Tag: transportation

Unfair Subsidies for Buses

Cato essays on the Department of Transportation contain a common theme: federal subsidies for various modes of transportation have stifled privately funded and operated alternatives. One emerging bright spot is private intercity bus companies.

From a Cato essay on Amtrak subsidies:

If Amtrak is privatized, passenger rail will be in a much better position to compete with resurgent intercity bus services. The rapid growth in bus services in recent years illustrates how private markets can solve our mobility needs if left reasonably unregulated and unsubsidized. A Washington Post reporter detailed her experiences with today’s low-cost intercity buses: “This new species offers curbside pickup and drop-offs, cheap fares, clean restrooms, express service, online reservations, free WiFi and loyalty programs … The bus fares undercut Amtrak and, depending on the number of passengers, personal vehicles.”

That’s why a story out of Minnesota is disturbing. According to the Duluth News Tribune, Jefferson Lines, which operates a bus line between Duluth and the Twin Cities, received $2.65 million in federal stimulus money to purchase five of the eight buses it has in service. One of Jefferson Lines’ competitors isn’t happy:

That angers Dave Clark, owner of Skyline Shuttle, which provides transportation from Duluth to the Twin Cities. Clark claims it’s unfair for Jefferson Lines to use government money to compete with his business and cut into his revenue.

“When there’s a market and they are competitors, it should be left to the market without government interference,” Clark said. “They could have taken the risk themselves, but they relied on the taxpayer to take the risk.”

The first problem is that federal taxpayers across the country are being forced to subsidize a private bus line in Minnesota. The second problem is that the government is effectively picking winners and losers in the market for intercity bus services. Instead of spreading transportation subsidies across every form of transportation, the federal government should cease with the seemingly endless interventions and allow free individuals to figure out what makes the most sense.

High-Speed Rail Battle

Wisconsin has become a battleground over the Obama administration’s plan to create a national system of high-speed rail. Of the $8 billion in HSR grants awarded to the states in the stimulus bill, $810 million of it went toward a high-speed route between Milwaukee and Madison.

Ironically, this Wisconsin “high-speed” route would only achieve speeds of 79 mph initially and 110 mph by 2016. As a Cato essay on high-speed rail points out, HSR aficionados don’t even consider 110 mph to be true high-speed. In fact, passenger trains were being run at speeds of 110 mph or more back in the 1930s. And those “high-speed” trains didn’t prevent the decline of passenger trains after World War II.

The Cato essay also notes that the 85-mile line between Milwaukee and Madison “is only a tiny portion of the eventual planned route from Chicago to Minneapolis, and no one knows who will pay the billions necessary to complete that route.” In fact, to build a national system of true high-speed rail on the 12,800 mile network envisioned by the administration, the cost could be close to $1 trillion.

Where would the money come from? State governments are hoping that it would be all from federal taxpayers. As I recently discussed, the states’ interest in grabbing new federal HSR money has dropped now that Congress is requiring a 20 percent state match:

The states already have dedicated revenue sources for federal highway aid matching requirements (also 20 percent). With state tax revenues flat due to the recession, where would the money come from to pay for high-speed rail projects? Proposing new taxes to fund high-speed rail would probably be political suicide. And most state policymakers recognize that shifting money away from more popular programs to pay for high-speed rail won’t be any more politically rewarding.

The issue is even affecting elections in states that are in line to receive federal funding for high-speed rail. Scott Walker, a Republican candidate for governor in Wisconsin, recently said he’d send back the $810 million in stimulus funds the state has received for a rail line between Madison and Milwaukee. Walker appears to understand that his state has more pressing infrastructure needs and that high-speed rail could become a fiscal black hole.

On Tuesday, Walker won the GOP primary to replace outgoing Democratic Governor Jim Doyle, who is an ardent supporter of the Milwaukee-Madison route. Walker’s Democratic opponent, Milwaukee mayor Tom Barrett, supports the route’s construction. According to Stateline.org, the outgoing Doyle administration plans to have $300 million of the money under contract by January, which Walker says he would cancel if elected.

Wisconsin Democrats have made hay out of the fact that former Republican Governor Tommy Thompson first championed the idea of a regional network of high-speed rail. Unfortunately for HSR proponents, Thompson’s past involvement with federally-subsidized rail is a reason not to build the route.

From a Cato essay on Amtrak subsidies:

Amtrak reform legislation in 1997 stipulated that its board be replaced with a “reform board” of directors. The Clinton administration nominated, and the Senate confirmed, politicians that included the then-governor of Wisconsin, Tommy Thompson, and the mayor of Meridian, Mississippi, John Robert Smith. Mayor Smith tried to create a route that would have lost millions linking Atlanta and Dallas via Meridian. Governor Thompson succeeded in creating a route from Chicago to Janesville, Wisconsin. It was eventually discontinued after Thompson’s departure from the board due to low ridership and financial losses.

