How McCain or Obama Can Permanently Eliminate the Gas Tax, Cut Pork and Help the Environment

I certainly see the logic of keeping roadway decisions at a more local level, but I’m having a harder time following you all the way to getting rid of federal funding entirely. Elements like Interstates and large-scale mass transit like AMTRAK could be tough to negotiate between locales. Although I suppose private industry could step in to fill the need, I’m not sure how we would avoid monopoly-like conditions.

Whatever my quibbles, you’re certainly moving in the right direction in my mind. Pork would be reduced significantly. The “I’m gonna lower gas prices” proposals do have that ring of government paternalism, don’t they?

If the massive subsidies that roads received were done away with, then passenger rail would be economically competitive, and wouldn’t need to receive subsidies. There would be massive uprooting in the short-term, when suburbanites (who I believe account for over half of Americans nowadays) realize that their homes are worthless without cheap transportation. That’s why I’m skeptical that America will be the first place where free market transportation and land use is actually practiced. These things need to be proven first, and given America’s history with publicly-funded roads, I think Americans are far too conservative to take this radical step without concrete proof that it will lead to better living.

I’d bet that city-states (or maybe anarchic Somalia??) will be the first to experiment with a truly free market system of land use/transportation, and only when the success is realized will it be transplanted to the US.

Daniel,

I think the states could deal with negotiating travel between each other’s borders. They do it now on the state highways.

I don’t think private highway monopolies would be as bad as the current public monopoly on nearly all transport.

Stephen,
You are exactly right. In fact, many developing nations are using private investments to build infrastructure. It is a huge growth market for institutional investment. The US will probably wont learn the lesson until they see the successes of the third world. Over the next decades as the world develops, private infrastructure will be one of the largest industries on the planet. So, the private infrastructure lobby will inevitably be powerful enough to push the US in that direction.

Some thoughts:

1. Why is state control better than federal control? Don’t they both basically face the same perverse incentives that lead to waste, inefficiency, monopoly, malignant growth, and commanding the populace by force? Are the tyrants who run, say, local school boards really any closer to free markets than federal bureaucrats?

2. Free markets in roads seem quite efficient, but free markets in *transportation* would require the elimination government control of, and subsidies to, all public transportation too. In the end, this might make public transportation cheaper (because of less waste) or more expensive (because taxpayers would no longer be forced to pay for it).

3. I believe that you have the “Obama” and “environmentalist” causality reversed. You imply that they support socialism as a means to further their environmental goals. I claim the opposite: They support environmentalism to further their socialist goals. As one small example, recall the “no nukes” hysteria, where environmentalists and pacifists would protest the presence of nuclear energy and weapons by the USA — claiming that they wanted a safe world. Fine. But now, where are they today, with Iran developing nuclear weapons? Silent. It’s not the nukes they hate, it’s the USA-individualist-capitalist they hate.

4. Why the term “gas guzzling”? Why is it worse to “guzzle” gas than it is for people to “guzzle” cotton for clothing, or to “guzzle” water, apples, wool caps, books, etc.? Isn’t that a judgment that is best reserved for individuals to make for themselves?

Regarding (1): complete privatization would be the ideal. However, I am making a specific policy recommendation that could be put forth by a Presidential candidate. It would be a real battle for the federal government to mandate to the states that they cannot be in the transportation business. Nonetheless, there are distinct advantages vs the current model. One is pork. The second is bringing the costs and decisions closer to the user. Another is that some states’ bureaucracies will not be able to handle it and would be privatized or privatization would be used by the states to raise money.
(2) Transit may become more expensive, but preferable to many people who will now have to pay for the roads they use. The long-term result would be a shift in location preference.
(3) OK. That’s a big topic – one could create an entire blog on that subject.
(4) I don’t care if individuals guzzle their gas or sip it, as long as they are not subsidized to do it. But, I used those terms as vernacular a typical leftist would relate to.

