WEBVTT NOTE Roads, Education, and Waterways: The Case Against Public Services 1 00:00:00.000 --> 00:00:19.000 My topic is privatization, and before I get into some of the radical privatizations such as oceans, education, bodies of water, 2 00:00:19.000 --> 00:00:26.000 I thought I would rehearse the reasons why we would want to privatize anything at all. 3 00:00:26.000 --> 00:00:55.000 And it seems to me that there are two reasons for privatizing anything. One is morality, ethics. The idea is when I trade my pen, my pen for your tie, we have a voluntary exchange. I own the pen, you own the tie, we agree to exchange. 4 00:00:55.000 --> 00:01:00.000 There's no coercion whatsoever involved. 5 00:01:00.000 --> 00:01:05.000 Imagine if ties and pens and things like that were not privatized. 6 00:01:05.000 --> 00:01:11.000 Then the way we would engage in tie and pen creation and transfer 7 00:01:11.000 --> 00:01:16.000 would be we would get the government to collect money from us all 8 00:01:16.000 --> 00:01:19.000 and then give back the ties and the pens. 9 00:01:19.000 --> 00:01:23.000 And the problem with that is that it's coercive. 10 00:01:23.000 --> 00:01:30.000 People would then be forced to pay money for a tie or a pen that they may or may not have wanted. 11 00:01:30.000 --> 00:01:41.000 So just on basis of morality apart from efficiency, we know that there are benefits to markets and markets are predicated on privatization. 12 00:01:41.000 --> 00:01:46.000 So we have one argument for privatization of anything. 13 00:01:46.000 --> 00:01:49.000 The second one is economic efficiency. 14 00:01:49.000 --> 00:01:57.000 Now, if you trade your pen for my tie, it must mean that you value this tie more than the pen you're giving up. 15 00:01:57.000 --> 00:02:02.000 And it must mean that I value the pen that I'm getting more than the tie. 16 00:02:02.000 --> 00:02:04.000 So we each gain a profit. 17 00:02:04.000 --> 00:02:07.000 We exploit each other if you want to say it that way. 18 00:02:07.000 --> 00:02:09.000 That would be the leftist way of saying it. 19 00:02:09.000 --> 00:02:16.000 But the more rational way of saying it is that we each gain the profit of the difference to us between these two objects. 20 00:02:16.000 --> 00:02:41.000 But, if it's done through the government, no such conclusion follows, because you are forced to pay money to get a tie, we can't deduce that you benefited from it, because if you would have benefited from it, you would have been willing to do it voluntarily, but it was done under coercion, so the same economic implications do not follow. 21 00:02:41.000 --> 00:02:57.000 Now, there is some discipline in the political system. With democracy we get some benefits. We have some control over our masters. 22 00:02:57.000 --> 00:03:07.000 Nothing like what we have over private enterprises. The reason that we have no crisis in pens or pizza or ties or shirts 23 00:03:07.000 --> 00:03:15.520 is because if somebody is producing badly we just don't go to them we don't buy 24 00:03:15.520 --> 00:03:20.400 from them we don't patronize them and if enough people don't then they go then 25 00:03:20.400 --> 00:03:32.440 they go broke. When FEMA came to help in quotes my problem with FEMA was not so 26 00:03:32.440 --> 00:03:38.440 So much that they screwed up royally, it's that there was no market mechanism to get rid of them. 27 00:03:38.440 --> 00:03:45.440 I mean, look, in the private enterprise, it's conducted by human beings and human beings err. 28 00:03:45.440 --> 00:03:50.440 And this is the reality. We're on the wrong side of the Garden of Eden if we want perfection. 29 00:03:50.440 --> 00:03:52.440 So there's always going to be error. 30 00:03:52.440 --> 00:03:56.440 The benefit of the market system vis-a-vis the political system is that when you make an error, 31 00:03:56.440 --> 00:04:01.440 there are automatic feedback mechanisms that reduce your scope, you earn less profits, 32 00:04:01.440 --> 00:04:03.440 and eventually you have to go broke. 33 00:04:03.440 --> 00:04:09.200 Now, if FEMA were a private enterprise, they wouldn't be around anymore. 34 00:04:09.200 --> 00:04:11.440 The Army Corps of Engineers. 35 00:04:11.440 --> 00:04:13.520 Again, I don't blame them for making mistakes. 36 00:04:13.520 --> 00:04:15.360 Private people make mistakes too. 37 00:04:15.360 --> 00:04:18.320 But when private people make mistakes, they lose money and they go broke. 38 00:04:18.320 --> 00:04:23.120 When the Army Corps of Engineers makes mistakes, they get more money. 39 00:04:23.120 --> 00:04:28.640 So how do you expect economic rationality from a system where you reward incompetence 40 00:04:28.640 --> 00:04:37.720 Incompetence and visa via system where you retard incompetence by making them go bankrupt. 41 00:04:37.720 --> 00:04:42.800 Let's compare the dollar vote and the political vote. The dollar vote occurs every day. The 42 00:04:42.800 --> 00:04:50.240 dollar vote is narrow. You can buy pizza or salad. The political vote, you might have 43 00:04:50.240 --> 00:04:56.520 candidate A whose policies 1, 3, 5 and 7 you like and candidate B whose policies 2, 4, 44 00:04:56.520 --> 00:05:07.520 and you have no way of narrowly focusing your vote on Policy 2 or Policy 3, it's a package deal, it occurs every four years. 45 00:05:07.520 --> 00:05:23.520 So the control that we have as voters is very much less than the control, voters over politicians is very much less than the control we have over market participants, entrepreneurs. 46 00:05:23.520 --> 00:05:39.520 Okay, with this very, very brief introduction to why privatize things, let me move into a discussion of oceans, education and private roads. 47 00:05:39.520 --> 00:05:47.520 Why do I pick these? Well, it's sort of like shooting fish in a barrel to say, let's privatize the post office. 48 00:05:47.520 --> 00:06:17.520 Office. I mean, I'm all in favor of it. And I think that the people who focus on that are doing good work. And indeed, I have been known upon occasion to write articles and even speak about that. And I favor that. But it doesn't really grab you. It's not challenging enough. And my own perverse mind works in weird directions. So I have to go in that direction. OK, let's start with perhaps the most radical thing. And that would be privatizing. 49 00:06:17.520 --> 00:06:44.520 Can you see that? What I've got here is just a rough estimate of what the surface of the Earth 50 00:06:44.520 --> 00:07:08.520 is composed of and it's composed of roughly 25% land and 75% oceans and then I have an estimate of the GDP that is produced in these two places and it's just right off the back of the envelope estimate on my part because it's very difficult to get data as to what proportion of the GDP is created on the land versus on the oceans. 51 00:07:08.520 --> 00:07:12.520 Nobody's interested in this question, nobody gathers information on it. 52 00:07:12.520 --> 00:07:18.520 My next project will perhaps be this and then I'll be digging and perhaps get better data for you. 53 00:07:18.520 --> 00:07:25.520 But the answer is that there's a disproportionate amount of productivity on the land than on the ocean. 54 00:07:25.520 --> 00:07:30.520 Now you might say, well, possibly because most people live on the land and very few people live in the ocean. 55 00:07:30.520 --> 00:07:34.520 Okay, that might account for some of it. 56 00:07:34.520 --> 00:07:36.520 And I don't doubt that it does account for some of it. 57 00:07:36.520 --> 00:07:46.720 So my claim, my hypothesis is that that doesn't tell the whole story. That is more to it. 58 00:07:46.720 --> 00:07:51.640 And we have this thing called the tragedy of the commons. And what is the tragedy of 59 00:07:51.640 --> 00:08:01.400 the commons? The tragedy of the commons is that when something is unowned or, well, unowned 60 00:08:01.400 --> 00:08:08.400 If you are commonly owned, we tend to treat it in a different way than when it is privately owned. 