Wednesday, September 8, 2010

The Government's Monopoly on Roads

If you made a list of the places that you spend the most time waiting in line, I suspect that virtually all of those places would be some government agency or department. These government agencies have no incentive to provide fast and efficient service, because they have captive "customers." You must go to the government to get your driver's license renewed, or to obtain a building permit, or a myriad other activities, and there is no private alternative.

On the other hand, private businesses continually face competition. If one business routinely has long lines consumers will go elsewhere.

While it is probably impossible to calculate all of the time wasted by government mandates, controls, and regulations, the Texas Department of Transportation (TDT) recently released a study that provides a hint as to the time we waste on government roads.
The most congested roadway segment in Texas in 2009 was in Harris County, according to the data. Topping the list was the 9.3-mile stretch of road on Interstate 45 from Beltway 8 North to Interstate Highway 610, where the annual delay per mile was 484,630 hours and drivers dealt with 4.5 million hours of delay during the year.
This one section of road created a delay of nearly 1 hour for every man, woman, and child in the Houston metropolitan area. And that doesn't include all of the other congested highways and roads in Harris and adjoining counties. 

TDT calculated that the cost of these delays amounted to $21.75 per hour. All told, traffic delays cost Houstonians tens of millions of dollars every single year. Despite these costs in time and money, we are continually told that only government can build, own, and operate roads.

The government's monopoly on roadways is the cause of traffic congestion. First, consumers have no viable options (other than another government monopoly--mass transit). Second, consumers do not directly bear the cost of their use. Because government roads are supported through taxes, rather than user fees (or something similar) consumers have little incentive to modify their driving habits. 

All goods and services exist in a limited quantity, including the roadways. Prices are the means by which goods and services are allocated to those who value them most highly. But in the case of roadways, use is "free" and there is no pricing mechanism to moderate traffic. If the roadways were privately owned, the owners would seek to maximize efficiency by raising prices during periods of peak demand.

For two reasons I won't begin to attempt to explain how private roads could and do work. First, such an explanation would take far more space than a single blog post. Second, I won't claim to know what creative solutions entrepreneurs will come up with when they are motivated by the opportunity to profit.

But I will point out that it wasn't that long ago that defenders of the postal service claimed that private mail delivery would never work. Today, companies like FedEx and UPS are sapping customers from the postal service. And this is despite that fact that the USPS still enjoys a monopoly on first-class mail. In other words, to the extent that private businesses are free, not only can they provide they provide services, they do so more efficiently than the government. Consumers agree, as evidenced by their voluntary choice to use the private businesses.


Anonymous said...


Oh, but they care about their customers and are working on a solution --next they will ensure they take away our ability to afford automobiles and pack us like sardines in government transportation -- their latest rail projects are envisaged for precisely such purposes --to ameliorate our pain and inconveniences! Problem solved!!

Satire aside, the increasing signs of the government's fascist/socialist attempts at taking away ever small comfort from our lives should be a matter of concern for many -- but it is not. Many have not learnt the skill to project what everyday life will be like if this ideology of altruism and sacrifice is not stopped in its tracks. I did not have to learn that skill --I came from a country where I was able to experience that picture in real life. Which is why I fight so hard to stop it here --I know first hand what the results look like...


Brian Phillips said...

It's not even necessary to project what life will be like if present trends continue. We can look at any dictatorship, or read Atlas Shrugged.

Jason said...

Good post.

I think a major part of the problem regarding peoples' view of infrastructure is that they think just having something, anything, as long as it is there, no matter how inefficient or problematic, is "good enough."

As an example, Amtrak (government operated railroad) is abysmal by objective standards. A flourishing, healthy, booming economy (which would be the norm in a free society) demands highly efficient transportation, likely including railroads, which self-interested people will selfishly, voluntarily cooperate on to achieve. Majority rule pragmatic dictates make such legitimate, rational planning impossible.

But today, people just want some railroad (and roads), of any quality, as long as it is there.

People need to value their time more; until then, they will view congestion merely as an inconvenience, but not an existential threat and something worth changing their philosophy over.

Before I heard of Objectivism and its grounding of capitalism, I used to think our infrastructure was good enough. My view was, it gets you from point A to B without frequent accidents, isn't that pretty amazing?

By objective standards, it is not amazing; it is abysmal, and not able to support a healthy economy.

We need to convince people to want that flourishing economy and to very selfishly value their time--both of which require a lot of mental effort and personal responsibility, which Americans have generally not wanted to engage in and take for many decades.

Brian Phillips said...


You make some interesting points.

In some ways, our transportation system is pretty amazing. I can drive about 1 mile and connect to an interstate system that will take me to any state in the nation. Compared to most of the world that is pretty amazing. And for those who have grown up with it, that is simply the way things are.

But the way things are isn't always the way things should be, nor is it necessarily the best way.

We live pretty comfortable lives, and for the average person, that comfort and security is good enough. Deprived of the ability to think critically (thanks to our educational system) and unaware of historical examples that demonstrate the power of the free market, they are simply unable to envision what life could really be like.

The real enemy is altruism. Until people value their own life in a rational, objective sense, they won't be motivated to discover anything better.

Jason said...

Yes, the science, engineering, and technology behind current infrastructure is awe-inspiring, and we should value, admire, and praise it qua technology, but at the same time focus on its objectively defined failure and inability to support rationally, egoistically defined human existence.

Harold said...

It's certainly true that a little freedom goes a long way. There is a common belief that "infrastructure" is some magical subclass of goods not subject to supply/demand constraints. It isn't, and as you said the same considerations for optimizing use in other fields would come into play with roads if privatized.