The Privatization of Roads and Highways - Ludwig von Mises Institute

Road Privatization: Rejoinder to Mohring 365
account quality of service. Posit, then, that when we fully incorporate
this phenomenon into our calculations, that the proper
rule of thumb would be that markets are four times more efficient
than bureaucrats. Then, the number of people slaughtered on our
roads would be 8,000 per year, with a savings of 32,000 lives. 24
If so, this casts doubt on the goal of promoting greater governmental
efficiency on the roadways, even under the assumption
that our only goal was the utilitarian one of reducing fatalities.
Yes, if they began peak-load pricing and engaging in other
quasi-market activities, there might be a marginal decrease in the
death toll. But this would inevitably come at the cost of putting
off the day of complete privatization. There is no such thing as a
“social” rate of time preference, on the basis of which we could
unambiguously compare the present discounted value of a small
number of lives saved, in the short run, with a more efficient
government enterprise, versus a larger number of people safeguarded,
later, under full privatization, so any exact calculation
24Even this is likely to be a vast underestimate, and for two reasons. First,
it does not take cognizance of the fact that, in many cases, these so-called
“private” workers are unionized. In the fully free society, there would be no
institutions of this sort. See Walter Block, “Labor Relations, Unions and Collective
Bargaining: A Political Economic Analysis,” Journal of Social Political
and Economic Studies 16, no. 4 (Winter 1991): 477–507.
Second, was the Soviet Union even fully one fourth as efficient as the
American (this is the implication of the analysis in the text, if we assume
that that the former had zero privatization, and the latter 100 percent, an
obvious overestimate)? Paul A. Samuelson (Economics, 5th ed. [New York:
McGraw Hill, 1961], p. 830), depicts a convergence between the economies
of the U.S. and the U.S.S.R. He claims (Economics, 12th ed. [New York:
McGraw Hill, 1985], p. 837) that between 1928 and 1983, the growth rate for
the Soviet Union was a remarkable 4.9 percent per year, higher than that for
the U.S. Mark Skousen (The Making of Modern Economics [New York: M.E.
Sharpe, 2001], p. 416; and “The Perseverance of Paul Samuelson’s Economics,”
Journal of Economic Perspectives 11, no. 2 [Spring 1997]: 137–52) properly
debunks these outrageous claims. There are recalls for all sorts of things:
toasters, cars, tires: why none for Nobel Prize winning economists such as
Samuelson, who has mislead an entire generation of economics students?