Monday, 11 January 2010

Magical thinking?

I'm a fan of markets, but they aren't magical. Anti-Dismal points to the IEA blog which suggests the recent snow-clogged roads in Britain are another reason that roads ought to be privatized: private road owners would have a profit motive to keep the roads cleared.

I'm skeptical. Of course there's a profit motive to keep the roads cleared, but there's also the cost of maintaining the stock of equipment that would be necessary to deal with "once in twenty year" events. It's unclear to me that public agents have incentive to be undercapitalized relative to the private sector; think of the Bear Patrols in Springfield and whether the private sector would have had quite as many anti-bear helicopters.

I think this far more an example of "cold houses in warm climates" (or, snowy roads in warm climates) than of government failure. As a Manitoban in DC, I always laughed at how the town would shut down for the slightest hint of snow, but it would have been massively wasteful for DC and Virginia to have invested in the kind of snow clearing apparatus that was necessary for Winnipeg winters.


  1. The problem here Eric isn't how big it is, its what you do with it! The incentives for a private firm to use its capital, however much they have, are better than those of the public providers.

  2. Hey, if they have snowplows sitting idle in the middle of all this, then you're definitely right on government failure. Is that the case though?