Rediscovering the road less traveled

Congress is now in its traditional August recess. Unfortunately, the break didn’t come soon enough: Before lawmakers left Washington they approved $11 billion to keep highway projects going through next spring.

Many of America’s airports, bridges, canals, ports, roads, railroads, and tunnels are in disrepair, but this spending is good money chasing bad. A better way to improve our nation’s infrastructure is to turn over its development and management to private companies. Privatizing the nation’s transportation infrastructure by selling (or leasing) it to private companies would make traveling the country fairer, faster and more efficient.

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Federal and state governments have financed and controlled most of the country’s transportation infrastructure for the last century, but the results have been mixed at best, especially considering the enormous cost, which has been estimated at $180 billion per year. The nation’s infrastructure (a D+ according to the American Society of Civil Engineers) and the Highway Trust Fund (due to become bankrupt again in spring 2015 despite the recently approved $11 billion infusion) are in a deplorable state. It is time we consider alternatives.

Privately owned and operated infrastructure is fairer than its public counterpart because people only pay for what they use. When the government owns transportation infrastructure, taxpayers are forced to pay for services they do not use. Why should someone who does not own an automobile pay to fill potholes in I-95? Or why should citizens in my home state of South Dakota subsidize Amtrak, which has zero stations in the state? Conversely, when transportation systems are owned and operated by private companies, people only pay for what they need.

In a privatized transportation system, you will be able to get around faster. You won’t be stuck in long lines scrounging for change because new technology makes toll collection cheap and easy, not the hassle that it once was. Tolls can even be adjusted in real-time to alleviate congestion, allowing commuters to decide if they want to get to and from work quickly or inexpensively. Investors want to generate profits so they will offer a range of options suited to different consumer preferences.

Most importantly, private companies tend to run more efficiently than governments do. Bureaucrats do not have to pay for cost overruns themselves but private owners do, so they are much more sensitive to construction and operating costs.

While privatization would mean paying tolls more frequently, the tolls would be lower than you might expect because a private system would be more efficient than current public transportation systems. Most tolls collected today go to government agencies that do one of two things. They waste them (Google “corruption” and “Pennsylvania Turnpike” for an inkling), or use them to subsidize other parts of the transportation system (for example, Golden Gate Bridge users subsidize Bay area ferry and bus service).

While Americans have become accustomed to thinking of transportation infrastructure as a key government function, the fact is that government ownership of infrastructure is a relatively new phenomenon. In fact, New York City’s subway system was developed by private investment as was almost every bridge, canal, railroad, and tunnel built before World War I. That was the transportation infrastructure that supported America’s Industrial Revolution and its legendary economic prosperity.

Some states are beginning to experiment with private infrastructure again. Florida, for example, recently permitted a private company to begin building and operating a new passenger rail system between Miami and Orlando. The Dulles Greenway, which connects Leesburg, Virginia to Dulles Airport, is privately owned. Indiana’s toll road was privatized in 2006; it is currently operated by a Spanish construction company and an Australian infrastructure company. It may soon go bankrupt, as many new businesses do, but the costs will fall primarily on private investors, not distant taxpayers.

It’s true our nation’s infrastructure needs repair but let’s examine how we can improve our transportation systems—in cost, quality and service – without burdening taxpayers.  History gives us examples of how private companies can deliver more efficient, innovative, and lower cost infrastructure, driving the U.S. economy to a more equitable and prosperous future.

Wright, Ph.D., is Nef Family Chair of Political Economy and director of the Thomas Willing Institute for the Study of Financial Markets, Institutions, and Regulations at Augustana College.