| | I just finished reading Mr. Stolyarov's article and scanned the comments. I'm all for reducing the size of government in most respects and privatizing, but roads are not a high priority for me. I believe the article has some good arguments. But I have some comments and think some arguments are questionable. Some quoted parts that follow are from "The Necessity of Road Privatization."
I live on the North Shore of Chicago, one of the most affluent areas in the entire United States... with some of the poorest roads I have seen anywhere in the country. A good part of their being so poor is the huge volume of traffic they bear. The nicest roads tend to be where there is little traffic (or they are new).
The ancients, with far fewer technology than is available in our age, created roads with two thousand times the life expectancy of the average street on the North Shore of Chicago. That strikes me as a big exaggeration. The ancients also made some roads that lasted far less time, e.g. corduroy roads. The longer-lasting ones were built with huge blocks of stone, they didn't have much traffic, and they were not made smooth enough to handle today's fast-moving vehicles.
Presumably the 2000 number comes from some Roman roads existing that long and assuming a life of only one year for the average street on the North Shore of Chicago. Streets are repaired often, but not a given stretch every year, nor are they completely torn up and replaced every year. To say each street's life is one year because it needs a little repair now and then is akin to saying a person dies when he/she only has heart surgery.
Consider this: if you were a road entrepreneur, whose foremost concern is not "public service" (I repeat, re-election), but profit, would you seek to magnify your expenses by hiring costly road maintenance crews every year? Or would you use the modern technology at your disposal and incur only marginally higher initial costs to build a road that can serve you over twenty lifetimes without requiring repair? What evidence do you have for "only marginally higher initial costs"? For what kind of roads are you comparing costs? Lets' consider the location and use of the road. Suppose it's a local street or county road that doesn't get much heavy traffic. Does it make sense to build a very durable but very expensive one? What's so wrong with one that's much cheaper now but needs some repair or even needs replacing many years hence? There is also the financing aspect. Builders (more exactly, financiers) of roads have budgets. Maybe they believe its better overall to spend less on the road now and spend more on something else. Economic allocation decisions are rarely absent.
I found a site addressing the issue of building a brick road versus a reinforced concrete road decades ago. The brick route was chosen even though it cost about twice as much initially. The page says "No mention is made of the comparative expenses of future maintenance, which would almost certainly have favored the brick roadway." A concrete road likely would have required more repair, but no attempt was made to back up the claim, using present value numbers (not absolute dollars).
The following is a hypothetical example. The numbers are invented but they illustrate the matter isn't so simple. Suppose the alternatives for the next 40 years are: (1) a concrete road which costs $40 million initially and requires $1 million per year maintenance the last 20 years and (2) an asphalt road costing $20 million up-front and $1 million per year maintenance its last 10 years, replacing it after 20 years at a cost of $35 million and maintenance will cost $1 million per year in years 31-40. (Edit and caveat: One could argue that my numbers are too far apart now, but not for many years past. The cost difference has narrowed a lot recently due to the higher price of oil.)
If you just sum the costs, it's $60 million for the concrete road and $75 million for the asphalt road. However, the present value at 5% of the two roads is nearly the same (about $50 million), with the initial outlays $40 million and $20 million, respectively. Which do you choose? I submit that a private road-builder will face the same kind of alternatives and may choose the one with the lower up-front cost.
Roman troops would often personally labor on the roads they would later use as avenues between their outposts on the empire's borders and channels of communication with the capital. Slaves, prisoners of war, and convicted criminals also did much of the work (source).
Converted to private hands, these roads could almost immediately be managed with far superior results than the current state of things brings about. Even if no new roads are built, privatizing the existing ones would greatly increase the quality of transportation and dramatically reduce the amount of road maintenance and traffic delays, which at presently grievously hinder the economic life in virtually all developed countries. Simply privatizing an existing road isn't going to improve matters instantly in the ways you say. Maybe over a span of years, but not immediately.
Government at any level can contribute to this by agreeing to privatize its existing roads. Say, City X has greed to transfer all of its “public” thoroughfares to private ownership. The city need not suffer financial losses as a result of this. In fact, it can turn a substantial profit by establishing an auction to sell the roads to the highest bidder. I'd be very wary of a transaction in which a government gets an immediate and huge influx of cash. What will it do with it? The Chicago Skyway was recently "privatized" with a 99-year lease (source). Why do you think it was done? An easy way out of looming government deficits. Like it says in the linked article: "They raise enormous amounts of money, making up for tax increases politicians won't impose. Texas, for instance, plans to raise $7.2 billion from a lease, which is just the first part of an ambitious plan to sink $180 billion into road and rail projects that otherwise would be politically unthinkable."
Of course, new roads will be built under a private system, and at far faster rates than under government control. The moment any private entrepreneur thinks an additional thoroughfare is necessary and profitable, he will begin building one; he will require no extensive political lobbying, no seeking of special-interest favors, no lengthy and tedious committee discussions that paralyze efficiency. What evidence do you have it would be faster? The private builder of a totally new road would face the obstacle of getting the right-of-way. That is a very slow process.
(Edited by Merlin Jetton on 9/08, 6:07am)
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