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Private road

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Monday, Jun 26, 2006

Nothing gets economists excited like a good road privatization. Privatization is usually in theory intended to create a market, and economiss love their markets and their magical efficiency. Most noneconomists probably don’t want to have to shop for roads to drive on (or shop for mail carriers or retirement services or electricity or water or what have you) because we like to think there is no room for competition in these services; they are simply provided or not provided. This is fiction, of course, but a useful one; if there is only one provider, no one can feel like they are getting second-rate service. (I know, that sounds like a justificiation for a Soviet system for universal inadequecy, but there must be nothing worse then to be aware you are getting a second-rate education or drinking second-rate water because you can afford better and your society doesn’t give a damn about you.) The existence of several road companies forces me to make a choice that is likely to based on limited information and likely to induce unnecessary stress. Privatization enhances efficiency (theoretically) at the expense of the peace of mind of most customers, who suddenly have more burdens of choice to deal with in areas where they don’t want it. Drivers don’t want a market in roads, they just want a road to exist and be maintained.


Richard Posner and Gary Becker comment extensively on the recent sale of the Indiana toll-road to Spanish and Australian interests. (Ironic, considering many Interstates were originally built for national-security reasons, in imitation of Nazi autobahns.) Becker in particular is excited because he thinks this will inspire competition in road building and management, which should drive down costs and enhance services and perhaps relieve congestion. But customers are generally used to roads costing nothing and are willing to pay the price of sitting in traffic rather than see the highways become a class-ridden system where auto-aristocrats pay for private roads and the rest of us suffer on broken down public roads that no one has any incentive to fix, once the government washes its hands of the business. Roads will no longer be something we travel down together; they will become infected with connotations of status, like every other kind of positional good.

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