61 00:08:08.400 --> 00:08:13.400 For example, suppose you all have a cup of coffee in front of you. 62 00:08:13.400 --> 00:08:17.400 And suppose you don't drink it with spoons, but I give you a straw. 63 00:08:17.400 --> 00:08:20.400 Maybe I should use orange juice as a better example. 64 00:08:20.400 --> 00:08:24.400 I give you a straw, and in the straw, unbeknownst to you, is a monitoring device 65 00:08:24.400 --> 00:08:28.400 picking up how quickly you slurp up your orange juice. 66 00:08:28.400 --> 00:08:32.320 That's one scenario and you slurp it up at a certain rate. 67 00:08:32.320 --> 00:08:35.640 The second scenario I give you is I give you very long straws 68 00:08:35.640 --> 00:08:40.320 and I give you a gigantic big bowl, maybe a swimming pool full of orange juice with long straws 69 00:08:40.320 --> 00:08:43.320 and we ignore the health effects of this. 70 00:08:43.320 --> 00:08:47.680 And we ask, what then will be your rate of sipping the orange juice? 71 00:08:47.680 --> 00:08:53.360 And the answer is you'll probably sip it a lot quicker if it's communally owned 72 00:08:53.360 --> 00:08:57.600 because you'll each reason that if I don't sip it now, the other guy is going to get my share. 73 00:08:57.600 --> 00:09:07.600 So I better slurp away at a furious clip, whereas if it's privately owned, you have it under your control, you can take it in at your leisure. 74 00:09:07.600 --> 00:09:18.600 The alternative cost of a SIP now, in the private case, is you lose that amount that you SIPed when you did SIP. 75 00:09:18.600 --> 00:09:27.600 The alternative cost in the case of the public is virtually zero because someone also get it anyway. 76 00:09:30.600 --> 00:09:33.600 One of the reasons, let me give you another chart here. 77 00:09:34.600 --> 00:09:43.600 One of the reasons that collectivized forms in the Soviet Union were very inefficient and here the data is much better. 78 00:09:43.600 --> 00:10:10.600 The Soviet Union land was 3% of it was private, 97% of it was public, and on the 3% that was private, they'd give each of the farm workers a little front yard or backyard where they could grow crops, they produced 25% of the crops, and on the public, it was 75% of the crop. 79 00:10:10.600 --> 00:10:40.600 and on the public it was 75% of the crop think of it in this terms if you own a cow a private cow and the cow is having a calf at 3 in the morning where are you going to be if you're a farmer you're going to be out with that cow making sure that the cow does well because you're a big part of your income your wealth your position depends upon a healthy cow and a healthy calf on the other hand if it's a collectivized 80 00:10:40.600 --> 00:10:56.600 The cow, and there are 10,000 of them, and there are 10,000 workers, the indication is you'll just sort of turn over and go back to sleep because you own very little of it, and the benefits that accrue to you are very small. 81 00:10:56.600 --> 00:11:06.600 So here we have two examples of the tragedy of the commons. Let me just give you one more, and that is the cow and the buffalo. 82 00:11:06.600 --> 00:11:14.920 The cow never came within a million miles of being extinct because people own private cows. 83 00:11:14.920 --> 00:11:18.640 Nobody ever went into their lower 40 with a machine gun and started shooting all their cows. 84 00:11:18.640 --> 00:11:22.600 It's just silly because the alternative costs of doing that are very high. 85 00:11:22.600 --> 00:11:27.320 If you shoot your cow today, you don't have the cow tomorrow. 86 00:11:27.320 --> 00:11:28.760 Now, take the buffalo. 87 00:11:28.760 --> 00:11:35.160 There was this movie, Dances with Wolves, where somehow the white man was evil because he shot all the buffalo. 88 00:11:35.160 --> 00:11:42.160 Well, it's rational to shoot all the buffalo, even if all you benefited from them was their tongue or something or their hide, 89 00:11:42.160 --> 00:11:53.160 because they were running around like crazy men, they weren't fenced in, and if you didn't shoot one, someone else would get it. 90 00:11:53.160 --> 00:11:56.160 So the cost to you of shooting one was nothing. 91 00:11:56.160 --> 00:12:04.160 So of course they were overused just as you sip your orange juice more quickly under common or non-ownership. 92 00:12:04.160 --> 00:12:06.520 Okay, well, it's the same thing on the oceans. 93 00:12:06.520 --> 00:12:11.720 The tragedy of the commons is the key with the oceans. 94 00:12:11.720 --> 00:12:18.720 The reason we have dissipating fish stocks, cod, mackerel and other fish is because if 95 00:12:18.720 --> 00:12:23.800 I don't get it, you'll get it, so I'll grab it all and I have no incentive to save it. 96 00:12:23.800 --> 00:12:29.880 What we have to do if we want to have a non-species extinction or protect species is we have to 97 00:12:29.880 --> 00:12:32.120 privatize the buffalo. 98 00:12:32.120 --> 00:12:37.160 As far as I'm concerned, the elephant is just a cow with big ears and a funny-looking nose, 99 00:12:37.160 --> 00:12:38.680 the same with the rhino. 100 00:12:38.680 --> 00:12:42.920 If you want to preserve these species, you have to privatize them. 101 00:12:42.920 --> 00:12:49.880 Yes, you might have to have a bigger barnyard for the elephant than the cow, but so what? 102 00:12:49.880 --> 00:12:56.120 And maybe you'd have to have a thicker fence or a, what do you call it, an electrified fence. 103 00:12:56.120 --> 00:13:01.480 There was this movie, Star Trek, I forget which one it was, I get confused, but this 104 00:13:01.480 --> 00:13:06.480 This was a very remarkable movie. What happened was we were in the 25th century or something like that, 105 00:13:06.480 --> 00:13:12.480 and our boys were in trouble. There were these super beasts or these super creatures that were kicking the butt out of our boys. 106 00:13:12.480 --> 00:13:18.480 Why were they so upset with our boys? Because there were no more whales. The whales had been gone. 107 00:13:18.480 --> 00:13:21.480 Don't ask. It's true. I'm not making this up. 108 00:13:21.480 --> 00:13:27.480 So our boys had to come back to the 20th century to get a whale and then bring the whale back to the 25th century 109 00:13:27.480 --> 00:13:57.480 Well, why don't we have any whales in this scenario? Or why are we on the verge of losing the whales? And that's because the whales are unowned. They run around like, you know, like free fish or something. We're not in favor of freedom for fish. We're only in favor of freedom for human beings. And if there were a god of whales, the god of whales would probably want the whales to be privately owned because then they would be like cows and then they would be preserved. 110 00:13:57.480 --> 00:14:07.480 The Federal Reserve, whereas under the present circumstances, it doesn't pay to save the wealth. 111 00:14:11.480 --> 00:14:15.480 One way to save them is to make barnyards out of the oceans. 112 00:14:15.480 --> 00:14:18.480 Different people get different parts of the ocean and we electrify it. 113 00:14:18.480 --> 00:14:24.480 Right now, there is no incentive to do that because private property rights in the oceans will not be recognized. 114 00:14:24.480 --> 00:14:29.680 It's not a technical problem, it's a legal problem, or an ethical private property rights problem. 115 00:14:31.680 --> 00:14:39.480 Even nowadays, the first ways before they had barbed wire to keep cows, to keep track of cows, was branding. 116 00:14:40.280 --> 00:14:44.480 Those were the fences, or the way to determine who owned which cow. 117 00:14:44.480 --> 00:14:51.080 Well, we could do that now by shooting little radio wave kind of things into the whale, 118 00:14:51.080 --> 00:14:52.880 and that would establish who owns the whale. 119 00:14:52.880 --> 00:14:54.180 Would there be poaching? Yes. 120 00:14:54.180 --> 00:14:58.180 but we have, we have our vays of dealing with poachers. 121 00:14:58.180 --> 00:15:02.220 But better to have private property rights with poaching 122 00:15:02.220 --> 00:15:04.980 than total, I wouldn't say anarchy, 123 00:15:04.980 --> 00:15:07.220 but total chaos with regard to whales. 124 00:15:09.120 --> 00:15:12.120 Okay, so much for oceans. 