The Privatization of Roads and Highways - Ludwig von Mises Institute

360 The Privatization of Roads and Highways
In fact, Mohring contradicts himself on this issue. Remember,
he is saying that there is something unique about road services,
compared to all other goods, e.g., “widgets,” such that the former
is somehow guilty of this market failure of externalities, wherein
motorists do not take into account the time costs they impose on
others of their ilk, while this malfunction, somehow, does not
take place in the latter case. But he is also on record as stating:
“The wait for service in a department store is typically substantially
longer during the week before Christmas than in late January.”
14 Why is this? That is, why is it that the market failure of
externalities, wherein buyers do not consider the time costs of
others, does not afflict, also, department store customers? The
reason is simple. Department stores are privately owned. 15 Thus,
there is economic incentive for their proprietors to act rationally,
lest they suffer losses and be forced into bankruptcy. By
Mohring’s own admission, they do so; e.g., they charge higher
prices “during the week before Christmas than in late January.”
Thus, December shoppers are lead by Smith’s “invisible hand” 16
to take into account the wishes of other customers, and to not
impose, or at least to reduce the imposition they make on their
scarce and valuable time.
In sum, there is no intrinsic difference in this regard between
highway or street transit, and any other good (widget). If either is
in the hands of private enterprise, pricing will gravitate toward a
situation in which the customer’s time, as well as money, is taken
into account. In contrast, if either is in the hands of government,
pricing will not gravitate toward a situation in which the customer’s
time, as well as money, is taken into account. Then, truly,
government, not at all by the market, to ignore the time costs they impose
on others.
14Mohring, “Congested Roads,“ p. 146.
15At least on this side of the G.U.M. stores of the late and non-lamented
U.S.S.R.
16Adam Smith, An Inquiry into the Nature and Causes of the Wealth of
Nations (New York: Modern Library, [1776] 1965).