Private roads: a model

Statue of Atlas, that became the cover illustration for Atlas Shrugged. Is the Third Option a variation on this theme?
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Two years ago, CNAV looked at whether totally private roads could connect everyone. CNAV took this on after someone complained that “in the Ayn Rand world,” no one would build, plow, fill potholes in, or guard roads in a way “to serve the public.” Afterward, Senator Elizabeth Warren (D-Mass.) followed up on Barack Obama’s infamous “You didn’t build that!” cry. The senator said specifically: if you made a business run, you did not build the road you moved your goods on, nor hire the police who patrol it.

Lay aside for a moment that we can’t build that if the government won’t let us build that. Consider instead: what if the government did let us build private roads for the public to use?

What do “private roads” mean here?

First let us define the term. Say “private roads” to most people, and they will think “driveways to the mansions of the very rich,” or maybe “office-park driveways.” Most members of the public may not drive on those roads. They may if the rich mansion owner invites them to visit, or some corporate officer or office-park tenant grants them an appointment or gives them a job. But they may not “just pass through.”

In this model, “private roads” means only that private persons or companies would own, work, plow, keep up, and guard the roads. This model treats roads all members of the public, who have the privilege of driving, could travel. Note carefully: the privilege of driving. Any Division of Motor Vehicles will tell you every year when you renew your driver’s license: driving is a privilege, not a right.

Murray N. Rothbard first treated the subject of universal private roads

Murray N. Rothbard. Photo courtesy Ludwig von Mises Institute, CC BY 3,0 Unported License

Murray N. Rothbard, in For a New Liberty, devoted a full chapter to this kind of private roads. (Note: the Ludwig von Mises Institute took down their web entry for this work, including the link to the PDF version of the work. But the Wayback Machine took a snapshot before they did this. Use this link while it lasts!)

Dr. Rothbard spent most of his chapter dispelling many of the myths people cite when they say, “Only the government can or should own, work, plow, keep up, and guard roads for public use.” Naturally CNAV will rely heavily on this work, while also filling out details Dr. Rothbard might not have foreseen. Why didn’t he? Because even he could not have foreseen the spontaneous, and exquisitely adaptable, network of instant inter-communication we call the Internet.

No one agency should own all the roads!

Roads make a network, similar to the Internet. In any typical community, the city, town or village owns and works all the roads inside it. The county owns and works roads that connect cities and towns and so on. The State owns and works other roads, called highways, that normally connect communities over long distances. (The federal government does not own or work something called the Interstate Highway System. At least, not yet. The Interstate label applies to that network of superhighways President Dwight D. Eisenhower commissioned to move troops across the country. The federal government granted money to the States to build these, and grants money to the States to keep them up to this day.)

When one agency owns all the streets and roads, who decides who gets plowed, and how soon, and how often?  Who decides where to fill the potholes? The Big Names With Pull decide that. They make the noise, and the squeaky wheel gets the grease. Residents in New York City found out the hard way in the winter of 2010. Some of them couldn’t even get to the main streets. The city failed to plow the streets where they lived. They could not squawk loud enough until after the blizzard had long passed. If the neighbors themselves owned that street, they would never have had this problem. They would have chipped in maybe ten bucks each and bought their own plow, or turned out with shovels and pick-axes if they had to.

So the private roads system would bring one key reform: ownership, control, upkeep, security, and so on, would stay in hands as local as possible. The ones in control would have the most to gain from good service. Because the quality of roads would affect them directly. At the same time, the private roads would form a network. So the players in it would take steps to make it run well.

So who, ideally, should own which classes of private roads? CNAV proposes three classes of road, each with a different way to work it, keep it up, guard it, and pay for it.

Residential streets and roads

If you own or rent a house, townhouse, apartment, or condominium, you want a street you can use to drive to and from other roads to carry you somewhere else. Obviously any landlord (or condo declarant) has a good incentive to build good roads connecting his buildings together and to the larger network. But how does this apply to a road when several houses front on it, several apartment complexes open onto it, and no two houses or complexes have the same owner?

Obviously, after a condominium development outlives its declaration period, a homeowner’s association takes it over. This also applies to a new neighborhood, where one company laid out some streets, built several houses, and sold each to a different family. And if any given city or town or village passed a private roads ordinance effective today, tomorrow all residential streets and roads would have a homeowners’ association, or landlords’ association, or some such, to take them over.

