The Privatization of Roads and Highways - Ludwig von Mises Institute

130 The Privatization of Roads and Highways
In a second attempt, Mohring and Harwitz inform us that in
questions of highway benefits “reliance is placed entirely on the
body of theory that would likely be used by an economist in
attempting to place a value on a dam, a steel mill, or any other
productive investment.” 44 But this, too, fails. First, the economist,
qua economist, simply has no special aptitude as an appraiser of
real estate, factories, or any capital good. This is the job, rather, of
the businessman, or entrepreneur, whose success depends on his
acuity in making such determinations. No theoretical economist,
empirical economist, historical economist, nor any other kind of
economist, qua economist, has any practical training or experience
as an appraiser. Second, there is no “body of theory” that
can be used by an economist (or by anyone else) in determining
the value of a capital asset. The value the market places on an
asset depends upon what people plan to do with it, with its complements
and substitutes, and upon the reactions consumers are
expected to have toward the finished product; it depends upon
the course of new discoveries and inventions, upon wars,
famines, storms, and so forth. Some people are better able to
anticipate the future course of the market than others; but such
people are successful entrepreneurs, not economists or other
social scientists. But Smerk nevertheless suggests in his book on
urban transport:
External costs and benefits, many of them of a nonpecuniary
nature, should be weighed along with the pecuniary costs and
revenues internal to the project. Some of the external factors to
be considered will be: (1) Overall freedom of movement; (2)
Gains or losses to central city businesses in terms of customer
traffic; (3) Gains or losses in travel time for subway riders, public
transport riders in general, and motorists; (4) Gains or losses
in real estate values; (5) Effects on air pollution and other
amenities. 45
44Herbert D. Mohring and Mitchell Harwitz, Highway Benefits (Evanston,
Ill.: Northwestern University Press, 1962), p. 7.
45Smerk, Urban Transportation, p. 236.