Abstract
Privatizing all goods and services will satisfy consumers far more effectively than allowing their management to remain in the hands of the state, under socialist provision. If we have learned one thing from the fall of the economic system of the USSR, it is that. More controversially, city streets are no exception to this general rule. They, too, can be mismanaged by the municipal government or run more efficiently through the institutions of private property and competition. What society needs is a system wherein entrepreneurs are rewarded for promoting consumer sovereignty and penalized for failing to satisfy customers. The ballot box vote is perhaps aimed in this general direction, but it is cumbersome: elections occur only every four years, and the electorate is usually given a choice between only two or three options. In very sharp contrast, the “dollar vote” occurs every day and can be focused in great detail upon choices at the micro level; it can distinguish between flavors of ice cream and colors of shirts. It can also reward and penalize individual street owners, tending to guarantee better performance on their part.
The author benefited from discussions with Jeff Tucker while writing this chapter; he wishes, also, to acknowledge the benefit of some very helpful suggestions made to him by two referees of this journal.
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Notes
- 1.
I use examples from New York City since this is perhaps the most well-known locale in the world.
- 2.
This is meant sarcastically. I make no apology whatsoever for attempting to apply what we have learned about the best way to supply cars and chalk and cheese and computers—namely, free enterprise—to an analogous good, roadways.
- 3.
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- 4.
Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, Indianapolis, IN: Liberty Fund, 1776/1979.
- 5.
Mises, Ludvig von, Bureaucracy, New Rochelle, N.Y.: Arlington House, 1969; Mises, Ludwig von, “Economic Calculation in the Socialist Commonwealth,” in Hayek, F.A., ed., Collectivist Economic Planning, Clifton, N.J.: Kelley, 1975 (1933).
- 6.
Beito, David T., “From Privies to Boulevards: The Private Supply of Infrastructure in the United States during the Nineteenth Century,” in Jerry Jenkins and David E. 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(1999), Market Provisions of Highways: Lessons from Costanera Norte. Planning and Markets, Volume 2, Number 1; De Palma, Andre and Robin Lindsey, “Private toll roads: Competition under various ownership regimes,” The Annals of Regional Science, 2000, Vol. 34, pp. 13–35; De Palma, Andre and Robin Lindsey, “A Model of Curb Rights In Private Urban Transit Markets,” Canadian Transportation Research Forum, Proceedings of the 36th Annual Conference, 2001, pp. 581–596; Klein, Dan, “The Voluntary Provision of Public Goods? The Turnpike Companies of Early America,” Economic Inquiry, October 1990, pp. 788–812; Klein, Dan, Majewski, J., and Baer, C., “Economy, Community and the Law: The Turnpike Movement in New York, 1797–1845,” The Journal of Economic History, March 1993, pp. 106–122; Klein, Dan, Majewski, J., and Baer, C., “From Trunk to Branch: Toll Roads in New York, 1800–1860,” Essays in Economic and Business History, 1993, pp. 191–209; Klein, Dan and Fielding, G.J., “Private Toll Roads: Learning from the Nineteenth Century,” Transportation Quarterly, July 1992, pp. 321–341; Klein, Dan and Fielding, G.J., “How to Franchise Highways,” Journal of Transport Economics and Policy, May 1993, pp. 113–130; Klein, Dan and Fielding, G.J., “High Occupancy/Toll Lanes: Phasing in Congestion Pricing a Lane at a Time,” Policy Study, No. 170, Reason Foundation, November 1993; Lemennicier, Bertrand, “La Privatisation des rues,” Journal Des Economistes Et Des Etudes Humaines, Vol. VII, No. 2/3, June-September 1996, pp 363–376; Roth, Gabriel, Paying for Roads: The Economics of Traffic Congestion, Middlesex, England: Penguin, 1967; Roth, Gabriel, The Private Provision of Public Services in Developing Countries, Oxford: Oxford University Press, 1987; Roth, Gabriel, A Self-financing Road System, London, England, The Institute of Economic Affairs, 1966; Semmens, John, “Road to Ruin,” The Freeman (December, 1981); Semmens, John, “The Privatization of Highway Facilities,” Transportation Research Forum, (November, 1983); Semmens, John, “Highways: Public Problems and Private Solutions,” The Freeman (March, 1985); Semmens, John, “Intraurban Road Privatization,” Transportation Research Record 1107 (1987); Semmens, John, “Using Competition to Break the U.S. Road Monopoly,” Heritage Foundation (December 14, 1987); Semmens, John, “Privatization: Saving While Serving the Public,” Goldwater Institute (April 25, 1988); Semmens, John, “Taking Over the Roads,” Liberty (November 1988); Semmens, John, “Why We Need Highway Privatization,” Laissez Faire Institute (March 1991); Semmens, John, “Private Highways? They’re Cheaper, Better, Fairer,” Phoenix Gazette (April 3, 1991); Semmens, John, “The Rationale for Toll Roads: You Get What You Pay For” Phoenix Gazette (December 16, 1992); Semmens, John, “Highway Privatization: What Are the Benefits for Arizona?,” Goldwater Institute (December 1992); Semmens, John, “From Highways to Buy-Ways,” Spectrum (Fall 1993); Semmens, John, “How to Solve Mandatory Auto Insurance,” Goldwater Institute (July 1995); Semmens, John, “Highway Investment Analysis,” Arizona Department of Transportation (December 1994); Semmens, John, “Privatize Driver’s License, Registration System,” Tribune (December 25, 1994); Semmens, John, “Privatizing Vehicle Registrations, Driver’s Licenses and Auto Insurance,” Transportation Quarterly (Fall 1995); Semmens, John, “Selling the Roads: Privatizing Transportation Systems,” Liberty (1996); Semmens, John, “Goodbye, DMV,” Liberty (January 1996).
