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Post 100

Friday, October 10, 2008 - 6:54amSanction this postReply
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In part 10 Mr. Stolyarov responds to my questioning of his claim that sections of roads are blocked off for months, during which no work is done on them. We could quibble all day about this, but it hasn't been my experience. I have seen times when a segment of road is closed for a long time, especially in the cases of re-routes and lanes being added. However, during those times I have also seen work in progress not long after the closing.

He writes:
What happens frequently is that a stretch of several miles in length is blocked off, and the construction work begins at one end and takes several months to reach the other. The construction cones are not removed from the segments on which work has been completed until the entire blocked-off area has been fully repaired. Moreover, the areas remotest from the segments on which work began first stay blocked off for months before the workers actually reach them.
Firstly, the sort of blockage used in  re-routes and widenings are barrels or even concrete barricades, not cones. My purpose is not to nit-pick, but trying to focus on the sort of work being done. In these cases it seems to me the segments must stay blocked off until all work is done. At least it would be impractical and costly to put a series of temporary re-entries to the traffic flow. Wouldn't a private road owner also face such practical difficulties?

In part 11 Mr. Stolyarov responds to my saying: “Still granting that government may be part of it, other causes for poor road
quality are volume of traffic, weather conditions and salt.”

He responds:
I grant that all of these are possible causes for poor road quality and certainly each of these factors, ceteris paribus, will affect the quality of the road. The key issue in my mind is whether some of these factors may also contribute to the severity of others – namely, whether government control of roads leads to greater vulnerability of roads to weather, salt, and high volumes of traffic.

I don't believe much of a case can be made for weather and salt, but high volumes of traffic, yes. In general motorists don't pay directly for road use. The exception is toll roads. It seems the government could have a lot more toll roads than exist, but toll roads can contribute to higher quality and fewer traffic jams under a government system as well as a private one. Of course, I'd expect that tolls would be much higher under a private system, at least for new roads, because the road owner would not have access to tax revenue (fuel taxes especially).
High volumes of traffic indicate high levels of demand for roads. If there is a lot of demand for a good – such as roads – on the free market, then the high price users are willing to pay for the good on account of this demand will tend to attract more entry into the field, leading to an increase in supply.
This "market force" also exists under a system of government roads and can be utilized with more toll roads. 

Toll roads or not, at a very local level and short distances, there is a natural constraint on increasing supply with more routes. The shorter the distance between point A and point B, the fewer the number of reasonable routes there are.

He also responds to John Aramaos' post 76. His response says nil about toll roads. One might argue that his response indirectly does via private roads. Regardless and in contrast, my post 98 does, and toll roads are an option to improve government roads, too.

My position bears repeating. I am in favor of more private roads and Mr. Stolyarov has given some good arguments in favor of them. On the other hand:
- I have other higher priorities for changing government.
- I don't believe government roads, or the work done on them, are as awful as he portrays them compared to private roads.
- There are options to improve government roads short of wholly private ones that are more politically feasible. Robert Poole has done a lot in this area. I note that Mr. Stolyarov's two essays do not cite him.

(Edited by Merlin Jetton on 10/10, 8:04am)


Post 101

Sunday, October 12, 2008 - 9:49amSanction this postReply
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In Part 12 Mr. Stolyarov responds to my post 90. There I used the "budget issue" to challenge his claim that "a greater proportion of roads will be of a high-quality, low-maintenance nature under a free market for roads than under a government-controlled market." There are two aspects of the "budget issue." I only gave one in post 90, but did give the other in post 96: "More importantly, a private road owner might choose to spend less on road X because it also wants to spend on road Y."

I proceed in post 96 to the "law of dimishing returns." At least for a private owner I think that law bears more on the quality level of roads then does Mr. Stolyarov's more abstract claim. It's difficult -- at least for me -- to say ex ante how the law of dimishing returns will affect road quality. Maybe Mr. Stolyarov is a lot more confident about his own predictive powers. Nonetheless, I acknowledge his point about government fiscal mismanagement. Mismanagement exists in the private sector, too, but market forces work to expel it.

I have little to say about Part 13. If Mr. Stolyarov wants to promote private road ownership, that is fine by me. I hope he has benefitted from this dialogue. The broad point I believe he could use to improve his advocacy is that private-owned roads and government-owned roads are not as far apart as he portrays them. I've made the point in several ways. It's not a case of "private all good" and "government all bad." While he may not believe exactly that, it is the way many detractors will read him. That approach won't attract many converts or even hold their attention.

