August 15, 2006
Free Markets and Lexus Lanes
In the summer issue of Dissent, Benjamin Ross, a transit advocate from Maryland, offers a deconstruction of free-market arguments for road building and then takes on express toll lanes.
August 15, 2006 10:24 AM
Ross Williams Says:
Most toll lanes don't pay for themselves. That should come as no surprise to anyone.
The one real eye-opener here was the idea that High Occupancy Toll lanes might not even pay for the extra costs associated with creating special toll lanes. That certainly has implications for the decisions on I5.
The argument about equity - who benefits, who pays - is also important to the I5 discussion. Metro's models found that adding any capacity in the I5 corridor would increase housing values in rural Clark County while lowering values in Portland and its suburbs, relative to what they would be without new capacity. Its not just an abstract theory about highways subsidizing suburban development. But we ought to understand that those subsidies are coming at the expense of urban home owners as well.
August 15, 2006 12:36 PM
When people have deflated expectations of price then of course the roads don't pay for themselves because they don't charge a proper price point to actually cover the cost.
I still don't see how anyone that wants to decrease traffic and protect the environment can say that using the market as a mechanism isn't smart. It's the most efficient mechanism to control excessive transit usage across the board. In all seriousness, traffic would decrease with every method if full costs where bore at the ticket/fare again like they where in the past.
It's really simple economics, it's simple to observe in places where full price is bore (the few that are left), and it leaves very little left for such a view that degrades from an obvious economic activity. This article almost acts as if things aren't the way they are to build it's argument.
...credit 0. try again.
August 15, 2006 1:31 PM
Ross Williams Says:
It's the most efficient mechanism to control excessive transit usage across the board. In all seriousness, traffic would decrease with every method if full costs where bore at the ticket/fare again like they where in the past.
I don't know that is true. But assuming it is, doesn't that mean we also have to give up the benefits of those trips? The benefits are not necessarily entirely to the person who is making the decision, so if they have to pay the full cost while only getting some of the benefit that doesn't create a positive result.
I don't think you can, or would want, to reduce everything to an economic transaction.
August 15, 2006 1:34 PM
interesting, adron, did you read the article, or are you just commenting on the content of this post? if you didn't read it, fyi, chris's summary is a bit misleading. the point of the article is not to attack market mechanisms for the development and allocation of transportation infrastructure, but to deconstruct the arguments of, and policies favored by, the auto/oil/concrete industry funded so-called "free market" conservatives.
the introduction is nothing that anyone reading here doesn't already know; that many (most?) "free market" conservatives turn into rank socialists when it comes to transportation policy concerning automobile use.
the rest of the article is a thoughtful take on what kind of market mechanisms could be used to more equitably pay for highway construction, and deal with congestion. notably, these policies are largely prefered by the left/center-left, and adamantly opposed by many "free marketeers". perhaps because the left realized that the market is a very useful, and highly efficient tool, whereas for conservatives it is an article of faith?
honestly, i don't know why anyone uses the term "free market" anymore--it is such a meaningless political term. i find that most people who use it tend to mean "free" as in "free beer", not "free" as in "free speech" (to borrow a phrase from richard stallman).
oh, and where are the places where the full price is bore?
August 15, 2006 2:54 PM
peter - good point.
What I hate though is articles that try to "deconstruct" something that doesn't exist in the first place.
The transportation industry in America is extremely socialized in context to any idea of a "free-market" industry... and as you wrote, why anyone uses the term free-market is unknown to me also. I understand the premise, and it's nice to see individual markets acheive close to that ideal, but it's rare and often times polluted by people who want control, manipulation, and power over others - thus descrediting the whole ideal.
...as for the full price.
The railroads bore the full price of passenger rail pre-1971. They also bore the cost of stations, tracks, taxes, and other such mess.
Taxis, Streetcars, and other vehicles in the past also operated, and paid for most capitol costs if not all from fare box revenue.
...thus in America, in a day long ago and long forgotten, people paid their way. They where also responsible enough to find their own way if they needed to. Thus the progress of technology in the guilded age of America.
August 15, 2006 4:57 PM
Michael Wilson Says:
To add to Adron's comments, there were also plenty of roads built by developers in the past and maintained by them as well.
August 15, 2006 5:51 PM
seems like we're on the same wavelength, though i disagree slightly about the deconstruction argument. the "free market" does not exist, but the strawman that has been erected by the "free-marketeers" is so strong that it may as well exist. Dean Baker over at CEPR has done a really good job of "deconstructing" ;) this "free market" bait-and-switch in his free book The Conservative Nanny State.
