Regulating privatized expressways

Built in the late ’60s, what we today call expressways were originally known as “diversion roads.” They were meant to divert traffic from the national highways that traversed busy town centers. Funded by taxpayer money, the first such roads, one going North and one going South, proved convenient to long-distance travelers. They offered access to remote places, literally paving the way for the growth of new cities and communities.

So beneficial were these new infrastructure projects that they soon became the principal gauge of an administration’s achievement.

But they came with a price. Most of them were constructed using foreign loans that had to be repaid. The government justified collecting a small fee from motorists who used them, instead of imposing new taxes on everyone. Though this looked like double taxation, people didn’t mind paying the toll to enjoy the convenience of highway travel.

Today, we have forgotten that the responsibility for building roads that facilitate public mobility is basically a function of the state. What remains of this responsibility when the operation of public goods like expressways is transferred to private corporations? The answer, quite simply, is to make sure that the private operators or concessionaires that take over these facilities do not overcharge, that they properly maintain them, and that they prioritize the public’s safety and convenience.

What I am sketching here is a very rudimentary version of the complex concept of regulation. There is a whole subdiscipline in economics entirely devoted to this concept, which continues to grow as new ways of doing business emerge.

In the United States, the early distrust for big business gradually gave way to an enlightened view of capitalism as a result of the introduction of better antitrust laws and more effective administrative instruments. “Efficiency became the only generally accepted goal of antitrust,” writes Richard A. Posner, a leading figure in pragmatic legal theory.

In my column last week (“Chaos at the expressway toll booths”), I specifically zeroed in on the failure of the expressway operators to properly carry out the Department of Transportation (DOTr) mandate ordering the implementation of a full-scale contactless collection system. Their failure has caused monstrous logjams around the toll booths, resulting in incalculable inconvenience to motorists and losses to business entities that rely on the timely delivery of goods.

But that’s only half of the picture. We need to ask: What exactly did the regulatory agencies under the DOTr — the Toll Regulatory Board (TRB), the Land Transportation Office, and the Land Transportation Franchising and Regulatory Board — do to ensure proper compliance by the expressway operators with the order to shift to a total cashless toll collection system?

What steps did these agencies take — other than to set deadlines and threaten the public with traffic citations and fines for noncompliance — to carry out their own department’s order? By itself, Department Order No. 2020-012 bears the signs of callousness and ignorance. It was signed on Aug. 13, 2020. The implementing rules and regulations or IRR were issued only on Oct. 5, yet the deadline for the completion of the shift was set on Nov. 2. It was later moved to Dec. 1. Anyone who would set an unrealistic time frame like this does not have the vaguest idea of what this shift entails — especially in the midst of a pandemic.

Rather than inflict deadlines and threaten penalties on the riding public, the DOTr and its myriad agencies would have served the public better if they had first formulated the basic standards governing electronic tollways—for example, the average time a vehicle needs to clear a toll booth. Radio-frequency identification (RFID) is not a new technology. In some countries, a vehicle traveling at 20 or 30 kilometers per hour can have its transponder read by an RFID sensor without having to make a full stop.

Obviously, the reliable RFID models are also very likely to be more expensive. If the operator is ordered to give them out free of charge, that would be additional investment without a corresponding return—except in terms of public convenience. The technology to be used, along with timelines and the system for distributing the devices, etc., needs to be negotiated between the regulatory agencies and the operators. Plain common sense indicates that a sufficient period for testing and evaluating every aspect of the system be provided before it is rolled out for full implementation.

A fair process might require the advice of neutral experts. Administrative agencies like the TRB are supposed to be precisely “arenas for the deployment of neutral expertise.” The original meaning of bureaucracy—in Max Weber’s sense—was rule by experts. Today, unfortunately, it means rule by politically-connected petty tyrants.

If something as ordinary as the installation of an electronic tollway system can cause so much confusion, how do we expect to roll out a vaccination program on a scale never before seen in history? It is frightening just to hear of the problems the British government has to face after a number of so-called “GP practices” chose not to participate in the National Health Service’s vaccination program “amid concerns their workloads are already too heavy” (The Guardian, Dec. 11, 2020).