Untitled Batman Begins Sequel went and got itself a title without telling me. A title and a (somewhat dull) teaser. The Dark Knight is due out on 18 July 2008. Mark your calendars. If you haven’t seen Batman Begins yet, you should look into new real estate. Your current abode under that huge rock isn’t helping you any.

Also in sequels that got names recently, Untitled Fourth Indiana Jones Movie is now Indiana Jones and the Kingdom of the Crystal Skull. I am cautiously intrigued.

The Chamberlain announces the completion of the Astrolabe. Please see the Clocks page.

~Chamberlain of Content

Every good prag­matist knows that one of the absolutely essential functions of government is to own, operate, and maintain public roads. Several arguments I have heard advanced in favor of publicly-​​owned roads include:

• Uniform standards;
• Unrestricted access;
• Cost-​​free access;
• Universal access to an essential resource;
• Safety;
• Efficient allo­cation of scarce resources;
• Availability of eminent domain power to effi­ciently locate major roadways;

And of course the vague but ever popular, “that’s what govern­ments are for!” And every good economist knows that all of this is bunk. But is there something more nefarious in the insti­tution of the public road?

Consider cable tele­vision. Or any other utility that requires long, narrow, contiguous strips of property. Cable tele­vision is conve­nient because it is an excellent, modern example of the practical end result of public road ownership, as we shall soon see.

Joe Capitalist decides to start a cable company. He will sell cable tele­vision service to his customers. To do so, he buys up land (or easements across land) to bury his cable and connect his satellite receiving station to the homes of his customers. Perhaps he charges instal­lation by the cable foot from his station. This will be costly for distant customers, but inex­pensive for nerby ones. In addition Joe Capitalist also charges a surcharge for each easement he has to obtain in order to connect a new customer. Again, distant customers will be priced out, but adjoining customers will enjoy a great discount, as no easements will be necessary. As Joe’s business grows, the number of customers who must pay easement surcharges will decrease. Joe might even want to sell to some distant customers below cost, because the property owners crossed by Joe’s cables will be encouraged to sign up, too. Once a line has been estab­lished in an area, neighbors are encouraged to buy from Joe, because buying from a similarly-​​structured competitor will require the payment of easement surcharges, whereas connec­tions to Joe’s existing lines will be much cheaper. But if Joe’s prices get too high, or his service gets to crappy, then the extra cost to buy from a superior competitor is justified. Everything works.

If Joe wanted to, he could make a large capital investment and lay out cables all over town by dealing with whoever owns the roads. Cable requires long, narrow, contiguous strips of land, and roads are just that. There are three relevant road-​​ownership models to consider:

1. Roads are owned by adjoining property owners, who may or may not license road main­te­nance and management out to a third party that does such things; such road main­te­nance entities would be busi­nesses in them­selves whose service coverage would coalesce by offering lower rates (and expending less in cost) for service to adjacent road-​​owners;
2. Roads are owned by a third party, who operates a large percentage of roads in a geographic area which, for the same reasons as above, would likely be contiguous; or
3. Roads are owned by the government.

Under the first scenario, Joe might sometimes find laying his cable out on the roads to be a good idea. If the roads are owned by adjoining property owners, then he can offer them the bonus of cheaper cable tele­vision in return for letting him bury his cable near or under their section of the road. But it could be spotty. If he runs into an intran­sigent property owner, he may have to divert across an existing customer’s land to find new customers. So a plan for laying out cable exclu­sively along the roadways might actually harms him in the long run. Roads are func­tionally one-​​dimensional: for any given point on the road where a cable could branch off, only two prop­erties are adjoined. But whole parcels are frequently bordered by more than two neighbors. Even in rigor­ously designed commu­nities, each parcel will ordi­narily have three neighbors: one to each side and one to the rear. While Joe might make use of roads occa­sionally, they are not neces­sarily the most efficient way to lay out cable.

