A Monopolist’s Bridge

(Photo: netjackal)

More than 25 per cent of trade between the U.S. and Canada goes over the Ambassador Bridge between Detroit and Windsor, Ontario. The bridge, built in 1929, has since 1979 been owned by one individual — Matty Moroun. He also owns duty-free stores and sells gasoline that escapes taxes. The Bridge isn’t quite a monopoly—there is also a tunnel; but the Bridge is more convenient for a lot of traffic.

Michigan has a constitutional amendment on the ballot requiring that any new bridge be approved by voters before state money is spent on it. Perhaps unsurprisingly, the Bridge owner is funding a large advertising campaign supporting the amendment. No monopolist likes to have the stream of monopoly profits diminished, which a new bridge would surely do. His political advertising is a smart move for him—a good way to ensure a continuing flow of profits.  Whether it’s good for Michigan, for U.S.-Canada trade and the well-being of the average North American consumer is questionable.  (HT to DJH)

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COMMENTS: 23


  1. Ryan Jones says:

    You should see the commercials. They loosely imply that the new bridge will be taxpayer funded AND divert money from schools, police, and fire – despite none of that being true.

    The bridge will be mostly paid for by Canada and Federal tax dollars – a fact they’re distorting so they can legally say “michigan taxpayers” since michigan taxpayers pay federal taxes. The reality though, is that if Michigan didn’t get these federal dollars for the bridge, they wouldn’t get them at all – so it’s not costing schools or police anything.

    Seriously, watch the commercials.

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    • Joe J says:

      SO being a virginia / federal tax payer, I would be funding this bridge, and have no vote over it, sounds unfair to me.
      PS “if Michigan didn’t get these federal dollars for the bridge, they wouldn’t get them at all ” is a very bad attitude, and actually untrue. the money for a bridge, comes eventually from taxppayers, so if it didn’t go to the bridge, it would either stay with the taxpayers, or be used on other gov’t resources. Which unless the Dept. of Education has vanished overnight, would include schools.

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      • Daniel says:

        You are correct that it’s a bit unfair for Michigan to be able to vote on taking tax dollars provided by other states.

        However, if that money is not spent on the bridge, maybe we should just not spend it… Maybe we could cut this project and put it towards deficit reduction rather than borrowing 47 cents of every dollar spent. The feds have no money, every project they “fund” is on borrowed or printed money.

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      • Clancy says:

        Daniel is on the right track before he veers off into a political attack.
        But, yeah, there is no new tax levied to pay for the bridge (I’m assuming, based on the way Congress usually works) It’s likely deficit financed, so if the money isn’t spent in Michigan, it isn’t spent. The only benefit to me (a New Yorker) or to any Michigander (unless they happen to live near the proposed bridge route)if the bridge isn’t built is that the federal deficit would be slightly smaller. Some people seem to see this as an important benefit, I don’t really see it, but that’s another discussion altogether.

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      • jack sprat says:

        I feel much the same about all of that waste along the Potomac, Hampton Roads, etc.

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      • Nick says:

        “SO being a virginia / federal tax payer, I would be funding this bridge, and have no vote over it, sounds unfair to me.”

        It’s no less fair than any of the Interstate freeways that run through Virginia. Surely you can concede that there are practical reasons for not letting the public vote on every inch of road.

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  2. Daniel says:

    His political advertising might be in the best interest of his monopoly, since the alternative is the government making a decision to subsidize competition with him without the approval of voters. Essentially putting Michigan taxpayers on the hook for paying for a new bridge, even if it loses money.

    I’d like to point out that there is not really a monopoly here. A lot of trucks use the bridge for sure, but there is a tunnel as you pointed out for passenger travel, barges as an alternative for local trucks, and for long hauls, there is the Blue Water Bridge (owned by MDOT already) in Port Huron.

    The taxpayers shouldn’t be forced to fund a new bridge without a vote, especially if the state plans on undercutting the competition and putting any losses on the public dime. Putting private owners out of business and moving the monopoly to the government is the eventual result.

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    • Seminymous Coward says:

      Most things that governments fund are done without a popular vote. Do you object to representative democracy in general? If so, I must confess I’m getting closer to siding with you over time. If not, bridges are a very strange place to draw the line.

      Also, since it’s apparently federal money, do you think citizens of other states should vote on Michigan’s bridge? Would you think so even if the bridge weren’t international?

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    • Nylund says:

      From the article regarding the new proposed bridge:

      “It would be a public-private partnership. Michigan and Canada would own it but a private company would fund, build, and operate it for profit. Canada would loan Michigan some $550 million to build new highways. Responsibility for paying back the loans would fall to the bridge operator.”

      Furthermore, the current proposal involves leveraging that by getting 160% in matching funds from the Federal Highway Administration. None of this involves taking Michigan tax payer money away from other efforts (like education or whatever).

      Basically, you have Moroun and the Canadian Transit Company (the private firm that handles the Canadian side of Moroun’s Bridge) pushing real hard to prevent competition so they can keep their current levels of revenue.

      Moroun, being a rich guy, has the support of American’s for Prosperity. The Dick Armey/Koch Brothers group who have become incredibly good at getting “Tea Party” types to support the interests of billionaires. They’re tactics, like usual, are pretty nasty…putting up fake eviction notices on properties that imply a new bridge will cause residents to lose their home…stuff like that.

      In essence, you have a rich buy who has monopolistic power (note, that doesn’t mean 100% control…just a huge market share), who has gotten together with other rich guys to convince working class people to vote to let them keep their huge market power so they can continue making large profits, by scaring them, telling them that a new bridge will raise their taxes, or cause them to be kicked out of their homes.

