Reihan Salam sees Bastiat's Formulation at work on the roads.
Since the Interstate Highway System was almost entirely funded by the federal government, local policymakers found it hard to resist going along with plans that tore neighborhoods apart. Who in their right mind would turn down “free” money? Who would turn it down if the neighborhoods that were being destroyed were full of people who didn’t have a ton of political power, as was frequently the case?

While this approach seemed to work pretty well in the first few decades of the interstate, it has proven destructive in the long term. Over time, as the cost of maintaining the federal highways has crept upward, lawmakers have been reluctant to raise the gas tax to a level high enough to keep up with rising costs. And so every few years Congress has to scramble to find some clever way to prevent federal highways from falling into utter decrepitude. It turns out that redistributing gas tax revenue from states with lots of drivers to those with very few also means redistributing gas tax revenue from states that need more transportation infrastructure than they have to states that have more transportation infrastructure than they need.
Perhaps, the best thing for the national government to do about crumbling infrastructure is go away.
First, let’s get the federal government completely out of the business of maintaining the interstate highways crisscrossing our big metropolitan areas. Hand these roads over to state governments as soon as possible, and free state governments to finance these roads in any way they see fit, from higher state gas taxes to variable tolls they could use to reduce traffic congestion. Second, for interstate highways that connect cities across deserts and cornfields, let’s replace the federal gasoline tax with per-mile tolls. One of the many problems with the gas tax is that as gas mileage improves, and as a small but growing number of drivers turn to electric vehicles, gas tax revenue is not keeping up with the needs of the highway system. Per-mile tolls can solve that problem by charging drivers according to how much they actually use the highway system, regardless of the kind of vehicle they’re driving. And as Robert W. Poole Jr. explains, they can be pegged to the cost of each road and bridge, which will help ensure that roads and bridges are adequately financed.
There's no reason the interstate turnpikes can't be owned and operated by private companies, perhaps even by wholly-owned subsidiaries of trucking companies selling spare capacity on their rights-of-way, something that makes more sense on roadways occupied by steerable vehicles than it does on railroad tracks. And local governments can decide whether to spend tax moneys on roads or on railroads or bike trails.
After adopting this approach, we will see states investing in the infrastructure projects that best meet their needs, with some states, like California and New York, choosing to invest more heavily in urban mass transit while others, like Texas and Utah, build bigger and better highways. What remains of the federal highway system, meanwhile, will evolve over time, as the routes that attract the most traffic will grow in line with their per-mile toll revenue while those that attract the least will stay the same size, or perhaps even shrink. We’ll have an infrastructure worthy of a bigger, denser, more decentralized America—the kind of infrastructure that Ike, in his infinite wisdom, would be proud of.
Note, though, both Texas and Utah once had interurban railroad networks in thickly settled areas, and major metropolitan areas in both states are installing Commuter Rail and latter-day interurbans. And I have a post in preparation about the potential for enhanced Passenger Rail in Texas.

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