Practical Anarchy Part 8 - Roads

The issue of roads always seems to arise as an objection to the stateless society. This makes perfect sense, as the roads are a form of public ownership we have all experienced on a daily basis. Public roads have been the norm in western civilization for over 200 years. For these reasons it may be difficult to imagine how such a service could be provided in the absence of a government.

The alternative to state roads is usually conceived to be toll roads. This is viewed as a disastrous solution, as who could stand having to pay a new meter every time they turned a corner onto a new road?

You must keep in mind, as before, that this is a market scenario. There are two sides to the negotiation table. If invasive tolling is a concern of the customer, how might the road designer design roads such that these concerns are alleviated? Those road owners who are best able to satisfy the needs of their customers will be the most successful. Those who charge high prices and provide bad service will go out of business.

Imagine you have invested your entire life savings into a new road company. You need additional funds, so you go to a bank to take out a loan. You must convince the bankers that your idea for your roads will sell, thus guaranteeing they will be paid back. If you propose a complicated road network, with tolls at every turn, inadequate maintenance, and so on, or you fall short of any number of concerns the bankers present, is it likely they will give you the money? Of course not. If you cannot satisfy the bank, and then satisfy your customers, your business will fail and your children will be hungry.

Thus you can see that road entrepreneurs have a strong incentive to create the most brilliant, user-friendly roads imaginable. If your objection to stateless roads is a fear they will be too difficult to use, then the last thing you should advocate is allowing one road company to achieve a monopoly on road design and construction, and then enforce that monopoly with violence. This is, of course, what we have today.

NEW ROADS

I feel we can all agree that the roads, or some method of transportation, are a necessity for any society to function. If a new mall is built, customers will require a means of reaching that mall, or the stores within the mall will most certainly go out of business. For this reason, if I were an entrepreneur looking for someone to fund my road construction, the first people I would talk to would be the businesses who most benefited from the creation of my road.

A similar situation can be applied to housing developments. It is unlikely any buyers will wish to purchase a new home if there are no roads nearby. Furthermore, if these roads are exceedingly expensive, or engrossed in crippling regulations, it is unlikely anyone will wish to purchase those houses. Thus home constructors will wish to communicate with road constructors who provide the best roads for the lowest prices, and will work in conjunction with these road constructors in building new communities. The price of building the road will ultimately be included in the price of the house, and maintenance fees may be worked out via contract with the road company or some other means. If you are concerned that the road company will jack up road maintenance fees after you have purchased the house, simply make certain a provision in the contract protects against this. Otherwise, you may insist while purchasing the house that you own the road yourself, or perhaps the community forms a partnership in owning the road. Maintenance of the road can then occur as need requires, and may be funded through community donations or common agreements signed upon entering the community. This is the "communitarian option."

THE STATIST PONY

Imagine a family living in a communist country. In this communist country, it has been determined that every girl who celebrates her sixteenth birthday will be given a pony by the state. If one were to suggest the communist country turn to the free market, the family might rightfully ask "How will all sixteen-year-old girls then be provided ponies?" The answer is they will not, unless they purchase the ponies themselves. However, one should ask if the ponies are truly necessary for all sixteen-year-old girls, or if the resources used to purchase the ponies might be better directed elsewhere.

Today's government roads are much like the ponies - extravagantly wasteful, badly planned, facilitating dangerous and inefficient behavior, and sometimes useless, like all "services" supplied by a violent monopoly. I have no idea what the anarchist road system will look like, but I can guarantee it will be very different from what we have today. Drivers will have to pay for the roads they use themselves. They will not be able to offload costs to taxpayers.

So what will customers purchase? Clearly safety will be a primary concern, a concern scarcely met by government roads. Where helpful, safe road designs should exist, we find distracting signs and increased ticketing. While government roads use jolting, wasteful, and dangerous traffic lights, anarchist roads would use fluid roundabouts, which have been proven worldwide to be safer and more efficient. Customers will purchase convenience - road maintenance in the dead of night, rather than during the agonizing slow pace of rush hour. Road owners may create separate passages for trucks, preventing the deadly suction of high-speed 18-wheelers on smaller automobiles, preventing countless accidents.

