Mark Wadsworth

This is a spare 'blog in case my main 'blog at markwadsworth.blogspot.com isn't working

For Whom The Bridge Tolls (coda)

I used the example of a privately owned bridge to illustrate privatised tax collection a few weeks ago, and I left a comment in response to others as follows:

… the road from Hereford to Hay-on-Wye is a total of 23 miles, of which fifty yards is this confounded bridge… if it’s acceptable for the bridge owner to charge 80p for the crossing, why not sell off the other 23 miles in half-mile chunks (worth £4 million each) and allow each new private owner to charge a toll of 80p?

In fact, why not split it into fifty yard chunks and allow each owner to charge a toll of 80p? The value to the driver of that distance has nothing to do with how expensive the road/bridge was to build and everything to do with the value to him of getting from A to B (and back again). Each bit of that road has the same “ransom value”.

Happily, I stumbled across a real life example of such privatised tax collection in yesterday’s Metro:

China: It seems that capitalism is really taking root in the communist country. Canny farmers have cut a track through their crops, so that drivers can pay them 20p to bypass a £1 toll road. “We make more money from out toll road than we ever did from farming,” said one of the budding entrepreneurs in Liujiang. “Hundreds of cars come through every day.”

Let’s assume that the road is government owned, so the £1 is a tax. How is the 20p not also a tax, albeit a privately-collected one?

Question: How much would the farmers be able to charge if the government scrapped the toll on the official road?

Answer = nothing (unless the official toll-free road is hopelessly congested).

So this isn’t really capitalism at all (creating, working, investing, etc) it’s merely skimming off the location value of the field, which just happens to be located between two towns between which people need to commute (without these towns, there’d be no commuters and hence nobody to collect tolls from) and which just happens to be next to a toll road.

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