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The Future of Transportation Policy
By David Strom
Thank you for inviting me to speak at this forum. It is an honor to be included with such an august panel of speakers.
As you know, transportation policy has risen to the top of the political agenda. Even before the dramatic collapse of the I-35W Bridge over the Mississippi, Minnesotans have been bombarded by a dizzying array of proposals for how to address our transportation needs in the state, and a bewildering range of options on just how and in what manner the government should provide and pay for our transportation infrastructure.
It seems to me that this debate has been sterile both in content and in effect. Despite years of political wrangling, and billions of dollars of government expenditures intended to improve our transportation system, the public debate itself has resulted primarily in increased frustration rather than improved mobility for Minnesotans.
The reason for this failure, I believe, is actually quite simple: transportation policy has been a hot political issue so long that hardly anybody has thought about the most basic questions of why transportation is a government function at all.
Why Government?
Transportation policy in Minnesota is a mess primarily because policymakers have lost sight of why exactly they are involved in the decision-making process in the first place.
So logically, it makes sense to first establish why government has a legitimate role in the planning and development of transportation infrastructure in the first place.
Government exists primarily to ensure the provision of public goods that would or might not be adequately provided for by market forces. The classic examples of public goods would be things like police, fire departments, courts, and of course national defense.
Government has the right to use its coercive power to ensure the provision of such public goods because everybody benefits from their existence, but markets themselves don’t work sufficiently well at providing them.
In general, it makes sense to limit the use of government power, due to its coercive nature. When government chooses to do something, individuals are left with no option to opt out.
What makes public goods so nettlesome to provide is that everybody benefits from them more or less equally, but no particular individual has much of an incentive to pay for them as long as others are willing to do so. This is the so-called “free-rider” problem, where the individual’s incentives are to avoid the costs of a collective good.
In this context, I would argue that roads are certainly a public good: everybody benefits from their existence—without them other public goods such as police and fire services would be impossible, not to mention their vital role in the delivery of goods and services. Without an efficient and effective network of roads it would literally be impossible to provide even the most basic public services, no less have a functioning economy. Roads are essentially a public good because even those who do not use them themselves benefit enormously from their existence.
It is impossible to imagine the existence of any kind of civilization, at any point in history that did not include roads as the primary means of transporting goods and services.
Mobility
Of course, roads are a public good not primarily for what they are, but for what they provide. It is not roads per se that are a public good, but the near universal mobility that they provide to both public and private consumers.
Hence, the true public good that policymakers should be focusing on is increased mobility for everybody.
What, exactly, is mobility?
I would define mobility as " the ability of people to get from where they are to where they want to go, when they want to get there to do what they want to do.
The driving force in public policy decisions regarding transportation should always be: Does this public investment maximize mobility per public dollar spent on transportation?
Arguments over transportation have been dominated in recent years by advocates of different modes of transportation. One group argues for expansive light and heavy rail systems, another for increased bus service, or more bike paths, or making it easier to walk more, and of course there are still a few advocates out there for increasing our road infrastructure.
These arguments have been so heated largely because they rarely refer back to the first principle by which all government investments in transportation should be made: maximizing mobility for all.
Modes of transport
Once you focus on mobility, most of the confusion over transportation policy disappears. The vast majority of trips taken on any given day—about 12 million in the Twin Cities metropolitan area—are made using the private automobile. And the reason for this is pretty simple: almost without exception, private automobiles maximize mobility: they allow people to go where they want to go, when they want to go there, and in general do what they want to do.
And, relatively speaking, automobiles are extremely cost-effective compared to other modes of transportation. It costs government less than half a cent per passenger mile to provide mobility by roads, while according to the National Transit Database buses cost about 80 cents per passenger mile and our light rail system costs about 30 cents per passenger mile in operating costs alone, excluding the capital investment costs.
Private automobiles also greatly exceed public transit systems in the mobility they provide. While government-run transit systems go where bureaucrats want them to go, when bureaucrats want them to go there, and artificially limit what you can do (for instance, shop at a Home Depot and pick up a few bags of mulch, or shop at a grocery store for an entire week of groceries), private automobiles are remarkably flexible because entire networks of existing roads allow drivers to go just about anywhere they want, just about any time they want to get there.
Simply put, no public transit system can match the cost-effectiveness of automobiles in providing the greatest mobility to the maximum number of people. And they certainly add nothing to the capacity to move goods and services efficiently and effectively.