It has been fun thinking about the topic and learning a little more via research.

(Edited by Merlin Jetton on 10/12, 3:10pm)


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Post 102

Monday, October 13, 2008 - 7:52pmSanction this postReply
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Greetings.

Part 14 of my response to Mr. Jetton is available here:
http://progressofliberty.today.com/2008/10/13/response-to-jetton-14/

I do plan to respond to some others of Mr. Jetton's remarks as well, but I fear that I will have to delay doing so for a few days, as I am preparing to give a public presentation critiquing John McCain's ideas on foreign policy this Friday. During that time, the daily posts on The Progress of Liberty will be devoted to developing the online counterpart to my presentation.

Sincerely,
G. Stolyarov II


Post 103

Tuesday, October 14, 2008 - 5:36amSanction this postReply
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I do strongly agree with the last two paragraphs of Part 14.

Post 104

Saturday, October 18, 2008 - 7:03amSanction this postReply
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Greetings.

Within the next few days, I will try to post the remainder of my responses to Mr. Jetton.

Part 15 is available here:
http://progressofliberty.today.com/2008/10/18/response-to-jetton-15/

Sincerely,
G. Stolyarov II

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Post 105

Sunday, October 19, 2008 - 7:05pmSanction this postReply
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Greetings.

Part 16 of my response to Mr. Jetton is now available here:
http://progressofliberty.today.com/2008/10/19/response-to-jetton-16/

I will post the rest of my response in the future. However, I will devote the next nine daily blog posts on The Progress of Liberty to videos that I created, critiquing John McCain's ideas on foreign policy.

During that time, I will also be preparing for and taking Actuarial Exam 3L, so I will be quite occupied. However, I do look forward to continuing my discussion with Mr. Jetton afterward.

Sincerely,
Gennady Stolyarov II

Post 106

Thursday, October 30, 2008 - 12:34pmSanction this postReply
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Greetings.

Now that I have taken Actuarial Exam 3L, I once again have some time to devote to daily responses to Mr. Jetton.

(I think I passed the exam, by the way, but exact results will only be available toward the end of the year.)

Here is Part 17 of my response:

http://progressofliberty.today.com/2008/10/30/response-to-jetton-17/

Sincerely,
G. Stolyarov II

Post 107

Saturday, November 1, 2008 - 12:28pmSanction this postReply
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Greetings.

Two new parts to my response to Mr. Jetton are now available.

Part 18:
http://progressofliberty.today.com/2008/10/31/response-to-jetton-18/

Part 19:
http://progressofliberty.today.com/2008/11/01/response-to-jetton-19/

More is to come on Monday.

Sincerely,
G. Stolyarov II

Post 108

Monday, November 3, 2008 - 8:31amSanction this postReply
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Greetings.

Part 20 of my response to Mr. Jetton is now available:

http://progressofliberty.today.com/2008/11/03/response-to-jetton-20/

More is to come on Wednesday.

Sincerely,
G. Stolyarov II

Post 109

Monday, November 3, 2008 - 8:50amSanction this postReply
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Best wishes to Mr. Stolyarov for passing exam 3L.

I've read his Parts 15-20. I won't say much in response and basically agree with them. To an extent that is pretty easy to say, since he agreed with me. :-)

In post 95 I suggested considering the empirical evidence of the building or expansion of airports with regard to whether or not there would be unanimous approval among 1000's of people whose property is affected by proposed road construction, since it would be lucrative for all. Mr. Stolyarov replies:
Airports, if they are built or expanded, must be built within some specific land area, and the airport developer has little choice about where an existing airport might be expanded or how to arrange a new airport so as to accommodate unusual shapes of the plots of land on which it would stand. However, with roads, there is much more flexibility.
I agree that there is generally more flexibility for roads, but think comparisons should be made with care. Compare new roads with new airports and road widening with airport expansion. There is little flexibility on widening roads. I admit it wasn't a superb analogy, but the target of my suggestion was Mr. Stolyarov's contention that with private roads there would be unanimous approval among 1000 people, since it would be lucrative for all.

