Chapter Three

Who Will Build the Roads?

“I suppose I won’t see you driving on any of those government roads, then, will I?”

Eventually, every libertarian runs into this supposed conversation ender. Anti-libertarians believe that not only does this “zinger” refute libertarian arguments for private roads, but libertarian arguments about anything. “Oh, you want to get the government out of health care? I guess I won’t see you driving on any government roads.” It gets that ridiculous.

This sophism is pregnant with anti-libertarian nonsense. Most superficially, it is a cheap shot at the character of libertarians. It implies they are hypocritical moochers who not only fail to live by their beliefs, but seek to be “free riders” on the government’s road system without paying into it. It also contains the more serious argument that a workable road system wouldn’t exist if the government didn’t build it.

Both arguments are so wrong that one feels slightly embarrassed for the people who make them. Not only are supporters of government roads the “free riders,” but opposing government road and infrastructure building was once a policy position that won election after election. Anti-libertarians are sadly ignorant of their own history.

First, let’s examine the hypocritical moocher argument. It rests upon the assumption that libertarians want to use the roads but not pay for them. That is not even close to what libertarians say. Libertarians not only wish to, but believe they are obligated to pay for any good or service they choose to buy. Like all libertarian arguments, the underlying principle is non-aggression. Exchanges of property should only occur with the mutual, voluntary consent of all parties to the exchange.

Nothing built by the government is paid for voluntarily. Taxes are compelled by a threat of force.

Libertarians don’t argue roads shouldn’t be paid for. They merely argue individuals should have a choice about whether they buy roads and from whom. The choices to buy or not, from whom and at what price are the cornerstone of free markets. They are the only reason the market performs better than government. In a free market, consumers can say “no.”

Libertarians believe they should be responsible to pay 100% of the cost of anything they buy under those conditions. It is actually anti-libertarians who at least partially want to be “free riders.” Yes, they agree to pay taxes, but why is it necessary to have government in the middle of the transaction? Why can’t anti-libertarians simply pay the road builders directly?

The answer is the same for roads as it is for all government programs. The government is not merely an organizer or planner. The market does far better at both. But the government can do something the market can’t. It can force people to buy things whether they want to or not.

That’s really what anti-libertarians are arguing for, although most probably don’t realize it. The government monopoly isn’t necessary to ensure you pay for products you bought yourself. For those, the seller simply sends you a bill. The government is necessary to compel you to pay for things other people want but are unable or unwilling to pay for themselves.

In a free market, those who want a road must pay for it. When the government builds the roads, both those who want the road and those who don’t are forced to pay. The latter group isn’t necessarily against roads. They might want a road built somewhere else, or by someone else, or not at all. They may benefit from the road, but not enough to justify the cost, in their own judgment. Thus, they may choose not to buy a particular road that others want. The government takes that choice away.

Anti-libertarians maintain that if some people want a road built, then they should have the power to make others who do not pay for it anyway. Who are the real moochers?

The charge of hypocrisy is equally spurious. It is not hypocritical to try to get some use out of a product one was forced to buy. Despite their objection to being forced to buy the government’s road and being prohibited from building their own, libertarians nevertheless pay for the roads like everyone else. Attempting to get some value out of them does not contradict their argument.

An analogy might be helpful. Suppose someone wants a BMW, but BMWs are illegal and everyone is forced to buy Toyotas. We wouldn’t accuse opponents of this policy of hypocrisy if they drove the Toyotas they were forced to buy. They would be perfectly justified in driving the Toyotas while at the same time objecting to the law.

The government monopoly on roads not only forces us to buy Toyotas, but at BMW prices.

The analogy is actually an insult to Toyota, which makes a good, affordable product that foregoes luxury to meet demand at a certain price point.

In contrast, the government road system is an unmitigated disaster. Not only are government roads among the most dangerous places on earth; they are grossly deficient in quality. They are under constant repair, which takes years, sometimes decades, for any given stretch of road. One cannot drive ten miles in any direction in America without encountering a sea of orange pylons and barrels. Those few government roads not partially closed for repairs are typically inadequate to the volume of traffic. Americans literally spend years of their lives sitting in their cars in bumper to bumper traffic.

Monkeys could be trained to manage the road system better than the government.

This isn’t to imply the people who work on the roads or even the bureaucrats who plan them are lazy or incompetent. It’s the system they work in that’s broken, not the people. The incentives are all wrong.

