Libertarian Prepper

The world divides politically into those who want people to be controlled, and those who have no such desire.

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Without Government, Who Will Build the Roads?

Not that explaining who would build the roads absent government is particularly difficult, nor is it even the most interesting aspect of a Stateless society, but this question is raised so frequently by the anti-freedom crowd that it has become a sort of mascot for Statism.

So let me try to not just provide a brief answer, but also see if I can help you extrapolate the reasoning to other goods and services.

First though, a quick definition. I’m defining government as a coercive entity that plunders wealth by force, and redistributes it on projects of various kinds, from infrastructure and bribing voters, to war and weapons of mass destruction. I am not talking about all systems of organization (as some people seem to define government that way). Therefore, firms can exist without a government, since people in firms earn their living by providing goods and services other people willingly pay for. They don’t need to point a gun at anyone’s head to earn a living.

The Engine of Self-Interest

As with all problems on a free market, the greatest (though not the only) engine of problem solving is self-interest. The farmer may have lofty goals of feeding others, but he’s mostly there to earn a living for himself, and whether or not he wants to help his fellow man, on a competitive free market he must provide a good product at a good price or nobody will buy it from him. His ability to satisfy his own self-interest is therefore primarily guided by the satisfaction of the self-interest of others. Markets are therefore inherently altruistic.

So, let me quickly summarize the people who would have a very strong motivation to build roads. We will also look at the mechanisms they can employ to finance this road building.

Who Wants to Build Roads?

The Salesman

That supermarket you like to shop at? The clothes store at the mall? All the other sales establishments you visit? They all want you to be able to get to their store. Whether they’re located in the middle of a city, or outside it at a discount shopping center, they’re very much self-interested in you, their customer, being able to reach their store with whatever vehicle you choose to use. If enough of their customers use vehicles with wheels that their sales justify the building and maintenance of a road, then it will be built and maintained.

All Businesses

Every business has a logistical side to it. Whether it’s the aforementioned stores needing to be restocked, a factory producing goods, a farmer raising cattle, or anyone else who needs something delivered to and from them. All of these people need roads (or railways) to get goods to and from their business. This is why most of the railways built in the United States were built privately – the businesses requiring them were more than willing to pay the railway companies.

By the way, I question very much if the current emphasis on trucks for transportation of goods would have occurred if the government hadn’t externalized the costs of road building onto all taxpayers. If the people who used them most had to pay for them, railways might still be dominating roads for heavy logistics. I suspect railways are cheaper and more efficient for such purposes than highways, and that roads networks would mostly exist only in densely populated areas, with scarcely populated areas in between being connected by rail.

Shipping companies

If businesses are prepared to pay to have materials delivered to them, or products shipped away from them, then shipping and road-building companies will pop up around this demand, and create a market for it. Absent a government, existing companies like UPS, FedEx, DHL, and all the others, would have to allocate a sufficient part of their budget for road building and maintenance, or face losing their entire business.

Tourists

How much of the airports and airlines are built using money coming from tourists? Businesses are not the only ones who use transportation infrastructure. If demand from tourists is good enough to get huge flying metal constructs into the air, I’m sure people on a free market can handle fundraising for something as simple as roads.

The Homeowner

It’s not enough for the businesses you patronize to have roads. You still need roads to leave your house and reach their roads, and that means building roads in neighborhoods. There are several ways this can be done.

The first is a public ownership project, in which each homeowner chips in and they collectively raise funds to build the roads. This system runs into the free rider problem – why should you pay for the road when you can just wait for your neighbor to do it? And of course while everyone thinks this way, the roads don’t get built.

Here’s where threshold pledge systems come in. The website kickstarter.com uses a system just like it. The rules are simple: An entrepreneurial fellow calculates the costs of building the road and starts a project. People can pledge their money with no risk to themselves, because unless the goal is reached, they are not charged.

