Archive for June, 2008

Is transit an “inferior good”?

Monday, June 30th, 2008

Norm Leahy insists that mass transit is really a mass transfer of wealth from the vast majority, drivers, to a small minority, riders. The damning truth, which he pulls from a peice by Sam Staley is that

Only about one third of transit’s revenues come from customer fares. The remainder comes from taxes and federal grants (often funded by road users)

A pretty powerful statistic, but one that I think is fundamentally misleading. Whether automobiles, buses, light rail, subways, bicycles or pogo sticks are the best choice for any given route should ultimately be a question for people to decide for themselves, through a free market. But what we have now is anything but. Roads are paid for by taxes, just like transit. So it means nothing to say that 2/3 of transit budgets come from taxes–the same applies to roads.

The first (correct) response to this observation is that a large chunk of road spending today is from the gasoline tax, which is very much like a user fee for roads. Of course, depending on the state, a significant amount still comes from general fund revenues, sales taxes, and property taxes that have nothing to do with driving. And historical road spending is far worse in this regard. But the main point is probably correct: a larger chunk of road money comes from gas taxes than transit money comes from fares. Problem solved, the argument goes—people are paying most of the cost of their driving through gas taxes, and the fact that transit tends to be more luxuriously subsidized by unrelated money proves that its prospects in a free market would be dim. So we should oppose increased transit spending across the board.

Not quite. The error lies in the absolute distinction between “roads” and “transit” as two different goods. Roads and transit are two means of providing the same thing: transportation. Distinctions between one set of transportation routes—which might happen to be rails, roads, or a mixture of the two—and any other set of routes are arbitrary.

Norm’s argument goes like this: travel on one set of routes (railroads) accounts for only a fraction of the total passenger-miles. Yet some of the cost of maintenance and construction of these routes is paid by people who never use them. This is an unjust transfer of wealth, and it probably leads to inefficiency, too.

However, there are thousands of miles of pavement in the Commonwealth, of which I only drive a small fraction on a regular basis. There are many sets of road routes that, taken as a whole, cost more to maintain and build than the people who drive them are paying in taxes. Is this also an unjust, inefficient transfer of wealth, too? Well, actually, it is. Realizing this does not give rail as a whole a free pass. But it does teach two important lessons: (1) the question of whether road or rail is the most cost-effective investment must be determined on a route-by-route basis, not in a summary fashion, and (2) even taking into account the fact that much road money comes from the gas tax, the current system still really bad at figuring out what makes sense and what does not. Bureaucrats are left to guess about what to build with the aggregate money that comes from taxes, gas and otherwise.

Imagine we purchased food the same way. The Virginia Department of Lunch was responsible for feeding people, and it funded itself by charging a calorie tax. What would happen? For one, it would be quite unfair. A calorie from fois gras is not the same as a calorie from fritos. Second, it would not take into account the tastes and preferences of the citizens. Suppose I really enjoy fois gras and would be willing to pay more to eat it. When bureaucrats run the show, there is no way to express my preference through a market–I am reduced to begging. Worse still, even if a well-meaning VDOL employee sincerely wanted to satisfy my preference, how would he go about figuring out if the investment in goose farms was a wiser choice than, say, investment in deep-frying equipment? He couldn’t.

Getting back to the immediate case of roads, VDOT is in the same position as VDOL. Like fois gras and fritos, a lane-mile of road in NoVA at rush-hour is a much more coveted possession than a lane-mile in Bristol at midnight. But it costs citizens the same in gas taxes to drive it. The soviet-style approach to pricing these goods does not take into account their scarcity. How are we to know what people’s preferences would be if they had to weigh the market price of driving on the beltway compared to the market price of taking the subway? Under the current system, we simply can’t. Consider, too, the fact that transportation decisions impact the pattern of growth in the long term (10-30 years) and that this pattern of growth is also something about which people have varying preferences. New developments around the Metro stops in Nova are totally different products from developments around the new 288 interchanges. Many people like the urban one-car or no-car lifestyle. Where are they going to live when command-and-control transportation policy restricts the supply of the kinds of areas that they enjoy?