There are endless possibilities for how roads can be improved, but so long as one organization monopolizes the industry, they will never occur. Like all government programs roads exist to provide profit to special interests - construction companies, unions, police, bureaucrats, and so on - and not for the sake of the users. The tens of thousands of deaths and hundreds of thousands of injuries (in the United States alone) would be completely unacceptable body counts if roads were a private industry. Though great advances in road construction have occurred around the world, they simply do not make it through a statist system, any more than salmon steaks showed up in the bread lines of Stalin's Russia.

CITY ROADS

Whatever happens to the highway system, we can appreciate that the maintenance and provision of city roads are important, and challenging. If every road in the city is owned by a different organization or bound by a different contract, how shall the nightmare of endless tolling be averted?

If we look at our typical downtown scene, we find large groups of shops. Clearly every one of these shops is highly interested in maintaining the roads that lead to their businesses. Is it really so hard to imagine that these shops might each chip in to a modest fund to maintain the roads? Would it not be bad publicity for a local businessman to refuse to contribute to the very roads which provided him with business? Such communal decisions are always a possibility for solving the problem of roads. If you do not believe it is possible for communities to work together, then you certainly should not advocate a government, for whoever winds up running the government will serve only their own interests and ignore the concerns of the community.

If the communal options is not to your liking, there are many other possibilities. Perhaps GPS systems could track the motion of one's car, and road owners might submit bills based on meters traveled on their road. Perhaps a variety of road clubs may come into existence, where you pay a membership fee in exchange for access to all roads in a geographic region (like cell phone calling zones). Perhaps roads could be subsidized by advertising, ideally over radio so as to cause less visual distraction.

There are many non-violent solutions to the problem of paying for city roads, and all of them maintain market forces and prevent monopolies. Whatever solutions you may imagine, there is likely none worse than the "solution" of the state.

A PREDATORY ROAD MONOPOLY?

"Alright," you say, "I understand how competition is beneficial to the consumer, but realistically speaking you are not going to have multiple highways built next to one another competing for drivers. The investment in road construction is too great to risk if you cannot acquire a near monopoly over the customer base."

This is somewhat true, but we need to be accurate in what we mean by "competition."

Brad Pitt has a monopoly on Brad Pitt (that is, until he got married). However, Brad Pitt does not only compete with other actors - he competes with all other activities that people might participate in for entertainment. Brad Pitt competes with bowling, napping, sex, reading Howie's blogs - everything. Thus, although he has a monopoly on himself, he does not have a monopoly on YOU. This is the difference between the government and the free market. The government has a monopoly on you because it can initiate violence against you. The free market cannot, and you are free to spend your time and resources as you wish.

Let's take an example. One day, an evil capitalist road-building robber baron named Jacques decides he is going to dramatically increase the rates on his highway. He owns the only highway connecting points A and B in a straight line, thus he is confident he can raise his prices consequence-free.

Remember that Jacques is not making these decisions in a vacuum - there are other players involved. Any loans Jacques has taken out to build his highway will involve contracts with his bank. Any houses and stores connected to his highway will involve contracts with those individuals. Chances are, since this is such a likely objection, there will be terms in his contracts guaranteeing Jacques will not raise his prices more than, say, 2% a year. Examples of this sort of contract in today's world would be insurance rate limits and fixed-rate mortgages.

But let's assume there are no binding contracts on Jacques, and one day he announces he's going to raise his prices. Fine, what will happen? Well, people are not likely to move as a result of Jacques's actions, but what they are likely to do is go to their bosses and say "the price of roads to your business have risen dramatically. If you want me to continue working for you, I will need a raise." Bosses are notoriously cheap individuals, but they can't stay in business without their employees. Since they don't want to give raises, they will explore other options.

As a boss, instead of a raise, I might offer more flexibility in working hours. Perhaps, if possible, employees may work more often from home. Perhaps they can take more vacation days in exchange for occasionally working overtime. Perhaps Jacques charges higher prices during rush hour, so I make start and end times more flexible every day. If I were an entrepreneur aware of this problem, perhaps I'd start a website dedicated to forming carpools, or perhaps I'd start a busing company.