Not only will the non-participant now gain nothing from his non-participation because he can no longer be a free rider and the road will simply not be built without sufficient funding, but anyone who doesn’t participate when they have an actual need for the road (e.g. they have a car they can’t currently use) will probably face social pressures from his community.

Interestingly, there can be competing offers. If someone else (such as a manager in a firm who build roads professionally) thinks they can build the road cheaper, they can compete with their own bid. Unlike a government system in which bureaucrats try to siphon off as much taxpayer money as possible, the mechanism here is reversed, as firms compete to build the road as cheaply as possible, while still maintaining good quality.

Now this is by no means the only way the road can be built. A private firm could buy the land, build a road, and deny access to it unless the user pays the construction and maintenance fee. In my opinion, this system is less likely to be as popular as the threshold pledge system because fear of abuse would prevent homeowners from selling their land for road use to such a company in the first place.

Perhaps the homeowner could rent out a part of his land for road use to a company, or even give it away for free on condition of perpetual permission to use the road, and the company would agree because they would be getting land for free, and would earn enough money from people outside the neighborhood using the roads to justify not charging the homeowner.

I’m sure there are other ways of raising funds I simply haven’t thought of. It’s also possible that a sufficiently profitable business will build and maintain a road all the way to the home owners, or that networks of roads will be funded by contributions from all the shops and offices whose customers and employees need them to get to work.

You know how some businesses advertize that a portion of their revenues goes towards medical research, and other charities? I can picture a sign saying “5% of all proceeds at this store go towards maintaining your local community road network.” That way you can bring your custom to whichever business you feel supports your community the best.

One thing you should realize is that everyone is already paying for the roads. The question is not one of a lack of funding. If anything, given government inefficiency in the administration of taxpayer funds, on a free market people would pay much less for roads. More importantly perhaps, people would pay for roads largely in the proportion in which they use them. Transportation companies and car drivers would pay more for road maintenance than people who choose to walk everywhere.

I can imagine that a company would charge users differently based on the vehicle they use. A car obviously inflicts much more damage to a road than a bicycle, therefore requiring more maintenance. It also causes more congestion (unless the car’s passenger seats are all filled). I expect car drivers would pay a lot more for the right to use a road than cyclists.

The Advantages

If roads were built on a free-market, with a diversity of competing builders and owners who had self-interest at their heart, we would have much safer roads, and with far fewer potholes.

Why? Simple: You have two roads you can take. The first is a road built and owned by company A, who has a time-tested reputation for good quality roads, and safe rules and regulations for their use. Not rules based on politics, but based on science and accident prevention. Their speed limits, use of signs, and other safety rules and devices are determined largely by an analysis of accidents, use of statistics, and a little motivation from insurance companies, who are more than willing to lower their premiums for a more safety-minded road owner.

Road B is built by a firm with a horrid reputation, run by incompetent and corrupt businessmen who resemble politicians more than anyone else. It is statistically more dangerous in use, its poor maintenance and potholes cause more damage to your car, and the rules that govern its use (set by the property owner) are frankly insane.

Which road will you choose? Which company will prosper, and which will soon go out of business?

On a free market, the answer is obvious. Under a government system, Road B and its company continue to prosper, for the simple reason that they don’t ask you which road you want to patronize. They just point a gun at your face and take your money.

For example, in an excellent display of spontaneous order on a free market, experiments that switched off traffic lights in a city actually reduced congestion while improving safety, since drivers became a lot more attentive and careful. On a competitive free market, road owners and managers would constantly look for ways to improve the safety and efficiency of their roads, and successful experiments would be emulated by their competitors, rapidly spreading the implementation of innovative ideas.

One way funds could be raised is subscriptions. Road owners could charge a one-time fee for use of their road (such as by using tolls, or cameras photographing license plates and sending bills to their owners), or they could use the far more efficient subscription method. Using it, a driver can pay a yearly, monthly, or other fee and have access granted to the road for a period of time. To make things even easier, there are likely to be road networks, in which road owners enter their roads into a single network, and they are then paid a share of the subscription fees based on use of their roads.

