Big Lies: What If We Privatize Everything?

Sep 20 2011 Published by under Uncategorized

Big Lies: Free Market Economics

You hear a lot of noise these days from self-styled “libertarians” and right-wingers about how great the “free market” is.

Ron Paul fans, in particular, just love to throw around phrases like “Austrian School” as though they are actually economists who understand the intricate arguments involved in various economic theories and on what bases one might accept or reject those theories.

Some have even suggested that all functions of government should be privatized.  Let corporations build roads for profit, rather than collecting taxes and having the government handle it.

So let’s take that example, and compare it to a similar infrastructure network that is currently privatized:  broadband internet.

The US currently lags behind much of the rest of the modern world in internet accessibility.  Most rural areas still have no broadband access, and it seems unlikely that they’ll get it any time soon.

Why is this?

Simply put:  there’s no profit in it.  It costs more to lay the lines or construct the necessary cell/wireless infrastructure to enable access than a private corporation could ever hope to recover by charging access fees.  If their fees allowed for rural broadband to be self-sustaining, they would necessarily be so high that nobody could afford them.

After all, building a cell tower or laying a few hundred miles of fiber optic line is not cheap.

Now imagine for a moment that the roads were all owned by private corporations.

You’d have to pay those corporations to use them, of course…and since there would be multiple corporations involved you’d have to have some arrangement whereby your access fees were paid to the rightful owners of the road.

So every time you moved from a road owned by Smith to a road owned by Jones, you’d have to pay some kind of access fee.  It’s not hard to imagine this scenario quickly developing into a situation where you’d have a toll both at every intersection.

There would also be no guarantee that the roads would be built to any sort of standard.  After all, there’s no government oversight…so who is going to determine standards for lane width, speed limits, signage?  Who is going to insist that potholes be patched or new routes constructed?

Nobody, unless they can make a profit.

Roads Are Networks

So imagine you live in some rural area, your home is two miles from the nearest neighbor.  Suddenly, there’s no longer a road to your home…because there’s no way to make it profitable to build that road.  You’re the only one who will use it.  People aren’t going to come and see you, because the tolls necessary on such a road would be so high just to keep the road functional that nobody – including you – could afford it.  Say goodbye to that family farm, that hunting cabin, that nice cozy little cottage in the middle of nowhere – you can’t afford to drive there anymore.

The Interstate Highway System is one of the most over-budget projects undertaken by the US federal government, and is a favorite target of “small government”/”let private industry take care of it” demagogues…but imagine where we’d be without it.  It wouldn’t take much…just drive down US1 from Washington, DC to Key West, FL some time and see how much longer that takes than taking I-95.

Now imagine how much longer it would take if there was no single route for that trip at all, but only a series of options that involve constantly jumping from one company’s street to the next, stopping to pay a toll every time.

It would be a mess.

OMG SOCIALISM!

So instead of that mess, we have a federal government, to which we all contribute a portion of our income (those of us that can afford it anyway), and then we collectively enjoy the benefits of how that income is used.  It’s not just cheaper travel for us, it’s also cheaper prices at the grocery store – because shipping costs less.

It’s cheaper vehicle maintenance because we have some hope that the roads will actually be maintained, since there is no CEO with a half-dozen vacation homes each with its own pair of nubile mistresses to maintain draining the profits away from the company to finance his lifestyle.

It’s saving lives because emergency vehicles use those nice, broad, open highways to get from place to place.

So next time you hear someone suggesting that “private industry should handle it,” ask them how they’d like to pay for-profit prices to drive to work every day.  Make them show you the math that explains how a private corporation would be able to make a profit on those roads at a lower cost than the taxes we currently pay to maintain them, when the whole basis of complaints about the road systems is that they cost so much to maintain and there’s not enough revenue to cover those costs.

One pixel of a huge image

This is just one example of how badly this “let private industry handle it” argument breaks down under even cursory examination.  What proponents of such arrangements invariably fail to understand is that this system has been tried, and it failed.

Then there are the really strange notions.  These are put forth by people who appear to have no understanding of basic realities of life.   To wit:

“Let’s make roads a market-based commodity and start paying the full market price for all of our driving resources.[1] ”

That’s just great, Mr. McPhereson…except for those people who can’t afford to pay full market price for driving to work every day.  What do we do with them?  Tell them to stay home and not work at all?  What if there’s an emergency?  What about ambulance service?  What about the differences in impact between bicycles, freight trucks, passenger cars, and other types of road-based transport?

The truly macabre aspect of this suggestion is that it’s given as an alternative to government regulations forcing vehicle manufacturers to build cleaner, more fuel-efficient cars.  To heck with that – that would be government, and that’s bad.  So instead let’s have people paying for-profit companies exorbitant access fees to use their roads…and if you can’t afford that, well I guess that’s just society’s way of telling you that you don’t deserve to travel, isn’t it?

One is forced to wonder how one could ensure equality of opportunity if one cannot even sure equality of access to even the most basic of mechanical needs in the modern world.

[1]Scott McPhereson. (n.d.). Private Roads and the Economics of the Environment. The Future Of Freedom Foundation. Retrieved September 19, 2011, from http://www.fff.org/comment/com0308c.asp

The “Big Lies:  Free Market Economics” series on the LowGenius Network:

John Henry is a political, social, and media analyst at LowGenius.Net

 

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