Thursday, June 29, 2017

HEROIC: A Nobel Prize Winner Calls for Privatization of the Interstates

Vernon L. Smith,  the 2002 Nobel Laureate in Economics, writes in The Wall Street Journal:
President Trump, please consider a major expansion in your thinking. You’ve promised to rebuild America’s crumbling roads, bridges and airports, and you’ve proposed to privatize air-traffic control. Now privatize the interstate highway system, including all those bridges in need of repair and major upgrading....

 [T]he richly interconnected highway network really could be auctioned. Between major highway intersections there are alternative routes that could be auctioned to different bidders, assuring drivers of a choice of toll roads, along with state and local freeway alternatives. That competition would keep tolls affordable.

Perhaps most important, surface transportation rights of way would be opened to new mass-transit innovations at a time when driverless vehicles are making their entrance. A few autobahns might also compete more effectively with short- to medium-haul airline routes, but you will need to resist airline opposition.

You should also consider auctioning off the Bureau of Land Management’s extensive grazing lands. Better incentives through ownership, or long-term leases, mean better stewardship and innovation. But neighboring farmers and ranchers won’t like the impact on their land prices.
Smith does go down hill from there and calls on the government to control the proceeds of privatization instead of refunding taxpayers:
How could you use the money from highway and land sales to benefit all Americans—and improve your own popularity? By creating a new Permanent Citizens Fund, invested in stocks, bonds and real estate world-wide. Every citizen would hold an equal share, with annual dividends paid in cash.
But at least he gets it right that the private sector would be much better at managing the interstates.

BTW, economist Dr. Walter Block, who also deserves a Nobel Prize, has been calling for the privatization of roads and highways for a very long time. He even wrote a book about it, Privatization Of Roads And Highways: Human And Economic Factors.



  1. Hmm that really makes a tax payer who gets told your taxes go to maintaining roads and infrastructure wonder at the double down tax that tolls wold represent to drivers.

    I cant wait for the crash and burn for many in the world of business when the realization hits that you cant squeeze the John Q Public stone for anything more.

  2. But the reality of privatization is a contract that sells off taxpayer funded infrastructure to insiders for pennies on the dollar with monopolistic rules built into the contracts.

    The government socializes the costs and privatizes the profits in everything it touches.

  3. @Shegottawideload: would eliminating gas taxes help?