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Liberalizing cities | From the bottom up

“Market Urbanism” refers to the synthesis of classical liberal economics and ethics (market), with an appreciation of the urban way of life and its benefits to society (urbanism). We advocate for the emergence of bottom up solutions to urban issues, as opposed to ones imposed from the top down.

Block vs Poole: The Public-Private Partnership Debate

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The Orange County Register’s Freedom Politics website (check out my rent control article FreePo published in March) features articles discussing two differing takes on road privatization from notable scholars Walter Block and Robert Poole.

In Robert Poole’s article, he discusses the merits of the increasingly popular use of Public-Private Partnerships (PPP) to fund and operate roadways:

Four potential benefits are particularly important:

  1. Fewer Boondoggles: Elected officials often champion projects that yield political benefits but have costs greater than their benefits. But with PPP toll projects, nobody will invest unless the benefits exceed the costs to the extent that they can project a positive return on their investment. That’s a powerful safeguard against boondoggles.
  2. Avoiding “Big Dig” Disasters: Large-scale “mega-projects” like Boston’s notorious Big Dig are prone to large cost over-runs and schedule delays. In a well-structured PPP project, those risks can be transferred to the private sector, shielding taxpayers from those costs.
  3. Cost Minimization: Traditional highway projects are built by the lowest-bidder, which often means they are built cheaply and need lots of expensive maintenance over their lifetimes. But a PPP toll highway must be maintained for decades at the private company’s expense. Hence, it has every incentive to build it right to begin with, to minimize total life-cycle cost.
  4. Sustainable Congestion Relief: If you add ordinary freeway lanes, they tend to fill up and become congested. But today’s urban toll lanes use variable pricing (as on the 91 Express Lanes) to keep traffic flowing smoothly on a long-term basis.

In contrast, Walter Block takes a more principled stand for complete privatization:

Public – private partnerships (PPP) are thus part and parcel of both fascism and socialism; they constitute a partial state ownership of the means of production. As well, they are emblematic of fascism, and government is the senior partner, and its regulations still determine the actions of these public – private partnerships.

Block has dedicated a chapter in his new book, The Privatization of Roads and Highways: Human and Economic Factors to a critique of Public-Private Partnerships.  I haven’t read it yet, but hope to share some of the insights when I do.

This is a concept I have been debating in my head for a while.  Are public-private efforts towards privatization really a step in the right direction towards liberalizing the transportation system, or are they just a form of corporatism that enable governments to bail themselves out of their fiscal crises?  Should we hold out for Block’s ideal, yet unlikely, complete private overhaul, or hope for gradual, yet inevitably incomplete liberalization with PPPs as the first necessary step?

What are your thoughts?  Have any readers read Block’s critique of Public-Private Partnerships?  (a pdf version of the book is offered free from the Mises Institute)

  • Two things:

    1. I agree with Block on a philosophical level – just because the Holocaust was put out for competitive bidding don’t make it libertarian.
    2. It’s frustrating to hear even principled advocates of privatization like Block couch their arguments in terms of lessening traffic congestion and reducing driving deaths. The truth is, Block’s alternative vision of a libertarian transportation network just isn’t that much more appealing than the status quo, especially for the risk that it entails (what a radical step to save a few thousand lives!, ordinary people must think) – all he envisions is a little tweaking around the edges. In fact, what he’s describing looks a lot like those 1950’s movies where you see long ribbons of empty highway with the occasional car zipping by at an extremely high speed. It’s a shame he doesn’t realize how radically different (and I’d say more efficient) our land use and transportation patterns would be under his ideal regime (i.e., no regime).

  • Two things:

    1. I agree with Block on a philosophical level – just because the Holocaust was put out for competitive bidding don’t make it libertarian.
    2. It’s frustrating to hear even principled advocates of privatization like Block couch their arguments in terms of lessening traffic congestion and reducing driving deaths. The truth is, Block’s alternative vision of a libertarian transportation network just isn’t that much more appealing than the status quo, especially for the risk that it entails (what a radical step to save a few thousand lives!, ordinary people must think) – all he envisions is a little tweaking around the edges. In fact, what he’s describing looks a lot like those 1950’s movies where you see long ribbons of empty highway with the occasional car zipping by at an extremely high speed. It’s a shame he doesn’t realize how radically different (and I’d say more efficient) our land use and transportation patterns would be under his ideal regime (i.e., no regime).

  • Bill Nelson

    I attempted to read Block’s book. I carefully read the first couple of chapters, skimmed over the next few, skipped the rest, and threw the book in the garbage.

    It seems to be a collection of his thoughts over many years and is therefore quite stale. For example, he predicts that government could never operate advanced electronic toll collection equipment. (I really hope that was written before the introduction of EZ-Pass.)

    And his thoughts on private roads seem subordinate to his desire to win arguments with other people — and to show off his expertise. He displays far too much confidence in his opinions for my comfort. In fact, there’s a debate that I listened to recently (I forgot where I found it, sorry) between Block and Richard Epstein, where Epstein made Block’s theoretical arguments look pretty weak. For example, Block was stumped when confronted with the issue of where air rights over one’s property begin. And the issue of transaction costs required to assemble thousands of properties in order to build a somewhat direct highway. Epstein had no satisfying answers (to me, at least), but at least he acknowledged the problem.

    And Block seems obsessed with highway fatalities — and unless I missed it (maybe this was addressed in the pages I skipped), there is no mention of maximizing safety vs. optimizing safety.