As is the case with Amtrak, HSR can’t compete with more efficient modes of transportation like automobiles and airplanes without massive subsidies. At a time when the federal debt is heading toward the moon, policymakers should be looking to the private sector to take care of our transportation needs. The country simply can’t afford to sink taxpayer money into high-speed rail when it makes so little economic sense.

“We’re Talking Bridges…”

On Labor Day, President Obama announced his plan for an additional $50 billion in spending, mostly on transportation.  An area Obama specifically mentioned was more spending for bridges, playing on the widely held perception that America’s bridging are falling apart.  While clearly there are bridges that are greatly in need of repair and represent a threat to passenger safety, what has been the overall trend in bridge quality?  In one word:  improving.

According to the U.S. Bureau of Transportation Statistics only about 1 in ten bridges today can be characterized as “structurally deficient”, this is, in need of serious repair.  This may sound high, but it is down from 1 in four back in 1990.  As one can tell from the accompanying chart, the percent of deficient bridges has been on a steady decline over the last two decades.

It is also worth noting that over 80 percent of the deficient bridges in the U.S. are in rural areas, and  subject to much less passenger traffic.  Many of these bridges likely see little, if any, traffic. 

Perhaps more important from the perspective of “economic stimulus” is that additional bridge construction and repair would take years to have any real impact on employment.  Rather than coming up with policies designed with solely political appeal in mind, the President and Congress should focus on broad policies that allow the private sector to determine what investment needs should be addressed.

Donald Shoup on Free Parking

Donald Shoup, the author of The High Cost of Free Parking, has posted a response to my first post about Tyler Cowen’s op ed against free parking. Shoup points out that I erroneously attributed proposals to him that are in fact only urged by his followers, such as maximum-parking requirements and requirements that all businesses charge for parking. I apologize for that.

In fact, Shoup’s book argues that cities should eliminate minimum-parking requirements and charge market rates for on-street parking. I favor these things as well. Where we may disagree is about the effects of these policies.

My post pointed out that many municipalities do not have minimum-parking requirements, but businesses still offer plenty of free parking to their employees and customers. Shoup asks for “a list of some of these.” Virtually all counties in Texas, most counties in Nevada, and many counties in Indiana have no minimum-parking requirements, and I am sure I could find counties in many other states as well. Unlike California, where Shoup lives, and Oregon, where I live, these states do not restrict urban development to within city limits or urban-growth boundaries, and developments in unincorporated parts of these counties offer plenty of free parking.

Much of Shoup’s response seems to assume that my posts were defending minimum-parking requirements. “City planners have no training that would enable them to estimate the demand for parking, and no financial stake in the success of a development,” says Shoup. “They know much less than developers do about how many parking spaces to provide for each project.” As I pointed out in my later posting on this issue, I entirely agree. My goal was to defend private provision of free parking.

That said, I think Shoup’s worries about the “high cost” of parking are overblown. As I pointed out in my first post, surface parking is cheap, and even structured parking is not terribly expensive in the long run. Most of Shoup’s analysis is not of the high cost of free parking but the high cost of minimum-parking requirements, and there the cost is only of the spaces that developers are forced to provide that they wouldn’t otherwise provide. Shoup and I seem to agree that businesses who want to free parking should be allowed to do so.

Unfortunately, many urban planners disagree; they want to set maximum-parking limits, and they often cite Shoup in their plans and proposals. The negative effects of such limits are likely to be as bad if not worse than minimum-parking requirements. Planners promote such limits in order to discourage driving, which planners say is bad.

Shoup himself relies on anti-auto rhetoric. “Ubiquitous free parking helps explain why American motor vehicles, by themselves, consume one-eighth of the world’s total oil production,” Shoup says, for example. “America’s extravagant consumption of imported oil to fuel our cars is not sustainable, economically or environmentally, and anything that is not sustainable must eventually stop.” But we can find many alternatives to “extravagant consumption of imported oil” without limiting people’s mobility the way many urban planners want to do.

Planners with Portland’s Metro, for example, have set a goal of allowing congestion on most of the region’s highways to reach level of service F (meaning stop-and-go driving). They also promote “traffic calming” (a euphemism for congestion building), “boulevarding” (a euphemism for taking lanes away from autos in busy thoroughfares), and other anti-auto policies. But their own analyses found that these policies would have very little effect on the amount of driving people do. The biggest effect came from a plan to require that all businesses in the region charge for parking – yet even that effect was small, estimated to reduce per capita driving by about 2 percent. Even though such a plan has not been put into effect, at least a few years ago Metro’s transportation models assumed that it would be put into effect sometime in the next couple of decades.

