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Who Will Build the Roads? Soon, Not the US Government

By: Nick Zaiac - @NickZaiac - May 19, 2016, 12:08 pm
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Today, there are more miles of private, tolled interstate lanes being built than at any time in history. (Flickr)

A generation or two into the future, people will look back on the 21st century in amazement that nearly every piece of transportation infrastructure in the United States was once owned by the government.

The nation’s roads, airports, seaports and mass transit systems are almost all currently under the stewardship of a federal, state or local body. But as maintenance costs balloon and systems deteriorate, money to pay for the ongoing costs of infrastructure remain scarce.

Faced with the prospect of cutting costs elsewhere to pay for road repairs or upgrades to port facilities, cities and states are more and more deciding that the private sector has a role to play in transportation.

This also according to eminent infrastructure economist Robert Poole at the Reason Foundation. He has been writing on infrastructure privatization for decades, including a monthly newsletter that documents developments in the world of private infrastructure, as well as the growing trend against government monopoly in infrastructure.

Today, there are more miles of private, tolled interstate lanes being built than at any time in history. Meanwhile, the commercialization of the federally run air traffic control system could very well happen this year.

Abroad, private airports, air traffic control systems, seaports and highways are far more common. The U.S. is playing catch up, and catching up it is. New projects are popping up across the country, the latest being the Virginia suburbs of Washington, where the state approved miles of tolled highway lanes. Recently opened toll lanes elsewhere, including cities like Denver, have proven to be a success.

It all comes back to money. Without enough money to maintain the product that they monopolize, governments are seeking outside sources of capital. The status quo for most infrastructure is that the government pays for construction and maintenance, and anyone can use the resulting product. Heavy users are typically subsidized by those who use the goods less.

What this means is logistics companies, such as UPS, FedEx and the nation’s patchwork of trucking companies are subsidized by taxpayers as a whole, even while their heavy machines do far more damage to roads than passenger cars.

What’s worse, it gives the benefiting companies and their workers a reason to lobby for more free infrastructure. They work hard to defeat private infrastructure where they would otherwise be forced to pay for such infrastructure services.

Despite this, the trend against the government’s monopoly on infrastructure is real. State and local budgets really can’t keep up with demand for new roads, bridges, airports and tunnels.

Economic theory predicts monopolists will provide fewer goods at higher prices than the market would provide without the monopoly. To cut costs, we expect monopolists to sap the quality of their products to maximize the money for them to use at their discretion.

Service has deteriorated and money is spent on expensive unionized construction labor and lavish public pensions for workers rather than steel and concrete.

People see this, or at least some do. Many states are changing their laws to allow new infrastructure to be built with dollars that do not come from taxpayers on products that are not free to all.

When new private infrastructure is built, it typically wears after only a few years. If there’s any silver lining to the governments running out of money, its faltering infrastructure monopoly may well be it.

Nick Zaiac Nick Zaiac

Nick Zaiac is a public-policy researcher in Washington, DC. He also serves as a policy analyst at the Maryland Public Policy Institute. His column, The DC Leviathan focuses on the often-ignored bureaucratic agencies, from the Department of the Interior to the General Services Administration. He has been published in the Baltimore Sun, City AM, CapX, and other outlets. Follow @NickZaiac.