The Orange County Register’s Freedom Politics website (check out my rent control article FreePo published in March) features articles discussing two differing takes on road privatization from notable scholars Walter Block and Robert Poole.
In Robert Poole’s article, he discusses the merits of the increasingly popular use of Public-Private Partnerships (PPP) to fund and operate roadways:
Four potential benefits are particularly important:
- Fewer Boondoggles: Elected officials often champion projects that yield political benefits but have costs greater than their benefits. But with PPP toll projects, nobody will invest unless the benefits exceed the costs to the extent that they can project a positive return on their investment. That’s a powerful safeguard against boondoggles.
- Avoiding “Big Dig” Disasters: Large-scale “mega-projects” like Boston’s notorious Big Dig are prone to large cost over-runs and schedule delays. In a well-structured PPP project, those risks can be transferred to the private sector, shielding taxpayers from those costs.
- Cost Minimization: Traditional highway projects are built by the lowest-bidder, which often means they are built cheaply and need lots of expensive maintenance over their lifetimes. But a PPP toll highway must be maintained for decades at the private company’s expense. Hence, it has every incentive to build it right to begin with, to minimize total life-cycle cost.
- Sustainable Congestion Relief: If you add ordinary freeway lanes, they tend to fill up and become congested. But today’s urban toll lanes use variable pricing (as on the 91 Express Lanes) to keep traffic flowing smoothly on a long-term basis.
In contrast, Walter Block takes a more principled stand for complete privatization:
Public – private partnerships (PPP) are thus part and parcel of both fascism and socialism; they constitute a partial state ownership of the means of production. As well, they are emblematic of fascism, and government is the senior partner, and its regulations still determine the actions of these public – private partnerships.
Block has dedicated a chapter in his new book, The Privatization of Roads and Highways: Human and Economic Factors to a critique of Public-Private Partnerships. I haven’t read it yet, but hope to share some of the insights when I do.
This is a concept I have been debating in my head for a while. Are public-private efforts towards privatization really a step in the right direction towards liberalizing the transportation system, or are they just a form of corporatism that enable governments to bail themselves out of their fiscal crises? Should we hold out for Block’s ideal, yet unlikely, complete private overhaul, or hope for gradual, yet inevitably incomplete liberalization with PPPs as the first necessary step?
What are your thoughts? Have any readers read Block’s critique of Public-Private Partnerships? (a pdf version of the book is offered free from the Mises Institute)