A more reasonable road

Privatization can help address our transportation challenges

By Patrick R. Gibbons
  • Wednesday, March 25, 2009

According to the Urban Mobility Report, from Texas A&M's Texas Transportation Institute, the average commuter in Las Vegas will face 30 hours of traffic delays over the course of a year — almost an entire work week wasted in traffic. As Nevada continues to grow, congestion and pollution problems will mount unless the increasing demand for road capacity is met.

Currently, Nevada's transportation system pays for new road capacity through taxes. Thus, where new road capacity is developed becomes a political decision, rather than a decision determined by traffic density and commuter travel habits. Also, as energy-efficient vehicles allow people to drive farther on less fuel, a transportation-funding system based on gas taxes increasingly becomes inadequate. Finally, big tractor-trailers crossing Southern Nevada, inflicting wear and tear on local roads in the process, need not contribute a dime of gas-tax revenue to support road upkeep.

To remedy these multiple problems facing transportation in Nevada, we should look to toll roads. The state of Indiana leased one of its highways to a private firm for over $3 billion. Not a single taxpayer dollar will be used again to pay for the upkeep on that highway. Instead, the private company will manage the highway based on safety standards set and agreed upon with the state. The private company has every incentive to keep fares low enough to attract customers, while providing safe, smooth, comfortable and speedy driving. If the company sets prices too high, allows the road to deteriorate or doesn't keep traffic moving efficiently, people will simply use alternative routes and the firm leasing the toll road won't make money.

While Nevada could, and probably should, follow Indiana's lead, Gov. Gibbons has proposed converting high-occupancy vehicle (HOV) lanes into toll lanes. This is an excellent first step. HOV lanes do little to reduce pollution and keep traffic moving, while toll lanes reduce congestion, since anyone willing to pay for access to the lane also reduces traffic in the non-toll lanes.

Unfortunately, even this modest plan has enemies on the right and the left. On the right, some conservatives view a toll road as "double taxation" since taxpayers already financed the road's construction. Logically this makes little sense. While we taxpayers paid for the road, we continue to be taxed for its upkeep. And since government "earns" money by simply taking it, non-users are compelled to subsidize the users, and government has little incentive to provide the best service for the lowest price. Thus our "free" roads grow more and more expensive.

On the left, people oppose it simply because toll roads involve private companies. In a recent Las Vegas Sun article, Sen. Mike Schneider said, "If you get in bed with guys on Wall Street, they're sharks. They don't get involved unless they know they're going to be pulling out hundreds of millions of dollars."

On this, Schneider is right, but he misses the essential point. Private companies don't get involved in projects that lose money, since losing money hurts the company, its shareholders and its employees. Additionally, companies losing money or failing to make a profit make society in general worse off, as it means that necessarily scarce resources are being wasted. It is, after all, the profit motive that compels companies to be as efficient as possible while providing the best service they can muster to customers. The government, ultimately, has no such incentive.

Furthermore, the objection to privately run toll roads on the grounds that private companies make a profit is illogical, given our present reality that private companies already make a profit constructing our "free roads." However, since there are fewer incentives for government-employed private companies to construct roads efficiently and quickly, they often take longer and more expensive routes to finishing projects. So, if you object to private firms making a profit off taxpayers, you must also object to our current system of "free" public highways.

This isn't rocket science. When government destroys or eliminates market pressures, it is the private firms allied with politicians that end up raking in the largest profits at the expense of the public. Toll roads, by strengthening the taxpayer-protecting dynamics of the marketplace, would produce better service for Nevada's residents.

Perhaps our politicians' real objection to toll roads comes down to this: Private toll roads take a great deal of control out of their hands. And that means fewer sweetheart deals they can pass on to preferred contributors and special-interest friends.

For more information, see John Stossel's ABC special on toll roads titled "The Road to Nowhere?" and reason.tv's Drew Carey special, "Gridlock."

Patrick R. Gibbons is an education policy analyst at the Nevada Policy Research Institute.

blog comments powered by Disqus