125 00:15:12.120 --> 00:15:15.580 Let me now talk a little bit about education. 126 00:15:15.580 --> 00:15:18.520 Why should we privatize education? 127 00:15:19.660 --> 00:15:22.380 Well, if we privatized education, 128 00:15:22.380 --> 00:15:30.380 Probably the proportion of money that we spend on education compared to the GDP would be lower than it is. 129 00:15:30.380 --> 00:15:36.380 In the days before public education, and public education only came in in the 1890s, 1910s, 130 00:15:36.380 --> 00:15:41.380 a lot of education was on-the-job training, apprenticeships, things like that. 131 00:15:41.380 --> 00:15:48.380 You didn't have the situation where such a high proportion of the numbers of people went to get education. 132 00:15:48.380 --> 00:16:18.380 Education. Part of this move was an attack on the Catholics by the Protestants. What happened was in the turn of the century, the last century, there were people who came from Italy and Ireland who were Catholic and they set up their own private schools and the powers that be at the time, Protestants, didn't like this promotion of papacy 133 00:16:18.380 --> 00:16:24.880 or potpourri or whatever it was, and they were good economists. 134 00:16:24.880 --> 00:16:30.380 They figured if you have to pay more for education, then you'll have less of it. 135 00:16:30.380 --> 00:16:37.080 So what they decided to do is to make the Catholics pay twice for education if they sent their kids to private schools, 136 00:16:37.080 --> 00:16:43.080 once for the private schools and then once for public schools for other people's children, namely their own. 137 00:16:43.080 --> 00:16:49.360 So there's nothing intrinsically wonderful about public education, part of it came from 138 00:16:49.360 --> 00:16:56.840 nefarious purposes, this religious kind of a thing. 139 00:16:56.840 --> 00:17:02.440 What I'm trying to say is that the market allocates resources in a proportion that is 140 00:17:02.440 --> 00:17:05.580 conducive to the ideals of the people. 141 00:17:05.580 --> 00:17:12.400 Right now there is no crisis of misallocation between peas and carrots, or between forks 142 00:17:12.400 --> 00:17:19.080 and Spoons. If there were, the market would operate in such a way as to undo the misallocation. 143 00:17:19.080 --> 00:17:23.660 In other words, if there were too many peas and not enough carrots, the profits in peas 144 00:17:23.660 --> 00:17:27.820 would fall and we'd have fewer peas, the profits in carrots would rise and we'd get more carrots 145 00:17:27.820 --> 00:17:32.120 until we achieve some sort of balance. We never reach the perfect balance, we're always 146 00:17:32.120 --> 00:17:37.200 changing our minds on these things, but we have a rough conformity of the resource allocation 147 00:17:37.200 --> 00:17:42.960 Education on the one hand and our desires on the other. But with education, we don't 148 00:17:42.960 --> 00:17:48.360 have that. Namely, we are forced to pay for education whether we want to or not, for other 149 00:17:48.360 --> 00:17:53.120 people, for ourselves, what have you. And so we have less control of the allocation 150 00:17:53.120 --> 00:17:59.120 of resources. And allocation of resources, some sort of thing that economists, it cuts 151 00:17:59.120 --> 00:18:04.780 to the quick of economists. For example, one of the worst things for an economist is misallocation 152 00:18:04.780 --> 00:18:10.020 of Human Body Parts, the idea we have no markets in body parts, so on the one hand 153 00:18:10.020 --> 00:18:17.020 you have livers and kidneys and hearts going to the grave, young people die on motorcycles 154 00:18:17.460 --> 00:18:23.020 which are called donor mobiles sometimes, on the other hand you have other people going 155 00:18:23.020 --> 00:18:27.460 to the grave for lack of these things because they need a kidney or a heart or a liver or 156 00:18:27.460 --> 00:18:32.520 a spleen or whatever it is, and it's sort of a horror because you don't have an allocation 157 00:18:32.520 --> 00:18:38.520 of Resources, you don't have cooperation, and what economics is really is the study of human cooperation. 158 00:18:38.520 --> 00:18:44.520 And one way to cooperate with each other is to make sure that extra people don't go to the grave before their time 159 00:18:44.520 --> 00:18:50.520 because they can't get other stuff from other people, and yet the government in its infinite wisdom makes it impossible for this to work. 160 00:18:50.520 --> 00:18:54.520 They do the same sort of a thing with regard to education. 161 00:18:54.520 --> 00:19:18.520 Now, with regard to education, the way this thing goes is you have a supply and demand curve. 162 00:19:24.520 --> 00:19:54.520 Can this be seen in the back? How are we doing? It's okay? Okay, we have a supply and demand curve for education, we have the price of education, the quantity of education, and we have an actual amount of education, and the argument from the people who say we should have subsidies for education is that the demand curve 163 00:19:54.520 --> 00:20:20.520 only encompasses private benefits. In other words, you go to school, you get more learning, you get a better job, and you'll only go that far, you'll only get that much education, the actual amount of education, as behooves your own personal interest, as satisfies your own need for education, whether it's to get a better job or psychic values or whatever. 164 00:20:20.520 --> 00:20:26.360 But the economists say, well, this is part and parcel of market failure. 165 00:20:26.360 --> 00:20:28.200 What's going on with market failure? 166 00:20:28.200 --> 00:20:37.000 What's going on with market failure is that education is an instance of external economies or positive externalities. 167 00:20:37.000 --> 00:20:42.640 Namely, when you become educated, not only do you benefit yourself, but you benefit everyone else. 168 00:20:42.640 --> 00:20:44.280 You'll vote more wisely. 169 00:20:44.280 --> 00:20:45.880 You'll engage in less crime. 170 00:20:45.880 --> 00:20:47.680 You'll be a better citizen. 171 00:20:47.680 --> 00:20:53.480 And all sorts of wonderful things will happen. 172 00:20:53.480 --> 00:20:58.240 So when we take that into account, the demand curve shifts to the right 173 00:20:58.240 --> 00:21:05.080 and the optimal amount of education then becomes 174 00:21:05.080 --> 00:21:06.000 more. 175 00:21:06.000 --> 00:21:07.800 You get it? The argument is 176 00:21:07.800 --> 00:21:14.840 that we have a market failure, we're only considering our narrow selfish personal interests. 177 00:21:14.840 --> 00:21:17.000 If we consider the public good, 178 00:21:17.000 --> 00:21:20.920 You would realize that when we become educated we help everyone else and therefore the benefits 179 00:21:20.920 --> 00:21:25.560 are greater than the private benefits we see. 180 00:21:25.560 --> 00:21:30.400 Well, there are problems with this view. 181 00:21:30.400 --> 00:21:33.160 One problem is that it's very subjective. 182 00:21:33.160 --> 00:21:37.600 A lot of education, at least at the college level nowadays, consists of multiculturalism, 183 00:21:37.600 --> 00:21:42.200 feminism, black studies, queer studies, relativism, egalitarianism. 184 00:21:42.200 --> 00:21:46.400 I'm not sure that I like that stuff. 185 00:21:46.400 --> 00:21:51.840 It seems to me that that stuff is a negative externality if I buy into this whole externality 186 00:21:51.840 --> 00:21:55.880 argument to begin with. 187 00:21:55.880 --> 00:22:00.480 Mainly, maybe what we ought to do is tax education, maybe we have too much of this 188 00:22:00.480 --> 00:22:01.480 sort of education. 189 00:22:01.480 --> 00:22:09.120 There have been studies in various departments at universities like sociology, history, political 190 00:22:09.120 --> 00:22:13.920 science, anthropology, religion, philosophy, and there what they do is they ask for pro 191 00:22:13.920 --> 00:22:20.320 pro and anti-market sentiment. Sometimes the proxy variable is Democrat versus Republican. 