The Privatization of Roads and Highways - Ludwig von Mises Institute

Public Goods and Externalities: The Case of Roads 103
the contrary, it is a hoary tradition. Jackman, writing of England
in the mid-1830s, referred to the argument “that [only] those who
used the roads should [financially] sustain them,” saying:
But the fact is that it was not alone the carriers, but the public
as a whole, that reaped the benefits from good roads, and therefore
the upkeep of the roads should not be a charge upon those
who used the road, but upon the public treasury, for all derived
the advantages from them. It was, therefore, inevitable that in
time the turnpike gates should be taken down and a more equitable
method adopted to secure the end desired. 6
The American Henry Clay wrote that it is
very possible that the capitalist who should invest his money in
[turnpikes] might not be reimbursed three per cent annually
upon it; and yet society, in its various forms, might actually
reap fifteen or twenty percent. The benefit resulting from a
turnpike road made by private associations is divided between
the capitalist who receives his toll, the land through which it
passes, and which is augmented in its value, and the commodities
whose value is enhanced by the diminished expense
of transportation. 7
The major flaw in the externalities argument is, as we have
seen, the fact that it is vulnerable to a reductio ad absurdum, for
indeed there is precious little (if anything) that is not an example
of an externality. And unless we are willing to follow the internal
logic of the argument and hold that government is justified in
taking control of practically every aspect of our economy, we
must, perforce, pull back from the conclusions of the argument
from neighborhood effects.
6W.T. Jackman, The Development of Transportation in Modern England
(Cambridge: Cambridge University Press, 1916), p. 261.
7Cited in William C. Wooldridge, Uncle Sam, The Monopoly Man (New
Rochelle, N.Y.: Arlington House, 1970), p. 129.