Demystifying privatization: Private roads and sidewalks in Hong Kong

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According to The Heritage Foundation, Hong Kong is and has been, for the last 25 years, an exponent of and exemplary model for economic freedom. Despite its urban development regulation, property rights infringement, state monopolies, the erosion of the Rule of Law, or its unequal and overwhelming labour regulations, Hong Kong can still be proud of one of the most thoroughly discussed aspects of classical liberalism: private roads and sidewalks. After offering a brief explanation of the different alternatives to road-socialization, I will focus on one specific problem in the privatization of roads: the idea, vox popul, that if we privatize common areas such as roads, sidewalks, or parks, they would not be free anymore, but shall become expensive, unaffordable or unavailable.

Who Will Built the Roads?

Roads, sidewalks, and other common areas are a scarce resource and, thus, the best way to distribute and manage them is, libertarianism tells us, the free market. There is a psychological element behind the idea that government intervention is a must when we are dealing with complex, important, or basis services, such as healthcare, education or, indeed, roads. Our emotional response is a compelling, dire need for a superior and abstract entity who can magically manage that complexity: the government. But the government is not, however, an abstract entity –it is in fact a collection, so to speak, of highly unskilled individuals without incentives to do their job properly. Therefore, government management often results in absolute failure and waste of resources. As it is the case with traffic jams: a collision between the private production of vehicles and the public management of roads.

But without government, who will build the roads? This endless question has a simple answer: the same people who are building them now: contracting companies hired by the government. The government does not build roads. The government, in fact, builds nothing. The government only steals half of our salary to redistribute it inefficiently to provide us with things that we barely use or that, once we use them, they won’t work properly. The fantasy perpetuates itself like a self-fulfilling prophecy under the excuse that “it has always been like that” and, if things were to change, it will lead to complete chaos.

But when abolitionist tried to get rid of slavery in the United States, some people used the same excuse: Who will pick the cotton when we free the slaves? Indeed, many were convinced that, without slaves picking cotton, clothes would not get made, families and companies would go bankrupt, and kids would freeze to death (Rothbard 2006; Samuels 2015, 191-193). But after the abolition of slavery new incentives led to the development of new technologies to pick the cotton. As happened with slavery, we are unable to predict what kind of roads and how necessary roads will be in a world without public roads, because government intervention kills any possible incentive to such development. Without free market and the incentives it creates we cannot predict the development of new technologies.

There are, however, many alternatives to government intervention based on the private sector, from the threshold pledge system described here, to roads built by companies who need logistic services, roads for their employers, and roads for their customers. In Hong Kong it is not hard to see “Private Roads” in all neighborhoods, working as open malls where people and cars can freely come and go without restrictions –a variation of the “center model” proposed by Block (2009, 16).

Privatization and accessibility

Those who advocate the socialization of roads and common areas believe that privatization is unlikely to be benign for citizens, mainly, for three reasons:

  1. A private system of roads will lead to anarchy: many and very different traffic rules would affect traffic and drivers. It would be something like passing different examinations for different roads with specific rules. This can be easily refuted: (1) roads with a complex system of rules will lose customers for those offering a better service. As a consequence, (2) both big companies and private owners will decide together a standardized system of rules, since all roads are ultimately connected. A similar example of standardization can be seen with computers: it is convenience, not government, the reason behind standards such as USB or operating systems. If these systems do not respect the customers or fail to address their concerns, alternatives systems such as Linux will be develop, creating new opportunities that would never have existed within a government regulated system.

  2. A second objection is safety, an issue that has been broadly discussed by Walter Block for almost 40 years. Traffic accidents are so common that if any private enterprise was responsible for so many deaths in their roads, it would be an outcry. According to Block,

“As far as safety is concerned, presently there is no road manager who loscs financially if the accident rate on “his” turnpike increases, or is higher than other comparable avenues of transportation. A civil servant draws his annual salary regardless of the accident toll piled up under his domain. But if he were a private owner of the road in question, in competition with numerous other highway companies (as well as other modes of transit such as airlines, trains, boats, etc.), completely dependent for financial sustenance on the voluntary payments of satisfied customers, then he would indeed lose out if his road compiled a poor safety record (assuming that customers desire, and are willing to pay for, safety).” (Block 1979, 216).