In Part 19 he writes:
On the contrary, government failure to provide genuinely useful services (such as roads, education, health care or a myriad of other goods) is a genuine failure because government monopolizes or quasi-monopolizes the field and then fails to deliver on the goods, leaving consumers with a shortage of inferior-quality products (and virtually no superior-quality ones).
I agree this is true in general, but an exaggeration as written. Again road quality much relates to traffic volume, age, and weather, not simply whether the road is private or government-owned. I also reply with a brief story. Returning from near Madison, WI to DeKalb, IL on Saturday, instead of taking I-39 down to I-88, we traveled Genoa Road and IL-23 instead (after a bit on I-90). Each is only two lanes, but in terrific shape. They probably don't get a lot of traffic, especially from 18-wheelers. But I guess that traffic is increasing. There is new construction along IL-23, like new housing developments and a brand new Jewel Food store, the location probably chosen to serve Genoa, Sycamore and DeKalb.

In Part 20 he writes:
And yet, I must ask Mr. Jetton and my other readers to compare the quality today of most privately built and owned apartments and most governmentally built and owned housing projects. Which kind of building typically exhibits less wear, better infrastructure, a longer expected functional lifespan, less crime, less vandalism, and more devotion to its upkeep on the part of its inhabitants?
I grant there is a big difference private apartments and government housing projects, but don't see a lot of mileage :-) using that as an analogy with roads. Regarding private apartments he doesn't say whether he refers to owner-occupied or renter-occupied apartments. Residents of government housing projects are usually lower income renters. In either case lower income renters tend to be less careful about upkeep. I believe the analogy to roads is weakened because there is no counterpart among drivers. The vehicles that contribute the most to road deterioration are the 18-wheelers.

Also in Part 20 he writes:
The cost for the private entity is necessarily aligned with its own expenditures. It must pay for any expenses out of pocket or convince venture capitalists or donors to help them. For government officials, the benefit may well be detached from any consumer experiences. Rather, the officials may be seeking publicity, promotion, reelection, political power, or the advocacy of the ideology of government control.
This is a valid point. However, I reply again that tolls, even on government-owned roads, provide a way of aligning revenues with consumer experiences.
(Edited by Merlin Jetton on 11/03, 11:15am)


Post 110

Monday, November 10, 2008 - 6:14amSanction this postReply
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In Part 21 on his blog (Nov. 5) Mr. Stolyarov writes:

The private road owner could use mobile barriers instead of stationary ones. Each small segment of a concrete barrier and each barrel could be made to have retractable wheels that could enable the barriers to be relocated much more conveniently.
Very funny. Did you mean axles, wheels, and tires? Concrete barriers weigh tons and are put in place with a crane (large ones) or forklift (small ones).

In post 100 I wrote: “I’d expect that tolls would be much higher under a private system, at least for new roads, because the road owner would not have access to tax revenue (fuel taxes especially).”
He asserts:
While tolls for private roads may be higher in some cases than tolls for government roads under the current system, I disagree with the statement that they would be much higher under a private system. Moreover, I do not even believe that private road tolls would be higher than current government tolls in most cases.
I could have been clearer, but I meant tolls under all private roads versus tolls under the current government system, in which the toll is most often $0.00. (I grant that privatizing a gov't toll road might result in lower tolls, but that is about all.) Here are some revenue numbers from the Federal Highway Administration for 2006.
                                            local
                            hwys        roads
fuel taxes            26.08%    53.11%
vehicle taxes       15.66%    25.50%
tolls                      5.49%      0.00%
bonds                   3.18%      0.93%
Fed Hwy Adm   25.17%      4.33%
other                  14.42%    16.13%
      total            100.00%  100.00%
                         $122 bil     $17 bil
Sources:
http://www.fhwa.dot.gov/policy/ohim/hs06/htm/sf1.htm
http://www.fhwa.dot.gov/policy/ohim/hs06/htm/sf5.htm
The numbers show that tolls generate less than 5% of revenues for highways and local roads combined. Yet Mr. Stolyarov's claim implies that private roads would cost far less than 1/20th of current costs. 1/40th? 1/100th? Can you say "pipe dream"?

(Edited by Merlin Jetton on 11/10, 6:12pm)


Post 111

Thursday, November 13, 2008 - 9:40amSanction this postReply
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Greetings.

Part 22 of my response to Mr. Jetton is now available at

http://progressofliberty.today.com/2008/11/13/response-to-jetton-22/

Part 23 is coming tomorrow.

Sincerely,
G. Stolyarov II

Post 112

Friday, November 14, 2008 - 8:10amSanction this postReply
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Greetings.

