Free & Clear: February 2013

Paved with good intentions
By John Hood

It was a competitive campaign for governor. Education issues, economic development, tax policy and national politics were key flashpoints. Seeking to gain an advantage, the more conservative candidate made a highly publicized speech at an event in North Wilkesboro. “If I am elected governor of the state,” he said, “I will use every faculty I possess to help put a policy through the General Assembly which will result in the speedy construction of a great system of highways worthy of North Carolina, the most progressive state in this republic.”

The year was 1920. The candidate: Cameron Morrison, a longtime machine politician and former Rockingham mayor contesting the Democratic nomination with Lt. Gov. Max Gardner. He had begun his political career as a race-baiter and in the campaign stressed his opposition to women’s suffrage and the teaching of evolution. But transportation became his signature issue. Nearly a century later, some point to Morrison’s “Good Roads State” strategy as a model for new Republican Gov. Pat McCrory. In his 14 years as Charlotte mayor, McCrory devoted much of his time and political capital to transportation issues. He twice persuaded voters to support a half-cent sales tax to pay for rail and bus transit in and around the Queen City and helped form a coalition of mayors to advocate for more-equitable highway funding from the state.

I agree that the new administration ought to make transportation a priority. Still, it’s important to remember the old saying: “History doesn’t quite repeat itself, but it does rhyme.” Investing wisely in transportation would indeed boost economic growth in North Carolina. Not all transportation projects are created equal, however. Building new capacity on highly congested corridors and keeping our roads and bridges in better repair would pay significant dividends. Other projects are unlikely to yield benefits greater than their costs.

When Morrison pushed through his program, which used $65 million in bond issues to build more than 5,000 miles of roads, automotive transportation was relatively new. The few cars and trucks in operation had to traverse dirt roads, slowly. Most freight still went by rail or water. Most people traveled long distances only rarely. The marriage of the mass-produced automobile and paved road was transformational. In economics terms, its marginal utility was high. Thanks to Morrison and additional efforts by his successor, Angus McLean, paved-road mileage in North Carolina nearly doubled in the 1920s, while the number of registered vehicles in the state more than tripled. New companies supplying rubber, steel, glass, fabric and other materials to automakers flourished. So did restaurants, retailing, tourism and housing construction in the new suburbs that automobility made possible.

Environmental extremists and even a few cranky conservatives have called the transformation of American life by the automobile an intrusive act of government. That’s a superficial conclusion. The real reason for the success of the car is that, for the first time, there was a feasible means of funding high-quality roads and streets: the gas tax. It created a link, albeit an imperfect one, between use and cost. The ability to collect a rough user fee solved the pricing problem that had plagued older turnpikes, plank roads and city streets. Far from being beneficiaries of unwarranted government intervention in free enterprise, private automobiles were a market-friendly development that made public roads a more valuable asset. Automotive transportation remains an overwhelmingly private industry. More than 80% of the annual cost of the system comes from operating private vehicles, not paving and operating the roads they traverse.

Subsequent rounds of road-building, such as Gov. Kerr Scott’s farm-to-market program in the 1950s and Gov. Jim Martin’s 1989 transportation bill, delivered real but diminishing returns. The latest empirical research shows that economies do not grow in direct correlation with how much tax money is spent on infrastructure. The quality of the resulting networks — their location and condition — is what matters.

In the 21st-century economy, where (largely private) investment in wired and wireless capacity continues to be transformational, policymakers must be careful not to crowd out spending on those ventures by raising taxes to pay for public investment. That means being choosy and applying hard-nosed calculations to new transportation projects. It also means paying for projects as much as possible with user charges, such as electronically collected tolls, instead of tax increases.

Should Pat McCrory emulate Cameron Morrison by making transportation a signature issue? Sure. But his program shouldn’t be a repeat. It just has to rhyme.

John Hood is chairman and president of the John Locke Foundation. You can reach him at jhood@johnlocke.org.