2. Look at an MTA annual report. Their budget is about $16,000,000,000, they serve about 4,000,000 people, and therefore the average annual cost per customer is maybe $4000 per year. Could a private operator do it for less? Absolutely. But the unknown is: Would people be willing to pay $3000 per year, with no subsidies, for public transportation? I don’t have the answer, especially since we don’t know what the alternatives would cost.

4. Fair enough. No more gas subsidies. (Are there any, BTW?) And no more public employee subsidies. No unions, no civil service, no job guarantees. Let private companies operate the highways and the trains. Let them buy land for tracks and roads. Let them borrow the capital for subway cars and highway bridges. Let them get filthy bloody rich if they do well, and let them go bankrupt if they fail. When can we start…?

2. The average comuter probably spends 1000 per year, so no matter what, fares would probably go up. However, a private subway company could better capture many externalities such as vendors in the station and on platforms, advertising, selling off land and air rights over rail yards. However, the private subway company wouldn’t likely pay more for the subway than a few billion in its current state because of the costs you mentioned and that it is competing with a socialized road system. So, I think the playing field would have to be leveled before it would be politically viable to privatize the subway. Otherwise, the public would see it as a give away.

4. I’d like to see a comprehensive, unbiased analysis of the direct and indirect subsidies of gas use. At a minimum, it’s not the gas itself that’s subsidized, but the use of cars fueled by gas that is subsidized.

It wouldn’t be the first time that a private company is able to successfully compete against a subsidized government bureaucracy:

– UPS/FedEx vs. the USPS
– Private schools vs. public schools, especially religious schools, and higher education
– Private housing vs. public housing
– Private gardens vs. public parks

But more to the point, I think that one thing that we’re both overlooking is that private businesses have a huge incentive to innovate and to be inventive. That is, without stifling bureaucracies, a yet-uninvented way of moving people might emerge that goes beyond highways vs. subways. For that matter, you could say that this has already happened with telecommuting and Internet commerce, which have made many trips obsolete.

One could debate whether mass transportation or highways get more subsidies. But it seems indisputable that transportation itself, regardless of mode, is subsidized. In whose interest is it to have people travel more (by *any* means) than they would if they had to pay the actual cost? (I think that was a rhetorical question…)

Yes Bill. Great point! The public sector lacks innovation and motivation to maintain. I almost took that as a given.

For example, I spent five years designing infrastructure for the public sector. There is a complete lack of innovation. I was forced to use antiquated design standards and only use technologies that were compatible with the public agency’s severely lagging approved systems. And then, my designs were reviewed by several bureaucracies. Each bureaucracy would have me make changes to designs simply because their engineers weren’t bright enough to understand the modern techniques I used to design and modern methods I recommended. Had my clients been private companies, I can only imagine how much more innovative and cost-effective the designs would have been. I couldn’t stay in an industry that rejected innovation.

I assume the same goes for the other bureaucracies you mention. The post office, schools, parks, etc. have no incentive to innovate since resources are better allocated to finding ways to get more money from their funding source to make improvements.

So, I predict that in the years to come we will look at the developing world for transportation innovation. The private infrastructure business will usher in new ideas that have been suppressed by the developed world’s socialized infrastructure planning.

I like the concept, let’s take it a bit further and have the federal government get out of the governing business too. Have the federal government deed over all of its property to the states where the property is located and allow those states to deal with costs however they want. We could even keep military bases in a few states rather than in each and pay fees to those states for holding our military. Each state could run itself however it chooses, though we’d maintain a bare minimum of federal institutions (congress, judicial) to enable all 50 states to interact with each other and if need be act as one, a united states of america if you will.

If we completely privatized roads, what would happen to bicyclists when the oil corporations buy up all the roads and ban un-motorized vehicles? The problem is not public vs. private, the problem is big vs. small. Small, local units (decentralized power) are way more efficient than big, unwieldy behemoths looking to centralize power in their own hands.

Down with big government and big business, up with us.

Adam, I’ll take your plan any day. Thanks for the comment.

That would be interesting if the oil companies owned the roads. I guess it would be in their best interest to keep costs of gas low. OR keep roads cheap. They are complementary products. I doubt they would view bicycles as much of a threat.

