The Privatization of Roads and Highways - Ludwig von Mises Institute

104 The Privatization of Roads and Highways
Gabriel Roth wrote the following concerning external
economies:
It is sometimes suggested that roads should not be charged for
because they provide “external economies,” that is, benefits to
the community which cannot in principle be recouped from road
users. For example, it is said that the construction of the Severn
Bridge will stimulate economic activity in South Wales, that the
benefits from this increased activity cannot be reflected in the
tolls collected on the bridge, and that therefore there is no point
in charging a toll.
While this argument is good as far as it goes, it applies in the
case of all intermediate goods and services. There is no reason
to suppose that the benefit to the community from a new or
improved means of transport is greater than the benefit from an
improved supply of electricity or steel. Unless it can be shown
that roads are a special case, the “external economies” argument
. . . in the case of roads becomes a general argument for
subsidizing all intermediate goods and services. 8, 9
8Gabriel Roth, Paying for Roads: The Economics of Traffic Congestion (Middlesex,
England: Penguin, 1967), pp. 20–21.
9Roth unfortunately contradicts himself several pages later. Even though
he is unwilling to accept the implication that government becomes
involved in the production of all “intermediate goods and services,” he
states: “As roads benefit non-motorists by providing facilities for pedestrians
and cyclists, and access to properties of different kinds . . . there is a logical
case for charging non-motorists for the use of the roads” (ibid., p. 43).
There would be no problem for Roth if the nonmotorist he advocated as
liable for tolls were limited to cyclists and pedestrians. Although they are
certainly nonmotorists, it is no less sure that these two groups do use the
roads. This interpretation will not do, however, for Roth raises this point
specifically in order to justify property taxes as a source of road funding.
But property taxes are paid by landowners, who are not to be confused with
motorists, pedestrians, or cyclists (although there is obviously an overlap).
In basing road charges on property ownership, Roth is using the very externality
argument which he had earlier seemed to reject.