In response to my recent post on busing, John Schwenkler of the wonderful Upturned Earth writes the following:
"I'd be all for opening up intraregional busing to competition from the
private sector. But just as road construction and maintenance can't be
made completely private - though I do favor privatizing highways when
possible - cheap busing is as much of a public necessity and legitimate
government concern as roads, sidewalks, and public parks. In general,
and as I said in the original post, I think that rail systems - because
of the huge infrastructure investments they require - are a less good
option, and are also a better case where involving private initiative
to at least a considerable extent is a good idea. But busing is too
essential, especially for the poor and elderly, for it to be free of
public financing and government involvement."
to which I responded:
"I'm not so sure I buy it. I work for a very large private company
that looked into getting into the private road business - building the
road, as well as maintenance, forever - and it would have been very
profitable. The reason we didn't get into it was existing interest
group politics, not profitability. Every local municipality is beholden
to their neighborhood civil engineering firm.
If access was really the issue, we could issue travel subsidies for
the poorest of the poor, and EITC's for those who pay taxes. We're
going to have to do it anyway once we start pricing carbon."
Schwenkler asks to for more background on the idea of privatized roads. The following is my most recent repsonse:
They were mostly highways in the Midwest, but it wouldn't take too much of an imagination to envision the model applied to the city. The fundamental source of profitability was that the company developed a composite that lasted much longer than conventional asphalt. Consequently, while fixed costs would be large, maintenance would be very cheap.
The idea would be to charge by the mile in the same way most toll roads do - with sensors that you can stick to the inside of the windshield. Customers would have to purchase the sensor initially, and then would be billed at the end of the month for total usage.
As far as equity is concerned, I can easily imagine "gas stamps" for the poor that would be a political goldmine - subsidies for those who drive most, and handouts to large companies,
This goes without mentioning one of the most important benefits of private roads: a reduction in the overall environmental impact due to traffic pricing.
I should note that I sounded as if I objected to all public financing, and then clearly advocated subsidies. I should have said that I object to the government picking winners. I don't mind government financing, as long as it leaves room for choice. Choice is the mechanism for generating competition, which actually lowers prices. Charles Murray has a great example of this sort of pragmatism in his most recent work in public policy, In Our Hands.
