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Many of us pay twice for the highways we use – with fuel taxes and with tolls. Most folks are aware that 15% of Federal fuel taxes are stolen by mass transit. How many know that tolls paid by drivers are also being diverted to mass transit?

Bridge tolls in both New York and San Francisco are currently funding mass transit programs.

Not only that, they started moving to the suburbs many decades before Americans even had cars, hence the term 'streetcar suburb':

http://en.wikipedia.org/wiki/Streetcar_suburb

And note that such suburbs even predated street cars:

"Although electric streetcars were not introduced until 1887, suburbs did exist earlier based on animal-drawn cars, but the distance they could be from a city core (where most jobs were located) was more limited."

Lastly, there's little doubt that Americans are willing to pay the cost of highway-building — in the form of fuel taxes (some portion of which are, in fact, not spent on highways, but are redirected to subsidize mass-transit and bike paths).

Like AIG gave away its mortgage backed securities? Fat chance.

Even if they paid cash to buy it, assuming the government (or a new private owner) paid an appropriately reduced price it could still be a money maker for the buyer.

Right. I can't wait to read about all the profits the TARP raked in.

The issue is efficiency. Would a quasi-private system of road construction and maintenance really be more efficient, in terms of constructing useful roads and maintaining them at reasonable cost, if proprietors know that unprofitable roads never fail?

Even if proprietors nominally "lose money" when building unprofitable roads, would it make any difference if they borrow the money anyway and simply declare bankruptcy after pocketing handsome compensation during years of construction and initial operation? Would lenders be more discriminating if TARP-like programs often bailed them out?

Would this "privatized" system really be any different from the public system, or would it only create opportunities for nominally "private" rent seekers?

I'm a minarchistic, but I'm not convinced that "private" rents are any less costly than "public" rents. [I don't refer to conventional "rents" reflecting the real marginal value of real capital here.] If market forces don't really operate, then "privatization" only privatizes "profits" while socializing costs.

This more fascistic system is not an improvement over road socialism and seems worse to me. It's a Hobson's choice, but if forced to choose, I'll choose socialism over fascism.

Two distinct theories seek to account for the manifest benefits of market organization.

One theory says that market actors seeking profit just make better decisions than central planners unconstrained by the profit motive. This theory still credits clever planning with the success, but it requires the proper "incentive" on the part of planners.

Another theory says that market actors might as well plan by throwing dice, because the key to market success is creative destruction, not clever planning. In other words, market organization is like evolution by natural selection.

The truth lies somewhere between these competing theories, but I have a lot more faith in the latter than the former.

Absolutely, Mr. O'Toole. Tom Martinson explained in American Dreamscape: The Pursuit of Happiness in Postwar Suburbia, p.19, how rail lines freed urban workers from the congestion of 19th century Boston:

"The urban Yeoman eventually participated in this suburban expansion – just as soon as public mass transportation freed him from having to live within walking distance of work. … With the extension of public transportation lines after the Civil War, suburban migration became universal, among all economic classes."

Martinson explained how workers used rail transit to escape crowded, 19th century Boston just as workers used automobiles to escape crowded, post-World War II Chicago. Compared to 1950's Chicago surburbs, houses were larger and lots the same size in 19th century suburban Boston. As Martinson points out:

"This provides a much different perspective from the contemporary notion that suburban "sprawl" is a singular, Post-Second World War phenomenon caused by the automobile."

That doesn't seem so bad. If a privately built toll road can't make enough money for its owner, giving it away to the government means it gets a nice new road for free. Even if they paid cash to buy it, assuming the government (or a new private owner) paid an appropriately reduced price it could still be a money maker for the buyer.

Would manned toll booths work for rural Utah or west Texas?

No. I'm skeptical that automated tolling would work well now, and "private highways" that don't turn a profit would soon become public highways, so I don't see much hope for privatization in this direction.

Isn't a long stretch of highway too big to fail? Would ripping one up to free the land for other uses often be cost effective?

My suspicion is that, in fact, roads aren't subsidized at all, they are 100% paid for by users.

More like 200%.

Of course, all "roads" are not created equal, so road use taxes (like gasoline taxes) don't only subsidized passenger rail and other public transport systems. The taxes also subsidize roads that aren't used as much as other roads.

Few will dispute that German highways influenced Eisenhower to champion the Interstate highway system. But, to be fair, U.S. highways were being built long before WW II – just not on the scale of the Interstate system. Furthermore, it is unlikely that Congress would have had support for the gasoline tax had there not been a pent-up demand for non-defense transportation in the U.S.

I know your blog is based on gov't funding for highways but who wants to travel 35mph to California?

(And I don't believe roads qualify as public goods anyway — the U.S. had many private toll roads in the nineteenth century.)

Possibly because the political class has wasted much of the product of the productive class on things that the productive class would not choose to pay for even if they thought they could afford it.

Was it too difficult to exclude non-payers 50 or so years ago, when the interstate highway system was first authorized? Wouldn't that have required manned toll booths across the nationwide interstate system? I can see how manned toll booths could be justified for high volume routes such as Pennsylvania or New Jersey Turnpikes. Would manned toll booths work for rural Utah or west Texas?

1. One person's consumption of a public good does not prevent others from consuming the good.

2. The public good can be consumed without paying for it.

3. The marginal cost of the public good is zero, or very close to zero.

4. Marginal cost pricing would then imply that the market price is zero.

5. If production of the public good were left to private markets, too little of the good would be produced – because the marginal price is zero.

Is that correct? Is that how eminent domain for procuring right of way is justified?