I believe that transportation is possible without government financing the roads. But American citizens have already paid taxes into the system and it would be wrong for the government to sell the road infrastructure to private companies. How can the transition be made?
Homestead it.
Homesteading would be like rolling a million dollars down the street, since the road is well known to exist and to be valuable and surrounded by many people it would lead to fighting. The government should give the roads to local business associations. That way it would be within the interest of the owner to have safe and free roads, and their would be no local coercive road monopoly, which would probably not spur up in a free market. The highways on the other hand should be sold to the highest bidder, with the proceeds going to the taxpayer.
That is sort of what I was thinking.
The roads are actually hierarchies of different scales of transportation, and they have different ways to generate revenues. Expressways are limited-access and can easily function as toll systems. A cul-de-sac, on the other hand, is really a very private courtyard for a group of residences, and can be paid for by those residences under a system of co-property.
If we were to do an intellectual exercise and ask how, starting from a purely free market, would roads come to exist, they would initially begin with large land-owners who needed to improve travel through their estates, (Julius Caesar was known as a prolific road-builder) and would connect their roads with the roads of neighboring estates to benefit from the networking gains. (Metcalfe’s law) This would not involve any tolls. Those large, connected estates would then be in high demand from settlers who would rent land along the points of interconnections to establish markets, and thus cities would emerge from that. The business at this point becomes that the estate builds roads and offers other services in exchange for rents from the property-owners. This is how the system works even to this day, despite the fact that the government has expropriated all the estates during the 18th-19th centuries.
As I mentionned previously, vastly different types of roads exists. A business association makes sense as landlord over highly-travelled, commercial streets. In fact, one of the most commercial network of streets in the world, The City of London, is still run by the same association of merchants that ran it in the middle ages. However a homeowner’s association is the most appropriate landlord over residential streets.
And good for you that you understand why homesteading makes no sense for public property. It’s a though pill for some people to swallow around here.
“The highways on the other hand should be sold to the highest bidder, with the proceeds going to the taxpayer.”
That tends to work very bad. The main - economical, not moral - problem of state property itself is moral hazard, corruption, disincentives for efficient operation etc. But the sale itself is the largest, most important decision of the state as an owner EVER makes. This is where the most bribes can be gathered, this when they are the most incentived to corruption. Therefore they tend to sell it very cheap.
That’s a problem not only because the taxpayer loses, but because if someone acquires something too cheap funny things tend to happen. For example, they might just close it down because they also own a railroad and want to increase demand. Then everybody loses.
Therefore the right way is stock market privatization. Create a state own company to own the highway. Start charging fees. Then put 10% on the stock exchange. Half a year later another 10% etc. Thus the market will gradually determine what the company worths, thus no one can acquire it cheaply and therefore use it inefficiently.
The constitution of a public stock company affects the performance of the company. If the state stuffs the board of directors full of its own people, they will be able to exploit the company against shareholder interests. The result is that the company will be “too cheap” anyway, and the people most likely to buy will be the insiders who are already profiting from it.
^this^
Given that they’re already being used, anyone initiating maintenance on them (homesteading them) and then restricting access to prevent existing users from using them would be criminal, as the easements on their use have already been homesteaded. As such, the maintenance should be supported by charity and advertisements rather than by tolls. New roads could however be toll roads, as there would be no problem on restriction arising from existing usage.
The problem of funding the roads is to be solved by the market. The problem we need to resolve is whom should have the right to sell the roads to the market and earn the capital value as profit.
I like this idea but why not simply put the entire thing up for sale right away? Instead of the State holding on to a majority of the shares, selling only 10% per year, why not simply do this. Let the State form a company that will appoint temporary officers to oversee the creation of the company. Then place 100% of the stock of the company up for sale with the caveat that no one person or company can own more than 10% of the stock. Once the sale is completed the stock holders could then elect a new Border of Directors who would then appoint the officers of the company.
Now, I’m sure since the State is putting this together the stock will be underpriced but why should that matter? We’ve been getting hosed over for decades anyway. One more hosing wont bother anyone especially if it is putting things right. Besides, the money raised should be used for operating capital for the new company. Remember, this new company is going to have to install tolling booths and other equipment in order to continue funding and maintaining the road.
I realized why I am wrong. In a gradual stock market privatization the management will be motivated to manage the company really badly, to make huge losses and thus be able to buy the stocks almost for free as no one else will want them.
Your idea is dangerous too - if no person can own more than 10% then those 10 who will own it will be the uncles, sisters-in-laws etc. of the managers with exactly the same scenario (manage badly to drive the stock price down).
OK. Let’s forget selling it altogether. What belonged to the state, belongs to the people because the state is supposed to represent them. So just distribute the stocks amongs the people with a way of lottery and that’s it.
That’s still not a problem-proof solution. The system by which a public stock company is governed must be established before the shares are distributed, and the choices made will affect the performance of the company.
I’ve been thinking about this problem all day. To me privatizing the public road ways and utilities presents the biggest challenge to eliminating the state. But this is what I’m thinking concerning the roads.
