Randal O’Toole: Taking Liberties With the Factsby Ryan Avent on June 2, 2009
The Cato Institute's Randal O’Toole gets
under the skin of many of those interested
in building a more rational and green
metropolitan geography, but in many ways
he’s an ideal opponent. It would be difficult
to concoct more transparently foolish
arguments than his. The man is an engine
of self-parody.
Is this spaghetti bowl turning a profit? Photo: Infrastructurist
A recent post at Cato’s @ Liberty blog
provides a nice example. In it, he
quotes George Will’s description of
Transportation Secretary Ray LaHood
as “Secretary of Behavior Modification”
en route to calling LaHood a “central
planner in waiting.”
This is one thing I’ve never understood
about the libertarian love affair with
highways; they seem utterly blind to the
fact that it has required and continues
to require massive government action
to build and maintain the road network.
The interstate highway system is
perhaps the single largest government
intervention in the economy in the 20th
century. Reading O’Toole you’d think it
was a wonder of the free market. The
source of his blindness on the issue
seems to be due to his belief that roads
pay for themselves, and that congestion
exists only because governments shift
gas tax revenue to pay for transit and
other smart growth projects. Nothing
could be farther from the truth.
In the first place, gas tax revenue comes
nowhere near paying for roads. Federal
gasoline tax revenues cover barely half
of the annual budget of the Federal
Highway Administration. Add in diesel
tax revenues and you’re still short.
And that’s just the federal budget picture.
Taking into account all gas tax revenues and
road spending generates an even starker picture.
The Texas Department of Transportation
recently developed an asset value index,
intended to gauge the cost-effectiveness of
a road over the whole of its life cycle. Theydiscovered that most roads don’t come close
to paying for themselves. In one typical road
analysis, it was determined that a real gas tax
rate of $2.22 per gallon would be necessary,
simply to break even. No stretch of road in the
whole of the state covered its costs.
But that’s not all we should consider. On top
of the cost of the actual road, drivers impose
costs on other motorists, pedestrians, and
society as a whole. Carbon emissions from
driving impose an annual cost of about $20
billion on society. Costs from congestion total
nearly $80 billion per year in lost time and
wasted fuel. And the annual cost of automobile
crashes (which claim nearly 40,000 lives per
year) is around $220 billion. In the absence
of driving alternatives, all of those numbers
would be higher still.
But of course, O’Toole thinks that the reason
we suffer from so much congestion is because
we are diverting money to transit rather than
building more roads. This is completely
incorrect, and a basic failure to grasp economic
analysis. Road space is scarce -- that is, not
unlimited. It therefore has a positive value,
which should be reflected in a market price.
If it isn’t -- if prices are fixed at zero (as is the
case with most roads) -- then a shortage will
result. This is well understood; if the president
attempted to fix the price of any other good
at a below market rate, libertarians would cry
foul and immediately argue that shortages
would result. Yet when free roads produce
congestion, they conclude that the best
solution is to spend taxpayer money on
more roads.
O’Toole makes a great show of the fact that
transit ridership is low, but the implication of
this factoid is not what O’Toole would have
you believe. For decades, roads have received
massive government subsidies, and drivers
have not been forced to pay the true cost of
their driving. In the meantime, backdoor
subsidies to driving have been rampant. An
example -- most communities have rules
establishing minimum parking requirements
for new construction. Cheap and plentiful
parking is a significant subsidy to driving,
and such parking requirements make it
difficult or impossible to build more compact
and walkable streetscapes.
Transit use has lately been on the rise as
congestion and fuel costs have exploded.
Cities with transit systems have benefited
enormously from the availability of a
substitute to driving, and those without
have suffered from their inelastic dependence
on cars in an environment of increasing costs.
