Downside of Government Transport
A wise man once said that the right answer can't be found by asking the wrong question.
There has been much discussion of late about the possibility of building high-speed rail transport in North Carolina. Proponents point out that rail transport is efficient and green; opponents respond that a rail project would be unnecessary and expensive, and that the government should focus on maintaining the highway system.
Caught up in technical arguments, these ideologues tend to miss a much more critical question: Should the government be building or financing transportation infrastructure at all?
The main argument for government transportation projects has to do with efficiency. While unsubsidized private businesses do have more of an incentive to be efficient, they don't have the same power to accomplish their goals that the government has. Government, being funded by taxpayers instead of profit-seeking banks, can afford to build larger, more elaborate projects that link the country together more effectively.
Government also possesses the power of eminent domain, which allows it to expropriate private property if it stands in the way of efficient road lines. Unsubsidized businesses, on the other hand, would have to pay the full price of any land they buy, and would be unable to use land that the owner doesn't want to sell; private roads would likely be less direct, having to travel around uninterested landowners.
A free-market system of transportation would likely be smaller in scale, have less carrying capacity, and would be efficient only for small communities and localized areas.
All of this is undoubtedly true, but why is it a problem? Why shouldn't we have smaller, more decentralized infrastructure? Certainly efficiency is a good thing, but there are opportunity costs associated with developing such efficiency, costs that must be factored into the equation. If a large, centralized transportation system is too costly to manifest itself in a free market, why must we distort the market for its sake?
Infrastructure projects are engaged in not because they are good for society, but because they benefit the powerful corporate interests that influence the government. Transportation is a natural diseconomy of scale; the larger a business, the more money it has to spend, generally, on transporting goods, materials and personnel.
A small business may make only occasional use of transportation infrastructure; a large conglomerate must regularly move materials from suppliers to factories to warehouses to markets, many of which are located in different parts of the country (or even in different countries).
Any subsidy to transportation, therefore, makes large corporations artificially competitive with small businesses. This is not a trivial matter; it defines the structure of the economy.
Economist Ralph Borsodi estimated that, even with transportation as heavily subsidized as it is, it is cheaper to manufacture most household goods at home than to buy them from their main suppliers solely because of increased distribution cost.
One can imagine that without transportation subsidies, there would be serious limits to the size of a profitable business.
Critics will likely respond that, as highways are paid for with a tax on gasoline, the businesses that benefit from transportation ultimately do pay for their utility.
A gas tax, however, cannot accurately account for the subsidy that public infrastructure provides. Heavy trucks, for example, which supply large corporations, cause virtually 100 percent of roadbed damage but consume far less than 100 percent of gasoline.
This system also accounts for neither the indirect subsidy of eminent domain nor the sheer size and capacity of the highway system. It is also inapplicable to rail transport.
It should be easy to understand why the government should not promote big business. Large corporations with excess capacity have to engage in "push" forms of distribution, which are wasteful and environmentally destructive.
Concentrated industry is also harmful to the poor; workers have much more bargaining power when there are many small businesses competing for them rather than a handful of large ones. If the free market can naturally check the size and power of business, it should be embraced.
If the rail debate occurs the way most political debates in this country do, it will probably continue until corporate interests decide what form of transportation they want their cronies to subsidize. High-speed rail will either be built or abandoned, and everyone will forget about the controversy.
If, however, citizens decide to take an active interest in this debate, they must at least consider the option not mentioned: complete privatization of all transportation infrastructure and an end to all related subsidies, direct or indirect.
Perhaps I'm wrong; perhaps a free market in transportation would not be good for the public. Unless we at least have this debate, we'll never know.
Andrew Soboeiro, a rising freshman at UNC-Chapel Hill, is a summer intern at The Pilot.
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