Political decisions are made for political reasons. While the civil engineer managing the road construction project may want to finish the road on time and under budget, there are contrary political forces seeking to prolong the project to keep people employed and exceed the budget for political motives. A sea of regulations and licensing requirements slow the work even further. Corruption abounds, with contracts given to the politically connected rather than the most qualified. Funding is a political football.

This is how a four-mile stretch of Route 275 in Tampa, FL can remain under construction for ten years, with no end in sight.

Does anyone really believe road construction would take as long if a private owner were losing money every day the road was not operating at full capacity?

This often brings up another variant of anti-libertarian nonsense, that private owners would exploit us all and charge exorbitant prices for access to the roads. A related argument says we would necessarily pay more for the roads if they were privately owned because, in addition to the costs already paid by the government, we would have to pay a premium for the profits private owners would seek to make.

If that’s true, then why not have the government provide everything? Surely, if private owners should be prohibited from profiting from roads, which are somewhat necessary, then they should be prohibited from profiting from selling food, shelter or clothing, which are absolutely necessary to human survival. Wouldn’t everything be less expensive if we didn’t have to pay for profits?

That question was already answered in 20^th century Russia and China, where tens of millions literally starved to death in an attempt to prevent “exploitation” by capitalists. To a large extent, the arguments against private roads are just another iteration of the arguments against free markets in general. The answers to these arguments rest upon the same principles as any arguments for free markets over socialism.

The profits earned by road capitalists are no different from the wages paid to their employees. They are compensation for capitalists’ labor, both present management of the productive structure and their labor in the past that produced the savings they used as capital to start the business.

Just as employees can demand no more in wages than employers are willing and able to pay for their services, capitalists can demand no more in profits than consumers are willing to pay for capitalists’ services. If a capitalist raises prices in an attempt to make unreasonable profits, his competitor will be happy to provide the product at a lower price. The competitor may make less profit on each unit, but he sells more units for every dollar he decreases his price. That’s just simple supply and demand economics, accepted by virtually everyone, libertarian or not.

Consumers bear the same costs of capital and management when the government builds roads. We just don’t call them “profits” and there is no competition to limit them. We pay a panel of bureaucrats a higher price to do the job the capitalist would do, plus pay for all of the waste and fraud that accompany government projects. Allowing capitalists to make profits is far cheaper.

Just as government workers aren’t inferior people, neither are capitalists superior nor more virtuous people. They simply operate in a system with different incentives. Capitalists in a free market please customers because customers have choices. They can buy from someone else. They can choose not to buy at all. Either choice means less profits, losses or bankruptcy for the capitalist. He can only survive and thrive when customers choose to buy his product.

Somehow, people have placed roads into a special category where these basic economic laws are supposedly suspended. But they’re not. The economics of road building is no different from the economics of food growing or toy making. Roads are just another product of human labor. A free market is the most efficient means for building, maintaining and distributing their benefits, just as it has proved to be for every other product.

Then, there is the convenience argument. Even if the roads would be cheaper if privately owned, wouldn’t it be terribly inconvenient to have to stop and pay a toll every time I left the property of one owner and drove onto the property of another? Wouldn’t there be toll booths every few blocks?

These concerns betray incredibly limited thinking. Even the government has somewhat overcome the inconvenience of stopping traffic at toll booths with wireless toll sensors overhead. This solution assumes the only way to pay for roads is for consumers to pay a separate fee for each use.

Proponents of government roads assume everyone benefits equally from them. While one could argue most people benefit at least indirectly from government roads, it is obvious everyone does not benefit equally.

The consumers who shop on a road where a group of retailers reside benefit from the road, but the retailers benefit much more. The consumers could survive without shopping there, but the retailers could not survive without the road. Thus, the answer to the perennial question, “Without government, who will build the roads?” For this road, the answer is simple: the retailers. Likewise for roads leading to the road they are located on.

Where would the retailers get the additional money needed to build and maintain roads? They’d simply pass along the costs in the prices of their products. This would not be an additional cost for consumers. Offsetting the slightly higher price of the retailers’ products would be the enormous savings in taxes not paid for the inefficient government road system.

