The Privatization of Roads and Highways - Ludwig von Mises Institute

372 The Privatization of Roads and Highways
and peak-load demands for their services, by Mohring’s own
admission, then the logical implication is that these amenities
should not engage in pricing either. 37 But more: all, or at least virtually
all, goods and services are cyclical in this regard. That is,
no one buys much of anything, typically, on any weekday
between 2:00 a.m. and 5:00 a.m., or on Christmas day. Congestion
prices, then, would be improper for just about anything, under
this line of “reasoning.” But there is only one institution that need
not charge prices for its wares, since it can finance them through
compulsion (e.g., taxation), and that, of course, is government.
Mohring’s analysis, then, if it “suggests” anything, leads right
back to the Sovietization of (virtually) the entire economy, something
the civilized world has been attempting to escape from lo
these many years, and something, since at least the fall of the
“evil empire” in 1989, one would have thought all scholars
would eschew. Not so, it would appear, for Mohring.
SOME PROBLEMS?
Mohring concludes with a litany of problems that undermine
the case for road privatization. He starts off, once again, on a fallacious
foot:
The increasing congestion that accompanies increasing travel
on a given road is the transportation counterpart to the increasing
short-run marginal cost of widgets that accompanies
increasing output from a given widget factory. Both increases
result from more intensive use of durable capital equipment—
the law of diminishing returns at work. 38
Nothing could be further from the truth. Increasing marginal
costs simply have nothing whatsoever to do with congestion. The
former is entirely a phenomenon of diminishing returns to a
fixed factor; the latter stems from variable demand and/or prices
37 Mohring, “Congested Roads,“ p. 143.
38 Ibid., p. 157.