Part 23 of my response to Mr. Jetton is now available at

http://progressofliberty.today.com/2008/11/14/response-to-jetton-23/

Sincerely,
G. Stolyarov II


Post 113

Sunday, November 16, 2008 - 10:59amSanction this postReply
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Greetings.

Part 24 of my response to Mr. Jetton is now available at

http://progressofliberty.today.com/2008/11/16/response-to-jetton-24/

Sincerely,
G. Stolyarov II

Post 114

Monday, November 17, 2008 - 8:07amSanction this postReply
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In Part 23 on his blog Mr. Stolyarov writes:
The problem with government-owned roads is that, while they  might have been even at the top of the line in terms of quality when they were first built in the 1950s or 1970s — depending on the location — they were built to accommodate the existing flow of traffic and existing economic patterns, rather than anticipating how traffic flow was likely to grow dramatically in the future.
Regarding the first interstate highways built in the 1950's this is false. Such highways were built for defense and military purposes -- evacuation routes and military transport.
http://geography.about.com/od/urbaneconomicgeography/a/interstates.htm
http://en.wikipedia.org/wiki/Interstate_Highway

He writes:
So, while it is more difficult to get nearby owners’ consent for a road widening, this situation will not occur with nearly the same frequency under a free market, because roads will tend to be built to be wide enough to begin with.
Again, capitalists have budgets, not unlimited funds. He again ignores the law of diminishing returns. Why will a road builder buy more right-of-way than needed? That would not be efficiency, but inefficiency. It would increase immediate costs and any returns thereon will be decades in the future.

Onto Part 24. In post 109 I said Mr. Stolyarov's analogy between private and public apartments versus private and public roads was weak. He modifies one side of his analogy -- shrinking it to low-income private and low-income private public apartments. That does not strengthen the analogy. The correspondence between source (apartments) and target (roads) remains weak. The vehicles that contribute the most to road deterioration -- 18-wheelers -- aren't analogous to low-income renters of public housing. They use the same roads (where permitted) as other vehicles. Also, they are the high rent payors, since they pay more in fuel taxes, motor vehicle taxes, and tolls to use the roads.


Post 115

Tuesday, November 18, 2008 - 8:37amSanction this postReply
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Greetings.

More parts of my response to Mr. Jetton are now available.

Part 25:
http://progressofliberty.today.com/2008/11/17/response-to-jetton-25/

Part 26:
http://progressofliberty.today.com/2008/11/18/response-to-jetton-26/

Part 27 will come tomorrow.

Sincerely,
G. Stolyarov II

Post 116

Wednesday, November 19, 2008 - 7:02amSanction this postReply
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In part 25 on his blog Mr. Stolyarov writes:
First, the barrels and cones often used in road construction are not made of concrete and so could be modified to incorporate the improvements I discussed.
Firstly, my comment in post 110 pertained only to concrete barriers. But I am curious to learn what efficiency is gained by putting retractable rollers on cones or barrels that are easily hand-carried by one person.
[W]ho said that construction barriers need to be composed of ridiculously heavy and cumbersome materials, such as concrete?
Why presume they are "ridiculously heavy"? I'm not an expert on the matter, but I won't presume concrete barriers were chosen simply based on the irrational premises of politicians or bureaucrats. Mr. Stolyarov proceeds to address possible dangers of heavy concrete barriers to drivers of cars, completely ignoring 18-wheelers and the safety of construction workers. Will private road builders be that negligent of the safety of their own employees?

In part 26 he writes:
So my argument stands that the total cost of private roads to most users will be much less than the total cost of government roads to most users today. 
Perhaps so.  However, his argument in Part 21 was this: "While tolls for private roads may be higher in some cases than tolls for government roads under the current system, I disagree with the statement that they would be much higher under a private system." This is about tolls only, whereas his claim above is about all costs, including those paid via taxes and licenses. This is not standing by the argument, but radically changing it.

In post 114 I wrote: "Again, capitalists have budgets, not unlimited funds. He again ignores the law of diminishing returns. Why will a road builder buy more right-of-way than needed? That would not be efficiency, but inefficiency. It would increase immediate costs and any returns thereon will be decades in  the future.

In part 27 he responds but falls far short of answering my question. He writes:
Revenues that occur farther in the future would indeed have to be discounted by a larger factor, but they would also be taken into consideration by the prudent, far-sighted entrepreneur. To consider only present returns is a myopic outlook that only a government official can have. Private owners will be in the road business for the long term, and they will necessarily have to consider long-term changes if they want to remain profitable.
So I will ask the question again in slightly different form. Why will a private road builder buy unneeded right-of-way for road X which will begin to generate revenues decades in the future, when the same money could be used on road Y that will generate revenues immediately?


