The Privatization of Roads and Highways - Ludwig von Mises Institute

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Public Goods and Externalities: The Case of Roads 135 reveals either that he has changed his taste or that at least he prefers it to the money he exchanged for it. His action has spoken, in this interpretation, louder than all his protestations to the contrary. Second, and perhaps in the present scenario more straightforwardly, we can reinterpret the good that was actually purchased. What was really bought was not only chocolate, but chocolate plus the pleasure of “proving Mises wrong.” If it had been a question of the chocolate alone, a true chocolate hater would not have purchased it perhaps at any positive price. It was the compensatory pleasure of attempting to disprove the thesis (that only human action establishes value orderings) that more than made up for the disutility of the chocolate. And if the person went so far as to eat the hated chocolate in order to prove his point, our interpretation would still apply and would be fully consistent with the Misesian view. The trouble with the revealed preference doctrine put forth by Samuelson, Savas, and Haveman is that it assumes a preference ordering on the part of the general public which is completely divorced from actual choices and actions. There is no room in scientific economics for “true preferences” which are not embodied in action. Samuelson may contend that “it is in the selfish interest of each person to give false signals”—i.e., signals which underestimate that person’s true value for the collective good—but he cannot show that his interpretation has any scientific validity. This is not to say that his statement is meaningless. Indeed, in the ordinary discourse that has room for measured and interpersonal utility comparisons, it is perfectly sensible. But if we are to remain true to the strict discipline of economics, we shall have to relinquish such loose talk from our vocabulary. There is simply no action that anyone can take which would demonstrate the truth of Samuelson’s contention. Samuelson might reply with an admission that he is citing inaction, not action; a refusal to purchase, not an actual purchase. The problem, though, is that (temporary) inaction is consistent with all too many other things. No one can logically reason from the fact that a person is not buying something (a “public good”) to the con-
136 The Privatization of Roads and Highways clusion that he really relishes the service in question and is seeking a “free ride.” It may be that he simply does not want it. We can speculate at length about the different reasons people have for not buying something (distaste, ignorance, the desire to “free ride”), but we cannot as scientific economists conclude from the fact of nonpurchase that the person “really” values the good. If we could legitimately reason in this manner, the sky would be the limit. Once we leave the solid foundations of preferences revealed in market action, the imagination is left free. Some contend that parks, roads, and national defense are public goods and would receive underinvestments in a free market. But using the same reasoning, one might hold that Edsels, pickle-flavored ice cream, and kerosene lamps are presently victims of vicious underinvestment because people are secretly waiting for everyone else to buy first, so that they can be free riders. All of these claims have the same logical status. Each is conceivable and expressible in ordinary discourse. But none is supported by demonstrated preference. We must regard all of them as scientifically invalid. ISOLABILITY Another argument for government provision of roads, closely allied to the externalities argument, might be called the isolability condition. According to this line of thought, a good or service comes properly under the province of the marketplace only if its benefits can be isolated and imputed to specific individuals. Otherwise its benefits are said to be “diffused,” and the good in question must then be supplied by government. As stated by one advocate of this position: “If it were agreed that the benefits from highway improvements are so diffused among inhabitants of a state that it is impossible to isolate individual beneficiaries, . . . [then] highways should be supported from the general fund.” 51 51 D. Netter, “Toll Roads and the Crisis in Highway Finance,” National Tax Journal 5, no. 2 (June 1952): 109.
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The Privatization of Roads and High
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This book is dedicated to my fellow
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vi The Privatization of Roads and H
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viii The Privatization of Roads and
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x The Privatization of Roads and Hi
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Acknowledgments Iwould like to than
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Introduction Most people who read t
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Introduction xvii dealing with obje
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1 Free-Market Transportation: Denat
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Page 186: Part II Applications
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Road Socialism 185 of the state app
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Road Socialism 187 It is in order t
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Road Socialism 189 indicates that v
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Road Socialism 191 vehicle inspecti
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Road Socialism 193 that “The domi
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Road Socialism 195 imaginative and
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Road Socialism 197 2. Perhaps the p
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Road Socialism 199 bouncer, to each
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7 Compromising the Uncompromisable:
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Compromising the Uncompromisable: S
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8 Roads and the Immigration Issue T
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Roads and the Immigration Issue 217
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9 The Motor Vehicle Bureau Newly ar
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The Motor Vehicle Bureau 225 In the
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10 Privatize Public Highways * Acro
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Privatize Public Highways 231 Thoma
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11 Homesteading City Streets: An Ex
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Homesteading City Streets: An Exerc
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13 Transition to Private Roads * Le
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Transition to Private Roads 281 pre
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Transition to Private Roads 283 Blo
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Transition to Private Roads 285 to
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Transition to Private Roads 287 But
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Transition to Private Roads 289 The
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Part IV Critiques
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15 Comment on “Roads, Bridges, Su
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Comment on “Roads, Bridges, Sunli
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Roads, Bridges, Sunlight, and Priva
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17 Who is Responsible for Traffic D
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Who is Responsible for Traffic Deat
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20 Aiding and Abetting Road Sociali
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Aiding and Abetting Road Socialism
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Part V Conclusion
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APPENDIX I Annual U.S. Street & Hig
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Appendices 423 It cannot be denied
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