Irish Liberty Forum

Imagining the Unimaginable: Walter Block on Roads

with 4 comments

I have almost finished reading Walter Block’s epic treatise The Privatisation of Roads and Highways. It has been a fascinating read that has answered many of the questions I had about how a free society would deal with the insurmountable challenge of private road ownership. Here I will do my best at channelling David Gordon, and summarise the book.

Summary

The central pillar of the book is extremely straightforward:

What reasons are there for advocating the free-market approach for the highway industry? First and foremost is the fact that the present government ownership and management has failed. The death toll, the suffocation during urban rush hours, and the poor state of repair of the highway stock are all eloquent testimony to the lack of success which has marked the reign of government control. [p. 12]

Block argues correctly that the government, lacking the profit and loss mechanism, can never be fully motivated to alleviate the problems on our roads. The government will never be financially punished for poor management decisions. It cannot go bankrupt like a private business owner can. Therefore, the chief cause of all misery on our roads is due to government ownership of roads. Block goes on:

Now consider the case where a restaurant goes out of business. The proximate causes are badly cooked and cold food, surly service, dirty conditions, lack of personal safety, poor decor, etc. But the ultimate responsibility, surely, lies with management. It and it alone failed to hire good cooks, to ensure that the waitresses, busboys, cleaners, bouncers, interior decorators, exterior architects, etc., did their assigned tasks in a satisfactory way. [p. 186]

The restaurant analogy is one of the recurring motifs of Block’s book. It is an excellent illustration of Block’s secondary point: proximate vs. ultimate causes. Block argues that instead of focussing on the ultimate cause of road fatalities – government manangement of roads – economists have been too concerned with the proximate causes – drink driving, speed and driver error. The solution to the road problem is the to allow the same market system that provides us with computers, cars and houses to provide our roads.

Block answers the charge that private road ownership is “impossible”, by pointing to the private toll road trusts of England and the United States that provided the respective nations with private roads. But Block’s book is a theoretical exposition, not a historical one, and hence for a more detailed account the reader will have to seek out T.S. Ashton’s An Economic History of England: The Eighteenth Century and W.C. Wooldridge’s Unlce Sam: The Monopoly Man. Block cites both favourably.

But we are given a morsel of evidence that private roads exist even today. Block gives the example of California’s 91 Express Lanes – the first priately funded U.S. toll roads since the 1940s. Although not mentioned by Block, I am personally aware of the privately owned Ambassador Bridge which connects the U.S. to Canada. More rudimentary examples include the “roads” in private shopping malls and gated communities.

Block maintains that he is merely applying market fundamentals to the road industry. He finds the parallels to the Soviet Union prescient:

For just as the Soviet agricultural planners knew that farming had once been conducted on a private basis,negating all arguments concerning the necessity of public ownership, so are their modern counterparts acquainted with the fact that initially roads were owned by private turnpike companies. [p. 184]

A Note on Sytle

The analogies above occur repeatedly throughout the book. This is not surprising as the book is not one continuous tract, but a collection of journal articles Block wrote over the past three decades. Fourteen of twenty-one chapters are reprints. It is claimed, however, that the entire treatise was edited word for word beforehand. Nonetheless, Block is repetitive throughout much of the book.

Block’s writing is humourous. This is not a dry book like Man, Economy & State. Off the wall comments and tangental self-referencing abounds in the book. There is little technichal jargon, so it’s perfect for the layman.

Finally a note on footnotes. Jesus Christ! I have never seen anyone go so overboard with footnoting in my entire life. They make up half the book. Seriously. Is he trying to win a competition or something…

World's Longest Footnote

World's Longest Footnote

Q&A Session

To finish up, I’d like to offer some answers to questions that Block considers in Privatisation:

1. Under a private road system, drivers would have to stop in front of each adjacent house and pay a toll. This would cause traffic to grind to a standstill. [p. 245, pp.284-285]

Government property gets privatised all the time. When a factory, for example, switches from public to private hands, the government does not sell one brick to person A, one tile to person B, and so on. There are several techniques to ensure that the capital value of the good in question is maintained. 

The obvious solution is not to divide the road into 10,000 pieces, but to form a new road owning firm with 10,000 shares based on taxes paid in the past.

2. A private road owner could end up owning all 4 roads surrounding a house. The owner could prevent access and egress from the house, thereby capturing the entire capital value of the property. [pp. 19-20]

Noone in their right mind would purchase a property without the accompanying right to access and egress. A lawyer who let a client purchase a property without this right would be swiftly fired and perhaps disbarred.

