RoR: Forum

Merlin, I take it you don't have a lot of experience hiring contractors or working with building inspectors? Certainly even the most unreliable contractor can come up with all manner of specs, plans, and work schedules, and claim they will do all the work to what they've committed to on paper and to a workmanlike manner and within a reasonable time and within the cost they propose.

Probably not as much as you, John, but you seem to have the situation reversed. On road contracts it is generally the buyer (federal, state, or county highway department or city street department) that writes the specs, not the bidding contractors. Then the buyer monitors the project during the work phase. It least in the larger projects (state and federal) I know there is a lot of work done by the buyer before the contract is put out for bids. That includes blueprints and estimates of material costs and man-hours. (My past work experience was all on state or federal projects.)

Post 81

Tuesday, September 30, 2008 - 9:02pm

Large contractors making good on their promises and building quality roads? Two words gentlemen.

Big Dig.

Huge cost overruns, shoddy workmanship, and even a fatality.

And all with government hacks overlooking the project. Go figure.

Nope, sorry, not convinced the government is the best entity to provide roads for us.

Post 82

Tuesday, September 30, 2008 - 11:06pm

Until the development of teleportation devices, unfettered access to the roads by public officials will be necessary for law enforcement. (If you are an anarchist, please exit now.) Since ownership implies the right to deny access at will, it might be problematic to treat all roads as if they were people's bedrooms. The question of the right of way is paramount. Rather than argue for private ownership of all roads, it might be better to speak of private manavement of the public right of way. Of course you can have a local housing development build and maintain its own raods, and private entities can develop toll roads. But private road owners will not have the right to deny access to all comers at will.

Post 83

Wednesday, October 1, 2008 - 1:04am

Ted, I wouldn't think that access for police would be any problem. If even a single person who has the right to use the road, say because their home is on it, grants the police permission to use the road, they have their access - just like I can invite anyone to come into my house, I can invite them to take the road to get there.

I imagine that the road owners are usually going to want the police to have access. If no homeowner is willing to grant the police permission and the road owner also denies the police the right to use the road, then they don't get to come on to private property without probable cause, hot pursuit, or a court order - but that's the way it should be, right?
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I don't see much purpose in discussing the privatization of roads when what we need to do is correct the monetary system, rein in an out of control congress, fix the broken party system, get government spending massively reduced, free the educational systems.... and a few other items that I'd give a higher priority.

Post 84

Wednesday, October 1, 2008 - 3:16am

Replying to John's "Big Dig" (-: , that's one case. One does not imply all or most or many. Are you suggesting that private roads would never result in cost overruns or a fiasco? Would you use this hotel (with 45 fatalities!) to depict construction under private ownership?

I have not claimed that government roads are best, only that government roads are not as dismal as portrayed by Mr. Stolyarov.

Steve wrote:

I don't see much purpose in discussing the privatization of roads when what we need to do is correct the monetary system, rein in an out of control congress, fix the broken party system, get government spending massively reduced, free the educational systems.... and a few other items that I'd give a higher priority.

I strongly agree and said so in post 34 -- "privatizing [ ] roads are not a high priority for me."

Post 85

Wednesday, October 1, 2008 - 9:17am

Per this site and based on survey responses of more than 400 truckers, the best and worst roads are:
WORST ROADS
1. Louisiana
2. Pennsylvania
3. California
4. Illinois
5. Michigan
BEST ROADS
1. Texas
2. Florida
3. Tennessee
4. Georgia
5. Virginia

Another trucker site says, "It�s no secret that Louisiana�s swampy terrain makes road building in some areas difficult."

Several variables have a role in road quality. Still, note that the best states are in the south, where the roads aren't subject to the freezing temperatures, snow, and salt that occur in northern states. Texas has a lot of road mileage between cities, which don't get a lot of traffic and would probably affect a trucker's rating.

(Edited by Merlin Jetton on 10/01, 11:34am)

Post 86

Wednesday, October 1, 2008 - 9:17am

Merlin:

Replying to John's "Big Dig" (-: , that's one case.

Well, how many cases would you like me to cite?

How about this one:

Bridge to Nowhere

Before Palin could scrap this project the contract was already signed. Forcing part of the project to start, with a road instead of a bridge that leads to nowhere. A road that now gets zero automobile traffic.

