From Todd William Schoonover
Fri, Oct 7, 2011
I would like to make a number of observations and counterpoints to Chris Persaud’s article “Sell Glades: Private Roads = Less Congestion“. Let me begin with a brief summary of the article’s main points. When the supply of something is government controlled there will be drastic shortages because it underprices that supply. In the case of roads, the price of use is $0 because the government funds road maintenance and construction with taxpayer dollars. And since the government is not making any money from road usage, they are not able to build more and better roads. Since governments cannot do this, there are traffic jams and congestion. If the roads were privatized, argues Persaud, all our traffic problems would be solved. This is so because competition between road-owners would drive prices of road use down and the quality of roads up, thereby resulting in less traffic. Right? Wrong!
To pose some problems which immediately strike me as glaring from the article, I would begin with the fact that the government often owns the supply of something that is a necessity. Roads, in our suburbanized and spread out world in South Florida, are a necessity; they are a necessity for student commuters to get to campus and for business men and women to get to their places of work. They are necessary for our trips to the supermarket, the doctor, the hospital, etc. They are not commodities which we are free to choose to consume or not to consume, to buy or not to buy (like the cable television example in the article). Given that most of us cannot choose to use other roads to get to our destinations because there are frequently only one, two, or three roads which take us there, the idea that competition will drive prices down in the case of roads does not work. A private road-owner would simply have to acquire a few roads to have a monopoly on roads to a destination. Indeed, he/she would have only to acquire one road to fix the price of using that road at any level he/she wishes because it is usually the case that certain roads cannot be avoided when attempting to arrive at popular destinations (like Glades Road and FAU).
It is possible to counter-argue by saying that road-owners could solve this problem by constructing more roads in order to facilitate competition. To this I would reply: Why would they want to? Competition could threaten their fixed, high prices and one would imagine that road-owners (probably very wealthy corporations) would do anything legally within their power to create barriers to entry to the road market in order to avoid this occurrence. In addition, the purchasing power of companies in maximizing profits can almost guarantee a “shared monopoly” if roads are privatized. Assuming, however, that companies do want to build more roads; where are you going to build them? Population density in South Florida is such that attempting to build more major roads to supplement those already in existence would require the relocation of people, which is a long, arduous, and often resented process.
Another practical concern I have is related to the energy crisis in California when Enron managed to acquire and de-regulate the electrical infrastructure of that state. In that case, Enron was shutting down power plants in order to create an artificial supply shortage which drove prices of electricity up (and left people without electricity) so that they could make large amounts of money trading energy futures. What is to prevent something similar happening in the case of privatizing roads?
These are just a few concerns I have with the idea of privatizing roads. Instead, we could try solving the issue of road quality by giving the government more “legally stolen money” (taxes).