Friedman and Roads
I’m currently podcast-less, due to the continued incompetence of PlusNet, and so am reading Milton Friedman‘s Capitalism and Freedom (at Richard’s suggestion). So far it’s an excellent book, and everything I expected.
It’s interesting how the power of the market might surprise even Friedman himself, however – given that the book was originally written in 1962. On page 30 Friedman discusses the use of tolls on roads, and how they are ineffective in the general case, because of the high costs of administering them on most roads. This is an example of a ‘neighborhood effect’, one of only two types of market failure he identifies. From this, the implication is that a petrol tax is an effective solution.
However, it seems obvious that a technological solution to this problem is not too far away, despite probably being unforeseeable in 1962: it will soon be possible to track people’s exact road usage for a reasonable cost, probably using some radio-based system. Such systems already exist in some restricted areas.
This still doesn’t overcome the local monopoly problem that Friedman also identifies (what happens when there is only one reasonable route from A to B?), but it could certainly shift the balance in favour of some road-use charging, which interestingly even the sluggish UK goverment is investigating.
Speaking of Friedman… I finally got round to watching his “open mind” interview the other day (where he talks about measuring the effects of a policy rather than its intent). I had no idea he was so articulate…. I should have realised he would but the clarity of his explanations was astounding.
Richard G Brown
22 Sep 06 at 08:09:40
Yep. You should definitely watch the ‘Free to Choose’ videos on Google. The first half of each one is OK – the actual documentary itself – but it’s the second half where Friedman shows his debating skill – cutting through woolly arguments.
Andrew Ferrier
22 Sep 06 at 10:09:29
[...] I’ve just finished reading Seth Godin’s book All Marketers Are Liars (yes, I know I was reading something different a few days ago; I’ve got a short attention span). His book taught me a lot about marketing and convinced me it doesn’t have to be fake and cynical. But perhaps the most important personal lesson I’ve taken away is to understand worldviews better. One of Seth’s basic principles is that each person has a set of worldviews: marketing that doesn’t match them is rationalised away in our brains, even when that’s illogical. This has been demonstrated by psychologists many times, but irrational rationalisation (pun aware) makes people uncomfortable, so we don’t talk about it much. This is one of things that makes marketing to people hard: framing the message in terms of their worldview. I think this is just as important to understand in personal relationships (persuading) as it is in selling products (marketing). In fact, it seems that Godin would assert that the former is marketing too. [...]
Andrew Ferrier’s Blog » Blog Archive » Irrational Rationalisation and Marketing
1 Oct 06 at 22:10:59