And I can also cite highway 11 in my state of CT. A highway that was supposed to connect Hartford to the I 95 corridor in Southeast CT that was never finished due to a lack of funds, but is still badly needed today. Instead you travel along highway 11, then at the last exist you're dumped onto secondary windy tree lined roads where it averages one fatality a year and a bridge that literally was only half finished and is hanging over a bunch of trees. It's disheartening really to think about it.

One does not imply all or most or many. Are you suggesting that private roads would never result in cost overruns or a fiasco?

No, but are you seriously suggesting there's not a more likely a case for overruns or fiasco when the government is involved? And ask yourself who bears the cost of such an overrun or fiasco. The private enterprise funding the project or the tax payer that is forced to pay for someone else's financial failure? Why not advocate the 700 billion dollar bailout while we're at it? My hotel has been ripped off before. I don't force my next door neighbor to pay for it. I'm saying when the government is involved, there is more likely the opportunity for cost overruns and fraud by contractors, because simply put the government is not spending their money, but rather someone else's. The incentive is not there to spend the money wisely.

Steve:

I don't see much purpose in discussing the privatization of roads when what we need to do is correct the monetary system, rein in an out of control congress, fix the broken party system, get government spending massively reduced, free the educational systems.... and a few other items that I'd give a higher priority.

Steve I would agree. Privatizing the roads is the last thing I'm concerned about but I'm only interested in discussing this for intellectual reasons.

Post 87

Wednesday, October 1, 2008 - 9:25am

Ted:

Until the development of teleportation devices, unfettered access to the roads by public officials will be necessary for law enforcement.

Ted I don't see any issue with that. The police can enter my hotel at any time as well as it is open to the public. I don't force them to leave nor am I able to. And with a warrant they can enter a guest's private room. So police do have unfettered access today to any business open to the public and with probable cause or a warrant they can go anywhere. So police requiring a right of way is not contradictory to private road ownership.

Post 88

Wednesday, October 1, 2008 - 9:33am

John A. wrote:

No, but are you seriously suggesting there's not a more likely a case for overruns or fiasco when the government is involved? And ask yourself who bears the cost of such an overrun or fiasco.

No, and I already stated my main positions in post 84, both given earlier. How many times do I need to repeat them?

I'm well aware of the second point.

Post 89

Wednesday, October 1, 2008 - 1:51pm

I have discovered a boondoggle in my backyard. There is a 309 expressway that had an interface to other roads - it used to be a cloverleaf but with poor entry/egress - the highway did need an upgrade. However, they not only took years to do it, but failed to think or run proper software to test it, and ended up creating a complex intersection with lights that now backs up traffic in all directions. So the new highway, at a cost of years and much money, has - at least in this area - made traffic far worse.
(Edited by Kurt Eichert on 10/01, 7:16pm)

Post 90

Thursday, October 2, 2008 - 6:46am

On his blog Mr. Stolyarov has now published Part 2 and Part 3 in response to my comments here.

Part 2 is brief. He acknowledges my points about Roman roads versus modern roads made in post 34. He concludes with:

And yet, despite the massive technological superiority and continuing advances of our time, road quality in places like Chicago continues to be dismal. I wonder why, and I see no answer besides government intervention and favoritism.

Well, I do. Still granting that government may be part of it, other causes for poor road quality are volume of traffic, weather conditions and salt. I gave the first in post 34 and the others in post 36. I elaborated on them in post 75 and post 85.

Part 3 is long with a lot of algebra, and a response to post 34, wherein I used costs to compare a more expensive, more durable road to a cheaper, less durable one. He argues that a higher quality road will generate more revenues and lower maintenance cost. That's fine. He also writes:

Mr. Jetton claims, quite plausibly, that, if CL + PV(ML) < CH + PV(MH), then the private owner would still opt to build the lower-quality road RL.
While this is certainly a part of the considerations a private road owner would have to face (along with any fiscally prudent government planner, of whom there are some, I grant), costs are not the only consideration for a private owner. Maximizing future revenues and minimizing foregone revenues is a still further consideration. With regard to roads, it is a fact that road maintenance greatly decreases the traffic flow that the road can accommodate.

To first make a small point, I didn't say the private owner "would opt", but "may opt" for the lower-quality road.