192 00:22:20.320 --> 00:22:23.920 That's not a perfect proxy, but it's better than nothing. And what they'll find is by 193 00:22:23.920 --> 00:22:31.400 a ratio of 30 to 1, these departments are populated by lefty queer studies, feminists, 194 00:22:31.400 --> 00:22:38.680 multiculturalists, whatever. God knows what they're teaching our kids. When my A students 195 00:22:38.680 --> 00:22:43.440 in economics go over and take one of these courses, they're always getting Ds and Cs 196 00:22:43.440 --> 00:22:45.120 and they're really bright kids. 197 00:22:46.200 --> 00:22:48.260 So I don't know what they're doing over there 198 00:22:48.260 --> 00:22:51.400 and whatever they're doing I don't think is good. 199 00:22:51.400 --> 00:22:56.320 It's no accident that rent control is most popular 200 00:22:56.320 --> 00:22:58.240 in cities like Boston, Santa Monica, 201 00:22:58.240 --> 00:23:00.320 New York City and Ann Arbor. 202 00:23:00.320 --> 00:23:01.800 Now what have Boston, Santa Monica, 203 00:23:01.800 --> 00:23:04.360 New York City and Ann Arbor got in common? 204 00:23:04.360 --> 00:23:07.520 A lot of university students being taught 205 00:23:07.520 --> 00:23:09.880 that capitalism is evil and we need rent control, 206 00:23:09.880 --> 00:23:12.040 we need minimum wage. 207 00:23:12.040 --> 00:23:17.640 So it seems to me that if there's any case for government intervention in education, 208 00:23:17.640 --> 00:23:21.040 it would be in the exact opposite direction, namely, we ought to tax it. 209 00:23:21.040 --> 00:23:26.440 Not that I'm favoring that, but I'm just trying to get the logical implications of the argument. 210 00:23:26.440 --> 00:23:29.640 Given this subjectivism, which is an Austrian insight, 211 00:23:29.640 --> 00:23:34.640 it's by no means clear that we ought to be subsidizing this stuff. 212 00:23:34.640 --> 00:23:39.540 But let's suppose, arguing though, that subsidies are justified. 213 00:23:39.540 --> 00:23:44.740 Don't ask me how, but let's just assume the argument for argument's sake. 214 00:23:44.740 --> 00:23:49.580 Well, the way we deal with food 215 00:23:49.580 --> 00:23:54.940 for the poor or, I mean, food also has external economies. You know, if you don't eat, you can't produce. 216 00:23:54.940 --> 00:23:59.780 If you can't produce, the whole economy goes bankrupt. I mean, so you could use this 217 00:23:59.780 --> 00:24:02.740 externality argument for anything. 218 00:24:02.740 --> 00:24:06.220 I mean, I take a shower once a month, whether I need it or not, 219 00:24:06.220 --> 00:24:36.220 and I benefit you people, especially in the front tables here, otherwise, you know, you'd be in trouble and maybe we should subsidize soap and, you know, once you let this particular cloven hoof under the tent, as Milton Friedman does, a so-called advocate of the free enterprise system, for him, neighborhood effects or externalities is a big thing, justifying government, you can justify pretty much anything, you know, it's sort of game over. So I don't buy into this but I'm just saying, 220 00:24:36.220 --> 00:24:40.220 Let's suppose we did, you know, let's trace the implications. 221 00:24:40.220 --> 00:24:46.220 Well, take food. We say that they're poor, we have to give them welfare. 222 00:24:46.220 --> 00:24:53.220 But we don't give them public restaurants or public grocery stores. 223 00:24:53.220 --> 00:24:57.220 So in other words, even if you think that there's a case for education subsidies, 224 00:24:57.220 --> 00:25:00.220 it doesn't mean you have to have public education. 225 00:25:00.220 --> 00:25:05.220 You can still have private education just like we have private restaurants and private grocery stores. 226 00:25:05.220 --> 00:25:10.020 We can have a Walmart of Education, for example, similarly with clothing. 227 00:25:10.020 --> 00:25:15.020 We give the poor money for clothing. We don't have government stores. 228 00:25:15.020 --> 00:25:19.420 Usually you think of food, clothing and shelter. 229 00:25:19.420 --> 00:25:24.420 We do have public shelter and it's called public housing and this is a horror. 230 00:25:24.420 --> 00:25:27.020 They keep having to knock down perfectly good housing 231 00:25:27.020 --> 00:25:33.620 because they become cesspools of crime and drugs and all sorts of bad things. 232 00:25:33.620 --> 00:25:35.620 So when government get... 233 00:25:35.620 --> 00:25:40.220 In other words, even if you buy into this argument, still we can preserve privatization. 234 00:25:40.220 --> 00:25:44.980 You can distinguish privatization from subsidy. 235 00:25:44.980 --> 00:25:53.860 Okay, let me now move into my third area, privatizing highways. 236 00:25:53.860 --> 00:25:55.660 What's going on here? 237 00:25:55.660 --> 00:26:01.340 Well, there is this guy, Michael Kinsley, who is a famous writer, 238 00:26:01.340 --> 00:26:04.940 And he just wrote about libertarianism. 239 00:26:04.940 --> 00:26:09.540 You know, I wrote my PhD dissertation on rent control. 240 00:26:09.540 --> 00:26:12.740 And when I first started giving public speeches on rent control, 241 00:26:12.740 --> 00:26:15.740 the way I envisioned the thing going would be, 242 00:26:15.740 --> 00:26:19.040 the critics would say, well, how about your t-values? 243 00:26:19.040 --> 00:26:20.340 How about your coefficients? 244 00:26:20.340 --> 00:26:21.540 How about your econometrics? 245 00:26:21.540 --> 00:26:23.040 How about your supply and demand? 246 00:26:23.040 --> 00:26:25.840 You know, they would criticize me on substantive issues. 247 00:26:25.840 --> 00:26:29.140 Instead, what they criticized me on was, 248 00:26:29.140 --> 00:26:35.140 Am I a landlord? Am I in the pay of landlords? Do I know any landlords? 249 00:26:35.140 --> 00:26:41.140 In other words, they didn't focus on the substance, they just used ad hominems on me, 250 00:26:41.140 --> 00:26:47.140 and I think that's pretty much our experience. We study carefully the case for privatization, 251 00:26:47.140 --> 00:26:52.140 and when we go public, our critics don't talk about the substance. What they talk about is, 252 00:26:52.140 --> 00:27:06.980 In any case, here is this guy, Michael Kinsley, who finally condescends, he lowers himself, 253 00:27:06.980 --> 00:27:13.180 magnificent of him, to discuss libertarianism. And here's what he says, quote, 254 00:27:13.180 --> 00:27:17.240 Sometimes libertarians end up reinventing the wheel. My favorite example is an article 255 00:27:17.240 --> 00:27:21.640 I read years ago, advocating privatization of highways. 256 00:27:21.640 --> 00:27:24.280 This is a classic libertarian fantasy. 257 00:27:24.280 --> 00:27:26.960 Government auctions off the land, private enterprise pays 258 00:27:26.960 --> 00:27:29.840 for construction and maintenance, tolls cover the cost, 259 00:27:29.840 --> 00:27:32.680 competition with other routes keep it all efficient. 260 00:27:32.680 --> 00:27:34.920 And what about intersections? 261 00:27:34.920 --> 00:27:37.800 The um is in there, I didn't make that up. 262 00:27:37.800 --> 00:27:40.240 Well, markets would recognize that it is more efficient 263 00:27:40.240 --> 00:27:44.200 for one company to own both roads at major intersections. 264 00:27:44.200 --> 00:27:46.360 And when that happened, the company would have an incentive 265 00:27:46.360 --> 00:27:49.080 to strike the right balance between customers on each highway. 266 00:27:49.080 --> 00:27:52.200 And stoplights, ultimately the author had worked his way up 267 00:27:52.200 --> 00:27:54.520 to a giant monopoly that would build, own 268 00:27:54.520 --> 00:27:56.760 and maintain all the roads and charge an annual fee 269 00:27:56.760 --> 00:27:58.220 to people who wanted to use them. 270 00:27:58.220 --> 00:28:00.460 None dare call it government. 271 00:28:00.460 --> 00:28:03.120 The implication is that if you had private roads 272 00:28:03.120 --> 00:28:04.960 it would revert to government anyway. 273 00:28:04.960 --> 00:28:06.460 So this whole thing is silly. 274 00:28:08.000 --> 00:28:09.800 Well, I will hand it to Michael Kinsley. 