The Privatization of Roads and Highways - Ludwig von Mises Institute

122 The Privatization of Roads and Highways
something that can be learned, that must be learned, if the market
is to operate. We cannot first prohibit the operation of the
market (by government preemption), and then conclude that a
market could not function, because of its inability to exclude beneficiaries
who do not pay. Of course it would be very difficult for
a market which hitherto has been prohibited to suddenly begin
effective operation (and it is much more difficult, as we have
seen, to envision the operation of such a market). But this difficulty
is not the result of anything intrinsic. It is because the erection
of bigger and better fences, the creation of more sophisticated
jamming devices, etc., can come only with practice; if there
is no market in operation, there is no chance for the experimentation
with the skills, institutions, and management requisite to
its development.
Bish and Warren assert that all “public or collective goods . . .
are ‘non-packageable’; that is, in principle, no one can be
excluded from consuming them.” 34 But they are incorrect. As we
have seen, even in the case of national defense, the paradigm case
of the collective good, there exist potential methods and institutions
for excluding nonpayers. 35 There is nothing in principle to
prevent excludability—there is only a lack of a past history of
market operation in this area and the limited powers of imagination
on the part of economists.
An interesting sidelight on the definitional problem of using
national defense as an example of a public good is considered by
Charles M. Tiebout. Tiebout contrasts national defense with radio
broadcasting, which he holds is not a collective good.
There seems to be a problem connected with the external
economies aspect of public goods. Surely a radio broadcast, like
national defense, has the attribute that A’s enjoyment leaves B
34Bish and Warren, “Scale and Monopoly Problems in Urban Government
Services,” p. 100.
35For examples of excludability of road users, see Haritos, “Theory of
Road Pricing,” pp. 55–56.