Kristopher Morgan (Special Thanks to Jared Miller for Collaboration), June 15, 2017
For libertarians, roads are a fun mental exercise in examining market relationships and using them as a model to explain how a free society could provide a service that is provided by governments. But for those opposed to libertarianism, roads represent the Ace of Spades. Modern society is entirely dependent upon roads, and if we don’t build and maintain them, the entire economy would collapse. Since governments possess the sole authority to use taxation as a means to fund them, it seems self evident they are best left in government hands. But is that really true? In this article, I wish to open the reader’s mind to alternative possibilities to government funding as well as to put an end to the ‘toll road nightmare’ scenario associated with markets.
There are four basic types of roads: Residential, business, rural, and highway. I will give a brief summary on how each type of road can be provided in a market setting.
Residential roads are probably the most important in our daily lives since without them we cannot get to and from our own homes. In my opinion, the most common way residential roads would be provided is through Business to Business relationships. Land developers would simply make installing a road part of the overall investment when constructing a residential area. The cost of the roads could be included in the price of the houses. This gets us around using a different toll for each street as well as the possibility that a homeowner who has no money for the toll being unable to afford access to their own property. The quality of the road itself would play a role in the overall value of the houses located on them in the same way crime rates and other conditions do, making it part of the overall investment for the buyer as well. Of course there is always the risk a road will fail/collapse and damage utility lines, which is why insuring the road would be in the best interest of the developers. Insurance companies would demand the best possible construction specs before agreeing to accept the risk. The close relationship between utilities and roads also creates an incentive for utility companies themselves to maintain residential roads and include the costs in monthly statements. Since the price of the road would be included in the sale of the house, anyone not paying their share of the road would literally be in default of their mortgage and would be dealt with accordingly.
Business roads are perhaps the most intriguing to debate. I love the assumption that without (government provided) roads, we simply wouldn’t be able to visit the local grocery store. Because we all know that is precisely what entrepreneurs want to do; they want to start a business, spend all their savings on the building, inventory, hiring employees, and then make sure it is completely inaccessible! It’s interesting how hopelessly greedy we assume businessmen are, until we are left to conclude that their greed leads to a net positive. Business roads differ in many ways from residential roads, due to their purpose. The road would have to be higher quality due to the amount of traffic that would be on it. People would come not just from one neighborhood to visit the location, but many. To keep costs down, business chains, especially those which are not in direct competition with each other, would divide the costs of having a road that provides motorists access to each of their businesses. The easiest way to do this would be for all businesses involved to invest an equal amount into a road company to take care of the issue. The cost of the road would be included in the price of some of the products which are sold, and that makes sense from a social justice point of view, as those using the roads most would be the ones paying for them. Toll roads may be tried at first, but if American society has taught us anything, it’s that people like convenience. If toll roads were even tried in business districts, the first cluster of entrepreneurs to network and eliminate them would leave their competition far behind. The fact that the statist attempts to bring up the endless-toll-road scenario says that they understand this as well.
Rural roads are a bit more tricky since we are dealing with fewer people in low traffic areas. But if the traffic is light, the road may not have to be as high quality. For homes built by developers, we can assume there is already a road in place for access as we’ve already seen. But let’s suppose you and five other people decide you’re going to build your houses in a rural area, and you all decide to share the cost of a road by entering into a formal contract. On the surface this poses a serious problem, as any of you could simply choose not to pay, but as we dig a little deeper we see this problem can easily be handled through contract. Part of the agreement could include a penalty for a person refusing to pay their share of the road, for instance a boot on the tire until the payment is made. Enforcing contractual agreements is perfectly within the confines of a political theory based on individual freedom. Sure, someone could claim payments were missed by someone else and penalize them by accident, but we do have receipts and bank statements that can easily solve that problem. By that same token, legal action need not necessarily be taken just because someone fell on hard times and missed a few payments. A clause in the contract could account for such a scenario, but we must also not forget that we can be flexible and compassionate. The contract itself would give those who signed it the ability to take action against someone for not paying; however, that does not mean they have to. Indeed, it is often the case that showing an inability to adapt to special circumstances hurts one’s reputation. Nobody would enter into a contract with a person who was unable to understand a bout of depression after losing a loved one or bad economic conditions causing one to lose their job, etc.