    But my biggest criticism, Adam, is that, from what you have written, I doubt that there is much in this book that you don’t already know; e.g., Do you really need to read a long introduction to congestion pricing?

    The book would have been much better if Block was actually a highway enthusiast; a little more knowledge of, and interest in, highways would go a long way to making his book readable.

    I recently read Traffic by Tom Vanderbilt — which I couldn’t put down. It’s written in a tone of exploration, and not proselytizing — and I learned much from it also. If you choose to read one book about traffic and highways, I would choose that one.

  • Bill Nelson

    I attempted to read Block’s book. I carefully read the first couple of chapters, skimmed over the next few, skipped the rest, and threw the book in the garbage.

    It seems to be a collection of his thoughts over many years and is therefore quite stale. For example, he predicts that government could never operate advanced electronic toll collection equipment. (I really hope that was written before the introduction of EZ-Pass.)

    And his thoughts on private roads seem subordinate to his desire to win arguments with other people — and to show off his expertise. He displays far too much confidence in his opinions for my comfort. In fact, there’s a debate that I listened to recently (I forgot where I found it, sorry) between Block and Richard Epstein, where Epstein made Block’s theoretical arguments look pretty weak. For example, Block was stumped when confronted with the issue of where air rights over one’s property begin. And the issue of transaction costs required to assemble thousands of properties in order to build a somewhat direct highway. Epstein had no satisfying answers (to me, at least), but at least he acknowledged the problem.

    And Block seems obsessed with highway fatalities — and unless I missed it (maybe this was addressed in the pages I skipped), there is no mention of maximizing safety vs. optimizing safety.

    But my biggest criticism, Adam, is that, from what you have written, I doubt that there is much in this book that you don’t already know; e.g., Do you really need to read a long introduction to congestion pricing?

    The book would have been much better if Block was actually a highway enthusiast; a little more knowledge of, and interest in, highways would go a long way to making his book readable.

    I recently read Traffic by Tom Vanderbilt — which I couldn’t put down. It’s written in a tone of exploration, and not proselytizing — and I learned much from it also. If you choose to read one book about traffic and highways, I would choose that one.

  • In France what you call a public-private partnership has existed for a long time, it is called either a public market or a concession. (Concessions go as far back as Haussmann!)

    The crux of the issue is that the capital remains in state ownership, it is only administered by a private contractor of the government, so it cannot truly be considered private in any way. The contractor cannot set the rules of driving. However the highways in France are top notch, although the tolls are expensive.

    Concessions are not a debate over what the state should be doing, since they presume that it’s the state’s business to hand out concessions. They are only a matter of the division of labor, pointing out that the state can contract out higher quality work for cheaper than its own bureaucracy could do. This is what, I presume, Block means by saying that the state could not run an EZ-Pass system.

  • In France what you call a public-private partnership has existed for a long time, it is called either a public market or a concession. (Concessions go as far back as Haussmann!)

    The crux of the issue is that the capital remains in state ownership, it is only administered by a private contractor of the government, so it cannot truly be considered private in any way. The contractor cannot set the rules of driving. However the highways in France are top notch, although the tolls are expensive.

    Concessions are not a debate over what the state should be doing, since they presume that it’s the state’s business to hand out concessions. They are only a matter of the division of labor, pointing out that the state can contract out higher quality work for cheaper than its own bureaucracy could do. This is what, I presume, Block means by saying that the state could not run an EZ-Pass system.

  • Bill,

    I had a similar impression of what to expect from Block’s book. I guess I was hoping there were some unique insights into the topic.

    Like Stephen, I find Blocks argument centered around traffic deaths interesting, but he hangs too much on that not overwhelmingly convincing concept. I also find the utility / land pattern argument to be more convincing, but does Block even touch on that? Maybe its time for me to get serious about writing a book myself…

    I’d love to listen to the Block/Epstein debate, as I find Blocks views on homesteading problematic when it comes to air rights. He sure loves a good debate…

    Traffic has been on my audible audio book wish list for a while. It’s even in the Market Urbanism bookstore at amazon. I think it’s time I give it a listen. I hope it brings up some good conversations.

  • Bill,

    I had a similar impression of what to expect from Block’s book. I guess I was hoping there were some unique insights into the topic.

    Like Stephen, I find Blocks argument centered around traffic deaths interesting, but he hangs too much on that not overwhelmingly convincing concept. I also find the utility / land pattern argument to be more convincing, but does Block even touch on that? Maybe its time for me to get serious about writing a book myself…

    I’d love to listen to the Block/Epstein debate, as I find Blocks views on homesteading problematic when it comes to air rights. He sure loves a good debate…

    Traffic has been on my audible audio book wish list for a while. It’s even in the Market Urbanism bookstore at amazon. I think it’s time I give it a listen. I hope it brings up some good conversations.

  • Public-private partnerships don’t seem to me to deliver the goods that privatization would. PPPs still involve the exercise of monopoly power, and thus don’t allow for non-monpolistic competition and flexible responsiveness to market demand.

    I think Rationalitate is right that Block seems unwilling, at least, here to articulate the really radical consequences of a market-based solution.

  • Public-private partnerships don’t seem to me to deliver the goods that privatization would. PPPs still involve the exercise of monopoly power, and thus don’t allow for non-monpolistic competition and flexible responsiveness to market demand.

    I think Rationalitate is right that Block seems unwilling, at least, here to articulate the really radical consequences of a market-based solution.

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