Subscribers could attach small electronic devices to their cars, which would be scanned at regular intervals to allow passage. Although advancements in technology are opening up new ways with which to make roads that much more efficient, a tried and tested low-tech method used for hundreds of years has been turnpike roads and trusts.

I’m curious whether “Which road network are you subscribed to?” will become a standard question on insurance forms for car drivers – so you will have an additional monetary self-interest in choosing safer roads.

Extrapolation

Now for a mental experiment, try to extrapolate the kind of reasoning above to all the other goods and services you may think cannot be provided without a government.

  • aw11

    I generally agree with the free market solutions, but have been running into some problems with the roads scenario:

    1. Duplication of roads. Since anyone could run a road network, inevitably there would be places where multiple roads ran side by side. This is probably not the most efficient way to use resources or land area.

    2. Tracking. Whichever company you choose, they will likely be tracking your movements for billing purposes or they might provide you with an unlimited access license plate / sticker. These would have to be checked at the entrance to all roads or otherwise enforced.

    3. Lack of competition. Unless there are multiple roads connected to your driveway, you will be forced to pay the company that owns that road. Similarly, if you want to get from point A to point B, you will be forced to choose between the companies that provide paths to get there, and it is entirely possible that there may be only one option for getting there.

    4. Complexity. Drivers would need to familiarize themselves with different sets of rules for different roads and companies.

    What do you think about using the gas tax for roads (and ONLY for roads) and not allowing no-bid contracts. That eliminates complex systems, duplicate roads and tracking. It also puts the heaviest charges on those that use the roads most (frequent drivers and larger vehicles would pay most). The biggest problem with that solution is that it still requires government control…

    • 1. In a free market, profit and loss are key. If the system is inefficient, it isn’t going to happen. If people can make sufficient profits by duplication (e.g. to solve problems of road congestion or poor quality and unmaintained roads) then it’s worth doing. If the demand isn’t there, it won’t be done.

      For example: There can be one four lane road, or two roads with two lanes each running side by side. If the latter configuration leads to competition between different road owners, such a system may actually be more efficient than the monopoly situation.

      Think of an analogy with factories. Is it duplication when a second factory is build to handle growing demand for car production? Or, if there is demand for 100,000 cars per year, and each factory produces 50,000, is this actually better? Remember that besides the benefits of competition, there are also dis-economies of scale arising from companies that are too large.

      2. Tracking is indeed a high-tech way of solving this problem. Turnpikes and toll roads are a lower tech way. Personally I don’t have a problem with tracking per se, only when it’s done by government, because they will invariably exploit the situation and use tracking techniques for oppression. A private company subject to lawsuits and unlimited liability on a free market? They can track me all they like (if I give permission), because they won’t get away with abuse.

      3. I provided several solutions to this problem, such as roads held in commons (and funded by threshold pledge systems or contributions by large-scale users such as businesses). In fact, this system is the most likely to occur, since a road open to everyone is usually better for attracting customers to businesses that use that road for access.

      Also, roads don’t just compete with other roads. Roads compete with all forms of transportation. That means rail, airplane travel, etc.

      Lack of competition is not really a problem on a free market – only in an interventionist market burdened by artificial barriers to entry. Otherwise, if there’s sufficient demand and the incumbent firms are doing a bad job, they’re going to soon notice a bunch of new competitors. Monopolies have, historically, always required the use of government force.

      4. While there would be room for different rules, because of the complexity that this might lead to, I imagine that there would be a lot of standardization too. Within large territories, people would still drive on the same side of the road, and road owners, in order to attract more drivers from their competitors, would probably strive to use standardized systems of signs that are easily understandable, etc.

      Further, any licensing companies would also train drivers and issue licenses for specific regulatory frameworks, and I imagine that driving on roads they are not prepared for would lead to drivers not being covered by insurance, which would be an added incentive for all the parties involved to standardize certain rules as much as possible. (I’m assuming here that road owners will require drivers provide licenses as proof of competence.)