Highways may be the one form of toll road that could survive in a market setting. This is not the same as the endless-toll-road scenario, as the motorist continues on the same road for a matter of hours before paying a toll. The advantage to privatizing highways is if there is a way to get rid of toll roads through other superior business models, people would be free to take on the project. It sounds far fetched to think about having a road that goes across the entire country not funded by tolls or taxation, but what about after we consider all the people who have an incentive for such a product? The tourist industry has an incentive for highways that are toll-free, as tourist sites are spread all over The United States. The US in particular has ocean-front property to the South, West, and East, all of which can be utilized to meet demands for vacation and retirement spots. It is also conceivable that roads connecting tourist locations with other roads across the country could be paid for with revenue made from cottage rentals and other goods provided by the industry. Anyone importing goods from sea that need transported to locations across the country would like to see it done without the use of tolls and could also include the maintenance costs of similar roads in the prices of the goods they sell, or even network with those in the tourist industry and share roads.
The Statist may point out that no matter what, we are all going to pay for the roads, so why bother changing it from government’s use of taxation to market relationships? Well, for starters, it also involves the possibility of democide; “the murder of any person or people by their government, including genocide, politicide and mass murder.” If you refuse to pay your taxes, eventually you will deal with a policeman, and if you disobey and resist a policeman as you would anyone else knocking on your door and shaking you down for money, the escalation of force could get you killed. Unfortunately, most people in society will blame you with phrases like “well, they should have obeyed the law,” or “everyone has to pay taxes,” and that will be the end of it. I can’t imagine that is how we really want to fund anything, or what we honestly think when we demand government pay for some other good.
Secondly, in power relationships, you simply don’t get win/win outcomes. Everywhere the government throws money, whether it’s healthcare, education, or banks (bailouts), we see bubble after bubble and prices inflated and services that are not meeting demand. Corporations benefit very well from receiving taxpayer dollars, at the expense of those who pay. The only situations in which win/win relationships are actually achieved occur when all parties involved are free to choose the conditions in which they will enter the agreement. Statists who, to their credit, are informed about roads and all of the other maintenance costs and variables that affect them, are more than willing to point out the costs involved. While such a person understands roads as they exist today, they don’t understand prices and how they reflect economic relationships. We should not act shocked at the conclusion that an entire industry can inflate the prices of its goods when its business model includes receiving tax dollars. When entrepreneurs have to convince us to buy their products rather than resort to receiving tax dollars, and there is a market based on private property and competition, prices tend to fall. We cannot pretend that the prices we see now are the exact same we would see with a free market. The first rule of making a sale is the consumer has to be able to afford your product.
Third, innovation in roads and daily transportation are massively hindered by the current system. Who’s to say we wouldn’t have developed something better by now if we hadn’t been forced to build our lives and our society around government-mandated infrastructure? In an age where new technology and production methods have revolutionized almost everything, why has road construction and maintenance stayed in the figurative “dark ages?” One of the externalities of suppressing markets in a sector of the economy is the loss of any creative energy that would have naturally flowed into it had it not been for government intervention.
Sorry statists, but we can clearly see that the issue of roads is not the Ace of Spades you thought it was. Everyone in society working together towards a common end through consensual agreements is, and always will be, far superior than a few groups of bureaucrats using law to deliver goods. Understanding this is what makes libertarians more collectivist than any other group in society. The intelligence and foresight of a handful of bureaucrats cannot possibly out-perform the collective intelligence of everyone in society. That is why stumping a libertarian on the issue of roads will never stump our overall position. The basis of our economic theory is founded on the fact that one person, or a small group, cannot possibly possess the knowledge it takes to run an entire economy. To illustrate the point, I will leave the reader with a list of everyone who has an incentive to make sure roads are built and maintained.
Fast Food restaurants
Anyone who might ever need to go to a hospital
Anyone who doesn’t want to walk or ride a bike to work
What really could we as a society accomplish if our creative energies were released to explore new solutions to problems which affect us all? It’s time to think outside of the box!
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