The simple truth is that government has
intervened heavily to create the road
network so beloved by libertarians, and
the country continues to bear heavy costs
as a result. Any clear-eyed examination
of costs and benefits will indicate that the
time to rebalance investments away from
highways and toward transit is long overdue.
under the skin of many of those interested
in building a more rational and green
metropolitan geography, but in many ways
he’s an ideal opponent. It would be difficult
to concoct more transparently foolish
arguments than his. The man is an engine
of self-parody.
Is this spaghetti bowl turning a profit? Photo: InfrastructuristA recent post at Cato’s @ Liberty blog
provides a nice example. In it, he
quotes George Will’s description of
Transportation Secretary Ray LaHood
as “Secretary of Behavior Modification”
en route to calling LaHood a “central
planner in waiting.”
This is one thing I’ve never understood
about the libertarian love affair with
highways; they seem utterly blind to the
fact that it has required and continues
to require massive government action
to build and maintain the road network.
The interstate highway system is
perhaps the single largest government
intervention in the economy in the 20th
century. Reading O’Toole you’d think it
was a wonder of the free market. The
source of his blindness on the issue
seems to be due to his belief that roads
pay for themselves, and that congestion
exists only because governments shift
gas tax revenue to pay for transit and
other smart growth projects. Nothing
could be farther from the truth.
In the first place, gas tax revenue comes
nowhere near paying for roads. Federal
gasoline tax revenues cover barely half
of the annual budget of the Federal
Highway Administration. Add in diesel
tax revenues and you’re still short.
And that’s just the federal budget picture.
Taking into account all gas tax revenues and
road spending generates an even starker picture.
The Texas Department of Transportation
recently developed an asset value index,
intended to gauge the cost-effectiveness of
a road over the whole of its life cycle. Theydiscovered that most roads don’t come close
to paying for themselves. In one typical road
analysis, it was determined that a real gas tax
rate of $2.22 per gallon would be necessary,
simply to break even. No stretch of road in the
whole of the state covered its costs.
But that’s not all we should consider. On top
of the cost of the actual road, drivers impose
costs on other motorists, pedestrians, and
society as a whole. Carbon emissions from
driving impose an annual cost of about $20
billion on society. Costs from congestion total
nearly $80 billion per year in lost time and
wasted fuel. And the annual cost of automobile
crashes (which claim nearly 40,000 lives per
year) is around $220 billion. In the absence
of driving alternatives, all of those numbers
would be higher still.
But of course, O’Toole thinks that the reason
we suffer from so much congestion is because
we are diverting money to transit rather than
building more roads. This is completely
incorrect, and a basic failure to grasp economic
analysis. Road space is scarce -- that is, not
unlimited. It therefore has a positive value,
which should be reflected in a market price.
If it isn’t -- if prices are fixed at zero (as is the
case with most roads) -- then a shortage will
result. This is well understood; if the president
attempted to fix the price of any other good
at a below market rate, libertarians would cry
foul and immediately argue that shortages
would result. Yet when free roads produce
congestion, they conclude that the best
solution is to spend taxpayer money on
more roads.
O’Toole makes a great show of the fact that
transit ridership is low, but the implication of
this factoid is not what O’Toole would have
you believe. For decades, roads have received
massive government subsidies, and drivers
have not been forced to pay the true cost of
their driving. In the meantime, backdoor
subsidies to driving have been rampant. An
example -- most communities have rules
establishing minimum parking requirements
for new construction. Cheap and plentiful
parking is a significant subsidy to driving,
and such parking requirements make it
difficult or impossible to build more compact
and walkable streetscapes.
Transit use has lately been on the rise as
congestion and fuel costs have exploded.
Cities with transit systems have benefited
enormously from the availability of a
substitute to driving, and those without
have suffered from their inelastic dependence
on cars in an environment of increasing costs.
The simple truth is that government has
intervened heavily to create the road
network so beloved by libertarians, and
the country continues to bear heavy costs
as a result. Any clear-eyed examination
of costs and benefits will indicate that the
time to rebalance investments away from
highways and toward transit is long overdue.
No comments:
Post a Comment