As I have shown at length, trying to save energy or reduce auto emissions by reducing driving is not cost effective, and the resulting reduction in mobility could have serious negative effects on our economy. Instead, it is much more cost effective to make the cars we drive more energy efficient and/or capable of using alternative fuels, and if oil prices go up that will happen without government coercion anyway.

Although Shoup teaches in an urban planning school, he is actually an economist, and he and I share many areas of agreement. I won’t even mind if it turns out that I am wrong: if cities get rid of minimum-parking requirements without imposing maximum-parking limits and it leads businesses to charge for parking that are now offering it for free, that’s just the market at work. My only concern is that many planners are using Shoup’s work to promote their own coercive agendas. I hope he responds to them as vigorously as he responded to me.

One more thing: Shoup asks, “Can you tell me if the Cato Institute offers free parking for its employees? If so, does it also offer commuters the option to cash out their parking subsidies?” I do not work in Cato’s Washington, DC, office, but as far as I know it does offer free parking to at least some of its employees and does not provide a cash-out option. Cato is currently expanding its building and I understand it is installing showers for cyclists, as required by DC zoning codes, and is not providing a cash-out option for cyclists (or other employees) who do not plan to use those showers. As a cyclist, I’ll probably use those showers from time to time on my visits to DC. Perhaps someday Dr. Shoup and I will write a paper titled, “The High Cost of Free Showers.”

Free Parking Revisited

Two weeks ago, I responded with dismay to George Mason University economist Tyler Cowen’s op-ed against free parking. This led to a variety of responses in the blogosphere, none of which address my point. Instead, they all argue against the minimum-parking requirements found in many zoning regulations.

In particular, Cowen himself points to a study that found that Los Angeles’ minimum-parking requirements forced some developers to build more parking than they would have without such requirements. But Cowen’s op-ed was titled, “Free Parking Comes at a Price,” not “Minimum-Parking Requirements Come at a Price.” The op-ed was based on a book by Donald Shoup titled The High Cost of Free Parking, not The High Cost of Minimum-Parking Requirements.

Nothing I wrote defended minimum-parking requirements. Instead, I pointed out that, even without such requirements, most businesses still provide free parking for their employees and customers. It is one thing to oppose minimum-parking requirements as an unnecessary form of government regulation. It is another thing to favor government regulation mandating that private businesses charge for parking.

That certainly seems to be what Cowen favors. His article concluded, “if we’re going to wean ourselves away from excess use of fossil fuels,” then “imposing higher fees for parking may make further changes more palatable by helping to promote higher residential density and support for mass transit.” There are a lot of fallacies in those statements. Will higher residential density significantly reduce use of fossil fuels? Probably not. Will support for mass transit significantly reduce use of fossil fuels? Probably not. Even if you believe we excessively use fossil fuels, do indirect tools such as “imposing parking fees” make sense when more direct tools are available? Certainly not.

Claims that parking is subsidized would carry a lot more weight if 5 percent of the people drove and the other 95 percent had to pay 75 percent of the cost. Those are, in fact, the ratios for transit (less than 5 percent of American workers take transit to work but fares cover less than 25 percent of transit costs), which Cowen wants to promote. With driving, the numbers are practically reversed: discounting air travel, more than 90 percent of travel is by car and auto drivers pay more than 90 percent of the costs of driving.

I suspect someone has made the case for minimum-parking requirements: without such requirements, businesses might try to externalize some of their costs by letting someone else provide parking for them. But let’s ignore that. Cities should get rid of zoning codes that have minimum-parking requirements. (Cities should get rid of zoning codes period.) Cities should charge market rates for on-street parking and any publicly owned off-street parking. But even if these things happen, private businesses will still provide free parking to their employees and customers in many areas – in fact, practically everywhere outside of old downtowns.

Note: My previous post on this subject quoted Cowan quoting Donald Shoup saying, “On average [in the U.S.] a new parking space has cost 17 percent more than a new car.” I commented that this was ridiculous. Someone sent an email saying that Shoup actually estimates there are four parking spaces for every car, and the combined cost of those spaces is more than the average car. Without searching Shoup’s 733-page tome to check his arithmetic, I am still not certain why this is important.

Most people who buy homes want to room to park their cars. People also need room to park at work and elsewhere. Should we only have one bathroom for every four houses because the average bathroom is in use only a couple of hours every day? Is it a waste that almost every home in the country has a kitchen, when there are plenty of kitchens in restaurants (not to mention many workplaces) as well? Then why is it a waste that homes, as well as offices, stores, and other businesses, have parking?

Free Markets for Free Parking

I am disappointed that the distinguished George Mason University economist, Tyler Cowen, has fallen for the “high-cost-of-free-parking” arguments of UCLA urban planner Donald Shoup. Shoup is an excellent scholar, but like many scholars, he has the parochial view that the city that he lives in is a representative example of what is happening everywhere else.