Mr. Stolyarov is quite correct that the revenue side of the alternatives is important. My comparison in post 34 used only costs to a great extent to keep it simple. Putting revenues in a comparison makes it more complete, but more complicated. But I'm quite willing to do so, and it easily accommodates different time frames, e.g. 40 years for a more expensive, more durable road and 25 years for a cheaper, less durable one. (I used 40 years versus two sequential 20-year periods in post 34 to make equal time frames.)

Mr. Stolyarov closes Part 3 with:

Thus, all other things equal, the private entrepreneur will be likely to choose to build a higher-quality road in a greater range of circumstances than the government official, which means that a greater proportion of roads will be of a high-quality, low-maintenance nature under a free market for roads than under a government-controlled market.

Maybe. There is one questionable, implicit assumption in all his algebra. It is neutral to the size of the different up-front costs. (Yes, higher revenues and lower maintenance costs for the higher quality road partly offset that.) However, there remains the "budget issue", namely the size of the initial outlay. Whether it is government or a private firm building the road, this is an important real world consideration. Let's assume the government or private firm has enough capital for the lower quality road, but not for the higher quality road. That does not necessarily preclude the higher quality road, assuming the government or private firm can borrow the difference. A comparison model could easily accommodate that. The money to repay the loan and interest thereon could be additional costs for the higher quality road. This identifies the questionable, implicit assumption in Mr. Stolyarov's algebra. It assumes no borrowing costs for the higher quality road and is indifferent to the different initial outlays to pay for construction. Borrowing costs might more than offset the additional expected revenues from the higher quality road.

Taking all this into account, it still might be the case that the higher quality road is the better alternative. However, the choice is somewhat more complicated.
(Edited by Merlin Jetton on 10/02, 10:18am)

Post 91

Thursday, October 2, 2008 - 9:43am

Actually, there are many cases where the government is arguably making the road too good, not too badly. One reason is the proliferation of massive safety regulations. Some bridges have been replaced, as they needed to be, and went from small, serviceable bridges into concrete monstrosities with huge side barriers and all sorts of completely unnecessary levels of "safety" because of regulations.

There are a lot of reasons increasing the number and privatization of roads is good, but I don't think that his contention of fantastic vs. terrible roads holds a lot of water on the scale he speaks about. The Roman roads comparison is off base.

Post 92

Thursday, October 2, 2008 - 11:23am

Kurt, good point about bridges.

There are a lot of reasons increasing the number and privatization of roads is good, but I don't think that his contention of fantastic vs. terrible roads holds a lot of water on the scale he speaks about. The Roman roads comparison is off base.

Terrible roads hold water. Good ones don't. :-) Good ones are crowned for drainage. Roman roads were crowned per Wikipedia.

I agree the comparison was off base.

Post 93

Saturday, October 4, 2008 - 3:54pm

Greetings.

Parts 4 and 5 of my response to Mr. Jetton are available here:

http://progressofliberty.today.com/2008/10/03/response-to-jetton-4/

http://progressofliberty.today.com/2008/10/04/response-to-jetton-5/

I will write more in subsequent days.

Sincerely,
G. Stolyarov II

Post 94

Sunday, October 5, 2008 - 5:41am

I agree with Mr. Stolyarov's comments in Part 4. Surely if a private road owner relies mainly on tolls for revenue -- in contrast to a government relying on fuel taxes, even on toll roads, or something else -- it will be more attentive to disrupting traffic flow.

In his Part 5 he writes:

Moreover, leasing the road generates a continuous income stream for the government, which makes permanently greater government spending more likely. In my proposed system of privatization, the government gets a one-time payment for each road, and that is it.

I believe Mr. Stolyarov misconstrues the lease terms for the Chicago Skyway and similar cases. What the Chicago government received was a cash infusion of $1.8 billion in exchange for a net revenue stream -- toll revenues minus maintenance costs -- spread out over 99 years. (See here.) Indeed, it would make little sense for the lease to give the Chicago government "rent" over 99 years when that's what it already had. Also, the city of Chicago's purpose in doing the deal was to give it cash to cover short-run deficits.

In Mr. Stolyarov's proposed system of privatization, I assume he means a sale rather than a lease. If so, it does nothing to counter my comment in post 34. The transaction, whether sale or lease, is a cash infusion into the hands of government (immediate or in a short span of time) which it can spend on other things.