      It’s pretty shady and disgusting stuff, but the Tea Party types are proving to be just the sort of sheep Maroun, Dick Armey, and the Koch brothers hoped that would be. They’re falling right in line and passionately defending the billionaire’s rights to monopolistic profits.

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  3. JOe says:

    In my state, we have a monopolists lottery.

    And, a liquor retailing monopoly.

    The state (NC) has acted repeatedly to suppress competition that would benefit consumers.

    “No monopolist likes to have the stream of monopoly profits diminished”

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  4. Alex B. says:

    The Detroit-Windsor tunnel does not allow commercial trucks, giving the Ambassador Bridge a clear monopoly on commercial traffic.

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  5. Zach Burtch says:

    Are there any reasons why you didn’t mention that because of Mr. Mouron and his political influence on the Michigan Legislature, the Canadian government has committed itself to pay the full cost of constructing the new bridge?

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    • Ryan Jones says:

      Exactly! As far as I can tell, this will cost Michigan $0 as the plan currently exists. In fact, it will actually create jobs on both sides as the federal government hires more border patrol agents, another duty free shop opens and hires employees, and toll booths are installed hiring more local Detroiters to staff them.

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  6. Joe J says:

    Just shows that government interference and politics are what usually causes monopolies to exist.
    Nothing in the amendment as stated would stop a different investor or private company from building a bridge, just not taxpayers.

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  7. TexCIS says:

    Who in their right mind wants to build a bridge to DETROIT? It’s the most dangerous city in the US . . . the local police officers are warning visitors to stay away!

    http://detroit.cbslocal.com/2012/10/06/enter-at-your-own-risk-police-union-says-war-like-detroit-is-unsafe-for-visitors/

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    • James says:

      I don’t think it actually goes TO Detroit, traffic just has to go through Detroit (and Windsor) to get to what’s on the other side.

      To the general argument, there are quite a number of other bridges between the US and Canada, from Sault Ste. Marie to Niagara Falls and along the St. Lawrence. All of those were presumably funded as part of the public highway system. Why should this bridge, if it’s needed, be treated any differently than any other highway project?

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  8. Terry says:

    Matty Maroun owns a lot of property in the Detroit area, including the Michigan Central Train Depot, which he seems to be content to let rot.

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    • TexCIS says:

      Terry, you must be a Liberal because you seek to blame a private citizen. In fact, the unions and the Democrats have controlled that city for over 50 years. It’s a perfect case study of what unfettered Liberalism will do, and California is headed that way fast.

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      • Kevin says:

        TextCIS, you don’t have to be a liberal to note that Matty Moroun is letting his properties rot. That’s simply an established fact here in Metro Detroit. He’s also funding preposterous, misleading ads that would change the state Constitution to require a vote for new bridge’s, not just this bridge. That’s foolish.

        The whole point of the state DOT is to build and maintain roads and bridges and we elect representatives to oversee and regulate that department. Voting on every new bridge could add years of delays and millions of dollars in extra costs to every bridge project going forward. That’s just dumb. Of course, it’s in his self interest to maintain his monopoly. But unless you work for him I can’t see why anyone else would back this proposal.

        You may also object to this bridge as not needed (though in Michigan there is widespread bipartisan support for it), but even if you do, this proposal is not the way to fight it. It’s bad for the state long term and should be voted down. This is one of many proposed Constitutional amendments in this state that should be voted down this year for the same reason. They may be right or wrong, but they’re going about things the wrong way.

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      • Kevin says:

        I should also note that the unions and Democrats controlling the city of Detroit have done an awful job for decades. Nobody in their right mind can argue against that. But that doesn’t absolve Maroun of any blame for letting properties he owns wither and rot away. The two concepts are not mutually exclusive. There is plenty of blame for everyone.

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  9. Lewis says:

    Surprised to see the idea of a real life “monopoly” be held up here. There are 6 crossings to Canada, 2 bridges, 3 tunnels, and a ferry. The Detroit Windsor Tunnel and Ambassador Bridge split passenger traffic 45/55 currently and charge the same toll rate. Commercial trucks can use the Ambassador Bridge or the Blue Water Bridge, as most freight is headed towards to Toronto, and the distance is roughly the same using either bridge. The Blue Water charges $3.25/axel for commercial, the same as “Class A” trucks on the Ambassador. The AB varies its weight, as the heavier the truck, the more wear on the roadway. Class B is $3.75. Class A and B account for a majority of traffic on the bridge. There are also two privately owned rail tunnels, and a lot of raw goods are transported this way. Far from a monopoly. The word monopoly has been promoted by local politicians promoting their agenda.

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  10. Lewis says:

    Also worth pointing out, a new bridge will draw traffic away from the Blue Water Bridge (government owned) and the Detroit Windsor Tunnel (government owned). Traffic is down 40% when compared to 2000 levels. So all the traffic (and tolls) for the new bridge would be drawn from these crossings. Michigan currently gets a cut of this toll revenue. Under the proposed agreement, Michigan gets $0. Michigan also gets a lot of tax revenue from the Ambassador Bridge.

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  11. JH says:

    There is currently no LEGALLY BINDING agreement to make Canada pay for the bridge. It’s more of a “gentleman’s agreement” right now. And $2 BILLION for a bridge is a little ridiculous to me.

    http://www.crainsdetroit.com/article/20121023/FREE/121029980/snyder-stumps-against-proposal-6-confirms-canada-on-hook-for-bridge-cost-overruns#

    I see this as a government Monopoly more than anything. Why would any private investor want to build a competing bridge knowing they could just get crowded out by the state and Canadian governments?

    That said, I’m actually voting NO on the proposal. The Constitution is to protect citizen’s rights, not codify legislative policy matters.

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