A Bump In The Road

Why does everyone complain about government?

Take roads, for example. They’re either full of potholes or under repair. And the repairs always seem to come in late and over budget.

Source: Wikipedia

This is what economist Adam Smith calls an “agency problem.” People tend to look after their own goods more carefully than they care for someone else’s stuff. And with the government, it’s always body else’s stuff.

One way out of the pothole problem, is to privatize. Toll roads tend to be well-maintained at a reasonable cost. Why? The private company has its own money at risk and it works like a phone company: by maintaining private ownership under local regulation. The system isn’t perfect, but we find fewer potholes in the phone system than in our roadways.

But we won’t see toll charges on our phone bills based on GPS tracking of our driving any time soon. We could, though. It could mean better roads at lower costs. And that would be a good thing.


Douglas R. Tengdin, CFA
Chief Investment Officer
Phone: 603-224-1350
Leave a comment if you have any questions—I read them all!

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By | 2017-07-17T12:34:14+00:00 September 23rd, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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