Prices are magical. The concept of prices, not nearly as widespread as you might think, is, in my personal opinion the single largest advance in human thinking ever made.
It beats all others - the wheel, Expressionist painting, the concept of a higher power, electricity, the light bulb...the idea that things have costs and these costs can be represented by a single price, that the two are inextricably linked makes nearly all other advances either inevitable or irrelevant.
I mention this because Maryland and Virginia are getting serious about soliciting private companies to put in place and operate private roads.
Now, students of public choice will remember that roads are a textbook example - literally, in every textbook, used as an example - of a public good alongside the common defense and monuments. The idea of a private road is an oxymoron. You shouldn't ever have private roads.
Public goods are defined in dry but well accepted terms as those things which meet the following criteria:
1. No one can be excluded from it's use.
2. The costs and benefits of a public good are purely external to the market.
3. The costs of each additional user is vanishingly small.
These are actually very shaded statements; the realm of what constitutes a public good versus a private good gets very murky.
When we're talking about roads, a few things have conspired to make roads less public and more private.
The first is the advent of technology that makes preventing the use of a road easier. Technology, especially easy automated toll collection technology, like the Pennsylvania Turnpike's EasyPass system, for example, have made it much less expensive - for drivers as well as for toll collectors - to collect and pay tolls.
The second is the that the vanishing marginal cost of each user is no longer true for some public roads. Congestion has put an end to that. As with many things governed by chaos dynamics, traffic levels have a tipping point. Below a certain traffic density and the system is in a laminar state: traffic flows easily, with cars able to move and maneuver effectively and at speed. If you add one car to a road at the boundary between laminar and non-laminar flow, it will slow to a standstill. By the same token, if you take a road that is laminar at a certain traffic density and change the boundary conditions - say with an accident - then the road my push through the laminar boundary and become chaotic or turbulent. Because of this effect, it means that the marginal cost of each user is no longer zero. In fact, perversely (and this is what makes this issue interesting, at least for me), all of the cars on the road up to the one at the tipping point have a marginal cost of zero. All of the cars after the car at the tipping point have a marginal cost of zero. But that one special car, the one that holds the special person whose just lucky enough to push the beltway over the edge on that one given day - the marginal cost of that person can be measured in the tens of millions of dollars.
If we were to attempt to eliminate the externalities of this action (a favorite activity of economists), then we would have to impose a fee on the one person who caused the roads to tip from laminar to chaotic equal the the cost of the time of all of the people who were delayed by the traffic jam. This feels unfair to me - mostly because we don't know if it will be us, and it feels as though the person who was on the on ramp right in front of the poor, unlucky bastard who gets hit with the fine must be almost equally guilty - but in fact, a few utterly life destroying, bankrupting fines would be the most efficient way of getting the information into the marketplace about the cost of traffic.
Of course, these fines can only really be imposed by the government, which really only has cognizence over the delivery of public goods, which roads aren't if they get congested, so they should be handed over to the private sector whereever congestion is a problem.
Which brings me to the connection between congestion, non linear physics, roads, the upcoming plans of Maryland and Virginia and the price of goods.
In this article in the Washington Post, critics of the plan have complained that it will create a two tiered system, one in which people who can pay will to avoid gridlock and people who can't pay end up stuck in gridlock.
Of course. That's the point - the incentives that result from different prices will more efficiently allocate our scarce resources than any other mechanism we have available. Thank heaven for different prices and different abilities to pay.