All this does not at all prove that we should increase or continue tax funding of rail infastructure in all cases. But it does explain why we should not expect rail to pay for itself from the farebox until we fundamentally change the way we pay for roads.

opt. cit. LOL.

Friday, June 27th, 2008

Its not often that reading a supreme court verdict has me ROTFL. Observe as Scalia lays the smackdown in the recent gun-rights case, DC v Heller:

The phrase “bear Arms” also had at the time of the founding an idiomatic meaning that was significantly different from its natural meaning: “to serve as a soldier, do military service, fight” or “to wage war”

Giving “bear Arms” its idiomatic meaning [as the dissenting justice do] would cause the protected right to consist of the right to be a soldier or to wage war–an absurdity that no commentator has ever endorsed.

Worse still, the phrase “keep and bear Arms” would be incoherent. The word “Arms” would have two different meanings at once: “weapons” (as the object of “keep”) and (as the object of “bear”) one-half of an idiom. It would rather be like saying “He filled and kicked the bucket” to mean “He filled the bucket and died.” Grotesque.

What happens when NIMBYs…

Tuesday, June 24th, 2008

… happen to be elected officials? Find out.

(Hat tip: Barticles)

Take that, Morgan Spurlock!

Wednesday, June 11th, 2008

“Super Size Me” never really rose to the level of making sense—of course you will be unhealthy if you eat 10,000 calories per day without exercise. But the film’s smug crypto-paternalism annoyed me nonetheless, so I feel that the cosmos are back in balance after reading this news story of a man that lost 78 pound by eating only at McDonalds.

Hippy Watch

Monday, June 9th, 2008

I was watching a History Channel special on the Hippies this weekend. It was mostly quite boring; good thing I had my reading. I looked up at one point to find the most unlikely “expert” to appear in such a show: NR Editor Richard Brookheiser. On second thought, being a member of the Pythagorean Brotherhood probably does qualify you to talk about hippies…

Worse than farm subsidies, if that’s possible.

Saturday, June 7th, 2008

Back from an overseas trip with my less-pythagorean brotherhood, I finally have time to catch up on all the important things in my life, such as checking the Amtrak YTD financial performance. The results? It is still hemorrhaging money, as expected. But the future is not so bleak. The most noticeable bright spot is that the Northeast Corridor is quite consistently profitable. All told, the trains that run from DC to Boston had an operating profit of $183 million so far this year. When the hodgepodge of “state supported” (read: subsidized off the balance sheet) routes in the rest of the country are taken into account, the net operating profit drops to a respectable $120 million.

The disgrace is the “long distance” (a.k.a. “retarded”) routes, which managed ring up a bill of, get ready, $247 million. Pause. Breathe. Has there ever been a more absurd government subsidy? Okay, there have probably been a lot. But this is pretty bad. Keep in mind too that this is an operating loss, which means that it is simply the ticket sales, minus labor, maintenance, and station upkeep. No interest and no depreciation is included—so its not as though the loss is so huge because the number is saddled with debt from loans used to buy the equipment. In short, the government could afford to pay someone $200 million to take the trains from them, and still come out ahead.

The top offending route is the Sunset Limited from New Orleans to Los Angeles, which, per passenger, per mile, lost 54 cents. That means one person making the entire 1,897 mile journey sends Washington a bill of $1030 (!)

Seriously, y’all. Lets pull the plug. The Northeast Corridor trains arn’t going anywhere, reguardless of whether Amtrak is privatized. States can make up their own mind about how much they want to spend improve their own rails (my guess is that Virginia will spend more than Arizona). And private companies like this one can take over to provide luxury land-cruises without requiring subsidies from Uncle Sam.