Human Transit: should transit agencies "retrench" to become "profitable"?

| 4 Comments

I seemed to have a stirred a hornet's net recently.

Jarrett Walker responds to (and deconstructs) my post at Human Transit Should transit agencies "retrench" to become "profitable"?:

I agree with almost all that Jarrett said. In short, we cannot be afraid of accounting.

I didn't think equity, welfare and redistribution were derisive terms, though I am sure there are more politically correct terms of art to talk about these things to avoid bruising egos (The term "coverage routes" which Jarrett prefers is just trying to ensure spatial equity, redistributing funds from areas where transit is profitable to those where it is not, a form of financial aid from the government, or "welfare payment" we might say.) Many coverage routes are just "suburban welfare". Admittedly the term welfare has become politicized in the US ("welfare queens", "corporate welfare"), but providing for the general welfare is a primary function of the US government and is in the Constitution. Welfare economics is a major branch of that field.

The point is not that transit should be profitable (though that would be nice), but that if it is useful, it should break-even (i.e. be financially sustainable without depending on others). If people are not willing to pay for the service, it is insufficiently useful. I think the public utility model is valid (and historically how transit had been organized in the first place).

Overall, I am neither of the anti-transit right nor the anti-transit left nor the pro-transit right nor the pro-transit left, not anti-road right nor anti-road left nor the pro-road right nor the pro-road left. I don't subscribe to modal warfare. I walk to work, live in a 5 person household with one car, two strollers, a trike, and a scooter, (and which would have a bicycle were it not stolen), have a GoTo Card in my wallet and use transit when necessary.

To this extent I am Hayekian (and small "l" libertarian), I cannot know what you want better than you can, there is an inherent data problem (Hayek's Fatal Conceit). Maybe you want transit, but maybe you would rather have the cash I am spending to provide you subsidized transit service so you can do something else with it. The only way to know what the best allocation of resources is, is to charge for things what they cost (at least to the extent we can figure it out, and the collection costs of charging are not too great - which are not trivial problems).

Cars need not fail for transit to succeed. Each mode has its use, the problem comes in deploying it where it doesn't fit (e.g. urban freeways, cars on campus, low volume fixed route transit). If we don't acknowledge the misfit, we will waste scarce resources (time and money) that could be better spent elsewhere. And let's not kid ourselves, these resources are scarce. If we don't acknowledge the subsidies and the cross-subsidies in the system, people will continue to behave inefficiently. The argument that because there are subsidies in other modes, we should have subsidies in our mode is wrong. Two wrongs don't make a right. A bad subsidy does not justify more of the same, it justifies removal.

4 Comments

While I don't share your political viewpoints in general, I would be more than willing to trade a withdrawal of road subsidies for a withdrawal of transit subsidies.

The big problem, of course, is that one is political popular and defended by well-heeled interests; the other is not. Many libertarians are fond of the old saw, "democracy is two wolves and a sheep arguing over dinner". While modern constitutional democracy generally keeps the wolves from devouring the sheep; in transportation planning circles, democracy is frequently five motorists, an oil company, and a bus rider deciding what gets subsidized and how much. Withdrawal of transit subsidies, either by overt political act or via unplanned reduction in tax resources, is a reality--many transit agencies have gone out of business in the past few years due to a recession-caused loss of operating revenue, and many others are in death-spiral mode. Roads and highways are simply not facing the same sort of existential crisis or loss of funding. Even in a green state like Oregon, the steamroller is kept quite busy.

The other big problem is the question of externalities. Libertarian philosophy doesn't deal well with the problem of people who pee in the well and profit thereby (especially when the well is not a resource which can be parceled out and privatized, and thus given an owner who will defend it against such encroachment). If one accepts the premise that A carries greater externalized costs that B (pollution, road damage, congestion, etc.), it seems reasonable that equitable that either A should bear a penalty or B provided a subsidy, to counteract this.

Scotty, I wouldn't say that Libertarian philosophy doesn't deal with externalities. Almost every prominent Libertarian blogger or public figure I know has a very strong stance on externalities. Many Libertarians would rather see Coasian bargaining (like Ryan Avent's solution to NIMBYism) than strong intervention, but it is a stance nonetheless.

Just because we don't fall into the trap of wanting hard regulation of everything due to a butterfly flapping its wings in Japan doesn't mean we don't address externalities.

"If people are not willing to pay for the service, it is insufficiently useful."

I would amend that slightly: If people are not willing to pay for the service, it means they *percieve* it as insufficiently useful.

I disagree that it makes any sense to remove subsidies for transit while keeping subsidies for cars. That creates a very uneven playing field. It's like saying we should remove subsidies for clean energy while keeping oil and coal subsidies. It's also a bit like tolling a major road while not tolling a parallel route--you won't be able to tell what the road is worth to people because they will mostly all shift to the free alternative.

David Levinson

Network Reliability in Practice

Evolving Transportation Networks

Place and Plexus

The Transportation Experience

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Assessing the Benefits and Costs of Intelligent Transportation Systems

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This page contains a single entry by David Levinson published on September 20, 2011 1:38 PM.

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