Everyone complains about government. Why?
Take roads, for example. They’re either full of potholes or under repair. And the repairs seem to come in late and over budget.
Much of this can be traced to what Adam Smith call the “agency problem.” People always look after their own money more carefully than they care for the cash of someone else. And in the case of the government, it’s always someone else’s money.
One way out of the pothole problem, is private toll roads. They tend to be well-maintained at an effective 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.
I don’t think we’ll see variable toll charges based on GPS tracking of our driving any time soon. But we could. And it could mean better roads at lower costs. That would be a good thing.
Douglas R. Tengdin, CFA
Chief Investment Officer
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