In this way we see that initially Jacques will increase his revenue, but eventually consumers will adapt to his prices. His increase in revenue will not be permanent, and if any new competition comes along (such as trains), he may alienate much of his customer base completely.

By increasing his prices, Jacques has also dramatically reduced the value of the communities which use Jacques's road as their means of transportation. Store revenues, housing values, and so on have likely dropped much more than Jacques has increased his profits. Such communities will tend to have community meetings, and shortly after Jacques's decision, will likely hold one to which Jacques will not be invited. Here they will discuss what to do about their losses, and will probably decide to ostracize Jacques for his selfish activities. Such ostracism will greatly inhibit Jacques's ability to move with ease through the local economic world, and he is likely to lose far more than he gained through his increased prices. Perhaps Jacques doesn't care about these business relationships, but it doesn't matter. His reputation, and thus his ability to do business, has been irretrievably harmed.

But let's say somehow all of this doesn't happen and Jacques succeeds in achieving tremendous profits from his increase in prices. Well, fine. The community of businesses are then highly motivated to plot a takeover of Jacques's road business. Whatever debts they incur in this takeover will be immediately recompensed through the return of their property values and the profits made by Jacques's road. The association can spend up to the amount of money they have lost in their takeover attempt and still be better off than if they had not attempted it. If they do not wish to perform a takeover, they can direct their resources towards attracting competition with Jacques, guaranteeing him great losses in revenue. The more predatory Jacques's business practices are, the more intensely his local community will react.

The instability, customer alienation, ostracism and endless competitive risks associated with increasing prices do not pay off well at all, and in fact threaten the viability of your business. In the example above we have simplified the situation by pretending Jacques could make all these decisions on his own. This is impossible in a free market. There would be multiple CEOs, many investors, lenders, and business partners participating in the decisions. Jacques would not have the right or the ability to make such a destructive decision without the support of the interested stakeholders, all of whom would view the sudden increase in prices as a suicidal business move.

AUTOMOBILE INSURANCE

Let us discuss the provision of automobile insurance and how it would affect the safety of roads.

In most western societies, automobile insurance is compulsory. By and large this principle would probably continue in a stateless society.

Personally, I would much prefer to use someone's road if I knew for certain that all other users carried insurance and were able to pay for the repairs of my vehicle should they cause an accident. Since I don't think I'm alone in this desire and this would be a demanded feature by many customers, it is likely most road owners would require insurance as a prerequisite to use their road. (How could this be enforced? Many possibilities. Perhaps road companies will enter into agreements with gas companies or currency companies preventing provision of gas to individuals who do not carry vehicle insurance).

Naturally the fewer car accidents there are, the more insurance companies profit. The desires of the road owners, the drivers, and the insurance companies are all in parallel. If a road company builds unsafe roads, insurance companies will discourage drivers from driving on those roads by charging higher rates for those who do. This will cut the profits of those who own unsafe roads dramatically. Thus providing safe roads will be the best way to guarantee highest profits.

Today insurance companies have no say in government road policies, thus car insurance companies can only compete in terms of price. They cannot participate in the proactive provision of road safety. However, when competition between roads heats up following privatization, insurance companies will compete for relationships with safe road companies in order to keep their prices as low as possible.

When the costs of driving are borne by the drivers, the possibilities are breathtaking. Without the ability to externalize road costs to taxpayers, drivers can make more informed, rational decisions about the benefits of driving. Where to live, how far to commute, whether to drive in rush hour, whether to take public transit, whether to carpool, whether to work from home - all of these decisions are fundamentally determined by cost, and in a statist society, the cost is extremely difficult to determine. The resulting detriments to resource consumption, damage to the environment, stress of employees, and health of millions of commuters are staggering.

A FINAL NOTE

If I were to suggest to you that all roads should be enclosed, air-conditioned, multi-leveled and connected by escalators, landscaped with flowers and fountains, patrolled by security guards, and surrounded by shops, surely you would say this was an outlandish standard to ask of the free market.

And yet we have shopping malls.

Never underestimate what the free market can provide.

Thanks for reading!