Normally I will not post a link to another article elsewhere without first adding my own view or analysis. However, this quality article over on the Von Mises Institute website by Robert P. Murphy needs no introduction: The Road To Taxi Serfdom .
As you have just read, it leads off with the topical subject of the New York taxi ‘design by decree’ and then dovetails this with mention of a free market in roads. I will touch on these areas in the reverse order.
Certainly my own preference, oft stated but not yet posted here, is for a fairly broad framework for a private road system. On a related point, road pricing is a subject that often seems to come up before a full private road system is discussed. It is my suggestion that there is no continuing implementation of road pricing until this full framework is in place. Otherwise there is a strong argument that such a system could deteriorate over time into a ’rentier’ system. This is if it is not considered to be one in the first place. Certainly if the road is still owned and operated by one provider, the government, through its agencies, then currently I believe this must be the case. However, I remain open to any argument highlighting a path that does not lead this way. City congestion charging, which unfortunately is already such an implementation, may reduce congestion, but there is no real requirement to respond to competitors and improve the quality or variety of the offering. Such a rushed implementation is a shame because I think it delivers few of the benefits that one might imagine could be achieved. It might also have the unintended consequence of deterring equally valid developments in vehicle hardware to solve these problems and improve quality. I do have sympathy with those who want to charge for use of a limited resource though.
If you were to catch yourself wondering for a moment what a person involved with a commercial enterprise in high quality ride sharing might be doing paying great attention to free market road systems then you would find , unsurprisingly, that it springs from the directional perspective of TEXXI, our private transit exchange. TEXXI does not require a private road system to deliver massive benefits. These advantages have been highlighted continuously on the blog and elsewhere and I will not repeat them again in this particular post. If people should make the conceptual mistake of conflating the two issues then they might receive an ‘answerphone’ response: one is separate from the other. However, in a time of increasingly advanced and accessible technology, the transport system and associated infrastructure is demonstrating remarkable similarities to the “models” of the technology industry. TEXXI is essentially an advanced software solution for shared transport. It succeeds by doing “clever” things in the virtual space. It is not long though before any sensible strategist, thinking ahead, might look to how the success of large scale ride sharing generated in the ‘soft’ space might start to shape the demand for features on the hardware side; the hardware side in this case being the vehicles and road infrastructure itself. Once you have arrived logically at this point of reasoned understanding, it only takes a few months of following online forums concerning intelligent transportation technology (autonomous vehicles and the like) , or a few moments browsing the web for ideas on snow resistant materials for road surfaces, or a solution to whatever specific problem it may happen to be, to understand that there are many competing and/or collaborative software and hardware solutions lining up to be possible winners in the transport space. However, we have a centralised public system of road management and there will be , if I am correct, an increasing amount of frustration as the quality of our transport system is determined heavily by debate, with single solutions picked as winners by committee on a national basis. It won’t have escaped the observant person’s attention that this problem, as now defined, is one that markets are particularly adept at sorting through whilst delivering people what they want. Nor does what people get have to be such a narrow thing.
Now we return to our taxi design by decree in New York. Imagine if when the first mobile phones came out, let’s say mid 90′s and ignore the bricks of yesteryear, people had been consulted as to what their views might be on some useful features and this had been cobbled together into something referred to as “The Design”. It is likely we would all still be on an early version Nokia. The wonders of Android and iPhone would not have been introduced to us. Steve Jobs would not have been able to ask hardware designers to slip in a multi-touch screen, a camera and a mercury switch with such ease. Software influences hardware and hardware influences software iteratively in this domain, why not for transport? New York limits itself by taking such an approach.
TEXXI has a future potential analogous to the sophistication of a UNIX* system or maybe super computer software. You do not run super computer software on a ZX81** for very long if you want all the benefits. Nor do you assume that vehicles, road or rail infrastructure need look the same as it does today when operating alongside ’soft’ solutions which have this increased potential. It is not even sensible that you try to pick how it will look, let the market do that. One can therefore see the importance in not becoming fixated on one way of doing things and why it is essential to open the door to discussion on this subject. People should also remember, as I heard it put so wonderfully by someone recently, that an iPad 2 has more and better of everything when compared to an iPad and at a lower cost. Who is to say that staying fixated on our current method of road building, maintenance or understanding of what a road is (and/or rail building, maintenance or understanding – if you prefer) is the right approach? This is is not simply a geeks desire to see new technology. When yet more money is allocated to filling pot holes, gritting roads or subsidising buses then one would do well to remember this economic argument. When people ask for more money to be allocated to the health budget or the education budget then they should remember that less spent here could mean more available there.
There is one last point in which I anticipate some of what people might think rather than having read direct argument. The desire of some for free market road systems has been there well before anybody might have considered that a road be anything much more than it is now. Certainly it was there before an acceleration in commercial technology provided the number of options at the prices we have today. A route to privatising the roads might be to encourage simplification of the “rules of the road” whilst arguing the safety issue. I believe this simplification has been trialled in the Netherlands, possibly amongst other places. When the roads are sold off you would have a nice private road where you are no longer told what to do. A utopia for some. Engineering and technology might start to look like centrally planned interference, but as I have already highlighted with comparison to the “model” of the technology industry and mobile phones in particular, it is not. A design where there is little technology and few rules is only one of many possible. Why should there not be competing rules systems for roads? Safety could be considered to be a matter of cost not of argument. If you venture out onto a road system that is less safe than any other then this will be determined as a matter of price by the insurance market covering that road system or, if you have the advantages of TEXXI, trip default swaps. You would have a choice to go on the least safe road system you might desire to go on and could still afford, either through insurance or by bearing the cost of any accident yourself (note this can neglect people who have to “tolerate” a road when they are not actually using it, but this is for another post on another occasion). Take the example of someone designing a fully autonomous vehicle, not necessarily a favourite of mine at the moment but that doesn’t matter. They wouldn’t have to prove to a central safety board that their technology was ready to use. If a road provider wanted to proceed to offer the service, or allow that type of vehicle on their road, then they could choose to do so with the full understanding that if it worked out badly, or their customers didn’t like it or couldn’t afford the increase in insurance premiums, because it did in fact reduce safety, then customers would be lost immediately to another provider. The market has resolved the issue.
To conclude, when considering a free market in roads and taxis it might be worth adding just one more perspective to the many existing ones. Finally, New York should reconsider this limiting approach.
* http://en.wikipedia.org/wiki/Unix “Unix (officially trademarked as UNIX, sometimes also written as Unix) is a multitasking, multiuser operating system”
** http://en.wikipedia.org/wiki/Zx81 “The ZX81 was a home computer produced by Sinclair Research”