Small units are not universally better. For many industries, efficiency can be gained through larger scale.

However, roads are potentially a huge industry that would not easily be consolidated. For example, the PA Turnpike was just leased for 12.8B. That’s already an extremely large scale investment of capital that is not easy to put together.

In a free market, firms would naturally tend towards optimal size. Businesses that are too small, may be consolidated with other firms to a more efficient scale, while companies that become too large will either have to downsize to compete, or fail.

My long-term concern, based on your point is that these huge road companies would become very powerful lobbyists…

If oil companies did own the roads they would act as a corporation naturally does, which means they’d attempt to squeeze as much profit out of these roads as possible. I’d imagine they would quickly ban non-motorized traffic or attempt to force us to pay tolls (it’s in their best interests to minimize non-motorized traffic in order to maximize their customer base). No way they would just let bicyclists, pedestrians, roller-bladers, skateboarders and others use their valuable assets for free.

You’re right that larger scales allow for greater efficiency, however processes on a larger scale also create a wider window for corruption to seep through. As the process becomes more efficient, there are more opportunities for someone to throw a wrench in the line and ask for some grease to fix it. I’ve seen tons and tons of instances of it here in Massachusetts from the Big Dig with its countless issues to the Mass Pike, which was supposed to shut down years ago, to the MBTA which has the highest paid public official and one of the worst track records.

In essence, that is the problem with large scale processes, they require large amounts of capital and the most likely way that large amounts of capital accumulates in one place is through some corrupt mean. The essence of economics is that one party takes advantage of an inefficient transaction or an ignorant party and as a result profits. If the world was fair, we wouldn’t have markets nor money and everyone would simply trade with one another for what they need.

A free market is a great solution for we are far away from having a free market. However, the big issue with a free market is everything has to be reset; otherwise, the rich will attempt to bypass the free market in order to maintain their current wealth. The free market was restricted to protect the public from rich tyrants but now restrictions are constantly put in place to protect the rich tyrants from the public!

Right now, if we set up a free market for roads your long-term concern would become very, very valid. The rich (whether real people or fake people, e.g. corporations) would seize up the roads and would immediately go about hiring lobbyists, lawyers, contractors, security, analysts and anyone else who could help them keep their roads and sell them to us as they wish.

The transaction costs involved banning bicycles is probably higher that the lost profit.

But, I should add that the oil companies would most likely not get in the road business. They are good at finding oil, refining it, and supplying it to society. They are not good at planning, building, and maintaining infrastructure. Oil companies are not investing in the current privatizations, such as the PA turnpike. They even pool from different types of investors, although certain oil companies may decide to form strategic alliances with certain infrastructure companies.

When a private firm becomes too corrupt to sustain itself, it will fail, and more appropriately sized firms will take it’s market share. The big dig is the perfect example of the public overseeing a project that would be better done by a private entity. Of course, there were many private consultants and contractors, but the overall incentive to save money can be overridden by personal ambitions, or political clout of the public agency. But, when a public agency is corrupt, it doesn’t fail, it just drains more money from taxpayers.

The essence of economics is that one party takes advantage of an inefficient transaction or an ignorant party and as a result profits. If the world was fair, we wouldn’t have markets nor money and everyone would simply trade with one another for what they need.

I don’t think the essence of economics is one party getting over on another. (although it does happen) In a typical transaction, both parties look at the transaction in relation to other opportunities to spend/invest money or provide goods and services. If everyone traded for what they needed, that would be considered a market, by definition. Money is just a representation of value, that can be traded like goods.

keep their roads and sell them to us as they wish. That is the desired objective, but without the lobbyists. But, even with the lobbyists, its better than the current situation. It is better to have the roads owned, operated, maintained, and sold by the private companies than the current socialized system. Currently, the costs are spread throughout society, while the benefits are enjoyed by the users. This has lead to the “tragedy of the commons” and overuse of roads, automobiles, and thus gas.