To quote Murray Rothbard:

The answer is that everyone, in purchasing homes or street service in a libertarian society, would make sure that the purchase orlease contract provides full access for whatever term of years is specified. With this sort of “easement” provided in advance bycontract, no such sudden blockade would be allowed, since it would be an invasion of the property right of the landowner. [For a New Liberty, p. 205]

Real-life examples of this are gated communites, where roads are privately owned and maintained, and access and egress rights must be allowed in order for houses to be sold.

3. What about compulsary purchase? It really easy to build roads if the government can just seize the land it needs. How would private road owners possibly manage? [pp. 17-19, pp. 366-368]

Compulsary aquisition is the name given to the State’s power to seize property without the citizen’s consent. The victim of State theft is usually given compensation for his loss – an amount the State deems a “fair” price.

The first thing to point out is that the price paid is never the “fair” market price, as there would be no need to appropriate the land in the first place if it were. If a landowner values his land at €100,000, and he is paid only €10,000, then the true cost of this transaction is not the €10,000 but the much higher figure.

The private road owner has several tools at his disposal. Firstly, the road does not have to be built in a straight line. Secondly, there is no reason why the prospective builder cannot purchase several options to buy land. If one seller holds out, than the road builder may purchase options two, three, four, etc. This rivalry among sellers will tend to lower the price the builder has to pay. Lastly, if there is still a hold out, there is another course of action. As as a free society would not recognise the doctrine of ad coelum et ad infernos then it would be possible to build a bridge over, or tunnel under, the land in question.

4. When two intersecting roads are owned by different companies, how is green light time allocated? [pp. 28-29]

Abbey Road

Abbey Road

If a single road company owns the roads and intersections in a given area (such as gated community, perhaps) then obviously it will decide how to allocate green light time. There is no problem here.

In the case of different companies, Block suggests that the two road owners will bid for the green light time. Ceteris paribus the street with the larger volume of traffic will bid out its rivals, as it risks losing out to rivals who can offer more green lights and hence a faster journey. The same distribution is likely to occur if the intersection were owned by the larger road, the smaller one, or a third party.

5. If a private road stretches from one end of a country to the other (e.g. Boston-Los Angeles) then the road would effectively split the country in half. The owner may not permit connecting roads, or access between the north and south of the country. [Chapter 14]

Firstly, it’s important to ask why a road owner would do such a thing. A road where you can only enter and exit at its two ends would have a lower capital value than one that has several road connections along it. The owners ability to make profit will be curtailed, and that road company’s CEO would swiftly get the boot.

But nonetheless, if the private road owner still holds out, what is to be done?

Again, as a free society would not recognise the doctrine of ad coelum et ad infernos then it would be possible to build a bridge over, or tunnel under, the initial road. Two problems come to mind when building a bridge over another road. The initial road owner may object to the overpass, as it would block out sunlight and rain from his property. This could be solved by building the overpass out of a clear material, or out of a mesh of some sorts.

Secondly, what happens if the initial road owner permits the transportation of a large object, like a space shuttle? The overpass will get in the way. The solution is again simple. Just build a drawbridge!

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Written by 20000miles

April 29, 2009 at 7:03 am

4 Responses

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  1. Transport is one area where I think the results are better if public spending crowds out private investment. It’s a personal preference, but I think our quality of life would be higher with less cars and more high speed trains and trams.

    Incidentally in Walter Block’s analysis who builds the country roads that lead down to the one-off houses & farm houses? You could argue such dwellings are uneconomical, but wouldn’t that make food production even less economical than it already is? If that particular subsidy was removed, what would that mean for the food security of the regional population?

    Mack

    April 29, 2009 at 3:53 pm

  2. This could be solved by building the overpass out of a clear material, or out of a mesh of some sorts.

    ahh no. also the above comment is of merit. also the m50 is another example of a toll road

    simon

    April 30, 2009 at 2:49 pm

  3. Perhaps I should have emphasised the idea that the road owner really can’t object to a road being built above his road, precisely because he hasn’t homesteaded that area. The clear mesh is simply a worst case scenario.

    20000miles

    April 30, 2009 at 9:07 pm

  4. […] house without the accompanying access and egress rights. I wrote a little Q&A on private roads here. 2. A private road owner could end up owning all 4 roads surrounding a house. The owner could […]


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