It’s not hard to see that there is something fundamentally wrong with the way we fund and manage the highways we all depend on. Highways are one of our basic public utilities — along with water, electricity, natural gas, telephones, etc. Yet we don’t have huge political battles over how to pay for those utilities. Every month you get a bill from your electric company, water company, phone company, and satellite or cable company. You pay for the specific services you used, and the money goes directly to the company that provided those services. None of that is true for highways.
Many years ago, Milton Friedman put his finger on what was wrong. Highways, he wrote, are “a socialized industry, removed from the test of the market.” Compared with other utilities, that means that for highways:
- There is no pricing;
- Major investments are not financed via long-term revenue bonds;
- Decisions on what gets built are made by politicians;
- Proper maintenance gets what little funding is left over after legislators spend most of the budget on projects in their districts; and,
- You are not a customer — just a “user.”
In my new book, Rethinking America’s Highways, I make the case that because highways really are utilities, they need to be financed and operated as utilities, rather than as politicized, state-owned enterprises. That means each highway needs an owner. Highway customers should pay their highway bills directly to that owner, based on how much they use the roads and how damaging their vehicle is to the pavement.