Year: 2017

Demystifying privatization: Private roads and sidewalks in Hong Kong

According to The Heritage Foundation, Hong Kong is and has been, for the last 25 years, an exponent of and exemplary model for economic freedom. Despite its urban development regulation, property rights infringement, state monopolies, the erosion of the Rule of Law, or its unequal and overwhelming labour regulations, Hong Kong can still be proud of one of the most thoroughly discussed aspects of classical liberalism: private roads and sidewalks. After offering a brief explanation of the different alternatives to road-socialization, I will focus on one specific problem in the privatization of roads: the idea, vox popul, that if we privatize common areas such as roads, sidewalks, or parks, they would not be free anymore, but shall become expensive, unaffordable or unavailable.

Who Will Built the Roads?

Roads, sidewalks, and other common areas are a scarce resource and, thus, the best way to distribute and manage them is, libertarianism tells us, the free market. There is a psychological element behind the idea that government intervention is a must when we are dealing with complex, important, or basis services, such as healthcare, education or, indeed, roads. Our emotional response is a compelling, dire need for a superior and abstract entity who can magically manage that complexity: the government. But the government is not, however, an abstract entity –it is in fact a collection, so to speak, of highly unskilled individuals without incentives to do their job properly. Therefore, government management often results in absolute failure and waste of resources. As it is the case with traffic jams: a collision between the private production of vehicles and the public management of roads.

But without government, who will build the roads? This endless question has a simple answer: the same people who are building them now: contracting companies hired by the government. The government does not build roads. The government, in fact, builds nothing. The government only steals half of our salary to redistribute it inefficiently to provide us with things that we barely use or that, once we use them, they won’t work properly. The fantasy perpetuates itself like a self-fulfilling prophecy under the excuse that “it has always been like that” and, if things were to change, it will lead to complete chaos.

But when abolitionist tried to get rid of slavery in the United States, some people used the same excuse: Who will pick the cotton when we free the slaves? Indeed, many were convinced that, without slaves picking cotton, clothes would not get made, families and companies would go bankrupt, and kids would freeze to death (Rothbard 2006; Samuels 2015, 191-193). But after the abolition of slavery new incentives led to the development of new technologies to pick the cotton. As happened with slavery, we are unable to predict what kind of roads and how necessary roads will be in a world without public roads, because government intervention kills any possible incentive to such development. Without free market and the incentives it creates we cannot predict the development of new technologies.

There are, however, many alternatives to government intervention based on the private sector, from the threshold pledge system described here, to roads built by companies who need logistic services, roads for their employers, and roads for their customers. In Hong Kong it is not hard to see “Private Roads” in all neighborhoods, working as open malls where people and cars can freely come and go without restrictions –a variation of the “center model” proposed by Block (2009, 16).

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From Confucian Libertarian, here.