Rothbard covered this model, but offered an alternative. Suppose instead, he suggested, the homeowners, landlords, and so on, would sell their ownership interest in the street, to a company that would own the street but not the houses or other buildings on the street. Such a company might try to “squeeze” the residents and landlords for exorbitant rents for use of the street. If that happened, a lot of owners would sell their homes at great losses or even “walk away” from them. But the company would have a problem, too: how could it collect rent from someone not living on the street? They might foreclose on the house. But now they own a house no one wants to buy. True enough: in that event, the homeowner loses money on his house. The homeowner took a calculated risk, and lost. That might seem tragic enough for people of good heart to seek to prevent. But life is proverbially never fair. And the street company would know it could ill afford holding a lot of worthless residential real estate. More likely the company, if its officers felt they couldn’t profit from the street, would hand ownership and control back to the residents, then dissolve.

And what would an HOA, or a street management company, do for the residents? It would take care of all the things people now rely on “the town” to give them: snowplowing, pothole filling, leaf pickup, storm drainage, and above all, community security. That security would come either from a neighborhood militia, or an outside security guard force, or whatever guard force the HOA or street company would hire, train, equip, fund, and run. And your first emergency call would go to that guard force, not to the city police department.

Thoroughfares

Thoroughfares, or roads carrying through traffic, have four kinds of stakeholder:

  1. A motorist passing through,
  2. A merchant who would like people to stop at his store,
  3. A factory owner having a workforce come in and who must move raw materials in and finished goods out, and
  4. A shipper, bus-service operator, taxicab company, or other firm moving people or goods on the ground.

Whoever runs the thoroughfare, can definitely expect stakeholders 2, 3, and 4 above to pay him to lay out a good road, keep it up, plow it in the wintertime, and guard it. But how does the motorist passing through pay to keep the road up?

Actually, this does not pose a big problem. That merchant, who needs customers, would gladly sponsor the through road for the same reason he advertises in the newspaper, on the radio, on television, and now on the Internet. The factory owner along the road relies on it to move things in and out. The shipper has a double incentive: he needs a road to get customers to come in and drop things off for shipment, and he needs a road for his trucks to travel to carry the goods. (And now the road owner, or the merchants’ cooperative, will soon have more competition: companies having licenses to deliver goods by the tiny multi-rotor helicopters called drones.)

So the motorist passing through would naturally “free-load” off the other stakeholders. But Stakeholder 2 won’t mind that in the least. He will make his store attractive enough so the motorist might stop, or even order something on-line. That merchant wants people to see him. So he wants the motorist to pass through, so that motorist can see him. On the other hand, the shipper, with all the goods he must move, has every reason to pay rent to the private roads manager to make sure he will have good roads to move goods from Point A to Point B.

Highways

Highways carry traffic between communities with vast open spaces between them. They also carry traffic that will not stop. In the private roads model, all highways would carry a toll. A long-haul shipper, or indeed anyone who uses a road regularly, might pay a monthly rate for a pass. The EZ-Pass Regional Consortium has the obvious model to enforce and collect tolls without making conditions on the highway worse just from the collecting. (And to tell who should pay what!)

One problem Rothbard noticed: today all motorists, at whatever level, pay the same toll no matter what time of day they travel the highway. So a passing motorist, or a long-haul shipper, has no incentive (other than “I hate this traffic!”) not to use the highway during rush hour. And for that reason, highways have a rush hour, worse than it must naturally be.

In the private roads world, whoever owns and runs the highway (either a dedicated highway company or a shipping/bus company cooperative) could charge different tolls at different times of day, depending on how heavy the traffic. In Rothbard’s day, one could predict “rush hour” and charge different tolls at different times of day. But today’s Internet, and especially the “Internet of Things,” offers a new way: charge a toll that varies minute-by-minute on how heavy the traffic becomes for any reason, at any time of day. Any motorist who has ever used a smartphone navigational aid (Verizon Corporation’s VZ-Navigator comes to mind) might have gotten this notice: “Traffic congestion reported at such-a-distance on such-a-highway.” The program then offers a link to a screen where the motorist (hopefully pulling over or otherwise keeping his hands free) can decide whether to let the program steer him around the jam. In a modern private roads system, such an aid could plot the most economical route to travel, considering instantly the traffic on the highway and along any detour. Any motorist having this aid could steer clear of jams. And if all motorists, truck drivers, and so on had this system, traffic might never jam. (Unless someone or something caused an accident. But at least the motoring public could steer clear, and the jam would not get any worse.)