- 7.
I owe this point to an anonymous referee of this journal.
- 8.
The quasi-private highways now in operation in Virginia and California are not exceptions. The goal of road privatization is to turn vehicular thoroughfares fully into the hands of private enterprise; in these cases, the state is still the ultimate owner. See on this (Block, 2009).
- 9.
Homesteading is the process of mixing human labor with land, by farming it, or using it, or, in our present case, building a road on it. The classical justification for this form of establishing ownership over virgin territory is Locke, John, An Essay Concerning the True Origin, Extent and End of Civil Government, in E. Barker, ed., Social Contract, New York: Oxford University Press, 1948, pp. 17–18. For improvements and refinements, see Rothbard, Murray N., The Ethics of Liberty, Humanities Press, Atlantic Highlands, N.J., 1982; Hoppe, Hans-Hermann, The Economics and Ethics of Private Property. Studies in Political Economy and Philosophy (Boston: Kluwer Academic Publishers, 1993).
- 10.
Seized means commandeered, or taken over, by eminent domain, whether or not this taking (Epstein, Richard A., Takings: Private Property and the Power of Eminent Domain, Harvard University Press, Cambridge, Massachusetts, and London, England, 1985) was in any way compensated. (If there were full compensation, presumably there would have been no need for the state to condemn the property. City governments purchase paper, pencils, etc., on free markets every day).
- 11.
For example, nationalization, or, in this case, municipalization.
- 12.
Suppose, to complicate matters, that one or a few taxpayers from the eighteenth or nineteenth centuries can be identified (or, rather, their heirs), but that in total the payments owed to them were a very small proportion of the present total value of the streets. Would these few claimants be given the streets in their entirety? Not in my view. The money they paid which went toward to paving of the streets, the setting up of traffic lights, et cetera, is a very small percentage of the site value of these thoroughfares. A similar analysis applies to the case where only one heir of a slave can be found, and there is a plantation to be divided up amongst the children of the slaves and the children of the slaveholders. Does the heir of the single slave obtain the entire inheritance? Not unless it can be shown that the labor services stolen from his grandfather, plus interest, amount to all or more of the value of the plantation. If not, then the heir of the slave owns only the value that can be attributed to his ancestor. On this, see Block, Walter, and Guillermo Yeatts, “The Economics and Ethics of Land Reform: A Critique of the Pontifical Council for Justice and Peace’s ‘Toward a Better Distribution of Land: The Challenge of Agrarian Reform,’” Journal of Natural Resources and Environmental Law, Vol. 15, No. 1, 1999–2000, pp. 37–69; Raimondo, Justin, “Is Zionism Racism?,” http://www.antiwar.com/justin/j080301.html, 8/3/01; Rothbard, Murray N., The Ethics of Liberty, New York: New York University Press, 1998, p. 75; Block, Walter, “On reparations to blacks for slavery,” forthcoming.
- 13.
See footnote 7, supra.
- 14.
Or in this case, illegitimately or improperly owned (by the state).
- 15.
It is here that tenants of contiguous buildings can make their claim: not as tenants per se, but, rather, as commuters between their homes and places of work.
- 16.
Particularly if he could get the cooperation of the man across the street.
- 17.
According to this proposal, any two owners located opposite of each other could together convert their little patch of road into a park. This would very much diminish the ability of the street to convey traffic. This is not to say that streets ought never to be converted to parks. Economic efficiency would require that this occur only when the value of the land as a park exceeds that used as a street. When one entity owns the entire length of a street, it will be in a position to internalize the externalities that might otherwise come into play.
- 18.
We also eschew discussion of the monopoly problem: where the road owner jacks up the price so far as to in effect capture the property values of all adjacent property. For a discussion of this issue, see Block, Walter, “Free Market Transportation: Denationalizing the Roads,” Journal of Libertarian Studies: An Interdisciplinary Review, Vol. III, No. 2, Summer 1979, pp. 209–238.
