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II. Privatization

What, then, is the best process for converting vehicular thoroughfares from the public to the private sector, stipulating if only for the sake of argument that this is not a quixotic quest, that it can work, if it is but implemented?

There are several choices. First, let us address the issue of whether these resources should be given to the citizenry, or sold to it. The case for the former seems clear: it is the people whose resources went into the creation of the roads in the first place, not that of the government. True, the state was the proximate cause of the spending, but, ultimately, the money came from the long-suffering taxpayer. Indeed, the state has no money of its own, over and above that mulcted from the citizenry. Further, it is the government, if we are correct in our underlying analysis, which is responsible for the problems of road socialism in the first place. It would come with particular ill grace for the guilty institution to reap the fruits of correcting problems it itself created. The point is, if the roads are sold, the proceeds will be given to the city administration, the last group of people deserving of them.

Given, then, that we reject sales, and favor give-aways, who are the worthy recipients? Several immediately come to mind: those who travel on the streets (or otherwise use them), those who live or work in the surrounding buildings, those who own these edifices. How can the claims of these various candidates be reconciled? How can they be ranked, so that those with a greater ones are given proportionately more ownership rights than those with lesser?

Fortunately, there is a theory that can elucidate these problems. It may not give definitive answers to the nearest four decimal points, but at least it can point in a proper direction. The theory is that of libertarianism, based on private property rights and homesteading; this may be readily used as a means of determining how un-owned resources can pass from that state into human control. Again, we will not justify this perspective, but rather apply it to the case at hand.3

How would it work? First off, if there were any case of a privately owned street seized from its legitimate owners and brought into the public sector (e.g., nationalization, or, in this case, municipalization.), those with first claim on it would be its former owners.4 For example, in the New York City case, while there never were any private streets condemned by City Council, there were two other transportation modes which were: the Independent Rapid Transit Corporation (IRT), and the Brooklyn-Manhattan Transit Company (BMT). When these are privatized, they will be given back to their former owners, not to those who traveled on them, or lived next to them, or above or below them, nor, even, to those who owned such surrounding properties. Borrowing a leaf from this experience, then, the first claimants on public streets are the taxpayers who were forced to finance them. These are the real and rightful owners of the streets: those who paid for them.

Assume, however, that the identity of such persons is lost in antiquity.5 Which other "stakeholder" would then have the next best interest in these properties?

One way to discern this is to ask, not as we are now doing, "Given the status quo, how shall we divide up the streets?," but, rather, "What would the world now look like had the city government never taken over the municipal streets, but had instead allowed this industry to develop purely under free enterprise strictures?" Had there been no government intervention, the likelihood is that the sites would have been claimed, and streets would have been built, by private road companies. This, at least, was the experience during medieval European times as well as in 18th century America. Who, in turn, might have invested in such companies? Although it can only be speculation, call it an educated guess, one reasonable candidate would be owners of the property alongside the street. This would be one way for the market to "internalize the externality" which might otherwise arise from different ownership of street and neighboring property. Insofar as this is true, we have another set of candidates for street ownership: those whose property abuts the street.

Would this apply, as well, to the tenants of these buildings? Not a bit of it. Tenants are not residual income claimants; they have no right to the real estate in question, per se. Their rights are limited to the use of these amenities, for a certain specified time. They could not possibly be entitled to the property in question, let alone ownership to it from centuries, decades, or even years ago.

What of the fact that these properties may have changed hands dozens of times throughout the years since the streets were first laid out and built? The rights survive. For the new owner(s) purchase the entire rights to the property, those recognized in law at the time, and, also, those that were not, e.g., that ownership of contiguous property would confer a claim over the abutting street.

Another way to discern who is entitled to street ownership is based on homesteading. Again, as it would take us too far a-field to explain or justify such a procedure, we shall content ourselves with merely applying it. A modicum of entitlement is automatically captured by those who "mix their labor" with an un-owned (or in this case, illegitimately or improperly owned -- by the state) piece of property. Thus, all of those who have traveled on the street by that token alone thereby obtain a claim of ownership over it. It is here that tenants of contiguous buildings can make their claim: not as tenants per se, but, rather, as commuters between their homes and places of work.

At first glance, this creates more problems than it solves. For there are many, many people who have walked, ridden cars, taxis, horse drawn vehicles, bicycles, motorcycles, etc., on the streets of Manhattan, for example. It would be a real "dog's breakfast" to determine who has a legitimate claim and who does not on this basis. People don't save their bus transfers, or taxi-cab bills, which, even on the best of assumptions, would only be the veritable tip of the iceberg of evidence of road use. Bills for gasoline in Manhattan, or in the surrounding boroughs, would also serve as only the most indirect of evidence for use of any specific street.

Under these conditions, the most accurate assessment might well be derived through proxy. That is, we can assume that all residents of Manhattan use its streets to a certain specific degree, call it X, and those in the surrounding areas to a lesser degree, say, X/3. Or, as a rough approximation, that all of the inhabitants of the entire city (or each of the residents of all five boroughs) are the legitimate owners of all of their respective streets.