275 00:28:09.800 --> 00:28:14.520 He does us the honor to at least address a libertarian issue 276 00:28:14.520 --> 00:28:21.520 and he doesn't confine himself to sneers and name calling as is the usual example. 277 00:28:23.120 --> 00:28:30.120 So let me use Michael Kinsley as a focal point and ask why do those of us who have worked 278 00:28:33.360 --> 00:28:39.280 in these vineyards, why are we hopped up about private roads of all things? 279 00:28:39.280 --> 00:28:43.480 To me there are two major, well one major and one minor reason. 280 00:28:43.480 --> 00:28:47.920 The minor reason is congestion. 281 00:28:47.920 --> 00:28:48.920 I don't know what it is here. 282 00:28:48.920 --> 00:28:53.320 Probably it's worse because this is a bigger city than New Orleans. 283 00:28:53.320 --> 00:28:58.400 I was once in California and I got up at five in the morning and I was in this hotel and 284 00:28:58.400 --> 00:29:02.340 overlooking the highway and at five in the morning there was bumper-to-bumper traffic 285 00:29:02.340 --> 00:29:04.920 in LA. 286 00:29:04.920 --> 00:29:11.280 Here it's probably not that bad but pretty bad and in New Orleans it's very bad also. 287 00:29:11.280 --> 00:29:15.280 I mean, the Long Island Expressway, when I used to live in New York, 288 00:29:15.280 --> 00:29:19.880 the joke there was that it's the longest parking lot in the world. 289 00:29:19.880 --> 00:29:23.980 It was 100 miles long, and you just, people bumper to bumper. 290 00:29:23.980 --> 00:29:29.380 What's going on there? Well, what's going on there is, 291 00:29:29.380 --> 00:29:37.980 at a zero price, demand exceeds supply during peak periods. 292 00:29:37.980 --> 00:29:45.480 And in the market, the price would rise and we would have all sorts of beneficial effects. 293 00:29:45.480 --> 00:29:54.380 People would naturally gravitate toward carpooling and manufacturers would stagger hours. 294 00:29:54.380 --> 00:30:01.480 Not everyone would work nine to five, some people eight to four, some people seven to three, other people ten to six. 295 00:30:01.480 --> 00:30:04.380 We would have all sorts of beneficial effects. 296 00:30:04.380 --> 00:30:10.380 But instead, there is no price based on the time that you use the road. 297 00:30:10.380 --> 00:30:14.380 And if anything, what the government does is it has anti-peak load pricing. 298 00:30:14.380 --> 00:30:18.380 See, peak load pricing would, you know, if you have peaks and troughs, 299 00:30:18.380 --> 00:30:23.380 the peak load pricing would be high at the peak and push down the peak and low at the trough, push up the trough, 300 00:30:23.380 --> 00:30:28.380 so you have sort of a more evenly spaced use of the roads. 301 00:30:28.380 --> 00:30:50.380 But what they do is they have these tollbooths, which is a whole other problem. I mean, it's just a very silly way to collect money, and what they do is they give you a month trip ticket, and if you buy the month trip ticket, you get a cheaper per unit price than if you just go one trip at a time. 302 00:30:50.380 --> 00:31:00.380 But who is using the roads enough to justify a monthly trip ticket, namely the people using it during the peak loads? 303 00:31:00.380 --> 00:31:07.380 So what they're doing is actually exacerbating the peaks by charging less if you use the roads during the peak. 304 00:31:07.380 --> 00:31:12.380 So it's just totally perverse, but that's the minor reason. 305 00:31:12.380 --> 00:31:16.380 It's just discomfort, although there is a little road rage and people are shooting each other, 306 00:31:16.380 --> 00:31:23.380 Hey, you cut me off, you know, I could have got one inch closer to my job and you cut me off, so I'm going to kill you. 307 00:31:23.380 --> 00:31:31.380 But that's just a... I see you people engage in that stuff. 308 00:31:31.380 --> 00:31:44.380 But the major reason for my and I think our opposition to public roads is there are 40,000 people a year who die on the roads. 309 00:31:44.380 --> 00:31:46.900 40,000 people. 310 00:31:46.900 --> 00:31:49.220 To put this into some sort of context, 311 00:31:49.220 --> 00:31:52.580 only 3,000 people died in 9-11? 312 00:31:53.660 --> 00:31:58.340 Only 3,000 U.S. soldiers have so far died in Iraq? 313 00:32:00.700 --> 00:32:04.900 40,000 people a year bite the dust on our nation's roads. 314 00:32:05.860 --> 00:32:07.420 This is horrible. 315 00:32:07.420 --> 00:32:09.380 We probably all know someone, 316 00:32:09.380 --> 00:32:11.300 or know someone who knows someone, 317 00:32:11.300 --> 00:32:13.700 who tragically had their life snuffed out 318 00:32:13.700 --> 00:32:16.700 on the Public Highways. 319 00:32:16.700 --> 00:32:20.180 It's just, and yet there's nothing in the news about this. 320 00:32:20.180 --> 00:32:22.900 This isn't a crisis, this isn't a problem. 321 00:32:22.900 --> 00:32:26.220 It's sort of like death and taxes it's seen as inevitable, 322 00:32:26.220 --> 00:32:27.300 but it's not inevitable. 323 00:32:27.300 --> 00:32:30.540 It comes from government ownership of roads. 324 00:32:30.540 --> 00:32:33.180 Now, our critics won't tolerate that. 325 00:32:33.180 --> 00:32:35.700 Our critics will not agree with this. 326 00:32:36.620 --> 00:32:39.340 Our critics will say, no, no, no. 327 00:32:39.340 --> 00:32:42.520 The real reason for the highway fatalities 328 00:32:42.520 --> 00:32:47.520 This has got nothing to do with the government. 329 00:32:47.520 --> 00:32:58.520 It's rather due to speed, drunken driving, weather, vehicle malfunction, driver error, things like that. 330 00:32:58.520 --> 00:33:06.520 People who study this, the socialists at the University of Chicago, list... 331 00:33:06.520 --> 00:33:10.520 That was an inside joke. 332 00:33:10.520 --> 00:33:16.520 By the way, when an economist tries to tell a joke, you better damn well laugh. 333 00:33:16.520 --> 00:33:19.520 It's sort of like when a bear plays the violin while riding a bicycle. 334 00:33:19.520 --> 00:33:22.520 You don't ask, is he in tune? 335 00:33:22.520 --> 00:33:27.520 You say, wow, a bear is playing the violin while riding a unicycle. 336 00:33:27.520 --> 00:33:29.520 And you say, wow. 337 00:33:29.520 --> 00:33:36.520 Well, when an economist tries to tell a joke, I mean, you say, wow. 338 00:33:36.520 --> 00:33:46.020 So let me read a list of Sam Peltzman, a University of Chicago socialist economist, says here are the real reasons for the fatalities. 339 00:33:46.020 --> 00:33:53.520 Vehicle speed, alcohol consumption, the number of young drivers, changes in drivers' income, the money cost of accidents, the average age of cars, 340 00:33:53.520 --> 00:34:00.520 the ratio of new cars to all cars, because it has been suggested that while drivers familiarize themselves with their new cars, accident risk may increase, 341 00:34:00.520 --> 00:34:04.720 traffic density, expenditures on traffic law enforcement by state highway patrols, 342 00:34:04.720 --> 00:34:10.820 expenditures on roads, the ratio of imports of total cars, because there is evidence that small cars are more lethal than large ones, 343 00:34:10.820 --> 00:34:18.120 education of the populace, the availability of hospital care, the National Highway Safety Traffic Administration, 344 00:34:18.120 --> 00:34:24.620 the equivalent of the FEMA or the Army Corps of Engineers, they have 125 different reasons, 345 00:34:24.620 --> 00:34:30.120 like how far you are away from the hospital, how fast the ambulance is, all of these things. 346 00:34:30.120 --> 00:34:37.120 I agree are causally related to debts, but my claim is that they're only proximate causes. 347 00:34:37.960 --> 00:34:44.960 Look, here we are in this restaurant. Menagio's restaurant? Okay, I can't pronounce it. You 348 00:34:45.400 --> 00:34:50.160 guys know what it is. Suppose that this restaurant, God forbid, I don't want to say this here, 349 00:34:50.160 --> 00:34:57.160 goes broke. And the reasons are lousy food, poor service, dirty conditions and bad location. 