      Lastly, businesses who build roads to attract customers have a very real incentive to make their roads as familiar and easy to use as possible, or lose customers.

      “What do you think about using the gas tax for roads…”

      Taxes are the one thing I cannot advocate, as taxation coercively violates property rights. It is the threat and eventual initiation of force against an innocent person, and violent solutions are not acceptable to me.

      I hope this helped! 🙂

      • Inquisitor

        Thanks for the reply. Your arguments make sense. What about oligopolies or monopolies? How do you stop that from happening?

        • I’m glad you found it helpful.

          As far as monopolies (and the same argument goes for oligopolies), most real monopolies are government-sponsored and granted, or heavily aided through artificial, legal barriers to entry and intellectual property (or as I prefer to call them, intellectual monopoly) rights.

          That said, there’s nothing wrong with a monopoly per se, so much as there is a problem with abuse of monopoly power. A business that achieves market dominance by creating a better product at a lower price than its competitors has won that position fair and square. The moment such a business begins to abuse its position, or simply lose its edge, new competitors will inevitably crop up and steal away market share by doing a better job, and without a government to lobby, nobody will intervene to stop them (the way they do today by taking people to court over IP, or requiring licenses and other fixed costs that small businesses cannot afford, or bailing out the biggest and most politically well-connected companies). On a free market, a business is able to hold monopoly power only insofar as they do a better job than all their competitors at satisfying their consumers’ desires. In this sense, it’s not a true monopoly in the sense of government monopolies over police, or government-granted monopolies to telecom companies like BT.

          It is true that under the current system, there is a strong trend for businesses to consolidate and remain in positions of power, even as they provide an inferior product, but this is a situation that I think is unsustainable without government support.

  • notsofast

    You have obviously never spent time on the (privately built and owned) French highway system. Every few miles there is a peage (toll station) which forced you to stop and throw a few euros down a hole. Drive 2-3 hours like this and you will have easily spent 60 EUR or more on toll fees. You might as well have flown for that price. Which brings me to your utopia idea that private enterprises would built and maintain the roads for us. But of course they would! And then they would squeeze your last pennies out of you for the rest of forever, form cartels to ensure there is no competition, concentrate power in monopolies, etc. All the ncie things that happen in the absence of free market regulation. Keep on dreaming!

    • I will keep dreaming, thank you 🙂

      As for your your argument,

      1. You provide the counter-argument in your own post. At the point at which it becomes cheaper to just fly or take the train, that’s exactly what a lot of people do. I myself prefer to take the TGV. If you book ahead of time you can get tickets for about €30. I actually live in France, and have had many road trips here too, but of course you know everything about me… So, back to the point: since the road-builders are competing with all kinds of other methods of transportation, the idea of a “monopoly” falls flat on its face.

      2. Secondly, cartels and monopolies only prevail when they can use the power of the state. There were a number of utility companies which tried to establish cartels in the 19th and early 20th century in the US. Every time they did, they would create incentives by which new entrants would come into the market. Every attempt they made to fix higher prices only led to more competition. This is why cartels are inherently unstable on a free market. It was not until they raised legal barriers to entry through, if I recall, licensing requirements, that they prevailed.

      However… from your post I sense you do not know the difference between markets mechanisms and government regulations, and are thus projecting certain features of the current fascist/socialist economy onto what a free society would look like. The truth is that corporations cannot exist without the state, and so a free market would not even have them.

