The Privatization of Roads and Highways - Ludwig von Mises Institute

364 The Privatization of Roads and Highways
as the basis of our calculation for roadway deaths, then we can
infer that, under privatization, only one half as many people
need die, that is, 20,000, and the other half, or 20,000 would be
saved. It is the latter figure, not merely 14,000, who are slaughtered
due to governmental negligence in this calculation.
But this “two to one” literature underestimates the efficiency
of private over public enterprise in two distinct ways; one, it does
not take fully into account that the services are often merely
“contracted out” by the government to the so called “private”
enterprises. That is, these business firms are not at all stand alone
members in good standing of the market. Rather, they have won
government-rigged contracts, with all the inefficiency implied
therein. Suppose, when this phenomenon becomes incorporated
into the analysis, that the rule shifts from “two to one” to “three
to one.” If so, than the pure market is not twice as efficient as the
state, but thrice. If so, then the death toll per annum of 40,000
would decline not to 20,000, but rather to 10,000, with a saving of
30,000 lives. But even this figure is likely to be an underestimate
of the true enormity of public ownership and management of
highways, in that this literature, also, only imperfectly takes into
Shield Administration Costs: A Study of Non-Profit Health Insurers.” Economic
Inquiry 13 (June 1975): 237–51; Thomas E. Borcherding, Budgets and
Bureaucrats: The Sources of Government Growth (Durham, NC: Duke University
Press, 1977); Kenneth W. Clarkson, “Some Implications of Property
Rights in Hospital Management,” Journal of Law & Economics 15, no. 2 (October
1972): 363–84; W. Mark Crain and Asghar Zardkoohi, “A Test of the
Property Rights Theory of the Firm: Water Utilities in the United States,”
Journal of Law & Economics 21, no. 2 (October 1978): 395–408; David G.
Davies, “The Efficiency of Public Versus Private Firms: The Case of Australia’s
Two Airlines,” Journal of Law & Economics 14, no. 1 (April 1971):
149–65; ibid., “Property Rights and Economic Efficiency—The Australian
Airlines Revisited,” Journal of Law & Economics 20, no. 1 (April 1977):
223–26; H.E. Frech, “The Property Rights Theory of the Firm: Empirical
Results from a Natural Experiment,” Journal of Political Economy 84, no. 1
(February 1976): 143–52; Cottom M. Lindsay, “A Theory of Government
Enterprise.” Journal of Political Economy 84 (October 1976): 1061–77. I owe
these citations to Randy Holcombe.