(Edited by Merlin Jetton on 11/19, 7:25am)


Post 117

Friday, November 21, 2008 - 8:09amSanction this postReply
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Greetings.

Part 28 of my response to Mr. Jetton is now available at

http://progressofliberty.today.com/2008/11/21/response-to-jetton-28/

More to come tomorrow.

Sincerely,
Gennady Stolyarov II

Post 118

Sunday, November 23, 2008 - 9:30amSanction this postReply
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Greetings.

Part 29 of my response to Mr. Jetton is available here:
http://progressofliberty.today.com/2008/11/22/response-to-jetton-29/

Part 30 is available here:
http://progressofliberty.today.com/2008/11/23/response-to-jetton-30/

More to come tomorrow.

Sincerely,
G. Stolyarov II

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Post 119

Monday, November 24, 2008 - 5:44amSanction this postReply
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In part 28 on his blog Mr. Stolyarov grants my point that the earlier interstate highways were built for defense and military purposes — evacuation routes and military transport -- not existing traffic patterns like he claimed. He stands by his claim that the government failed to anticipate the increase in civilian traffic over time. He cites numbers comparing the actual cost and time to the initial estimates for the interstate highway system. The actual cost was about 4.5 times the initial estimate, and it took 35 years rather than the estimated 12.

I'm not at all surprised the government failed to anticipate the increase in civilian traffic.  I expect hardly anybody in the 1950's anticipated (1) the migration from cities to suburbs, in which the new roads played a strong role, and (2) wives entering the workforce, a significant factor in the number of vehicles. I strongly doubt private road builders/owners would have anticipated it either.

I'm not surprised at all by the cost for multiple reasons. The estimate was done in the late 1950's. Inflation was very low, but rose to high levels a few years later. I suspect more accurate estimates were made, but the official government one was a lowball estimate to make congressional approval easier. I have no confidence in the ability of anybody, including businessmen, to accurately forecast market prices over 35 years, except by luck.

Mr. Stolyarov seems shocked by the mis-estimate and writes:
In the private sector, mistakes like that bring about instant loss of customers, investors, credibility, and anything else having to do with maintaining a viable business. Imagine what would happen to a private business if it even underestimated costs or time to completion of a project by a mere 20 percent, not 292% or 456%! The stock price of the business would plummet, and customers would flee in droves.
This is more hyperbole. Cost overruns often occur in the private sector, and the consequences aren't as dire as he might imagine. The Trans-Alaskan Pipeline was built and paid for by a group of private oil companies. The initial cost estimate was $900 million. The actual cost was more than $8 billion. That was about 900% of the estimate, and the project took less than 3 years! It did not cause the companies' demise, and their customers didn't flee in droves.

Even nowadays after many years of experience, computer programmers and their managers often substantially underestimate the cost/time of software development. "The mean effort overrun seems to be about 30% and not decreasing over time" (source).  From my personal experience (several years ago) overruns were usually 50-150%, sometimes more, and I heard similar magnitudes from many sources.

I'm amazed at Mr. Stolyarov's apparent faith in how accurately businessmen can estimate costs (or revenues) that depend on market prices (and/or activity) and span 35 years, or even 20 years, or even 10 years. Estimating future revenues is a minimal problem for government-financed roads. It would be a major problem for private-financed roads -- at least new roads.

In post 116 I said I was curious to learn what efficiency is gained by his idea to put retractable rollers on cones or barrels that are easily hand-carried by one person. I also responded to his charge that concrete barriers were "ridiculously heavy" with considerations -- 18-wheelers and worker safety -- that he did not address if much lighter barriers were used. 

He responds in Part 30. It seems he gave up on the idea of retractable rollers. Instead he throws out some new ideas about remote-controlled or robotic barriers. He expands on his idea for separate lanes for 18-wheelers, began in Part 29.

I don't have Mr. Stolyarov's level of interest in playing armchair engineer. On the other hand, if his unstated premise is that innovations are severely lacking with government-owned roads, then I call that more hyperbole. Innovations do occur -- by private contractors, their suppliers, and university engineering departments. If he only holds that there will likely be more innovations with privately-owned roads, I have not disputed that, but add a big caveat. Innovations can fail.   
 


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