Rather, this company�s incentives will be to use the road as intensively as possible, irrespective of the wear and tear this imposes over the long term. By the time the 99-year lease is up, I expect that the road will be in dismal condition, and the taxpayers will thereafter be given the repair bill.

Maybe. I strongly doubt the company will let the road deteriorate over the entire 99 years. That would likely result in revenue deterioration, too. If deterioration will be allowed, it will be the final few years, when the cost of maintenance exceeds the present value of the remaining revenue stream. It may not happen even then, if the company plans to renew the lease.

Onto part 6. I had written: "What evidence do you have that road construction would be faster under private ownership as compared to government ownership? The private builder of a totally new road would face the obstacle of getting the right-of-way. That is a very slow process."

Mr. Stolyarov replies:

I refer Mr. Jetton to my reasoning in the article itself, which Mr. Jetton cited prior to his question. I wrote: �Of course, new roads will be built under a private system, and at far faster rates than under government control. The moment any private entrepreneur thinks an additional thoroughfare is necessary and profitable, he will begin building one; he will require no extensive political lobbying, no seeking of special-interest favors, no lengthy and tedious committee discussions that paralyze efficiency.�

This does not exactly address my point unless "begin building one" includes obtaining right-of-way.

In this particular case, the question that should be asked is, �What evidence do you have that road construction is faster under government ownership now than in would be under private ownership?�

I grant that road construction might be faster under private ownership, but he is asking for a lot with such a paucity of data under private ownership.

I will address the question of right-of-way next.

I look forward to it.

Post 95

Tuesday, October 7, 2008 - 5:12am

In his article Mr. Stolyarov wrote that new roads will be built under a private system at far faster rates than under government control. I responded in post 34:

What evidence do you have it would be faster? The private builder of a totally new road would face the obstacle of getting the right-of-way. That is a very slow process.

In Part 7 on his blog Mr. Stolyarov objects. He doesn't say how fast, nor did I say how slow. I grant that building under a private system might be faster than under government control, but in my view that is all his arguments can support. They don't support will be far faster. He gives no specific empirical evidence to support his position. (Admittedly there is a paucity of empirical data about it.)
He writes:

Typically, any private undertaking is much faster than any undertaking that goes through the channels of government. It is typically much faster and easier for most decent people to convince even 1000 other private citizens to agree to their proposal (especially if it is a lucrative proposal for all sides) than it is to influence government policy in such a major way as bringing about the construction of a new road.

First, how often will it be a lucrative proposal for all sides, and they will see it that way, when there are 1000's of people involved? For building roads in urban areas, one might consider the empirical evidence of the building or expansion of airports.

I submit that many roads, especially local ones, were not built by governments in the first place. It was a community effort of the local people, led by the more influential among them and funded by the wealthier among them (who may have been the same people). Later the road was converted from community property to government property, maybe handed over or maybe expropriated. I'd guess what Mr. Stolynarov has in mind for a private system is private entrepreneurs who specialize in road-building for a profit. I submit that there is an alternative -- not as a public policy choice but as a fact of reality -- to only private-built roads ala Mr. Stolynarov or government-built roads. That is community-built roads. This is also the case for other sorts of "public utilities".

In part 8 he finally gets around to tackling the effects of weather (and salt) on road conditions. About the trucker survey I cited in post 85 he jumps on California not fitting my general thesis. I don't know enough about California roads to explain the anomaly. Maybe Californians are reluctant to spend money on roads. We do know there is a lot of traffic, and maybe truckers' ratings are sensitive to heavy traffic in metropolitan areas. However, one anomaly does not destroy the thesis.

Edit: Mr. Stolyarov points out that California has among the worst roads, despite its favorable climate, and Florida has good roads despite swampy areas (swampy areas are cited as contributing to poor road quality in Louisiana). This might explain that. Florida has 657 miles of toll roads, the highest of any state. California has 96 miles. Louisiana has 1.5 miles. Do you think that just maybe this has any connection to road quality? He cites I-40 in Oklahoma as a poor road, despite a favorable climate. Well, OK has lots of toll roads, but I-40 is not one of them. (link I-40 runs E-W in the center.)

He writes:

They [private road builders] are also more likely than government officials to experiement with new, innovative solutions to road deterioration due to weather. Government officials are likely to stick to already known, �tried and true� formulas that are imperfect but do not have the risk associated with novelty.

