Rodney M. Lockwood Jr.
Recently, the Michigan Senate held hearings on the proposed New International Trade Crossing, the publicly sponsored bridge that would connect Detroit and Windsor.
This is a key issue for Michigan and the U.S., as more than 20 percent of all trade between the U.S. and Canada occurs at the Detroit-Windsor border, of which 99 percent crosses the Ambassador Bridge. More commerce crosses the Ambassador Bridge than any other spot in our country.
The Ambassador Bridge is over 80 years old and has a single span, leaving it vulnerable to accidents or terrorism. Most observers feel a redundant bridge is good policy in light of the importance of this trade crossing.
Many issues have been discussed regarding the NITC bridge. Some of its opponents object as they feel it would not be financially viable and could place Michigan taxpayers at risk. Proponents assert that the NITC bridge, funded by toll revenue bonds, would not place any risk on Michigan taxpayers. These arguments, both pro and con, are rather technical and can only be answered by careful research and analysis.
Other groups and some legislators oppose the new bridge solely on philosophical grounds, based on their belief that government should not enter a market already served by the existing privately owned Ambassador Bridge.
Various tea party groups are opposed to the public bridge based on this viewpoint. I am a supporter of the tea party; many of my closest friends are tea party members. However, on this issue, I strongly disagree with the tea party on the philosophical question of public sponsorship of a new bridge competing with an existing private bridge.
Private enterprise and free markets are not an end to themselves; they are a means to an end. The end is for all citizens to have the opportunity to create wealth and prosperity for themselves in a voluntary and free process. The creation of wealth and prosperity generally is best achieved by private enterprise operating in free markets, as opposed to socialism and government intervention. But free markets assume competition and reasonable ease of entry by potential competitors. Without competition, pricing and service always suffer, as customers can not reward the best providers through their choices in purchasing.
The Ambassador Bridge is a private monopoly. It does not operate in a competitive free market economy. Like all monopolies, it charges tolls that are greater than those that would be charged in a competitive marketplace. Potential private bridge builders and operators who may want to compete in this market have no reasonable opportunity to do so. They cannot assemble the land required for the approaches for a new bridge without condemnation powers, which are now banned by recent state legislation.
Plenty of value remains
There are some who argue the owners of the Ambassador Bridge would have their investment made worthless or at least greatly devalued by the competition from a publicly sponsored bridge. Although there is little doubt its value would be decreased, when one looks at the numbers, there would likely be substantial value, even with competition.
Based on published vehicle traffic, revenue from tolls alone range from $75 million to $100 million per year. That does not include extra income from the duty-free stores and fuel stations. To compare maintenance costs, I looked at the Mackinac Bridge. In a recent report published by the state, that bridge, which is over four times longer, had annual maintenance expenses of about $7.3 million. After subtracting maintenance expenses, the Ambassador Bridge, even with significantly reduced revenues, will still be highly profitable.
It is entirely appropriate for a public entity to enter this market to compete with the monopoly. The public entity would be transparent; its construction costs and operating profit would be public information. And the public entity has the ability to assemble land and obtain permits to make a redundant bridge a reality.
I hope those who are opposed to the public bridge will reconsider their position and end the Ambassador Bridge monopoly.
Rodney M. Lockwood Jr. is principal of Lockwood Companies of Bingham Farms, which specializes in senior housing.