Saturday, August 04, 2012

The Super Toll Road

Suppose that when it was first built, the Interstate Highway System had companies built the roads (paying the companies large amounts of money to built them to their specifications) and then leased the roads from the companies. Toll roads, right?

Remember - the official title for the Interstate Highway System is the Dwight D. Eisenhower National System of Interstate and Defense Highways.  The justification for building the Interstate system (replacing the patchwork of numbered US highways that were then in place) was national defense - how to move troops and equipment quickly in times of national emergency. Although this network of "Superhighways" had been under discussion since the 1920's, it took the Cold War to finally get this in place.

The government pays large amounts of money to the  Super Toll Road  providers. The government paid for all the research on how best construct the roads, paid the cost of construction, and then pays to use it. It is a sweetheart deal for the road builders.

Further suppose that access to these  Super Toll Roads is limited to government traffic initially. It wouldn't do to have rush hour traffic clogging the road if you were a general trying to move tanks from Ft Bragg to Ft Bliss.

The Road Consortium also gets to use these roads for their own traffic (building roads requires moving lots of stuff from Point A to Point B). Universities doing government research, for advances in road-building and other defense-related topics can also use the Super Toll Road.

Meanwhile, a small sector of the public, learning of this vast network of government-contracted Super Toll Roads, and having grown weary with traffic signals and congestion on the US highway routes, clamors for access. After all, their taxes financed its creation, construction, and upkeep, even if ownership remains with members of the Road Consortium.

And so it came to pass.

Initially demand for access was modest. To meet it, local road owners leased on-ramps to the Super Toll Road, and sold monthly passes to locals. The on-ramps were initially not very good, but once on, visitors discovered a small but exciting array of services and amusements that had sprung up on the Super Toll Road for the benefit of its small band of users.

Some were available only for users of the Super Toll Road, and interest in the Super Toll Road increased. As it did, profits for the Road Consortium went up and up and up. What had previously been seen as a small but reliable part of their profits became their chief engine for growth. Large companies with new and better on-ramps replaced the dirt roads provided by the older access companies. Many of the new access companies were owned outright by members of the Road Consortium.

Money was made - lots of it - by the Road Consortium, the on-ramp companies, and companies selling goods and services on the Super Toll Road. But the thing about making a lot of money: you can never make enough.

And now the evil geniuses of capitalism step to the plate.

Said the Road Consortium to the people: "You can only drive on the road using cars that we sell you. It is to protect the roads. But you can drive all you want."

And the people said, "Oh! Well, if it's for the roads..."

Said the Road Consortium to the people: "This monthly pass only allows you to drive 45 mph on the road. To drive faster you will need a more expensive pass. But you can still drive all you want. It will just take you longer to get there."

And the people said, "Oh! Well, as long as I can drive all I want."

All was good, and traffic (and profits) increased.

But one day, the evil geniuses of capitalism reconvened, and decided there were surely more ways to squeeze money out of the Super Toll Road. "The Super Toll Road is popular, but we need to figure out how to add users without adding more lanes for the traffic."

Said the Road Consortium to the people: "Even though we said you could drive all you wanted to, some people drive more than the rest of you. Henceforth you will be limited to driving a thousand miles a month."

And some of the people grumbled, "But you said we could drive all we wanted to!"

Said the Road Consortium to the rest of the people: "Pay no attention to those people; they are abusing the generosity of our services. A thousand miles a month is plenty for any reasonable driver."

And some of the people continued to grumble, but there were no longer any real options to using the Super Toll Road. While there were different members of the Road Consortium, there was no real competition within any given area.

And the money continued to roll in.

Then the evil geniuses of capitalism came together again to discuss how to make even more money. But they were unable to come up with a way to do so until one bright light said, "Let's charge more for going to certain destinations. We'll put a surcharge on going to small towns because fewer people use those routes."

Another said, "Let's charge more for carrying certain types of cargo. If people want to carry building supplies in their cars it should cost extra."

And another said, "Let's have preferred partners on the Super Toll Road. We can charge more to do business with non-partners."

And some of the people protested and called for laws preventing the Road Consortium from imposing these new rules.

Said the Road Consortium through their lobbyists and shills: "These new rules interfere with our private property rights. We need to be able to do this to protect the network. We don't need government regulations, this will stifle innovation."

And some of the people said, "But you are putting regulations on people's use of the Super Toll Road!"

Said the Road Consortium: "This is between us and our customers."

And all across the Super Toll Road, billboards owned by the Road Consortium appeared that spoke out against Traffic Neutrality.

And the money continued to roll in.

And some of it rolled back out again to friends of the Road Consortium.

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