  1. Finally, socialists believe that, if roads, parks, sidewalks, and any other common are were privatized, then the access to them will no longer be free and only those who could afford them would be able to enjoy them. The most radical socialists view private roads as a complex system of limited-access toll roads where the drivers would have to stop and get out of their vehicle every mile.

However, this identification between privatization and inaccessibility is just a delusion created by people devoid of any intellectual activity. Seriously. Do you know how many private business offer free goods? Anytime you enter a shop, look around, and go out without buying anything, you are making use of a private space for free. Just like people pilling up outside a McDonalds or Apple Store to use their free Wi-Fi, or a mall, or the air conditioning of ZARA. Access to private spaces does not mean that you have to pay –it means that the space does not belong to the government and has not been payed with your taxes.

The same goes for parks and roads. Parks may be monetized with entertainment activities or small business, such as souvenir shops, refreshment stands, and so on. These business pay today a lot of money to the government –taxes, training, special permits, and all the stupid paperwork in between–, but a private system will reduce these costs significantly.

How about roads and sidewalks?

Hong Kong’s private roads and sidewalks

Common areas providing access to services would surely benefit from open-access private roads. However, how about roads and sidewalks providing access to private houses or going across private properties? In what follows I shall consider two examples from Hong Kong, one of private sidewalks in the Mid-levels, and another one of private roads all across the city.

Hong Kong’s Mid-levels can be barely defined as the area between Mount Austin and the Central district in Hong Kong Island. Its residential houses are built in a mountainous area with almost no public transportation, far from the big city. These houses –usually mansions– are connected by roads and small sidewalks where people can walk if they wish so. Surprise! These sidewalks are privately owned property and their management is not regulated by any government agency. And behold! You can freely tread on them.

Most people in Hong Kong are not aware of the fact that there are private sidewalks because they are not signposted. However, in 2007 a couple discovered that a Victoria City boundary stone in the Mid-levels, which marked the old boundaries of Hong Kong, had disappeared. After informing the relevant authorities, they found out that the piece of land where the old boundary stone was placed, the sidewalk of Magazine Gap 17, was private property and it belonged to the mansion nearby. For this very reason, the government could not intervene and was no responsible for the disappearance of the monument. Needless to say, the sidewalk is an open area despite of its private status.

Similarly, private roads prosper in Hong Kong, as it can be seen in the picture that opens this post, taken yesterday in Mei Foo. Private roads in Hong Kong work as any other road: you can walk in and out without paying a penny, you can use any service provided by any shop without any additional expense, and of course you can drive by and even park. But: if you do not live there, you won’t pay with your taxes for any construction work in that road.

When advocates of the socialization of public services state that privatization would make things more expensive or inaccessible to normal people, they opinions are based on a false assumption, lurking behind their value system: the Marxist idea, inherited from Thomas Hobbes, that human beings are fundamentally evil, essentially not self-sufficient, and that rulers must then have near-absolute power to secure order.

In fact, it seems that, when human beings work free and unrestrained and are not violently deprived of their capital, man is not the wolf to man. A private system of roads and sidewalks can be perfectly open for one simple reason: it is in our benefit that other owners do the same, opening their private roads. The free market will do the rest.

This article was originally posted in Spanish at Students for Liberty Spain.

 

Bibliography

Block, Walter. “Free Market Transportation: Denationalizing the Roads”. The Journal of Libertarian Studies 3/2 (1979): 209-238.

Block, Walter. The Privatization of Roads and Highways: Human and Economic Factors. Auburn, Alabama: Ludwig von Mises Institute, 2009.

Rothbard, Murray. For a New Liberty: The Libertarian Manifesto. Auburn, Alabama: Ludwig von Mises Institute, 2006.

Samuels, L.K. In Defense of Chaos: The Chaology of Politics, Economics and Human Action. California: Cobden Press, 2015.

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