“A traffic jam is a collision between free enterprise and socialism. Free enterprise produces automobiles faster than socialism can build roads and road capacity.” – Andrew Galambos
President Obama’s massive $4 trillion budget continues the cycle of big government and big spending. Part of that spending includes $478 billion in upgrades to infrastructure such as roads and bridges, which will be financed by a tax on overseas corporate earnings.
Our infrastructure certainly needs these improvements, but the government’s lackluster history is filled with cost overruns, delays, and political games. Although they claim a monopoly on building roads, that doesn’t necessarily mean they’re good at it.
Of course, this begs everyone’s favorite question: who will build the roads?
The federal government began providing aid to state infrastructure in 1916. Forty years later, the interstate highway project solidified the government monopoly on roads. Spending and intervention have since increased enormously. The Federal Highway Administration spent $52 billion in fiscal 2010. With a looming debt crisis, cuts from the federal budget would be a welcomed savings for taxpayers.
Government spending on roads and public works could be justifiable if not for the outcomes. Highway cost overruns are the result of the government’s self-regulation, such as the Davis Bacon Act. Cumbersome regulations are largely responsible for cost overruns on 77 percent of highway projects. Infrastructure projects average a 50 percent cost increase, but can skyrocket to 200 percent.
A 2013 report from the Government Accountability Office stated that 1 in 4 bridges are classified as deficient. Furthermore, there has been “limited improvement in the past decade” and “financial challenges still remain”. However, it isn’t from a lack of budget, but rather a poor allocation of funds. In the past 10 years, outlays from the Federal Highway Trust Fund have exceeded revenues by more than $50 billion.
Since 1982, more and more revenue from the Highway Trust Fund has been spent on urban transit subsidies. In fact, only about 59 percent of the funds are spent on roadway infrastructure. Congress even uses federal highway funds for truck parking facilities, anti-racial profiling programs, and dozens more non-road activities.
Bureaucratic mismanagement has led to cost overruns and the pursuit of non-value special interests. That said, can roads feasibly be privatized?
Since 1990, about $900 billion of state-owned assets, much of which are infrastructure, have been sold to private enterprise in OECD countries. According to the OECD, “public provision of infrastructure has failed to deliver efficient investment with misallocation due to political considerations”.
Privatizing roads would require a usage charge and building tolls everywhere is not a cost effective solution. However, with modern technology, most new cars are manufactured with a GPS tracking device. This technology presents a medium to determine a customer’s monthly road usage. Aside from that, a license plate tracking program is a new DEA favorite. Instead of using it to undermine civil liberties, it could instead be a value add service that would benefit tax payers and drivers alike.
There already exists private highway systems in the U.S. The Dulles Greenway in Northern Virginia has been competing with nearby “free” highways for 15 years. Despite costing $350 million to build, Greenway remains a profitable venture and well maintained travel route. There are a litany of other private highways, but Dulles Greenway is considered one of the largest.
Historically speaking, roads were a role assumed by states and private enterprise. By 1800, 69 turnpike companies were chartered across nine states with state subsidies in only three. Before the 20th century brought on a government monopoly, there were 2,500 companies operating more than 30,000 miles of roads. Many of these companies operated locally and worked together to construct longer highway roads that spanned great distances. Despite the lack of GPS technology, private ventures continued to be profitable until the government declared a monopoly.
As the federal government has become increasingly involved, so too have the costs increased. If government is going to fund roads, it should happen at the state and local level. Federal spending is inefficient and misallocated to political ends. The top down bureaucracy of the Federal Highway Administration has only continued to expand as it becomes less and less successful.
Businesses have an obvious incentive for employees and customers to have access to their facilities. Innovation would spur new developments that could potentially alleviate congested areas. Private enterprise has given us the smart phone and 3D printing. There is no reason they could not figure out how to build roads, especially if it meant saving billions in taxes.