It is no wonder that upwards of 90% of all trips taken in the Twin Cities use private automobiles. It just makes sense.
Expanding market mechanisms
Unfortunately, experience has shown that government has been relatively ineffective at allocating road resources where they are necessary. The essentially political and bureaucratic mechanisms we use today to allocate resources utterly fail to deliver services where they are most demanded, and waste resources on projects which fail to deliver benefits anywhere near the costs that are incurred.
In the long run, the best way to ensure maximum mobility for everybody is to expand the use of market mechanisms in the allocation of resources.
Simply put, the current scheme of government planning does not work.
It’s time to look at pricing mechanisms that effectively simulate the private market, begin moving away from the gas tax to pay for transportation, eliminate federal gas taxes entirely, and find ways to more effectively match supply and demand so resources are more effectively directed where they are needed.
The Public Role for Moving People
Of course, as a practical matter it is not the case that every person has access to a private automobile. One of the major cost advantages private automobiles have over public transit is that the operating costs are borne by the individuals benefiting from their use, which of course means that people below a certain income level are at least partially excluded from enjoying maximum mobility. Others, of course, are limited by disabilities or health issues from using private automobiles.
There is a case to be made for government expenditures to supplement its primary investment in road infrastructure to increase mobility for this subset of the population.
Studies have shown that one of the primary factors limiting lower-income individuals from improving their economic circumstances is limited mobility—they don’t tend to live within easy range of job opportunities, and the necessary prerequisites such as child care. The range of goods and services available is artificially limited, and for various reasons those goods and services tend to cost more in poor areas than in middle-class areas.
It is clearly in the public interest to avoid the concentration and duration of poverty, and it therefore makes sense to invest some level of public subsidy to avoid an unnecessary “mobility gap” in society.
Similarly, it would be inhuman to simply ignore the mobility needs of those limited by health or disability.
Until recently, this has been the argument for maintaining highly subsidized transit agencies: serving the “transit dependent” in our communities.
Public transit, though, is a remarkably inefficient and ineffective way of delivering mobility to this segment of the population, or, in fact, anyone else.
Think back to our definition of mobility: allowing people to go where they want, when they want, and do what they want.
For the same reason that public transit ill-serves the vast majority of the population who prefer and use automobiles, transit systems fail even more drastically for those who are supposedly “dependent” upon them.
In the current climate, the public resources we spend to serve the “transit dependent” is focused on providing infrastructure and services. Under such policies, people who cannot rely on automobiles are left with few if any options. Until recently, and to a great extent even today, taxicabs have been a highly regulated monopoly, and the public transit system has enforced a virtual monopoly.
I would argue that the “transit dependent” are victims, not clients, of the current top-down government-run transit system. Government-run systems by their nature are inflexible and thus limit mobility drastically. Buses and trains have limited routes, are run on a government-determined schedule, and make it virtually impossible to accomplish multiple tasks in a reasonable period of time. Imagine a single mother who needs to drop a kid off at child-care, commute to a suburban job, and pick up the groceries.
In the Twin Cities alone we spend about $320 million a year on publicly-funded transit operations. It is at all conceivable that given the mission to ensure the mobility of the relatively small “transit dependent” segment of the population anyone would possibly have chosen a system even remotely similar to the transit system that has evolved today?
A far better solution, and in the long-run undoubtedly more cost-effective, would be a system of mobility vouchers or tax credits, which would allow those who are transit-dependent to become customers and not dependents trapped within a system designed by others.
What makes sense, in my view, is to encourage the development of a private market in transit services, that would include Vanshares, a proliferation of taxicabs, and a whole range of other choices that the market could substantially expand the actual mobility of those who have been traditionally been dependent upon using government-run transit systems.
By subsidizing those genuinely in need of government assistance, and giving them a range of choices that extend far beyond those offered by the current transit system, a transportation voucher or tax credit system would be far superior to the current obsessive focus on transportation modes, such as roads vs. rail or bus. It would provide consumer choice, and hence more mobility for more people, than the current system can possibly provide.
Government subsidies should be directed at individuals and not systems, ensuring that it is the needs of customers and not the convenience of planners that are met.
David Strom is President of the Minnesota Free Market Institute. His remarks were delivered at St. Thomas University, November 2007.
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