350 00:34:57.160 --> 00:35:01.600 Conditions and Bad Location. Would you for a moment believe that these were the 351 00:35:01.600 --> 00:35:05.360 ultimate causes of the restaurant going broke? No, these are just approximate 352 00:35:05.360 --> 00:35:11.200 causes. The ultimate causes are the management. The owner, entrepreneur of the 353 00:35:11.200 --> 00:35:16.440 restaurant didn't get a good cook, didn't give someone a broom and say go sweep, 354 00:35:16.440 --> 00:35:21.160 didn't get a waitress or a waiter to you know take care of business as we used to 355 00:35:21.160 --> 00:35:51.160 Located on the wrong street. Do you get the point? Look, if I take a high-powered rifle and I shoot out into the street and I kill someone, and the cops and you guys all grab me and say, hey, Block, you're a murderer, and I say, tuk-tuk, wasn't me, it was the bullet. This would be silly, but in a sense, it was the bullet. I'm a hundred yards away from the guy that I just killed. I didn't do it, it was the bullet. That's just the proximity. 356 00:35:51.160 --> 00:36:04.160 The ultimate cause is me. Well, the ultimate cause for highway fatalities is not all the speed, drunken driving, and yack, yack, yack. It's rather the fact that the managers can't manage their way out of a paper bag. 357 00:36:04.160 --> 00:36:14.160 They can't stop the drunken driving. They can't stop the speeding. They can't stop the weather. By the way, the government is responsible for bad weather. 358 00:36:14.160 --> 00:36:19.160 How does this work? Well, if they hadn't been sucking up half the GDP for the last hundred years, 359 00:36:19.160 --> 00:36:23.160 the market probably would have found a way to solve the weather problem. 360 00:36:23.160 --> 00:36:31.160 But no! They grabbed up all our money, so they're responsible for the bad weather. 361 00:36:31.160 --> 00:36:37.160 Just take bad weather for a second. Where I live, part of my life, I live in Canada, 362 00:36:37.160 --> 00:36:41.160 and Canada is a cool place, very cold. 363 00:36:41.160 --> 00:36:47.040 And some of the driveways are on the side of a mountain in Vancouver where I live and they're very steep. 364 00:36:47.040 --> 00:36:50.200 And in the icy conditions, these would be very dangerous. 365 00:36:50.200 --> 00:36:56.280 So what the people do is they put these grids, these electronic thingies under the cement. 366 00:36:56.280 --> 00:37:03.640 And when the snow or the ice comes, it warms it up and it's a little wet, but it's not slippery. 367 00:37:03.640 --> 00:37:08.560 Well, if you had private roads, if I had a private road, and what's your name? 368 00:37:08.560 --> 00:37:14.200 Bill had a private road competing with me, and I was in Canada or in Colorado or someplace where there was snow. 369 00:37:14.200 --> 00:37:18.880 I would put a coil under it, and I would charge a little more, and I'd say, 370 00:37:18.880 --> 00:37:25.240 come to my road, you go to Bill's road, you'll die like flies because he doesn't do that. 371 00:37:25.240 --> 00:37:34.040 In other words, what I'm trying to do is to input the competition that gets us good pizza and good pens and good ties, 372 00:37:34.040 --> 00:37:36.400 and just apply it to roads. 373 00:37:36.400 --> 00:37:42.640 It's not that weird. It's not that crazy. In other words, we have this idea of privatization. 374 00:37:42.640 --> 00:37:48.540 Weeding out of the inefficient, promoting those who do a good job, giving them more profits. 375 00:37:48.540 --> 00:37:59.040 Why shouldn't we apply it to roads? What's so wholly about roads that roads are not to be applied to these basic economic principles? 376 00:37:59.040 --> 00:38:05.800 By the way, the first roads in this country were all private roads. They were turnpike roads. 377 00:38:05.800 --> 00:38:08.680 Somebody would get on his high horse 378 00:38:08.680 --> 00:38:10.440 and get a road from here to there 379 00:38:10.440 --> 00:38:12.680 and make a little, they would put boards, 380 00:38:12.680 --> 00:38:15.320 they would clear the path of puddles. 381 00:38:15.320 --> 00:38:18.480 They would charge based on how many horses, 382 00:38:18.480 --> 00:38:20.920 how many axles, the width of the wheel. 383 00:38:20.920 --> 00:38:23.360 If the wheel was very narrow, think ice skates, 384 00:38:23.360 --> 00:38:25.800 they would charge more because the wheel 385 00:38:25.800 --> 00:38:27.360 would rip up the road. 386 00:38:27.360 --> 00:38:30.360 If the wheel was wide, think steamroller, 387 00:38:30.360 --> 00:38:32.880 they would charge less because then the wheel 388 00:38:32.880 --> 00:38:37.120 Mill would sort of damp down the pits in the road. 389 00:38:37.120 --> 00:38:39.120 The first roads were private. 390 00:38:39.120 --> 00:38:47.840 There's nothing intrinsic about roads that have to make them governmental roads. 391 00:38:47.840 --> 00:38:52.700 At this point in my speech, I usually reach for John Stuart Mill, because when I do this 392 00:38:52.700 --> 00:38:56.760 in front of hostile audiences, at this time, they're all booing in his ennemi, so I have 393 00:38:56.760 --> 00:39:00.120 to give him a little John Stuart Mill about how, you know, you have to hear both sides 394 00:39:00.120 --> 00:39:28.120 Okay, so how would they work? Well, just like any other business, for profit. You set up a road. I want to go from here to there. No big deal. I assemble some land. I start charging people. How might I charge people for this? 395 00:39:28.120 --> 00:39:32.120 Well, when I first started writing, and as Lew said, my book on this will soon be coming out, 396 00:39:32.120 --> 00:39:36.120 I started reading grocery journals and people said, why are you reading grocery journals? 397 00:39:36.120 --> 00:39:45.120 The reason I was reading grocery journals is it was at that time that groceries were first putting in these bar chart things 398 00:39:45.120 --> 00:39:51.120 so that you could slip, you know, you buy some cornflakes and they go blip and then they charge you and it registers. 399 00:39:51.120 --> 00:39:56.120 And what I was saying is what we ought to do is put these little things on the underbodies of cars. 400 00:39:56.120 --> 00:40:10.120 And as the car goes over a big machine to pick up the code, it registers where you were, and it registers where you started, where you ended, and at the end of the month, it sends you a bill for road use. 401 00:40:10.120 --> 00:40:23.120 So that would be one way to charge. You don't have to – you see, when you think of private roads, our critics will – if they're not going to just resort to name-calling, our critics will say, well, you think that the traffic congestion is bad now. 402 00:40:23.120 --> 00:40:53.120 Now, wait till you see it on the private roads, and I had this idea that every time you pass somebody's house, you have to put in one-tenth of a penny, and you know, this would be crazy, but the way you would have roads is you wouldn't have it, each little bit of road would be owned by the person whose house or factory was in front of the road, and you'd have to pay them each individually, rather the road would be owned by a road company, the I-10 company, or the I-45, I think those are roads around here, the company would own it. 403 00:40:53.120 --> 00:40:58.120 How would it be given to people? Well, maybe everyone in use... 404 00:40:58.120 --> 00:41:03.120 There was this thing called the BCRIC, British Columbia Resources Investment Corporation. 405 00:41:03.120 --> 00:41:12.120 They had a bunch of mines and factories and cutting operations, 406 00:41:12.120 --> 00:41:16.120 just various resources in British Columbia, and a government came in that wanted to privatize. 407 00:41:16.120 --> 00:41:19.120 So what they did is they said, okay, here are all the resources. 408 00:41:19.120 --> 00:41:24.920 Resources, everybody in British Columbia gets five shares of it and now it's a private company. 