      • notsofast

        You know, I get it. I really do get it. You libertarian guys hate the government’s guts. And I have to agree, there is something really oppressive at having half your income taxed at a top marginal tax rate of 42% (like I do, living in a small town at the border to France in Germany). I value my personal freedom just as much as you do. I work hard and I would like to enjoy the fruits of my hard labour. Contrary to you though I don’t see it quite as black and white. To me oppression from the corporate world (such as through credit card / mortgage debt slavery, and yeah, I know, “nobody is holding a gun to people’s head and forces them to go into debt”, except for maybe many people don’t really have a choice, when 2-4 jobs in a family are no longer earn enough to make a decent living) is not any different than oppression from the government. Whenever there is something going wrong, you guys blame it on “the government”. Monopolies? Cartels? Financial crisis? Would never exist if it wasn’t for the government(s) constantly interfering with the virtuous “invisible hand” of the free market. Yeah right. There is NO PROOF that a unfettered free market economy always produces the best outcome for everybody involved. Its a mantra that has been repeated for so long, that it is taken as an irrevocable truth by people like you.

        • Oh, it has been proven, thanks to painstaking historical examples, as well as excellent economic theory. What you really mean to say, I think, is that you currently do not know of any such proofs. But it’s quite a jump to go from there to assuming that they don’t exist. The fact that you think corporate oppression would occur on a free market is to me good evidence that you have not studied a lot of economics. Or at least, not the correct kind (most of what is written on economics is erroneous to an unbelievable degree). If you’re interested, I can always suggest books.

          • notsofast

            And what kind of “sweetwater economics” books would that be? The type that insist that “bubbles don’t exist” or that “bubbles are the result of government interventions”? As I have pointed out, I live in Germany. I know both Germany and the US. Compared to the US, Germany is a highly regulated country, yet we have the consistently booming economy for what appears to be a decade now. Unemployment in the state where i live is below 4%. And that in a economic environment that could be described as difficult. Regulations per se don’t have to be bad for companies. Companies adapt, like they constantly have to adapt to falling prices due to competition and a multitude of other external factors. Markets have a natural tendency to develop monopolies and oligarchies. If you dont believe me then go to your local supermarket and buy a pack of cereal, shower gel, toilet paper or whatever. Chances are you will have 5-6 different choices for each of these products. Its easy to believe that you have a choice when in fact you dont. Most of these brands are owned by the same type of multinational corporations, like Kraft, Nestle, Proctor.

          • notsofast

            PS: And I mean oligopolies, not oligarchies, of course.

          • Kameko Bruns

            It’s cute how he vanishes like a fart in the wind as soon as you ask for proof.

            It’s been three years thus far. Wonder if he is still looking?

      • Kameko Bruns

        Wow. What a coincidence. You just happen to live in France. Gonna call bullshit on that one.

        “The truth is that corporations cannot exist without the state, and so a free market would not even have them.”

        Well that’s just fucking genius. Who do you sue then moron?

        You’ve seriously gone round the bend on this one. Now you want to eliminate corporations. Dear gods, that’s all sorts of stupid.

  • gartner101

    In a city like Lagos, Nigeria with lots of private wealth but weak and ineffective government what you see it luxurious private houses with pools etc, located on streets that are pot hole ridden and dilapidated and lacking sewage systems or any amenities like parks.

    • hejp

      Its seems that they could do with a few private companies to provide those utilities particularly the sewage system.

  • MLChadwick

    Baloney.

  • Kameko Bruns

    This is a perfect example of why you libertarians are so bat shit crazy.

    With all these different creators of roads, how are we going to have a unified building code so that one knows that all roads are safe? Businesses want to maximize profit so they will likely use the most cost effective materials. As a result a road can be unsafe.

    What’s the solution? Let the “free market” decide? How does that work? If enough cars slide off the road and the occupants die then no goes to those stores?

    Are you seriously arguing that the local baker, butcher and home owner should be responsible for creating their own roads?

    What form of mass delusion is responsible for libertarians?

  • Laure Ngouanfo

    Thank you for this post. It’s really inspiring. I would like to set up a company of my own for road construction in Cameroon, I have been thinking about this for years but I do not know how to go about it, where to start from. Your advices are highly welcome.

  • Chris Parker

    If companies like Cox cable were in charge of the roads I’d loose my mind. Enevitably there would be one large company that everyone in an area would have to go through and they would bend you over a barrel every month and do tricky fine print type stuff. Sounds awful.