Retailers already do this to an extent, as libertarian author Larken Rose humorously notes:

“On the supermarket’s private property are roads and parking lots (really wide roads). Where did they come from? Why didn’t they send me a bill for them? Because it was part of their premeditated loss in the deal to sell me sushi, pepperoni, and candy corns.”[1]

What about residential roads? That’s even easier. Voluntary contracts called “Homeowners’ Associations” already maintain landscaping and other “infrastructure” within residential communities. There is no reason roads could not be added to the list. Would that raise homeowners’ association fees? Yes, but savings in taxes would be greater than the increase in fees.

What about interstate highways and all of the other roads and bridges built by the government? The same principle applies. There are numerous entities who would be willing to build and maintain roads if the government didn’t do so. They include manufacturers who need roads to get their products to market, trucking companies who transport them there, retailers who sell them, and many other interested parties.

All of these benefit infinitely more from roads than the average commuter. Under a government road system, taxpayers are forced to underwrite this capital expense while capitalists keep all of the profits. As previously stated, capitalists aren’t more virtuous people. They respond to incentives like everyone else. The government road system allows them to let other people pay their expenses. It not only gives them an incentive to be moochers, it offers them no alternative.

Anti-libertarians often argue libertarian ideas sound great in theory, but would never work in the real world. Certainly, private roads are a prime example, right?

Wrong. Not only would private roads work better than government roads, they have and still do.

Somewhere down George Orwell’s famous memory hole has fallen almost a century of American history where government roads were vehemently opposed. Before Social Security, healthcare or unemployment were political issues, road building was a central one.

During the Washington administration, Alexander Hamilton championed government roads as part of the Federalist Party domestic policy platform of high, protectionist tariffs, a central bank and “internal improvements,” which meant government funded roads and canals. Taxpayers would foot the bill for roads and connected private corporations would build them and keep the profits.

On the other side of the debate were Jefferson and his Democratic-Republicans. They referred to themselves as “Republicans,” but were not the same as the modern Republican Party. They eventually evolved into the modern Democratic Party, although their platform in 1800 was far different from their platform today. During the 19^th century, the Democratic-Republicans were the party of free markets and limited government.

Jefferson’s “Republicans” opposed the central bank, supported tariffs sufficient to fund government but not to protect domestic manufacturers, and opposed government subsidized roads and canals.

The Republicans were at a disadvantage because they did not become a formal party until after the Federalists were firmly established. This gave Hamilton and the Federalists the opportunity to make the same arguments we hear today about why the government has to build the roads. They even got to launch a few projects. They were all disasters.

All of that changed with Jefferson’s electoral victory in 1800. So dramatic was the change in policy Jefferson himself often referred to it as a Second American Revolution. Distraught with Jefferson’s election, the heavily Federalist New England states actually held conventions contemplating secession from the Union. Among their dire predictions was that America would languish without an adequate road system because the Jeffersonians refused to allow the government to fund them.

They couldn’t have been more wrong, as Loyola University economics professor and author Thomas Dilorenzo points out.

“But the fact is, most roads and canals were privately financed in the nineteenth century. Moreover, in virtually every instance in which state, local, or federal government got involved in building roads and canals, the result was a financial debacle in which little or nothing was actually built and huge sums of taxpayer dollars were squandered or simply stolen.”[2]

Dilorenzo goes on to describe the spectacularly successful, privately-funded “turnpike” industry that built virtually all of the roads in early America. He attributes the success to the same incentives libertarians argue would motivate private investment in roads today.

“Local merchants had strong incentives to invest in private turnpikes because they would bring more commerce to their towns. Landowners would see their property values rise, and cities would more generally prosper as improved transportation extended the division of labor and the economic benefits derived from it.”[3]

This is not an arcane legend libertarians invented. It’s been well documented by “mainstream” historians for hundreds of years.

Alexis de Tocqueville noted ubiquitous private roads in Democracy in America (1835-1840):

“In France, contributions in kind take place on very few roads; in America upon almost all the thoroughfares: in the former country, the roads are free to all travellers; in the latter turnpikes abound.”[4]

Seymour Dunbar documented the same phenomenon in his four-volume 1915 treatise A History of Travel in America:

“Out of these new qualities of public thought came a suggestion that the task of turnpike building be turned over to private companies created for the purpose. The idea was adopted through all the country. Under its general operation many thousands of miles of improved roads were constructed, and within a few years it was possible to travel by stage-coach from the Atlantic Coast to the border of Indiana in about two weeks, at a cost of only forty-five or fifty dollars exclusive of board and lodging.”[5]

The success of private roads and the waste, fraud and incompetence inherent in government-funded road projects made resistance to government road building a mainstream political position in 19^th century America. Two major political parties met their demise largely for supporting government funded roads and other infrastructure.

