Monday, November 9, 2009

"Smart" Roads versus Private Roads

IBM, along with the Intelligent Transportation Society of America, is offering a $50,000 prize for the best idea that will "produce smarter infrastructure." (HT: Write On Metro) According to the New York Times:

In the United States, highway problems are exacerbated because the basic federal gasoline tax used to finance roads has not been raised since 1993. The funds the tax generates have not kept up with inflation, deterioration in highways or maintenance costs, and the revenue has also been reduced by the adoption of more fuel-efficient vehicles. Vehicles that burn less fuel pay less tax, but wear out highways at the same rate. Vehicles that consume no gasoline or diesel at all, like electrics or hydrogen, will of course pay no tax.

In consequence, I.B.M. reports, more governments are looking to supplement or replace fuel taxes. I.B.M. programmers are working on systems to charge per-mile user fees as an alternative.

Traffic congestion is a result of a simple law of economics: Demand for roads has increased at a faster rate than governments can provide a supply. And demand has increased because the cost of using the roads is hidden in gasoline and other taxes.

While charging drivers on a mileage basis might appear to be a market oriented solution, it isn't. Nor it will not solve the problem. The real solution to traffic congestion is to adopt a true market solution--privatize the roads. So long as roads remain "public" property traffic congestion will only grow worse.

As with any "public" property, the "owners" of roadways have little incentive to maximize the experience of users. Certainly, government officials must listen to the complaints of citizens, and they engage in an endless process of building new roads and expanding existing ones. But clearly government has not been able to keep up with the demand.

This is seldom a problem when a product or service is provided by a private business. The exploding demand for cell phones, computers, and other technology has not resulted in shortages, but an abundance of products and choices for consumers.

Where government officials are dominated by political considerations, private businesses are guided by the desires and needs of consumers. Where government officials ultimately impose one "solution" on the entire community, private businesses offer multiple solutions and allow consumers to pick those that best fit their interests. Where government seeks to develop a consensus and appeal to the noisiest groups, private businesses seek to offer better, cheaper, more efficient products and services.

What is true of cell phones, computers, video games, restaurants, delivery services, retail stores, and countless other businesses is equally true of roadways and infrastructure. Motivated by their desire for profits, private companies seek new and innovative ways to meet demand, and they often do so in ways that no government bureaucrat could ever imagine. And importantly, private businesses cannot force consumers to purchase their offerings; government officials can.

Admittedly, privatizing the roadways would be a complex undertaking. But the complexity in applying a principle does not negate that principle.

If IBM truly wants a "smart" solution, it should begin by recognizing the fact that individuals and businesses must be free to act on their own judgment. Recognizing and protecting the right of each individual to to think and act without interference from others--including government--is not only "smart", i.e., practical, it is also moral.

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