Friday, October 10, 2008

Why thinking is better than talking points--especially if you are a Libertarian

There are Libertarian talking points, and favorite in-house issues that we bandy about to the detriment of the cause of convincing more people to embrace liberty.

One of them is roads. We love to talk about privatizing roads, whether it's Ask Dr Mary Ruwart or the Cato Institute.

I'm not suggesting that the market wouldn't necessarily provide better alternatives, but I do think we need to consider reframing the question in historical rather than political terms.

I'd do this myself, but Tal Scriven has done it better in his Wrongness, Wisdom, and Wilderness:

The first line of response is to question the necessity of public road projects from the point of view of the time of their construction. It must be remembered that the rail system in the United States was constructed mostly by the expenditure of private funds. If it was not necessary for the government to build the rails upon which trains travel, then why was it necessary for the government to build the roads upon which cars and trucks travel? Why couldn't the companies that wanted to sell cars and trucks have been the ones who paid to make roads? Of course, the cost of road construction would not have been paid by Henry Ford but by the people who bought Fords. If the Henry Fords and J. D. Rockefellers of the time could not have laid out the necessary cash (which is unlikely), then the crtainly could have engaged other investors to make toll roads.

All of this leads to the second line of argument. The fact of the matter is that the automobile and oil industries in the United States have always been subsidized to the tune of whatever road construction has cost over the past century in a way that the rail system never was. As a consequence, the public turned more and more toward cars and away from trains. Cities spread out along freeways and everyone got used to going everywhere (even just down the block) in machines that are responsible for huge taxes, massive depletion of natural resources, fifty thousand deaths annually (in the United States alone) and global environmental concerns. The huge amoun of fossil fuels consumed by cars, of course, has the added consequence of making nearly every other commodity more expensive, because car drivers compete with manufacturers for those fuels. In short, it's really not clear that the government's construction of roadways has, on balance, created as much good as is commonly thought. If the government had not been so involved in these projects, then there would now be fewer roads, more railways, fewer cars, more compact but cleaner cities, and who's to say we'd now be worse off because of it?

Now there's a thought: State road-building as a direct subsidy to the oil and autmobilie industry. Put that way it makes a lot more sense to use the same lens on other problems.

Of course there are going to be those who argue that an America without roads and automobiles could never have become an industrial giant, won two world wars, enjoyed such a high standard of living, blah blah blah.

To which my answer is Robert W. Fogel's Railroads and American Economic Growth: Essays in Econometric History in which he took on the idea that the growth of railroads in the 19th Century was the only mechanism that could have driven the dramatic industrial growth of the US. Fogel used exhaustive analysis to show that--even with railroads--a combination of canals and wagon roads could have supported exactly the same level of economic growth as the railroads did.

Indeed, as reviewer Lance Davis notes:

Cliometrics did not really begin to flower until the publication of Robert Fogel's study of the impact of railroads on American growth in the nineteenth century. Not only did it generate a spate of parallel studies (of Russia, Mexico, Brazil, England, and Scotland, to cite only five), but much more importantly, it provided a methodological foundation for the systematic study of economic history and long-term economic growth.

Fogel's chief point is that there are always alternatives--in history or policy--but you have to willing to engage in the serious thought necessary to find them.

My point (and I think I still have one): is that Libertarians need to stop talking so much about privatized roads (which is looking backward) and start using the lessons of that historical model to look for undercover government subsidies that are nothing more than massive involuntary transfers of wealth.


Anonymous said...

While not necessarily arguing with the main point you were trying to make, I think it's less clear than you perhaps would like...

1. While the actual tracks for the railroads were privately funded, it is important to note that the railroads were GIVEN the rights of way on which those tracks were built, a much more critical and potentially expensive piece of the puzzle.

2. The railroads over the years have gotten a great deal of government subsidy money, especially the passenger services - I suspect that on a "cost per passenger mile" basis they might have gotten more than the road / automotive industries.

3. If you look at early American history you will note that many of the major roadways of the time WERE privately funded and built toll roads - at least until they were stolen by various gov't entities.

4. While it by no means covers all the expenses, a sizeable part of the costs of highway construction and maintaining is covered by fuel and other related taxes - IMHO one of our fairer tax structures (if any can be so described) as the amount of tax paid is very closely related to the amount of use and wear you put on the roads (even to the point where big trucks pay more per mile than little cars by virtue of getting lower gas mileage...


Steven H. Newton said...


1. You're right with respect to much post-Civil War construction but not for most of that prior to 1860, by which time there was a major rail transport system throughout the area east of the Mississippi. Right of ways in the 1840s and 1850s usually had to be purchased.

2. Those subsidies have primarily existed post-1880, which was the same period in which road subsidies started, and don't impact the original argument.

3. I'm drawing a distinction between the wagon roads of the 19th century and later paved automotive roads. Far fewer of the latter were originally built as toll roads than most Libertarians would like to beleive.

4. The whole point about the coverage of road expenses through taxes is that the primary impact of these taxes is to subsidize at my expense the automobile and fuel industries that would have no easy field of operation if the government was not forcing me to pay for them. I'm not arguing that it is a less efficient or less noxious tax, but that--and this is Scriven's point--making the choice to subsidize roads as the universal medium of transportation was a corporately influenced Statist choice, and did not necessarily represent the most effective way to expand the economy.