Any highway would, of course, have its own dedicated patrol force. they would do the same things State highway-patrol forces do today.

The subsidy problem

Any network system will have its freeloaders, those whose activities might get a subsidy from other, paying users. The modern road system has this subsidy problem. Even Dr. Rothbard felt the government had built too many roads. (Not to mention that governments classically use eminent domain to get their rights-of-way for road building.) Today, no motorist pays directly for using a road unless the road carries a direct toll. But motorists still pay for roads when they buy motor fuel. (And in Oregon, they will likely start paying by the mile they drive, with Global Positioning transponders to keep track of what they owe. Why? In Oregon, if not so much in other States, people adopted electric or hybrid cars in large numbers.)

The residential street does not have this problem. The owner of any house or apartment complex that fronts the street, has the direct incentive to keep it up, guard it, and plow it. A highway owner or operator has the obvious solution: charge tolls, including different tolls for different vehicles, at different times of day, and under different conditions.

Only the thoroughfare still has the subsidy or freeloader problem. And as mentioned: a merchant, running a store along the thoroughfare, wants people to see him. For this reason, some merchants buy or rent billboards or build ridiculously high signs so highway motorists can see them. (Which suggest another way to help fund the highway: charge merchants for the privilege of putting up a sign big enough and tall enough for a highway driver to see.) So consider the merchant paying his share to keep up the thoroughfare his store fronts. Any motorist who passes, might stop in his store to buy something, or at least remember him when they decide to buy the kind of goods he sells. So rent for private roads gives him an advertising benefit. But might the road carry too much traffic? That problem happens today. Private roads will not make that worse.

Driver’s licensure, vehicle equipment, etc.

In the government roads system, the State government decides who may or may not drive, and what kinds of vehicles one may or may not drive. The government has the absolute power to do this, for one reason only: the government owns the roads.

Now: who decides who may drive on private roads? Dr. Rothbard did not say. So today I will say.

Anyone who totally owns a road of any kind, has the right to decide who may or may not drive on it. This applies to traditional private roads, including mansion driveways and the “roads” in office parks. But must a motorist get a separate license to drive on every road, street or highway he might conceivably drive on? Not necessarily. Even today, the federal government does not (yet) license people to drive. State Divisions of Motor Vehicles do this.

But could any private agency grant a license to drive? The power of any license would lie in the number of people who would honor it. Similarly, the power of any testing agency, for electrical products or other consumer goods, lies in the willingness of others to trust its results.

Which brings us to consider the private non-profit testing agency, originally a cooperative of insurers, that has set the standard for safety testing for more than a century: Underwriters’ Laboratories. Who doesn’t recognize the “UL Seal”? Check their history. The government did not set up UL. Insurance underwriters did. Insurers accept risk. They make their money that way. So they set up this laboratory to test certain equipment they would take a risk on.

If all States abolished their Divisions of Motor Vehicles today, tomorrow either UL or some other such agency would take up the slack. UL (or whoever) could then accept you for vision, written, and road testing, and give you a certificate to say you passed their test. And what is a drivers’ license but just such a certificate of qualification? UL could even set up different exams for different regions. Road and street managers would inevitably come together to set uniform, or at least regional, rules. UL (or its analog) could even advise them on what rules would strike the best balance of safety with convenience. This would include speed and load limits, minimum speeds, “left-lane rules,” and the like.

UL (or its analog) might also take over the functions of the Insurance Institute for Highway Safety and the National Highway Traffic Safety Administration. Those two agencies write rules for how a motorist may, or may not, equip his vehicle. A private roads testing agency might eventually charge a premium for any vehicle lacking anti-lock brakes or even the collision-alarm and collision-avoidance systems you now can get on certain luxury models. And they would move far more swiftly than a government agency would, and work from one motive only: an objective measure of safety.

Note: regular inspection of motor vehicles has already stopped in some States. State legislatures have made a judgment that no sensible motorist would knowingly drive a car without making that car safe and keeping it safe. Those States now inspect only for tailpipe emissions. This covers a different debate: regulating a vehicle for air pollution, and what pollution costs others who use the road, and the neighbors of the road. The point: if States are already no longer inspecting for safety, maybe UL might start that again. That would improve automotive safety, not disimprove it.

To sum up

Private roads can work. They do not work by one person, or one agency, owning all the roads in one region. Three different kinds of road have three different ways to pay to keep them up, patrol them, and work them. And the private roads network would necessarily enforce its own standards for safe driving on all roads.

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Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.

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