government, gas taxes, and collapsing bridges

A nice piece from Resa Camoriano in this week's Jefferson Review on the costs (in dollars and in lives) of government inefficiency, in the context of government's provision of roads.

Three other thoughts here:
1.) The cost of government provision is typically borne disproportionately by those at the margins of society. (In the case of poorly-maintained bridges, the burden is shared more evenly/randomly.) If/when the government provides low-quality schools or other services, those with less income are more likely to be stuck with whatever bone the government throws them. If/when the government provides something inefficiently, the higher costs are passed to all taxpayers, but it's those at the margin who find the burden most painful.

2.) To build on Resa's comments, gas taxes (the primary cost for consumers to use roads) should not be merely another government revenue source. Gas tax revenue should be devoted to the costs of having roads-- building them, maintaining them, and the social cost of pollution. More broadly (and ideally), the costs of using roads should match the costs of you using the roads. So, for example, if your driving 10,000 miles can be connected to $100 in road building efforts, $30 in maintenance and $20 in pollution, then the ideal gas tax would be $150.

3.) Finally, a longer lesson on a key economic concept. Economists often use roads as an interesting potential example of "public goods". The key characteristic of a "public good" is a good or service for which it is difficult to exclude people from paying. This leads to the "free rider problem" since people will use it without paying for it appropriately. Obviously, this is a problem for market suppliers since they would bear costs and have difficulty getting revenue!

Government can be a relatively effective provider of such services, since they use coercive taxation to get the revenues that people will not voluntarily provide-- getting around the free rider problem. But often, markets are quiet effective in managing the free rider problem. Consider software. It used to be that people could routinely use it themselves and pass it along to countless others. Now, there are various innovations that prevent this multiple, free-riding use. Or consider churches that do not require tithing, do not monitor donations closely, and are large enough where reputations are not enhanced by having people see me put something in the offering plate. At some level, it is amazing that people don't free ride so much that churches have trouble staying open.

Roads are an interesting case because they can be provided by the private sector-- but often with some difficulty. How would a provider collect revenues? In a highway or bridge setting, toll roads show that it is possible through toll booths. Modern technology makes this easier (as cars are "scanned" and their drivers are billed for using the road services), but high-cost revenue collection is an impediment to private provision.

In any case, from a practical standpoint, the market's struggle with a "public good" should be compared to the government's struggle in providing the same service. Governments always struggle to provide goods and services with efficiency and equity. Market struggle should not be used as an easy excuse for what may turn out to be far worse government struggle.