Based on these considerations, we are faced with two very different implications, and thus two very different ways of distributing the thoroughfares to the people. On the one hand, the owners of the property alongside the road own it; on the other, all members of the society own one quotal share each.

But we have only begun to encounter complications. Another one concerns how the properties shall be divided up on the basis of either of these criteria. To wit, consider one long street in Manhattan, e.g., Broadway, which runs the entire length of the island. Suppose there are 10,000 separate properties that abut this avenue. Do each of these 10,000 property owners assume control over 1/10,000 of the entire facility? Or do they each own that little bit of it that touches upon their property? (In this case, every real estate holder would own exactly half of Broadway affronting his property, and the other half would be given to the owner across the street.)

The latter is clearly infeasible. With 10,000 separate owners of Broadway, this avenue would quickly become impassible to traffic. Each individual, particularly if he could get the cooperation of the man across the street, would be able to bring motorists to a standstill. Streets would come to resemble a Parcheesi board, and blockades could become the order of the day. This option must be rejected, but not only because of its undoubted impracticality. Fortunately, for our underlying homesteading theory, roads could never have been built in the first place in any such manner, for the same reason: initial susceptibility to blockades. Indeed, this model serves principally as an entirely refutable objection to the whole idea of private roads.6

It follows, then, that no abutting real estate holder may establish such a chokehold over any street. If so, how is ownership to be divided? Clearly, the best way would be to accord with the practice of ancient road enterprises; to set up a joint stock company composed of these 1,000 people, who together would control the entire venture. This in turn leads to another question: would each of the 1,000 own an equal 1/1000 of a share of the corporation, or would the division be unequal?

The latter is far more in keeping with homesteading theory than the former. That is, a building that stretches along Broadway from 55th to 56th Street is far more valuable than the same physical structure occupying the area between 155th to 156th. Naturally, the former would have more of a stake in Broadway than the latter. Were a road company to be set up de novo, it is inconceivable that the shares would be apportioned according to mere physical length. Based on these considerations, the ownership rights over Broadway would be distributed in a manner proportional to the assessed valuation of the property in question.

This leaves open the question of whether the stock company should own lengthwise, or in terms of geographical areas. That is, should a company own all of Broadway or 3rd Avenue, or 23rd Street or 42nd Street (the one dimensional format), or should one be assigned to Greenwich Village, another to Hell's Kitchen, a third to Harlem, etc. (the two-dimensional format.) In terms of road management, each has advantages and disadvantages.

The main drawback of the one-dimensional model is the dispute over green light time on traffic signals. If one firm owns 3rd Avenue, and another 23rd Street, and they cross at right angles, each will naturally wish to have the green light for as much time as possible, and the red for as little. In that way, traffic can flow more easily on its own property, and its revenues be enhanced.7 How, then, to settle this potential dispute? Simple. Each will bid against the other for the proportion of red and green light time. It is akin to the situation in which two ex-partners find themselves upon dissolution of the company: who keeps the firm? And the answer is, whichever of them is willing to pay more for the other's half. Presumably, the north-south artery, which in Manhattan usually serves more customers, will be able to outbid the east-west thoroughfare for the lion's share of the green light time, based upon the derived demand for these services emanating from the final consumer.

Another difficulty in this scenario will be the arrangement of staggered traffic lights; those timed in such a manner so that motorists can move at a steady pace (e.g., 25 m.p.h.) without being forced to stop and wait for a red light. This will call for no mean talent of negotiation if each and every street and avenue comes under the management of a different firm.

These problems will be as nothing under two-dimensional ownership. Staggered lights and allocation of green light time are all arranged under the aegis of one firm, so that by definition no negotiation or transaction costs need be undertaken. Instead, the practical difficulties arise when the streets of one neighborhood connect with those of another. What to do, for example, when Turtle Bay gives over to the East Village? Here, similar negotiating efforts must be undertaken in terms of coordinating staggered lights and green light time.

Historical precedents can be found on each side of this debate as well. Ancient stock companies typically owned long thin thoroughfares; this, too, was the practice of private inter city railroads. But equally free enterprise ventures such as Disneyland, Knott's Berry Farm, Universal Studios, etc., and hundreds of smaller shopping malls have organized themselves into the neighborhood, or two-dimensional format.

Given that there is in effect a "draw" 8 between these two models, I opt for the neighborhood format, if only because it is more modern. This indicates that the technology of private development has migrated from one to two dimensions. Since we are privatizing in the modern era, the latter is more appropriate. If this exercise were being carried out a century or two ago, the alternative option might well have been picked.

But why choose between having your cake and eating it? Why not have both? That is, were all the roadways in Manhattan owned by a single firm, all transactions cost vanish in one fell swoop. Well, not exactly. This is somewhat of an exaggeration, as negotiations would still be necessary vis a vis all the tunnels and bridges connecting this borough with its three neighbors, as well as New Jersey.

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