How "Free Market" Roads can Restrict Freedom: The Mirage of Free-Market Roads

By Martha Estes: March 29, 2012
An "amen chorus" to Timothy B. Lee's article in The Atlantic, The Mirage of Free-Market Roads. martha
March 29, 2012
Acton Institute (blog)by Joe Carter http://blog.acton.org/archives/30879-how-free-market-roads-can-restrict-freedom.html

How “Free-Market Roads” Can Restrict Freedom
In a political climate dominated by debates about individual mandates and restrictions on religious freedoms, an issue like road privatization isn’t likely to be on the top of anyone’s list of major concerns. But the excellent post on “The Mirage of Free-Market Roads” by Timothy B. Lee, a writer with Ars Technica and the Cato Institute, is worth reading even if you don’t care about toll roads. Lee provides an intriguing example of why we need to think clearly about how we apply principles to policy:

While I’m generally sympathetic to the idea of privately-managed roads, I’ve become convinced that the broader vision of “free-market roads” is a conceptual confusion. In the abstract, the idea of competing, privately-owned roads has a lot of appeal. But the more I think about it, the less sense it makes. Roads are deeply intertwined with governments. They always have been and as far as I can see they always will be. This means that they’ll never be truly private in the sense that other private companies like restaurants or shoe factors can be.

Assembling the land needed for a long-distance road is prohibitively expensive without government assistance. Unsurprisingly, private roads almost never come into existence without extensive government assistance. And that means that the profitability of a “private” road depends crucially on how many competing roads the government allows to exist.

It’s unsurprising, then, that real-world privatization schemes are often explicitly protectionist. A 2004 GAO survey found that four of the five privately-funded toll road projects started or completed in the preceding 15 years included non-compete clauses that restricted the creation of competing freeways nearby. It’s much easier to turn a profit when would-be competitors are barred from entering the market.

[. . .]

To be clear, this isn’t to say libertarians should oppose road privatization. To the contrary, private road management can be an excellent way to bring private capital and technical expertise to the provision of a public service. But it is to say that private road operators should be viewed as providing a service to the government, rather than operating an ordinary private business. [emphasis added]

Lee touches on one of the disturbing ironies of modern politics: purportedly “free-market” approaches can sometimes lead to more government involvement and greater restrictions on freedom. Those of us on the right side of the political spectrum have always been wary of government. But it’s refreshing to see that many of us are also becoming more aware of the dangers of rent-seeking behavior by crony capitalists.

TxDOT on the legislative griddle Feb. 5

By Ben Wear - The AUSTIN AMERICAN-STATESMAN - Wednesday, January 23, 2008

Shine your shoes and haul out a clean shirt, TxDOT. The Legislature wants to see you on Feb. 5. All day.

The Senate Transportation and Homeland Security Committee and the Senate Finance Committee have called what would be a very rare joint meeting at 9 a.m. Feb. 5. The meeting would be in the Finance Committee’s meeting room in the Capital Extension, E1.036.
The subject: “The Texas Department of Transportation’s 2008-09 appropriations.” Translated, that means, we want to pin you down and find if you really and truly are suddenly out of money. TxDOT shook up the Texas transportation world, and quite a few powerful legislators, over the past two months by suddenly cutting money for project engineering and right of way and announcing it will award no new road construction contracts after Feb. 1. Frankly, a lot of lawmakers think TxDOT is playing politics with its books.
After these two committees are through, probably around noon, then the Legislative Study Committee on Private Participation in Toll Projects (called the CDA committee or 792 committee informally) will meet at 1 p.m. in the same room. That committee, which includes three appointees each by Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick, was created by SB 792 and told to look at the private toll road contracts that stirred up the Legislature last year. This is that committee’s first meeting.
Meanwhile, TxDOT is under review by the Sunset Advisory Committee as well.
Better get a couple of clean shirts. And maybe some underwear as well.

Read more


Committee Information:
Senate Members:
Sen. John Carona
Sen. Robert Nichols
Sen. Tommy Williams

House Members:
Rep. Aaron Peña
Rep. Larry Phillips
Rep. Wayne Smith

Public Members:
John W. Johnson
Robert W. Poole Jr.
Grady W. Smithey Jr.


FROM THE LEGISLATIVE REFERENCE LIBRARY - Legislative Reports
PRIVATE PARTICIPATION IN TOLL PROJECTS - LEGISLATIVE STUDY - 80th R.S. (2007)

Committee Members; Rep. Aaron Pena, Rep. Larry Phillips, Rep. Wayne Smith
Committee Charges:
1. The legislative study committee shall select a presiding officer from among its members and conduct public hearings and study the public policy implications of including in a comprehensive development agreement entered into by a toll project entity with a private participant in connection with a toll project a provision that permits the private participant to operate and collect revenue from the toll project. In addition, the committee shall examine the public policy implications of selling an existing and operating toll project to a private entity.
Not later than December 1, 2008, the legislative study committee shall:
(1) prepare a written report summarizing:
(A) any hearings conducted by the committee;
(B) any legislation proposed by the committee;
(C) the committee's recommendations for safeguards and protections of the public's interest when a contract for the sale of a toll project to a private entity is entered into; and
(D) any other findings or recommendations of the
committee; and
(2) deliver a copy of the report to the governor, the
lieutenant governor, and the speaker of the house of
representatives.
Note: Created pursuant to SB 792, 80th Legislature.
NOTE: Martha Estes contributed to this post.