So resounding was the Federalists’ defeat in 1800 that they ceased to exist as a party not long afterwards. Government roads then found new champions in a successor party. Led by Henry Clay, the Whig Party repackaged Federalist ideas into what Clay called “The American System.” Its pillars were a central bank, high protectionist tariffs and internal improvements.

Clay and the Whigs promoted their American System for decades, losing election after election. So unpopular was the idea of letting the federal government build roads that as late as 1857, Democratic President James Buchanan felt the need to justify in his inaugural address what little road building he believed the government should undertake. Emphasizing the federal government’s powers should be strictly limited to the powers delegated in the U.S. Constitution, Buchanan went on to say.

“Whilst deeply convinced of these truths, I yet consider it clear that under the war-making power Congress may appropriate money toward the construction of a military road when this is absolutely necessary for the defense of any State or Territory of the Union against foreign invasion. Under the Constitution Congress has power ‘to declare war, to raise and support armies, to provide and maintain a navy, and to call forth the militia to ‘repel invasions.’ Thus endowed, in an ample manner, with the war-making power, the corresponding duty is required that ‘the United States shall protect each of them [the States] against invasion.’ Now, how is it possible to afford this protection to California and our Pacific possessions except by means of a military road through the Territories of the United States, over which men and munitions of war may be speedily transported from the Atlantic States to meet and to repel the invades?”[6]

Obviously, government roads were still very unpopular. Otherwise, Buchanan wouldn’t have felt the need to make such a lengthy argument for the few he advocated.

Like the Federalists before them, the Whigs eventually disintegrated after decades of failing to establish their American System. Private roads were firmly established as an American institution with little reason to believe that would ever change.

So how did government take over road building?

Like the Federalists, the surviving Whigs and their political heirs formed a new party. Calling themselves “Republicans” the new party was an alliance between former Whigs and abolitionists. Capitalizing upon the dominant issue of the day, the new Republican Party won a sweeping victory in 1860.

Most Americans remember the Lincoln presidency for the American Civil War, his Emancipation Proclamation and the eventual abolition of slavery in the United States. These huge issues tend to obscure what has now become a little known fact. Lincoln was a lifelong Whig who had supported its principles for decades. As far back as 1831, Lincoln had quipped during a stump speech,

“My politics are short and sweet, like the old woman’s dance. I am in favor of a national bank. I am in favor of the internal improvement system and a high protective tariff. These are my sentiments and political principles. If elected I shall be thankful; if not, it will be all the same.”[7]

These ideas, rejected by voters since 1800, had little hope of success before Lincoln’s victory. But by 1861, the issues of slavery and the war were so dominant that Lincoln and the Republicans had little trouble in finally establishing the American System. Opposition to government roads was the proverbial baby that went out with the bathwater of slavery.

Lincoln’s domestic policy agenda was not lost on the Confederate States. While their primary and most immediate reason for seceding was fear the Republican policy of prohibiting slavery in new states and territories would eventually threaten the institution in their own, they also opposed the crony capitalism of the American System. Georgia’s Declaration of the Causes of Secession talks at length about it, arguing the abolitionist movement had provided its proponents a new opportunity:

“…but the principle was settled, and free trade, low duties, and economy in public expenditures was the verdict of the American people. The South and the Northwestern States sustained this policy. There was but small hope of its reversal; upon the direct issue, none at all.

