The Privatization of Roads and Highways - Ludwig von Mises Institute

80 The Privatization of Roads and Highways
Restraint by permit does not commend itself by any of the criteria.
The granting of permits would have to follow rigid rules
and generally could be neither selective nor flexible. A permit
system would give no reliable guidance on investment policy,
as it would provide inadequate means of measuring the intensity
of the demand for road space. It would involve the creation of a
new bureaucracy to investigate the transport requirements of
all car users in order to find out which are, and which are not,
“in the public interest.”
The idea of a permit system is bound up with the definition of
the “essential” vehicle, but this is so difficult that it cannot be
usefully pursued. A doctor is usually considered as an obvious
“essential” user, but even his permit would raise problems.
Would he be entitled to use his car to take his family to the theatre?
Some might say that he should not, but what would be the
position if he were “on call” at the theatre and liable to be
rushed out for an emergency at any time? 49
49Roth, Paying for Roads, pp. 71–72. Although clearly on the right track,
there are some difficulties even with this eloquent plea in behalf of prices
and against permit restraint. First, there is no known or even possible way
to measure intensity, by a price system or by any other system. Intensity is
basically a subjective and unmeasurable phenomena. Given the inadmissibility
of cardinal utility measurements to the bar of economic theorizing—
cf. Murray N. Rothbard, Reconstruction of Utility and Welfare Economics (New
York: Center for Libertarian Studies, 1978)—the quest for a measurable
“intensity” is a will-o’-the-wisp. But in economics, it is not necessary to be
able to measure the intensity of road use in order to make welfare judgments.
Given a price system, where some motorists choose to patronize the
road at a given price and others do not, we may still conclude that utility is
being maximized in that the two partners to the trade, the road owner and
the customer who chooses to patronize his establishment, both gain in the
ex ante sense, or else they would not have agreed to the trade. The price system
will, and restraint by permit will not, sift out those who are unable or
unwilling to pay the congestion premium for road use.
On the second point, flexibility, it appears that a system of restraints
could, with dint of effort, be operated so as to permit the widest use of
empty roads and only inhibit the utilization of crowded roads. As to the