409 00:41:24.920 --> 00:41:29.180 Well, you could do something like that. It would be better if we could figure out who 410 00:41:29.180 --> 00:41:36.840 paid more taxes for the roads, then they would own more shares of the I-10. But these are 411 00:41:36.840 --> 00:41:41.960 just technical problems. We could solve them. Can we solve them perfectly, justly, with 412 00:41:41.960 --> 00:41:48.960 a God's eye view? No. But there are 40,000 people's lives at stake every year. It behooves 413 00:41:49.120 --> 00:41:59.120 How might I try to save lives if I owned a road? 414 00:41:59.120 --> 00:42:04.120 Well, one way, and this is stuff that I advocated very early in the 70s, 415 00:42:04.120 --> 00:42:09.120 would be to put crosses or Jewish stars or whatever it is for the Muslims 416 00:42:09.120 --> 00:42:15.120 right near where a death occurred, only real big ones. 417 00:42:15.120 --> 00:42:18.120 Another one was that nowadays they do a little of this. 418 00:42:18.120 --> 00:42:21.360 this every once in a while you see a few crosses and it shows there was a death 419 00:42:21.360 --> 00:42:25.280 I but the crosses are just you know a foot by two feet or something I would put 420 00:42:25.280 --> 00:42:31.680 big ones to get people you know there's that joke about the the mule trainer the 421 00:42:31.680 --> 00:42:34.760 novice mule trainer was pushing and pulling the mule and you know the mule 422 00:42:34.760 --> 00:42:37.940 wouldn't go anywhere and then they got the expert mule trainer and the extra 423 00:42:37.940 --> 00:42:42.000 mule trainer got a big hammer and hit the mule over the head and practically 424 00:42:42.000 --> 00:42:45.600 killed him and when he was asked why why'd you do that I said well I had to 425 00:42:45.600 --> 00:42:57.880 Well, a big cross will get people's attention more than a small one. You know those cars 426 00:42:57.880 --> 00:43:02.840 that are accordionized, sort of schmushed? You know, a 20-foot long car, now it's 3 feet 427 00:43:02.840 --> 00:43:12.720 long because two other cars. Put one of those up on a big pole to show what can happen. 428 00:43:12.720 --> 00:43:21.120 Another possibility is maybe it's not speed. Maybe it's the variation in speed. You know, 429 00:43:21.120 --> 00:43:27.040 I used to have this Honda 90cc motorcycle, and it was capable of doing maybe 40 with 430 00:43:27.040 --> 00:43:33.760 a tailwind and a downhill, uphill with a passenger and a headwind. I couldn't get up to 40, but 431 00:43:33.760 --> 00:43:39.040 I was on the highway because the minimum speed was 40, and I sort of do 40. And the maximum 432 00:43:39.040 --> 00:43:45.040 The speed is 70 and everyone's doing 85. You do 70 on the highway and you're like the nerd. Everyone's going right by you. 433 00:43:45.040 --> 00:43:55.040 So the variation in speed is from 35 to 80. Maybe what we ought to have instead of a three-lane highway with all the same speed limit, 434 00:43:55.040 --> 00:44:04.040 maybe what we ought to have is in the left lane, 80, in the middle lane, 65 and in the right lane, 50. I don't know. No one knows. 435 00:44:04.040 --> 00:44:11.040 The point is that the rules of the road don't come to us from on high or from Washington DC, which is about the same thing, right? 436 00:44:11.040 --> 00:44:18.040 They come from empirical experimentation. Bill has one set of rules on his road. I have a different set. 437 00:44:18.040 --> 00:44:25.040 This time he had fewer people killed on his road and I sort of follow him the way we do all businesses. 438 00:44:25.040 --> 00:44:33.040 We have competition. We have different policies. So maybe it's not speed. Maybe it's the variance of speed. 439 00:44:33.040 --> 00:44:38.760 I don't know, no one knows if we could but have competitive private roads and 440 00:44:38.760 --> 00:44:42.440 different people try different things and and there were private agencies 441 00:44:42.440 --> 00:44:46.520 monitoring the the death rates on these highways see right now when a death 442 00:44:46.520 --> 00:44:52.200 occurs a 15-car smack-up killing 30 people does anyone lose money who's in a 443 00:44:52.200 --> 00:44:59.080 position to change anything no how do you expect to get a sensible policy in 444 00:44:59.080 --> 00:45:25.080 in that way. Okay, let me consider a few objections to my modest proposal. One is, one time there was this, that's a map of the US, you can see Texas and Florida, and there's a little bit over there for Long Island, that's over here. 445 00:45:25.080 --> 00:45:36.760 What happened is I was once at this conference with my then 14-year-old son and Gordon Tullock, 446 00:45:36.760 --> 00:45:43.120 another supposed free enterprise, came to me. We were standing in this hall, it was in 447 00:45:43.120 --> 00:45:47.320 Vancouver, so my wife said I have to take my son, otherwise, you know, I can't go, 448 00:45:47.320 --> 00:45:52.080 so he was there. And Gordon Tullock taps me on the shoulder and says, Block, I hear you 449 00:45:52.080 --> 00:45:55.080 Do you favor private roads? I said, yeah, that's true, I do. 450 00:45:55.080 --> 00:46:05.080 Well, you can't have private roads because if there were a private road stretching from LA to Boston, you could cut the country in half. 451 00:46:05.080 --> 00:46:11.080 I said, what? He said, well, they wouldn't let anyone go in a north-south direction. 452 00:46:11.080 --> 00:46:20.080 And I said, well, you know, it's theoretically possible, maybe, but it wouldn't pay because the road wouldn't be worth much if you couldn't get off of it and on it. 453 00:46:20.080 --> 00:46:50.080 and if you get off of it and on it then you know you get up and down or past it and also if if you couldn't if you could just go from Boston to LA and you couldn't get off the road wouldn't be worth as much as if you could I said tut-tut you're right it is true but it could be done if some maniac wanted it so for the next two years my son and I discussed nothing else but this and we wrote a series 454 00:46:50.080 --> 00:47:20.080 There's a series of articles debating Gordon Tullock on this point, and the argument that we came up with is, even assuming a crazy person like this, and it's very unlikely that a person rich enough to get a road that big would act so foolishly, but suppose that some madman wanted to do that, still he couldn't get away with it, because we could tunnel under or bridge over. Now, the objection to that is this thing called ad-colum doctrine. The ad-colum doctrine, AD, 455 00:47:20.080 --> 00:47:23.120 C-O-E-L-U-M, I think that's the way you spell it. 456 00:47:23.120 --> 00:47:26.760 The Ad Colum Doctrine says that when you own a square mile 457 00:47:26.760 --> 00:47:31.760 of the earth, when you own a square mile of the earth, 458 00:47:33.120 --> 00:47:36.920 you own down to the core of the earth in a decreasing cone. 459 00:47:36.920 --> 00:47:39.240 Think of an ice cream cone, right? 460 00:47:39.240 --> 00:47:43.680 And you also own up into the air in an increasing cone. 461 00:47:43.680 --> 00:47:45.480 This is Milton Friedman's interpretation 462 00:47:45.480 --> 00:47:46.920 of libertarian property rights theory, 463 00:47:46.920 --> 00:47:48.960 but it's got nothing to do with homesteading. 464 00:47:48.960 --> 00:47:53.480 Nobody homesteaded stuff 50,000 feet up. 465 00:47:53.480 --> 00:47:55.040 If you had this Ad Colum Doctrine, 466 00:47:55.040 --> 00:47:56.680 you couldn't have airplanes flying around 467 00:47:56.680 --> 00:47:58.440 because they would have to pay a toll 468 00:47:58.440 --> 00:48:00.540 every time they flew over your house. 469 00:48:02.280 --> 00:48:05.200 You see, with Ad Colum, you couldn't have slant drilling, 470 00:48:05.200 --> 00:48:06.560 slant drilling as I drilled down 471 00:48:06.560 --> 00:48:09.200 and then across and under your house. 472 00:48:09.200 --> 00:48:12.240 But under libertarian property rights homesteading theory, 473 00:48:12.240 --> 00:48:16.040 you could because as long as I don't cave in your buildings, 474 00:48:16.040 --> 00:48:17.860 and I was there first. 475 00:48:17.860 --> 00:48:22.180 So if you have a road stretching from Boston to LA and I want to go north-south, 476 00:48:22.180 --> 00:48:27.740 all I have to do is go under and build a tunnel or a bridge. 477 00:48:27.740 --> 00:48:30.300 Now it's true the bridge would block out your sunlight, 478 00:48:30.300 --> 00:48:33.180 so I'd have to have a plastic see-through bridge, 479 00:48:33.180 --> 00:48:38.020 and it might stop your rain, so I have to have mesh, I can't have a solid bridge. 