I think the best way to do it is just like we are talking about. Set up a company that will sell stock to raise the startup funds as well as give some of it back to the people. I still like the idea of limiting people to just 10% ownership in the initial offering because I highly doubt that only 10 people are going to buy up all of the shares. There are plenty of businesses that have employed this method and I can’t think of one where only 10 people owned it all. The chances of that aren’t really that high in my opinion, but you never know. However, you could make it where you can by an unlimited number of shares and a single person like Warren Buffet, Bill Gates, Carlos Slim Helu or a giant mega-corporation like Citi or GE could by up every single share or simply purchase 51% of the shares and control the road. But then that’s the great thing about the market! Either way it is out of the hands of the State.
Another thing I was thinking is that initially you could purchase no more than 10% of the shares but once a Board of Directors is appointed then that restriction would be lifted and the shares could then be traded more freely. I think either way it is done it is far more superior solution than allowing the State to continue ownership and using coercive taxation to fund it.
We will probably see Road Corporation A merge with Road Corporation B in the future but then that wouldn’t really be a bad thing either. The vast sums of money that can be made from privatizing the roads with the promise of better maintenance makes selling the roads on the open market a much better solution. At least to me anyway.
I have a few suggestions. The government could sell the roads on a sectional basis. They would sell these sections to whomever lived the closest to that section. Then that person can choose to sell their portion of the road to a private company or choose to maintain it themselves. Another suggestion I have would be for the government to sell the roads to the highest bidder, and then use the profits off this transaction the give the taxpayers tax relief.
I was thinking that too. I think what you’ll see is a combination of things happening. It will probably end up being a vast system of toll roads and various types of associations that take control of the roads. It will probably depend on the circumstances of the road itself. For instance it makes more sense to turn an interstate into a toll way than it does the streets in a small neighborhood. In the case of the neighborhood the streets could be maintained by a homeowners association, however, I don’t know how you would handle someone who refused to pay the dues of the homeowners association or refused to join it. Deny them access to the steets? Possibly.
Property owners are already forced into belonging to municipal corporations. Swapping that for a more efficient and less expensive association is a net improvement for all of them.
Either way speculating on how state property will be privatized makes little sense. Unless we end up in control of the state, we will not decide how it happens. It is very likely that it will be extremely compromised. What we need to do is be in a position to patch it together into something functional once it is available to the market.
Agreed, switching from a municipal corporation to a homeowners association is a much better thing, however, we aren’t in the business of forcing people to join something they don’t want to join. Say I’ve lived in a neighborhood for twenty years. Now they want to bring in a homeowners association and I refuse. Why should I pay dues to those people? I didn’t have to pay to live in my neighborhood twenty years ago and I’m not about to pay now. By forcing me to join a homeowners association you’ve basically traded the coercive State for a coercive association. Neither one of which I want to be a part of. However, if this is a new development and one of the requirements for buying a house in the area is to join the homeowners association then that is a different story. I don’t have to buy that house as I could always go somewhere else but should I buy that house I have agreed to abide by the rules of the homeowners association and pay their dues.
And I think it is important to talk about these things and develop a strategy or at least a theory of a strategy. If we can come to some understanding of how a practical transition can be made perhaps it will allow us to formulate a strategy that we can then take to the masses. The biggest problem we have right now is we want to get rid of that and dump this but when we try to explain it to people they say, “Well, that’s all fine and dandy but HOW are you going to do it?” If we cannot present a viable option on how to privatize the road systems then why should anyone listen to us?
I absolutely can’t conceive of anyone owning property in an urban environment without paying some kind of rent. Perhaps you could point out some examples.
The benefit is obvious. We are replacing a landlord that has been forced onto people and is inefficient to boot, with a landlord that is on the marketplace, and therefore voluntary (the property owners can buy out the new landlord should they not be satisfied with its operations).
There are fundamentally only two answers to that question: conquer the state or fight the state to terms.
The important question to ask is how the process of the market results in roads being supplied to sufficiently meet demand. Large-scale land ownership resolves this problem.
But it is more “wrong” for the government to continue stealing money from people to continue to finance roads. I see no problem with the government simply selling the roads to the private sector, regardless of how much money the people do not get from the sale. The reason being is that even though they will still have to pay for the roads, the price either drop significantly or the quality would go up significantly. Either way, the people would get much more for their money in the future.
I was talking about homeowners associations. I live in the city but I don’t pay any dues to a homeowners association. I do have to pay the immoral property taxes that the city, county, and school district charges but in a libertarian society those taxes wouldn’t exist. Essentially, I didn’t have to pay anyone to allow me to move into my neighborhood. And if the state were to give up control of the roads to someone else that doesn’t mean I would want to give them money either. So the issue is how do you deal with persons who have refused to join even the homeowners association? I contend that you cannot force them to join it therefore we would have to find some alternative means of funding the streets.
Agreed. Land ownership does resolve this problem but the average Joe out there who doesn’t understand what we are talking about will only look at you like you’re mad when you say “We want to privatize the roads.” HOW are you going to privatize the roads? I could respond, “By selling them of course!” Who buys them? How are they funded and maintained? What is the system we should take to privatize the roads and what are the benefits, drawbacks, etc. from doing so? These are all questions that need to be addressed before the general population will accept this system. Simply saying “Oh, the market will determine how it is going to be done” doesn’t cut the mustard with people that don’t understand how the market works or even know what the market is.