Redistributing Public Transportation and the Fallacy of the Free Market

The D.C.-Virginia-Maryland metropolitan area is home to roughly six million people. The area is second nationally in its percentage of public-transit users, behind only the New York area. D.C.’s public transit system is among the most developed in the U.S., yet it is nowhere near as efficient or accessible as New York’s. D.C. Metro is in a seemingly constant state of disrepair with frequent and unexpected delays that routinely burden riders.

I could not find statistics for the number of D.C. metro residents who rely on automobiles for their primary mode of transportation, so let’s use a 20-percent estimate of 1.2 million people (total regional population is 6 million). Despite the estimate’s inexactness, it is well known that the region’s traffic is among the worst nationally. The major freeways are routinely paved, but paving roads does little to ameliorate traffic. Similarly, freeways are expanded and new roads built, but if anything, this only succeeds in calling for more cars. Rather than improved roads the area needs improved infrastructure for buses, metro lines, and trains. D.C. metro needs to be repaired quickly and service made predictable, expansion projects such as the purple line need to be expedited, and public transit in general needs to be made more convenient for the greater population.

Realizing these goals requires that the public transit system receive some of the funding that currently goes to auto and road infrastructure. This might seem contrary to the free market, but this could not be further from the truth. I never understood why roads are welcomed into the paradigm of limited government while mass transit is not, but perhaps someone can educate me. The truth is that cars and roads would be nonexistent without public (a.k.a. government) funding.

Reasons why the success of automobile infrastructure completely rejects notions of the free market

  • Roads are almost entirely funded with taxpayer money. There are no ifs, ands, or buts surrounding the following circumstance—the automobile industry (and the driving public) enjoys a free network for their goods. Roads are beyond subsidized—they are created and sustained by the public.
  • Gas prices are heavily subsidized in the U.S. by colossal tax breaks and handouts received by the oil industry. This is indisputable and attempts to reduce these tax breaks have consistently failed in congress.
  • The auto bailout.

The direct, out-of-pocket costs for driving are high without even factoring in the costs of the above bullets. If driving is so expensive it should be theoretically feasible to redistribute a portion of the costs to mass transit. Let us assume that K-Street’s automobile, gas, and mining lobbyists take a two-year hiatus from their relentless push to maintain the automobile as the dominant mode of transportation in the U.S. Next, let’s roughly calculate the annual spending of D.C.-metro-area drivers.

Estimated driving costs per driver

  • $200/month gas, or $50 a week
  • $250/month car payment
  • $100/month insurance
  • $500/annual maintenance and repairs

This totals $7,100 in annual expenses per driver. Assuming 1.2 million full-time D.C.-metro area drivers, annual car costs for the region are roughly $8.5 billion, or almost three times Washington Metropolitan Area Transit Authority’s projected 2013 budget. Unfortunately, not all of D.C.’s drivers could instantaneously stop driving and forfeit their annual expenses for the betterment of the regional mass-transit system. Even if they could, there are many uncertainties as to whether a cost-equivalent mass-transit system could service the additional 1.2 million riders who would no longer be driving.

Instead, let’s take some of the indirect, backend expenses such as taxpayer funding of roads and government subsidies to gas and auto companies, and siphon it into the mass-transit system. Taking this one step further, let’s appease those who favor limited government and open the expansion of mass-transit to the free market (industry profits tremendously from roads as well). Construction and transportation firms can bid for specific projects aimed at making the mass-transit system competitive with the auto industry and road network. The transition from cars to mass transit will require heavy public (a.k.a. government) funding, but as the transition materializes individuals will begin to shift some of their own transportation expenses from their cars to buses, trains, and the metro. In a country where people love their cars such change will not be easy, but in a world filled with the realities of diminishing fossil fuels and a changing climate, it is inevitable.

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Thoughts about environmental policy, sustainability, cancer, and more.
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2 Responses to Redistributing Public Transportation and the Fallacy of the Free Market

  1. Dave says:

    Hi Josh,

    You can’t refute a free market framework simply by saying that the status quo is not a free market framework.

    Your arguments aren’t logically valid. If someone is advocating free market roads, which many do, you’re not refuting them by saying that we don’t have free market roads — that the taxpayers currently fund roads.

    In transportation, free market advocates are advocating ~reform~, change, obviously. If we already had a free market, they wouldn’t need to advocate it.

    Your tax arguments are probably false. Gasoline is heavily taxed. We pay federal, state, and often local, taxes on every gallon of gas. I know of some income tax deductions and loopholes for oil related businesses — at least in the past there was — but an income tax deduction is not a subsidy. You’d have to crunch numbers and work with comprehensive data to know if the oil industry is actually subsidized, net. I assume someone has done this somewhere.

    We have lots of empirical evidence is government is inherently less efficient at the provision of goods and services than free markets, and this evidence goes back many decades, sometimes more than a century. I think we’d need an extraordinary argument and extraordinary evidence to conclude that government is better at transportation than a free market would be. There are some potential “natural monopoly” — you probably won’t have competing subway systems — but even withing the context of things like subways, there are all sorts of free market reforms we could make that would likely improve service and reduce cost. (You could certainly have competing, private providers using the same rail infrastructure, and lots of permutations of this.)

  2. Josh Kizler says:

    Hi Dave,

    Thanks for your thoughtful and challenging responses. Regarding the subsidies that I mentioned, the argument in general seems more rhetorical than anything. Are tax breaks considered subsidies? According to Wikipedia they are considered indirect subsidies. Many writers and institutions on the web also seem to point out the billions in subsidies (which are describe as tax breaks) received by the fossil fuel industries. Regardless of what the benefits received by the fossil fuel industry are labeled, my point is that these benefits provide the industry an economic advantage in the marketplace.

    Regarding efficiency and the provision of goods and services, what is your definition of efficiency? The maximization of GDP, profit, or something else? We have empirical evidence that capitalist enterprises, if left unchecked, use their economies of size to knockout far superior competition. Walmart is efficient, but its products are often of poor quality. Standard oil was very efficient, for itself, but not for a fair marketplace. The public road system (I would argue) is far superior than anything the private market would have ever created, mainly because a privately created system would have been drastically inequitable in its delivery of roads.

    I’m not arguing that the government is consistently more efficient than the marketplace. But I do think that there are certain services (transportation, policing, health) that if privatized will provide more benefits to those with means. In a sense this is already the case, as these services are part private and public. In terms of arguing that government would provide a better transportation system than a free market, I don’t think it would take much of an argument at all. Why would the private market build roads leading to projects or slums? How should people who cannot afford cars or rail tickets transport themselves? Again, I think it depends on your definition of efficiency. It might be much more economically efficient to build a road up to that house on the hills, as the wealthy who live up on those hills might contribute a lot economically to society. But this neglects the less fortunate, who (in my opinion), should at least have an equal opportunity to get to the next town over.

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