Comment by lostlogin
It’s rather vague as to where the line is, but as you say, ‘government intervention’ is a term with political baggage in financial theory.
It’s rather vague as to where the line is, but as you say, ‘government intervention’ is a term with political baggage in financial theory.
Roads are not public goods.
> In economics, a public good (also referred to as a social good or collective good) is a good that is both non-excludable and non-rivalrous.
If you ever sat in a traffic jam, you will have experienced that road use is rivalrous. And toll roads show that it's rather easy to exclude people from using roads.
Building roads with general taxpayer money and making them available without payment by the users might or might not be good policy. I don't know. But roads ain't a public good.
Most roads are difficult to exclude. Most spend most of their time with excess capacity and are not rivalrous. They're clearly not a typical private good.
And they're usually a natural monopoly, too. Not to mention that the acquisition of land to make a road is often problematic.
Basically, there's a lot of reasons to expect market failure in a market for roads. That's not to say the only solution is for the government to provide them, but that laissez-faire, completely hands off solutions are probably not going to turn out great.
Nowadays it's fairly easy to exclude people from roads: just put up a sign that says you can only use them if you paid. (You can also use a camera and some machine learning to catch offenders; or otherwise cheap overseans workers who manually review footage.)
> Most [roads] spend most of their time with excess capacity and are not rivalrous.
Most cars sit around idle most of the time. I'm not sure what your argument shows?
> And they're usually a natural monopoly, too. Not to mention that the acquisition of land to make a road is often problematic.
That's a different discussion. Though I'm more optimistic.
> Roads are not public goods.
They are a subsidy to the car industry.
They require ongoing maintenance.
They are a massive transfer to public land to whoever occupies the road, and the person occupying the road might not even be in their steel box for days on end.
Well, it depends on how the roads are financed. You are right that roads financed out of general taxation and free to use can be seen as direct or indirect subsidies to the car industry.
But the same physical road, but financed out of user-fees (or by voluntary contributions from nearby shops to attract shoppers etc) by a profit-driven private company, are not subsidies to the car industry.
Or take the hypothetical from the last paragraph, and add massive taxes on top, and all of a sudden it's the opposite of a subsidy. But the physical road stays the same.
How is stopping trucks on the road to check their papers, and holding up the delivery for some period of time, on a semi-random basis, not ‘intervention’ of some kind?
Yeah, even there:
> beyond the mere regulation of contracts and provision of public goods
Building roads or enforcing rules: not intervention, according to that.