Isn't it kind of only half the story to say that railroads bore the full price of passenger rail pre-1971? While it may be technically true, don't you have to factor in that when the railroad lines were built the companies were granted millions of acres of land? something like a 400 ft right of way plus ten sq miles of land every mile, plus sub-surface rights, and cheap government bonds? (i am guessing here)
August 15, 2006 6:10 PM
Terry Parker Says:
Instead of again adding more subsidies with highway tolls for transit alternatives where fares only cover 20% of the costs of operation - transit fares should be charged equal to the cost of operation or five times the current fares, and then a surcharge placed on fares during the rush hours to pay the costs for the extra busses and light rail trains that TriMet adds during those times that are otherwise sitting idle during non-rush hour times. The costs of those extra busses and driver’s salaries should be paid for by transit riders, not taxes on others.
August 15, 2006 7:18 PM
Ross Williams Says:
there were also plenty of roads built by developers in the past and maintained by them as well.
Well, as free market conservatives like to point out, they were actually paid for and maintained by the developers' customers weren't they?
August 15, 2006 10:59 PM
Erik Halstead Says:
transit fares should be charged equal to the cost of operation or five times the current fares
And don't forget to recoup the capital costs of MAX construction, by charging MAX riders at the time of boarding the cost of building MAX, and the interest on the bonds used to finance MAX construction - just like the toll bridges across the Columbia River were paid off.
As it stands, MAX almost recoups its costs, only because TriMet only counts operating expenses (i.e. cost of labor and electricity), not capital expense (which includes the costs of installing new TVMs, replacing platforms and shelters, new LRVs).
August 15, 2006 11:03 PM
Erik Halstead Says:
don't you have to factor in that when the railroad lines were built the companies were granted millions of acres of land? something like a 400 ft right of way plus ten sq miles of land every mile, plus sub-surface rights, and cheap government bonds?
It's been successfully argued at many rail-enthusiast groups and in books, and not yet refuted, that as a result of the land grants (which not every railroad received; nor every railline built with) those participating railroads were required to provide cut-rate pricing to the government, primarily for military and U.S. mail movements.
By the time the government rates expired (from the late 1940s through to the early 1980s) it's been estimated that the railroads repaid the U.S. Government back several times over for the original cost of the land grants.
August 16, 2006 5:06 AM
Michael Wilson Says:
M.W. wrote:"there were also plenty of roads built by developers in the past and maintained by them as well."
Ross Williams replies:"Well, as free market conservatives like to point out, they were actually paid for and maintained by the developers' customers weren't they?"
Thanks for bringing that point up. Yes they were maintained by the developers and of course paid thru the customers rentals and fees.
August 16, 2006 5:56 AM
Ross Williams Says:
Yes they were maintained by the developers and of course paid thru the customers rentals and fees.
And those customers paid whether they ever got into a motor vehicle or not. The problem here is the idea that we can accurately assess all the costs and benefits of a transportation system and allocate them accordingly.
August 16, 2006 11:13 AM
Terry Parker Says:
“And those customers paid whether they ever got into a motor vehicle or not.”
And whether or not they walked on the sidewalk or rode a bicycle down the street, there was still a benefit received.
“The problem here is the idea that we can accurately assess all the costs and benefits of a transportation system and allocate them accordingly.”
That is why there is a need to assess bicyclists direct user fees for road use and bicycle infrastructure. The problem here is the NIMBY syndrome where as bicyclists expect motor vehicle users to pay for their (the bicyclists) use of the road instead of paying their own way.
August 16, 2006 12:01 PM
Terry and Erik,
if you two are so concerned about all the proper costs being payed for by the customers, i would think you would be concerned about paying back all the generations of taxpayers who subsidized the largest public works project this country has ever seen when we rebuilt the transportation infrastrucure to accomodate, and then be dominated by, the automobile.
if you need a refresher, i outlined the first 40 or so years of automobile oriented government mobilization and social engineering on another thread here. it's time to be responsible and pay it back; we auto drivers have been getting a free ride for too long.
good point about the railroads. though i am not a railhead, i am a fan of revisionist history, so i know that it's been convincingly argued by Gabriel Kolko (in Railroads and Regulation) that the cut-rate pricing was not imposed upon the industry by the government, but rather imposed upon the government by the industry. The industry was heavily in debt, unable to sell stock, and facing populist outrage in the citizenry all the while troubled by what Rockefeller called "ruinous competition" in the form of rate wars and "discriminatory rebates" (ie: bribes) used to steal eachothers customers. They wanted price-stability, and a less competitive market, but were unable to successfully create a self-regulated cartel. In this environment, the ICC was not forcing cut-rate pricing, but actually enforcing pricing regularization across the industry preventing upstarts from entering the market with more competitive rates, as well as putting the costs of coordination, and quality control--and most notably--enforcment, on the tax-payers tab.