Ludwig von Mises Institute

Private infrastructure

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This page lists examples of privately produced infrastructure.

Private roads[edit]

Main article: Private roads

There is an extensive record of private roads built in the United States, United Kingdom and other countries.

Without traffic lights[edit]

Throughout most of the 20th century, engineers and planners had assumed that efficient traffic flows and road safety could be achieved only by separating vehicles from civic spaces. The Dutch traffic engineer Hans Monderman demonstrated that vehicles could be integrated into the social fabric of communities by treating drivers as intelligent citizens. He recognised that increasing control and regulation by the state reduced individual and collective responsibility, and he initiated a fresh understanding of the relationship between streets, traffic and civility. This raised important questions about the role of the state and regulation, and its effect on social behaviour and collective responsibility. Not surprisingly, his work caused discomfort among governments, but the ideas gained credence among local communities, which benefited from fewer accidents and traffic delays as well as much greater quality of space.

Monderman went on to develop the ideas in more than 100 towns and villages, using landscape, lighting, public art and local materials to redefine the language of urban streets and spaces.[1] Various towns in the Netherlands, Germany, Belgium, Sweden, New Zealand and UK have joined in the experiment.

The architect of this experiment, the late Hans Monderman, attributed its success to the fact that "it is dangerous, which is exactly what we want." "Unsafe is safe" was the title of a conference held on this practice. Monderman added that this effort "shifts the emphasis away from the Government taking the risk, to the driver being responsible for his or her own risk." Equally significant, drivers now focus more of their attention on other motorists — taking visual cues from one another, informally negotiating for space, turning into an intersection, etc. — instead of mechanistically responding to signs and electronic machines. Monderman stated: "When you don't know exactly who has right of way, you tend to seek eye contact with other road users. You automatically reduce your speed, you have contact with other people and you take greater care." He added: "The many rules strip us of the most important thing: the ability to be considerate. We're losing our capacity for socially responsible behavior."[2]

Private railroads[edit]

In the US, railroad lobbyists descended on Washington with the advent of the Lincoln administration. The federally-funded Union Pacific and Central Pacific Railroads were given sections of land for each mile of track completed; $16,000 in low-interest loans for each mile of track on flat prarie land; $32,000 for hilly terrain; and $48,000 in the mountains. Since the subsidies were paid by the mile the companies built wastefully circuitous routes and collected more and more subsidies. They even built tracks on top of several feet of ice in the Rocky Mountains and then rebuilt them when the ice melted, pocketing even more subsidies. The cheapest construction materials were used and speed, not workmanship, was emphasized.

By the time the Union Pacific and Central Pacific railroads were completed in 1869, both companies were bankrupt. Bribery was so rampant during the Grant administrations that the vice president, Secretary of War, numerous Republican congressmen, Grant’s private secretary, his Treasury Secretary, and even the ambassador to England were all implicated in stock swindles or bribery related to the Credit Mobilier Company scandal.

The advocates of government subsidies for transcontinental railroads made the argument that such railroads would never be financed by private capital markets. But railroad entrepreneur James J. Hill proved them wrong by building the Great Northern Railroad, which was by far the most efficiently built and most profitable of all the transcontinentals. "Our own line in the North," Hill proudly boasted, "was built without any government aid, even the right of way, through hundreds of miles of public lands, being paid for in cash."

The Mormons also built four railroads in Utah without any government subsidies. New Hampshire and Vermont gave no aid whatsoever to railroads, yet a privately-funded line was built across the rugged terrain of the two states. Unlike many other states, New Hampshire even refused to grant the right of eminent domain to private railroad companies and, in so doing, encouraged them to pay free-market prices for any rights of way.[3]

Bridges and other infrastructure[edit]

The first private toll-bridge company in the US, the Charles-River Bridge, opened in 1786 was called "the greatest effect of private enterprise in the United States." Its investors were rewarded with a return of 10.5 percent annually for the first six years. Through 1798, about 59 bridge companies were chartered in the states under consideration, principally in New England. Many of them failed and some were unprofitable, but a considerable number, especially in the Boston area, had proven themselves lucrative by the end of the century. In contrast to the turnpikes, the bridges did not suffer from toll evasion and liberal exemptions, and when profits were low they commonly obtained toll increases.[4]

Borderline cases[edit]

Many enterprises were undertaken in the early United States to make improvements, and it is debatable whether they can be counted as business corporations. There were marine and agricultural societies, but then come corporations for land improvement, lumber cultivation, and inland navigation. For example, a "case near the line" is the River Machine Company, incorporated in 1790 to dredge the Providence River. "The merchants of Providence had agreed to raise $1,000 in forty ’equal shares’" for the project. The company was to collect tolls from certain vessels, but any surplus was to be used at the end of twenty years for other improvements. "Thus no dividends were contemplated."[4]

Privatization efforts[edit]

Main article: Privatization

Privately financed infrastructure has made another appearance in post–World War II Europe. Starting with 1955 legislation, France began to tap private investors to build and operate what eventually amounted to 3,400 miles of autoroutes between cities. The Soviet Union’s collapse led to extensive privatization in former Eastern bloc countries during the nineties. As of 2007, the U.S. Department of Transportation estimated that worldwide, more than 1,100 public-private deals have taken place in the transportation field alone over the last two decades. Total value: approximately $360 billion.[5]

References[edit]

  1. Ben Hamilton-Baillie. "Obituary: Hans Monderman", The Guardian, 2 February 2008. Referenced 2013-01-17.
  2. Butler Shaffer. "Anarchy in the Streets", LewRockwell.com, April 7, 2010. referenced 2013-01-17.
  3. Thomas J. DiLorenzo. "The Role of Private Transportation in America’s 19th-Century "Internal Improvements" Debate" (pdf), referenced 2013-01-17.
  4. 4.0 4.1 Daniel Klein. "The Voluntary Provision of Public Goods? The Turnpike Companies of Early America" (pdf), Department of Economics, University of California at Irvine, Reprint No. 18, Economic Inquiry, March 1990. Referenced 2012-12-08.
  5. Steven Malanga. "The New Privatization", City Journal, Summer 2007, referenced 2013-02-15.

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