The Privatization of Roads and Highways - Ludwig von Mises Institute

Public Goods and Externalities: The Case of Roads 137
One problem with this reasoning is that if there is really no
one person willing to step forward and declare himself a beneficiary,
then there remains a serious question as to whether there
really are any beneficiaries. As we have seen in the discussion on
revealed preference, the only secure evidence of actual benefits is
market action—the actual payment by consumers for goods
delivered or services rendered. If payment is not forthcoming,
then it is only idle speculation to suppose that there are hordes of
beneficiaries who are unwilling to reveal their interests through
market action.
Second, if one is free to justify government roads on this
ground, then one is free to defend any state action on the same
ground: “X really benefits the masses, although no one person
will exemplify this through voluntary payments; the problem is
that the gains are diffuse, so that no one beneficiary can be isolated.
Therefore, government involvement in the provision of X
is justified.”
We would not for a moment accept this argument were it
applied to any good or service that the government is not now
engaged in supplying. As a defense of the status quo, however,
its defects are more difficult to see.
This argument can also be attacked on a third ground. Most
contemporary economists are comfortable with the phenomenon
of continuity in economics. For example, revenue curves and cost
curves are usually drawn as smoothly continuous, presumably
depicting economic action as taking place in a series of infinitely
small steps. The doctrine of “diffused benefits” is entirely in
keeping with this tradition, for here, too, an infinitesimal benefit,
so small as to not even be noticeable to the presumed beneficiary,
is regarded as “real”; indeed, it is seen as justifying government
involvement in the economy.
It is true that such a conception of the universe is exceedingly
helpful in the employment of the mathematical tools of analysis,
especially differential calculus. This no doubt explains, at least in
part, the popularity of smooth curves, and the acceptability of
diffuse, infinitely small gains. However, as Rothbard states,