Potential for Voluntary Infrastructure

Last fall I visited Budapest and learned some interesting history of the city’s beautiful Chain Bridge. Before 1849, the small cities of Buda and Pest were connected by a temporary bridge that was only viable during warm months. In the winter, the bridge had to be taken down due to ice, making it impossible to cross the Danube between the two cities if the ice wasn’t solid enough to walk on. Count István Széchenyi, a Hungarian statesman who traveled extensively throughout Europe, made it his mission to secure financing for a bridge to improve economic growth opportunities and Budapest’s standing on the world stage. His experiences in rapidly modernizing cities like London taught Széchenyi the importance of mobility for economic growth.

Legend has it that Széchenyi was motivated to build a bridge between Buda and Pest because ice on the Danube prevented him from getting to see his sick father before he died, but it’s unclear to me if this is an accurate history. The bridge was the realization of both a politician’s ambitions and a private financiers goal to profit from tolling the bridge and by increasing the value of his landholding in Pest. While the bridge lost money during its financier’s life, it ultimately began turning a profit in 1860. It’s impossible to understand Széchenyi’s motivations for securing the bridge centuries later, but it seems he was likely motivated by a combination of profit seeking, nationalistic pride, and philanthropy. The Chain Bridge joined a slew of other privately built bridges and other infrastructure around the world, built either by people who hoped to profit from providing transportation services or who sought to increase their land value by providing mobility.

While a voluntarily built bridge seems exceptional from today’s vantage point — when a public private partnership or contracted toll road management seems like the “free market” alternative to government built and managed infrastructure — this is because government policies have radically transformed infrastructure provision. As Adam has pointed out previously (along with David Levinson and others), transportation is a private good, not a public good that carries a strong rationale for government provision. History demonstrates that absent government provision and given a legal market that supports it, individuals and firms in the free market will provide infrastructure. While some argue that mobility has positive externalities, the presence of positive externalities doesn’t mean that a good should be provided by the government, or even subsidized. Beautiful architecture has positive externalities for the neighborhood around it and smaller positive externalities for passers by who enjoy it, but this doesn’t make it a good idea for the government to take over building design or for the government to subsidize property owners who choose good design.

The general growth of government beginning in the 19th century along with many discrete policy decisions have led to the decline of voluntary transportation infrastructure, but technological and economic changes should make non-government infrastructure more attainable than ever. Large corporations from Wal Mart to Apple have huge interests in ensuring that their products reach their consumers in a timely manner. It’s not difficult to imagine that corporations could play a large role in providing infrastructure in world without government crowd out. Given that private infrastructure prevailed in a time when making infrastructure excludable was more costly, technology today has only made voluntary infrastructure more attainable.