The Privatization of Roads and Highways - Ludwig von Mises Institute

150 The Privatization of Roads and Highways
CONCLUSION
Finally, even if the externality–public good argument for government
intervention were correct, it would be problematic
because it can so easily lead to abuses. All sorts of state activities
could, on the same grounds, be demanded by those who advocate
an ever larger role for government. Baumol warns of this
when he says:
The presence of external effects and other grounds for increased
governmental intervention need not constitute a license for
petty bureaucrats and others to impose their view of virtue and
good living on a recalcitrant public. 74
The problem is, of course, that many governmental operations,
supposedly justified on public goods grounds, do not
really involve externalities, even in the view of the proponents of
this view. Says Peterson, for example:
But government does not limit itself to activities which are
purely of this type [collective or public goods], or, necessarily,
even approximately of this type. For a variety of reasons, it
may, and often does, enter fields where the principles of the private
economy can and do operate, wholly or in considerable
degree. This happens when a government undertakes to supply
water or gas or electricity or street railway or bus service, when
it markets forest or mineral products from the public domain,
or even when it provides postal service. 75
Peterson might well have included the provision of highways in
this regard. Savas makes a different but related point:
74Baumol, “Urban Services: Interactions of Public and Private Decisions,”
p. 14.
75Peterson, “The Highway from the Point of View of the Economist,” p.
192.