor analogy as every actor has their range. I would not expect Arnie to do Shakespeare nor would I expect Olivier to play a cyborg. To call Arnie dreadful when he is cast in roles he clearly isn't suited for is disingenuous.
- Steven Johnston
UK
For such a dreadful actor he has made an awful lot of films and money. It's a poor joke and a poor analogy as every actor has their range. I would not expect Arnie to do Shakespeare nor would I expect Olivier to play a cyborg. To call Arnie dreadful when he is cast in roles he clearly isn't suited for is disingenuous.
- Steven Johnston
UK
Comrade Johnston, have I ever once called Arnie "dreadful"? I do not recall doing so. In fact I really like many of his movies. But that (or the number of dollars he made as an actor) does not make him a "serious actor", does it?
Just like the fact that so many people bought into Marx's narcissist moronic writings make Marx a serious thinker.
It is unfortunate that I have to explain the analogy so bluntly, as I though it was quite obvious from the start.
In fact I really like many of his movies. But that (or the number of dollars he made as an actor) does not make him a "serious actor", does it?
Why not? Millions of dollars were invested by Hollywood in his movies. He was surely taken seriously.
Moreover, he should be an objectivist's favourite: his movies are capitalist market successes, he plays larger-than-life heroes, most of his films portray a black-and-white good-and-evil world.
What's a Randian not to like?
;)
Thanks anon...plus we all took him seriously as the Terminator.
At least in the first one, I doubt any other actor would have done a better job.
"Just like the fact that so many people bought into Marx's narcissist moronic writings make Marx a serious thinker."
Ahhh that's more like it, business as usual from the objectivists here. But, what is to stop us substituting the name Marx for another philosphers? For mischiefs sake lets say Rand, surely it would still make it equally valid.
Plus, laughing, she had to be the most narcissistic philosopher ever. The majority of it was just word games to justify here like and dislikes.
- Steven Johnston
UK
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