All these classes saw this and felt it and cast about for new allies. The anti-slavery sentiment of the North offered the best chance for success.”[8]

Sadly, the Confederacy did not have to change the U.S. Constitution significantly regarding slavery because the Constitution supported the institution at the time. But the new Confederate Constitution did make a significant change to the Commerce Clause:

“To regulate commerce with foreign nations, and among the several States, and with the Indian tribes; but neither this, nor any other clause contained in the Constitution, shall ever be construed to delegate the power to Congress to appropriate money for any internal improvement intended to facilitate commerce; except for the purpose of furnishing lights, beacons, and buoys, and other aids to navigation upon the coasts, and the improvement of harbors and the removing of obstructions in river navigation; in all which cases such duties shall be laid on the navigation facilitated thereby as may be necessary to pay the costs and expenses thereof.”[9] [emphasis added]

Private roads were not immediately abolished by the government the day after Lee surrendered to Grant. However, the Republican Party’s domination of American politics in the post-war period made a government takeover of the road building industry inevitable. Dunbar recognized the significance of the Civil War on road policy:

“Many of the toll road franchises have only lapsed in recent years, and a few are still effective. Maryland, and perhaps other states, yet possess toll-gates. Not until after the Civil War did the various commonwealths generally adopt a policy under which roadways were considered public works to be created and maintained by the people themselves and used without toll fees.”[10] [emphasis added]

Tragically, their defense of slavery has sullied many of the good, libertarian ideas the southern states espoused, including opposition to government subsidization of roads, canals and railroads. Some actually accuse libertarians of racism or even of condoning slavery because their arguments sound like some of those made by the Confederate states. If you don’t think the government should build roads, you must support slavery.

Yes, it gets that ridiculous, too.

A century and a half later, the seceding states have been vindicated on at least one issue. As wrong as they were on slavery, they were absolutely right about government roads. The government hasn’t improved at building them since those “financial debacles” Dilorenzo described. We’ve just become accustomed to its incompetence.

Long tradition has desensitized us to the farcical prospect of repairs on short stretches of road taking years to complete, road construction projects with no workers present for days or weeks at a time, traffic jams, potholes, and a predatory police force waiting to spring out from cover to mete out disproportionate financial punishment for the slightest infraction.

Even conservatives accuse libertarians of taking free markets to an extreme by suggesting private roads. That’s not surprising, because government roads has traditionally been a conservative position, since the early days of the republic when the Federalist Party were the conservatives and Jefferson’s Republicans were the liberals.

If they’re right about libertarians being free market extremists, then they’d be surprised to find out where this extremism has been implemented with spectacular success: in so-called “Communist China.”

After decades languishing under true communism, China has been making market reforms to its economy since the 1980’s. They still call themselves communist and the Communist Party still has absolute control of the political process, but their economy is in many ways more capitalist than the USA’s.

One way is the extensive highway system they’ve built in a remarkably short period of time. China’s highways are built and maintained mostly by private companies and financed in the private capital markets. It’s not a completely free market. There is still plenty of government meddling and attempts at planning. However, the most important element of free markets is present. The costs for the roads are paid by the people who use them. At least for roads, costs are not “socialized” in the socialist state.

So impressed was legendary investor Jim Rogers by China’s highway system that he devoted a chapter to it in his 2007 book, A Bull in China. Rogers had ridden his motorcycle across China in 1988 and felt lucky to survive the dearth of roads. Less than two decades later, the transformation dazzled him:

“Under socialism, the slogan of China’s forced industrialization was ‘China Reconstructs.’ Today, the operative phrase is more like ‘Highways to Heaven.’ With 28,210 miles of highways at the end of 2006, China boasted the world’s second-longest set of freeways, roughly equal to those of Canada, Germany and France combined. In the last four years, about 3,000 miles of expressways were added each year on average. And there are plans afoot to construct and pave up to triple the current number.”[11]

Rogers goes on to recommend several Chinese expressway companies as investment opportunities.

Adrian Moore, Ph.D., Vice President of Policy at the libertarian think tank Reason Foundation, has also taken notice. In a Reason TV You Tube video, Moore observes,

“Here we have this very capitalist culture and country and we have this incredibly socialist transportation system, where the idea of having the private sector build and run a road is just crazy talk. And over in China, where it’s an avowedly communist system, the idea of having the private sector build and run a road is like ‘Well, yeah, how else are we going to build all the roads?”[12]

The libertarian argument for private roads is used as a bludgeon to stifle debate on reductions in government anywhere. Promoting even a modest reduction in income tax rates is enough for many anti-libertarians to “play the road card,” hoping others will perceive the libertarian as crazy.

It’s classic ad hominem. When you can’t refute the argument, attack the person making it. That’s why this tactic is employed so often.

Guess what? The road card isn’t worth a deuce. Neither history, economics nor common sense support it. If early Americans and 21^st century communists can build private roads, we can, too.