Under the second scenario, Joe might go to Sally’s RoadCo and strike a deal. Perhaps some sort of commission deal whereby Sally earns royalties on the customers Joe gets adjacent to Sally’s roads. He has this option, and it might work better, depending on how the roads are arranged with respect to the adjoining prop­erties. If Joe is paying royalties and also paying the cost of burying lengths of cable, this kind of agreement with Sally would work best on high unit density streets — where there are more customers per unit of distance along the road. Condos, apart­ments, high-​​rise office space. Under this system, remaining compet­itive would be more chal­lenging, because competitors would be able to make similar agree­ments with Sally, reducing the initial cost of entering the new market as compared with the previous road ownership model. Even if Sally likes Joe so much that she doesn’t give similar deals to Joe’s competitors (or, perhaps, offers him an exclusive agreement), it will be more difficult, but again not impos­sible, because Sally could still sell indi­vidual easements across the roads and competitors could fall back on the customer property approach, dealing with Sally only when they need to cross a road.

But in the third scenario, there is only one owner of the roads, and it is moved by the chad, not the dollar. Joe can no longer use the previous models for his business, because the government has surrounded small chunks of private property with public roads. Whereas under the private models Joe could negotiate with property owners, or with Sally, when he needed to cross a road, now he has to negotiate with the local government. Local government has interest in raising revenue, sure, but it does not need to worry about losing customers. So its services are crap and its prices stratos­pheric. Getting a right of way to cross a public road with his cable, either above it or below it, would be cost prohib­itive if Joe wanted to expand his market beyond a few suburban blocks. He no longer has a rational road owner with whom to deal. Nor does he have an alter­native road owner who might be more rational. What he does have, and where cable tele­vision shines as a perfect example of what I’m driving at, is the option of buying a municipal franchise.

With a franchise, Joe Capitalist pays 5–15% of his gross revenue earned from customers within the city. In exchange, Joe gets three things: 1) an exclu­sivity agreement, prohibiting any competitors from getting the same deal from the government; 2) the right to bury or suspend cable under, over, or along roads at no addi­tional fee beyond what it costs him to install the cable; and 3) the promise from the local government that no competitors will be allowed to operate in his territory. As if they could under these condi­tions. The royalties are so high that the agreement wouldn’t be of any value to Joe without a guarantee of exclusivity.

These and similar agree­ments have been used ever since public utilities began to dereg­ulate. Power, water, sewer, natural gas, telephone, the new fiber to the premises services (which some are arguing interfere with cable tele­vision fran­chises, because of Verizon’s intent to deliver TV over their FiOS product), &c. It is as if “dereg­u­lation” was just a cover for something entirely unlike deregulation.

But if Joe did not want to deal with the government, he could only sell cable tele­vision services (assuming no other obnoxious regu­la­tions) to people on his block. He cannot cross the road without dealing with the government.

This is different from the situation where Sally owns the roads, but doesn’t want to deal with Joe. Market forces affect Sally. They don’t affect the government.

By virtue of its ownership of roads, the government gains extra­or­dinary control over the cable tele­vision market. It may determine who offers cable tele­vision services, where they are offered, and the price customers pay. If customers don’t like their cable company, they cannot choose another. Their only recourse is to alter­native tech­nologies. Like satellite, which doesn’t suffer from road-​​related oppression, but has its own special problems (read: FAA, FCC, and NASA). Suddenly, Joe Capitalist doesn’t have any incentive to offer quality service at low prices any more.

Cable TV is only an example. Roads let local govern­ments control local markets by limiting the extent to which they can be operated without some inter­action with the government. Roads let local govern­ments control what private property owners may do on or with their property. I submit that, where roads are owned by govern­ments, there is no such thing as private property, and no such thing as a free market. If I were a power-​​hungry local government, and wanted a subversive yet powerful means by which to throttle local markets and property owners, I would make sure I owned the roads.

Alex Trebek asks a contestant, who boasts that she has slept in a hotel room floating on the Kwai river in Thailand, whether the original bridge (of cinema fame) is still there.