Tuesday, October 22, 2013

Murphy on government roads


A huge problem with government-provided roads is how they do not have to account for the costs they push on to their customers.

When I worked at Stew Leonard's, the company was constantly expanding and rearranging the Norwalk store where I worked. But they rarely inconvenienced the customers to do this: They would pay the workers time-and-a-half or perhaps double-time to work from store close at 11 PM until store open at 7 AM. They were willing to do this because the cost in lost business due to inconveniencing the customers would have been greater than the increase in labor costs due to working at night. The customers, after all, had somewhere else to go.

But when it comes to government roads, this is not true. So the government schedules the work when labor is cheap, during the day. The "customers" who windup stuck in a two-hour traffic jam do not have the choice of going to another road vendor with their custom.

Of course, there is some accountability: If you are mayor of New York, and the traffic jams get too bad under your watch, you will lose the next election. And that is why we sometimes do see government construction projects run at night. But it is much less fine-grained accountability than a private business faces.

Of course, this is not a knockdown case against the government ever providing roads. Realistic political economists, such as Smith, Marshall, Pigou, and Coase, always acknowledged the serious problems facing government provision of such goods, but thought that sometimes those down-sides were sufficiently counterbalanced that government provision was justified anyway. With my students in one of my classes, we have been looking at the arguments for and against high-speed rail projects. As I tell them, "If you are for government high-speed rail projects, that is fine. But you should acknowledge the arguments for why markets generally provide goods more efficiently than does politics, and be prepared to say why, nevertheless, this is a case where the government should step in."


  1. Generally agree, but a lot of this depends on what kind of work is being done. I think it's probably related to whether they're working in residential areas. There's all kinds of roadwork being done in my area, and the residential area work is what basically goes on during the day. Highway work that doesn't disturb residential areas goes on day or night. I imagine they want to avoid waking people up.

    Same variability applies to private projects. There's a construction site (private building, in other words) on Lee Highway right now on my way into AU. Late at night or in the wee hours of the morning I cruise by it fine. During the day it takes twice as long because they shut down a lane and have trucks going in or out. Of course the reason is they don't bear the costs of pissing drivers off because those drivers aren't customers yet. Same logic, but it all varies.

  2. Forgetting about Austrian economics' bizarre fetish for efficiency, I think a good reason for the government to set up roads is to provide a force that opens up the freedom of movement for people in a country. I've always had a hard time understanding how extra government-provided services provided alongside private industry was incompatible with laissez-faire. I occasionally wonder what it would be like for all the land in a country with a centralized government to be owned by several private communities. I guess that's what could arise from a ridiculous chain of contracts. Never really liked gated communities because they're like proto-states. I suppose one could secede from them but then they'd start to really be like states if one was stopped from seceding. I think anarcho-capitalists can't imagine much besides private property and I remember one asking how anarcho-communism was possible when he was presented with it.

    1. "Forgetting about Austrian economics' bizarre fetish for efficiency..."

      If anything, it would be neoclassical economists who have a fetish for efficiency, not Austrians

    2. I suppose that, too. They must've led to the wrank culture of economism that penetrates daily life. It's one of the several things that's been bugging me for a long time and Max Weber seems to have picked up on this long before I did:
      "No one knows who will live in this cage in the future, or whether at the end of this tremendous development entirely new prophets will arise, or there will be a great rebirth of old ideas and ideals, or, if neither, mechanized petrification, embellished with a sort of convulsive self-importance. For the 'last man' of this cultural development, it might well be truly said: 'Specialist without spirit, sensualist without heart; this nullity imagines that it has attained a level of humanity (Menschentums) never before achieved'"

      When I mentioned the Austrian school, I was thinking about the extent to which the concept of free markets are honed in on by today's practitioners. Then again, they are economists. I was surprised to learn a few years ago that the degree to which the Age of Enlightenment centered around economics instead of political philosophy since I always thought in terms of freedom, consent of the governed, and democracy. The libertarian cliche is that there is economic freedom and personal freedom. I think that division and the left-right spectrum are faulty as is the tendency to imagine policy in economic terms (i.e., "the Drug War is interference in the free market"). I feel like that's how Rothbard went astray.


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