Does Mr. Stolyarov believe that no road contractors, who are in the private sector, do research? I also suggest he look into civil engineering departments at universities. Here -- look for "frost heave research" -- and here are only two examples.

My next point is not directly related to Part 7 or 8, but is relevant to the thread. Road-building is a very long term venture. Typically, the longer a business venture, the more risky it is. Road-building requires a huge commitment of capital up-front for construction. The financial success of a private road will presumably depend on some sort of user fees such as tolls over a very long period of time, e.g. 20 years or more. Having built a model in Excel to analyze a road project, I can tell you that profit or loss is extremely sensitive to toll volume. (If anyone would like a copy of my Excel file, send me an e-mail.)

I'm confident that Mr. Stolyarov has learned from free market economists that entrepreneurs sometimes fail. (Of course, the main loser is the entrepreneur and those who invest with him.) The free market's incentive is profit, but the free market -- "where the rubber meets the road" (-: -- is a profit and loss system. Where in this entire thread has Mr. Stolyarov acknowledged this in regard to private roads? He has said plenty about government failure, but nil about private failure.
(Edited by Merlin Jetton on 10/07, 12:13pm)

Post 96

Wednesday, October 8, 2008 - 12:05pm

In post 75 I asked rhetorically: "Lastly, to maybe somewhat de-mythologize private roads, give some thought to the varying
quality of driveways. Are they all in great shape and made to last decades?

In part 9 on his blog Mr. Stolyarov responds, saying that private road owners would have an incentive to own higher quality roads because they have customers and want to make a profit.

I agree to a degree. The primary target of my rhetorical question was budgets. Some people are going to spend a lot less money on their driveways than others simply because they can't afford more. Similarly, some private road owners will likely spend less money on a road simply because they can't afford more. More importantly, a private road owner might choose to spend less on road X because it also wants to spend on road Y.

The customer or revenue aspect Mr. Stolyarov addresses is an important one. So in order to improve my question let's consider apartments rather than driveways. Are they all in great shape and made for high durability? I say no, landlords (and renters) have budget constraints.

The law of diminishing returns is also relevant to building higher quality roads. This law says a producer will increase marginal costs (MC) only if marginal revenues (MR) are larger. (It works with negative numbers, too, i.e. if MC < MR < 0.) There is a caveat to add in regard to road building (less so to road maintenance). MC is near-term and MR is long-term, which makes the producer's business more risky.

I'll also take this opportunity to respond to a point made by John Armaos in post 76 that I didn't earlier. The low amount of new road mileage built since 1976 is alarming relative to the growth in vehicle miles. It would be less alarming to compare "lane mileage" instead, since many roads have been widened. One mile of road with 4 lanes would be 4 "lane miles." I don't know how much less alarming.

Post 97

Wednesday, October 8, 2008 - 2:35pm

Merlin:

The low amount of new road mileage built since 1976 is alarming relative to the growth in vehicle miles. It would be less alarming to compare "lane mileage" instead, since many roads have been widened. One mile of road with 4 lanes would be 4 "lane miles." I don't know how much less alarming.

Merlin I believe Michael Dickey provided statistics on lane mileage which he got from the Bureau of Transportation statistics, please read his blog for more info. He wrote: "We see barely 20% more highway travel lanes than in 1975, while the number of vehicle miles traveled has doubled, and the number of cars on the road continues to sky rocket."

Wouldn't you consider a doubling of traffic while experiencing a 20% increase in lane mileage as something that is alarming? I do. I think that stinks. Demand is outstripping supply, and if motorists paid private entities for highway usage we would see a more optimal equilibrium between supply and demand.

Post 98

Wednesday, October 8, 2008 - 3:11pm

Wouldn't you consider a doubling of traffic while experiencing a 20% increase in lane mileage as something that is alarming?

I didn't read Dickey's blog before posting. It would depend on how heavy traffic was to start, but yes. Aren't the stats he cites national? I bet traffic has more than doubled on some roads or in some areas, less in others. Toll roads would help a lot, even if not private. Toll volume would instantly indicate more traffic. I note that his blog article complains about CT. Per here CT has 0 miles of toll roads!

(Edited by Merlin Jetton on 10/08, 3:13pm)

Post 99

Wednesday, October 8, 2008 - 4:14pm