Investor's Business Daily, August 21st, 2007
Infrastructure: Washington's response to the recent bridge collapse in Minneapolis -- a proposal to hike the fuel tax -- was typical. Why not consider privatization instead?
But that, too, will get a knee-jerk reaction from politicians and bureaucrats so encrusted with obsolete notions that they can't possibly weigh ideas that don't fit their world view. But that doesn't mean it's without merit.
IBD's Monday front page carried a story by Reinhardt Krause laying out the state of U.S. road and bridge privatization. The outlook is mostly encouraging, yet myopia still plagues progress.
"America, the land of the free, has been more hostile to free-market infrastructure than the rest of the world," Krause wrote. "In Europe, Australia, Canada and emerging markets such as Brazil, the private sector has jumped in to build new roads, bridges, tunnels and airports."
Expect political battles, particularly from communitarians. How dare the private sector take over a traditional government function, they'll ask? The roads belong to us all; they're a public good and should not be given over to private interests.
Others will see private-sector involvement and imagine medieval bridge trolls who monopolized river crossings, charging whatever they wanted.
But we will be seeing more privatized roads charging tolls in the near future. With government spending soaring and $200 billion in private money across the world ready to invest in infrastructure deals, it would be foolish not to enlist the private sector.
While $200 billion is not enough to repair every road and bridge in America that needs to be improved -- the Transportation Department reckons that would take $495 billion -- much of that money will be invested in U.S. infrastructure. Significant deals in Illinois, such as the eight-mile Chicago Skyway, and in Indiana, where an international consortium will take over the state's 157-mile toll road, soon will be followed by privatized infrastructure in other states.
Yes, as privatization spreads, so does the number of toll roads. It is inevitable, then, that the fairness issue will be raised. Let us fill in the blanks.
Tolls are not taxes, but user fees. Drive on the road or over the bridge, pay the toll. To avoid the toll, take another route. This is fair.
As it stands now, the cost of our road system is socialized by the fuel tax. Is it just for a motorist to pay a tax that will be used to build and maintain roads and bridges in a city that he will never visit? As tolls grow common and more motorists pay directly for their use of roads, Washington could trim the fuel tax without causing harm to our system. What motorists pay would then be much closer to the real costs of driving, not some socialist approximation.
Washington could even kill the federal fuel tax, as we suggested about two weeks ago, and let local and state governments determine what level of gasoline taxation is needed to pay for their roads that aren't funded by user fees.
Beyond fairer, more-efficient financing of our roads, the benefits of privatized infrastructure include system improvements, congestion relief and shorter commute times. These are not petty issues, but they are areas that government has difficulty addressing. Give the private sector, which has powerful financial incentives to succeed, a chance.
