Tuesday, April 17, 2012

Privatizing Transportation Infrastructure

Ed Koch Queensborough Bridge, NYC, with
doubledecker traffic lanes

Matt Yglesias has had interesting posts on the Moneybox Blog about the problems of privatizing transportation infrastructure.   He reminds us that in the early days of the republic, before governments had much power to levy taxes to build infrastructure, private companies were given charters to build tollroads to move people and goods efficiently:
 Now the problem here, as I said in my previous post, is that while America would do well to engage in more tolling of congested roads it's very socially inefficient to be tolling on non-congested roads.
I note that this is a substantial regression in policy design. It was standard 18th Century practice for governments to provide public services through limited monopoly grants. Corporations required special legislative charters and were usually banks or turnpike operating companies. For a government with constrained ability to collect taxes or keep records, these monopoly grants are probably a good idea since inefficient infrastructure provision is better than no infrastructure at all. But the 21st Century United States is only constrained in its revenue collection ability by dysfunctional politics that prefers a roundabout method of making Virginia's citizens pay for a bridge to the more efficient alternative of direct public financing.
I just returned from a trip to South Carolina.  My one-way trip through Illinois from South Beloit to Gary, Indiana was about 120 miles, and cost me  $12.40, or $.10 per mile.  Had I been driving the hybrid instead of the mini-van hauling high-schoolers and backpacks down to the AT in North Carolina, the tolls would have been more expensive than the gas.  Imagine what would happen if Wisconsin charged all those Minnesotans and Illini traveling from Chicago to the Twin Cities $.10 per mile or $29.00, just to pass through our state?  Would anyone really shift over to U.S. 12?  The reduction of congestion benefits from charging a toll aren't present, but the revenue benefits for the state treasury derived from out-of-staters certainly are.   Should I care that I have to pay $44.00 to get to Minneapolis and back five times a year if I could be assured the tolls were reducing my state taxes by an even greater amount by having non-residents paying the same toll fees?   Obviously, the tourism industry in the Dells and up north would howl in protest over such an idea.

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