480 00:48:38.020 --> 00:48:40.180 But these were the sorts of things that we were thinking about. 481 00:48:40.180 --> 00:48:47.620 So even under the most weird cases imaginable, we can still have a private road system. 482 00:48:47.620 --> 00:48:53.820 Much more reasonably would be that, you know, you're not going to get anything like this. 483 00:48:53.820 --> 00:49:05.620 Okay, another objection is you couldn't have a private road because you would need, what's 484 00:49:05.620 --> 00:49:10.700 it called, expropriation, eminent domain. 485 00:49:10.700 --> 00:49:15.060 You would need eminent domain because if I wanted to build a road from A to B, there'd 486 00:49:15.060 --> 00:49:23.060 There could be some guy who owned a plot of land right in between A and B, 487 00:49:23.060 --> 00:49:30.060 who would say that if you're going to get a road, you're going to have to go through my territory. 488 00:49:30.060 --> 00:49:33.060 And if you go through my territory, I'm going to charge you a trillion dollars. 489 00:49:33.060 --> 00:49:37.060 So, you know, you just can't do it. In other words, the holdout problem. 490 00:49:37.060 --> 00:49:44.060 You know, in the U.S., there are some buildings that look like this. 491 00:49:49.580 --> 00:49:52.380 See, a building that looks like that, namely, and you know what happened? 492 00:49:52.380 --> 00:49:55.340 There was this little old lady in that house who said, no, I'm not selling it, 493 00:49:55.340 --> 00:50:00.180 so they built all around it. In the Soviet Union, they don't have any of that. 494 00:50:00.180 --> 00:50:04.300 Well, to me, this is the price we pay for freedom. 495 00:50:04.300 --> 00:50:10.100 The point is that a little old lady valued her house more than the value of the high rise, and that's what you do. 496 00:50:10.100 --> 00:50:17.800 Well, private property rights are very important to our civilized order, and this is one of the implications of private property rights. 497 00:50:17.800 --> 00:50:22.600 But there are ways around the whole of that. What you could do is buy options to buy. 498 00:50:22.600 --> 00:50:30.100 Namely, you go to people along a certain route, and you say, I'd like to buy your land, your farmland, which is worth, oh, a thousand an acre. 499 00:50:30.100 --> 00:50:34.000 But I'm not sure I want to buy it, so I'll give you ten dollars an acre just as an option, 500 00:50:34.000 --> 00:50:38.120 And I'll exercise it within a year, and if I don't, I lose my deposit. 501 00:50:38.120 --> 00:50:44.400 And you try to get along one of those roads, say, 502 00:50:44.400 --> 00:50:48.200 so there are five ways that you can get across. 503 00:50:48.200 --> 00:50:55.400 And then if you get a holdout, you just go from three to two. 504 00:50:55.400 --> 00:50:59.720 And if you get a real nasty holdout, you tunnel under them. 505 00:50:59.720 --> 00:51:02.300 So you don't need eminent domain to do these things. 506 00:51:04.160 --> 00:51:06.120 Then there's the problem of the blockade. 507 00:51:09.520 --> 00:51:13.100 It's sort of like a tic-tac-toe thing, the blockade. 508 00:51:13.100 --> 00:51:16.680 You go into your, you own your house 509 00:51:16.680 --> 00:51:18.840 in the middle of the four streets, 510 00:51:18.840 --> 00:51:20.480 and you try to get out onto the street, 511 00:51:20.480 --> 00:51:21.520 and the street owner says, 512 00:51:21.520 --> 00:51:23.960 sure, I'll let you out for a million dollars. 513 00:51:23.960 --> 00:51:26.240 Each time you wanna come out, you have to pay a million. 514 00:51:26.240 --> 00:51:28.000 The idea is that if you had private roads, 515 00:51:28.000 --> 00:51:30.460 People would blockade each other in. 516 00:51:30.460 --> 00:51:32.800 Right now, when you buy a house, you get your lawyer 517 00:51:32.800 --> 00:51:36.280 and you go and you get yourself title insurance 518 00:51:36.280 --> 00:51:39.060 to make sure that the person from whom you're buying 519 00:51:39.060 --> 00:51:41.680 really has a clear title to the house. 520 00:51:41.680 --> 00:51:43.360 Well, under a regime of private roads, 521 00:51:43.360 --> 00:51:44.700 in addition to title insurance, 522 00:51:44.700 --> 00:51:48.000 you would get a thing called access insurance. 523 00:51:48.000 --> 00:51:50.280 Access insurance means you insure 524 00:51:50.280 --> 00:51:52.200 just against a thing like that. 525 00:51:52.200 --> 00:51:54.160 Look, the whole point of having a private road 526 00:51:54.160 --> 00:51:56.800 is you want people to build houses and factories 527 00:51:56.800 --> 00:52:00.200 in New Year Road so that the value of your road is enhanced. 528 00:52:00.200 --> 00:52:03.920 Therefore, you would be willing to be contractually tied up 529 00:52:03.920 --> 00:52:06.640 so you couldn't do this sort of a thing. 530 00:52:06.640 --> 00:52:08.800 And what I'm doing now is going over objections 531 00:52:08.800 --> 00:52:11.440 to the private roads, and I'm saying that 532 00:52:11.440 --> 00:52:14.820 none of these objections hold any benefits. 533 00:52:16.320 --> 00:52:18.700 Some speculations are, well, if you had private roads, 534 00:52:18.700 --> 00:52:21.180 instead of 40,000 people a year dying, 535 00:52:21.180 --> 00:52:23.920 you might have only 5,000 people a year dying. 536 00:52:23.920 --> 00:52:25.680 And that was my best estimate, 537 00:52:25.680 --> 00:52:28.400 based on public-private efficiency. 538 00:52:28.400 --> 00:52:31.080 You know, how much does it cost for private sanitation 539 00:52:31.080 --> 00:52:33.880 to remove a ton of garbage and public sanitation? 540 00:52:33.880 --> 00:52:36.160 And you get two to one, three to one, five to one. 541 00:52:36.160 --> 00:52:38.920 So I extrapolated with deaths. 542 00:52:38.920 --> 00:52:40.840 And I said, well, if there are 40,000 deaths 543 00:52:40.840 --> 00:52:43.320 on the public road after this competition, 544 00:52:43.320 --> 00:52:45.760 we'll still have debts, right? 545 00:52:45.760 --> 00:52:46.840 I mean, we're not perfect. 546 00:52:46.840 --> 00:52:48.120 We're not in the Garden of Eden. 547 00:52:48.120 --> 00:52:49.800 And let's say we have 5,000 deaths. 548 00:52:49.800 --> 00:52:51.640 So should we then say that the government 549 00:52:51.640 --> 00:52:55.640 is only responsible for 35,000 deaths? 550 00:52:55.640 --> 00:52:58.600 No, they're responsible for 40,000 deaths. 551 00:52:58.600 --> 00:53:02.200 Look, Hitler was supposed to have killed 6 million people. 552 00:53:02.200 --> 00:53:04.840 Let's take that number as legitimate. 553 00:53:04.840 --> 00:53:07.720 But suppose I tell you that 100,000 people 554 00:53:07.720 --> 00:53:10.080 would have died anyway during the four years 555 00:53:10.080 --> 00:53:12.520 or the five years of these concentration camps. 556 00:53:12.520 --> 00:53:14.800 Would we then say that Hitler was only responsible 557 00:53:14.800 --> 00:53:16.320 for 5.9 million deaths? 558 00:53:16.320 --> 00:53:18.640 No, he's responsible for 6 million deaths. 559 00:53:19.680 --> 00:53:24.400 So these bad guys are responsible for 40,000 deaths 560 00:53:24.400 --> 00:53:26.900 even though the market wouldn't eradicate every death. 561 00:53:27.820 --> 00:53:29.820 Well, I think it's time for me to conclude. 562 00:53:30.700 --> 00:53:35.700 What I've tried to do is give a principled explanation 563 00:53:35.700 --> 00:53:38.680 of why you would privatize anything 564 00:53:38.680 --> 00:53:40.520 based on ethical considerations 565 00:53:40.520 --> 00:53:43.960 and efficiency, economic considerations. 566 00:53:43.960 --> 00:53:46.280 And I've tried to apply it to three areas 567 00:53:46.280 --> 00:53:49.160 that are at the very least controversial. 568 00:53:49.160 --> 00:53:51.420 Because if we take upon ourselves 569 00:53:51.420 --> 00:53:59.700 the most challenging instances, then we can do well in defending ourselves on the easier cases. 570 00:53:59.700 --> 00:54:01.020 Thanks for your attention.