Sell the Streets?
In 2004, the Chicago Skyway was leased to a private company for 99 years for more than $1.8 billion. The company has the right to toll and concession revenue and the responsibility to maintain the road. In 2006, the same company purchased the right to maintain, operate, and collect tolls on the Indiana Toll Road for 75 years for $3.8 billion. Soon after acquiring these roads, the company introduced electronic tolling on them. Could the government have done this? Of course. But government lacks the profit-maximizing incentives that spur businesses to innovate to better serve consumers, so innovation and responsive customer service by government are much less likely.
This is from the latest Econlib article, “Sell the Streets,” by Suffolk University economist Benjamin Powell. In the article, Ben lays out why for-profit toll roads work so much better than the socialist commons and even discusses how you can have privately owned streets where tolls are infeasible.
Sometimes strong advocates of the free market are ridiculed for bothering to talk about such issues when, the ridiculers allege, we have so much more important issues to discuss. But talk to Americans about their biggest daily upsets and traffic congestion is generally high on the list. Powell proposes a solution that actually would solve the problem.