- 19.
Not of the sort that characterized the heavyweight title fight between Evander Holyfield and Lennox Lewis.
- 20.
The classical statement of the relationship between transactions costs and the nature of the firm is Coase, Ronald, H., “The Nature of the Firm,” Economica, November 1937, Vol. 4, pp. 386–406. See also his Coase, Ronald H., “The Institutional Structure of Production,” American Economic Review, Vol. 82, No. 4, September 1992, pp. 713–19. Why is it that firms arise in markets, but no one firm takes over the entire economy? For Coase, this has to do with the minimization of costs within and between firms. For example, it is very expensive for the waitress to bargain with the cook, offering him a price for the meal he gives her; in order to economize on these sorts of transactions, firms are created within which markets do not occur, but rather commands; for example, the owner of the restaurant “commands” the cook to give the waitress the meal without charging her for it. However, unless there is vertical integration between the restaurant and the supplier of vegetables, for example, the former purchases these factors of production from the latter.
- 21.
We pass over the “problem” of the discontinuity in Panama, given that there are bridges that enable cars to travel north and south over it. If there were none, then, instead of only one owner, there would be two, one for each of the American continents.
- 22.
Anderson, William, Walter Block, Thomas J. DiLorenzo, Ilana Mercer, Leon Snyman, and Christopher Westley, “The Microsoft Corporation in Collision with Antitrust Law,” The Journal of Social, Political and Economic Studies, Vol. 26, No. 1, Winter 2001, pp. 287–302; Armentano, Dominick T., The Myths of Antitrust, New Rochelle, N.Y.: Arlington House, 1972; Armentano, Dominick T., Antitrust and Monopoly: Anatomy of a Policy Failure, New York, Wiley, 1982; Armentano, Dominick T., Antitrust Policy: The Case for Repeal, Washington, D.C.: The Cato Institute, 1991; Donald Armstrong, Competition versus Monopoly: Combines Policy in Perspective, Vancouver: The Fraser Institute, 1982; Block, Walter, Amending the Combines Investigation Act, Vancouver: The Fraser Institute, 1982; Block, Walter, “Austrian Monopoly Theory – a Critique,” The Journal of Libertarian Studies, Vol. I, No. 4, Fall 1977, pp. 271–279; Block, Walter, “Total Repeal of Anti-trust Legislation: A Critique of Bork, Brozen and Posner, Review of Austrian Economics, Vol. 8, No. 1, 1994, pp. 35–70; DiLorenzo, Thomas J., 1997, “The Myth of Natural Monopoly,” Review of Austrian Economics, Vol. 9, No. 2, pp. 43–58; Boudreaux, Donald J., and DiLorenzo, Thomas J., “The Protectionist Roots of Antitrust,” Review of Austrian Economics, Vol. 6, No. 2, 1992, pp. 81–96; High, Jack, “Bork’s Paradox: Static vs Dynamic Efficiency in Antitrust Analysis,” Contemporary Policy Issues, Vol. 3, 1984–1985, pp. 21–34; McChesney, Fred, “Antitrust and Regulation: Chicago’s Contradictory Views,” Cato Journal, Vol. 10, 1991; Murray N. Rothbard, Man, Economy and State, Los Angeles, Nash, 1970; Shugart II, William F., “Don’t Revise the Clayton Act, Scrap It!,” 6 Cato Journal, 925, 1987; Smith, Jr., Fred L., “Why not Abolish Antitrust?,” Regulation, Jan-Feb 1983, 23.
- 23.
Block, Walter, “Free Market Transportation: Denationalizing the Roads,” Journal of Libertarian Studies: An Interdisciplinary Review, Vol. III, No. 2, Summer 1979, pp. 209–238.
- 24.
Ibid.
- 25.
Ibid.
- 26.
Road fatality statistics are as follows:
2015
35,485
2016
37,806
2017
37,133
2018
36,750
Source: National Highway Traffic Safety Administration
- 27.
There are no linkages between them and virtually all other private property.
- 28.
Foreigners have been precluded from taking part, which is a shortcoming of the system.
- 29.
In much the same manner that those convicted of certain crimes are not allowed to own gambling establishments.
- 30.
Optimal levels, of course, need not be zero. The latter might be approached if the private owners imposed a 5 miles per hour speed limit, and required all autos to be of Hummer quality or above (e.g., tanks), but it is my entrepreneurial understanding that this set of rules would not maximize profits.
- 31.
Under the present proposal could a street owner impose the death penalty on those who drove green automobiles? Not any more than he could charge whatever price he wished.
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Block, W.E. (2019). Homesteading City Streets: An Exercise in Managerial Theory. In: Property Rights. Palgrave Studies in Classical Liberalism. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-28353-7_20
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