Should free parking be a thing of the past?

Shoup’s work is biased by his residency in Los Angeles, the nation’s densest urban area. One way L.A. copes with that density is by requiring builders of offices, shopping malls, and multi-family residences to provide parking. Shoup assumes that every municipality in the country has such parking requirements, even though many do not, and that without such requirements there would be less free parking. This last assumption is extremely unlikely, as entrepreneurs everywhere know that (outside of New York City) 90 percent of all urban travel is by car, and businesses that don’t offer parking are going to lose customers to ones that do.

Shoup portrays such free parking as a “subsidy” because not all people drive and so the ones who don’t drive end up subsidizing the ones who do. But any business offers a variety of services to its customers and employees, and no one frets about subsidies just because they don’t take advantage of every single service. How often do you actually swim in the swimming pools or work out in the exercise rooms of the hotels you stay at?

Shoup also supposes (and Cowen accepts) that universal parking fees would greatly reduce the amount of driving people do. “Minimum parking requirements act like a fertility drug for cars,” Cowen quotes Shoup as saying. Metro, Portland’s regional planning agency, submitted this question to its transportation model and concluded that requiring all offices, shopping malls, and multi-family residences to charge for parking would reduce driving by about 2 percent. The model showed that charging for parking has a greater effect on driving than spending billions on light rail, building scores of transit-oriented developments, or increasing the urban area’s population density by 20 percent. But 2 percent still isn’t going to do much to relieve congestion or solve any of the other problems Cowen associates with driving. Plus he never really explains why he thinks reducing mobility is a good idea in the first place.

Shoup claims that a single parking space costs, on average, 17 percent more than the cost of an average car, and as a result, the cost of parking greatly exceeds the value of all automobiles in the country. This is ridiculous. Most free parking is surface parking, which costs about $2,000 a space plus the cost of land. In areas that have not used urban-growth boundaries and similar tools to create artificial land shortages, vacant suburban land with urban services typically costs about $20,000 an acre. Since each acre can hold about 100 parking spaces, the total cost is about $2,200 per space. From the point of view of a business owner, this cost can be amortized over 30 years at 6 percent, for an annual cost of about $160. If that parking space is used by just two customers a day, the cost is about 22 cents per customer. That’s pretty trivial, and the costs of collecting fees for such parking would probably be greater than the parking itself. Even structured parking typically costs only about $10,000 a space (or, using the above assumptions, $1 per customer), but structured parking is rarely provided for free.

Strangely, one of the examples Cowen uses in his article is Manhattan, where (he claims) “streets are full of cars cruising around, looking for cheaper on-street parking, rather than pulling into a lot.” Give me a break! I defy Cowen to find any free parking anywhere in Manhattan, where ownership of a single parking space can cost more than a median home in other parts of the country.

Cowen’s complaint about Manhattan is not about free parking but that the government is pricing on-street parking below the market. If that were the extent of Shoup’s argument, I would have no problem, as I noted in my blog last week. But Shoup’s goal isn’t market pricing of public parking; it is to create artificial shortages of private parking. He doesn’t want to simply eliminate the minimum-parking requirements that are found in many zoning codes; he wants to replace them with maximum-parking limits so that places like WalMart will not be allowed to provide their customers with as much parking as they like.

The empirical question is: do shopping malls, office parks, and companies like WalMart provide parking for their customers and employees because of zoning mandates, as Shoup claims? Or would they and do they provide parking just because it is good for their businesses? Texas counties are not allowed to zone, yet shopping centers and office parks in unincorporated Texas still provide plenty of parking. Much to planners’ annoyance, many developers elsewhere routinely provide more parking than zoning codes demand. This suggests that free parking is a free-market choice, and Cowen, who generally supports free markets, should have no objection to it.

And Your Point Is?

Matthew Yglesias is somehow offended by my recent post about the huge decline in the productivity of our socialized transit industry since 1970. He never addresses or even acknowledges any of the arguments made in my article. Instead, his problem is that the article “fails to acknowledge any government role in promoting the usage of private automobiles.” Since my article was about transit, not automobiles, I don’t see why I need to acknowledge government’s role in driving any more than I should acknowledge government’s role in our failed education system or any other government failing.

It could be that Yglesias is arguing that I am somehow inconsistent because I object to socialized transit without objecting to socialized highways. If so, he would be wrong: In books, papers, and policy statements I have argued that highways should be funded out of user fees, not taxes; that states should encourage private highway construction; and that the federal government should get out of the highway business. That isn’t in any way inconsistent with my article on transit.

It could be that Yglesias is going further and arguing that “government’s role in promoting the usage of private automobiles” somehow contributed to the huge decline in transit productivity since 1970. If so, he would be wrong. Since 1970, government’s role in transportation has mainly been to steal money from the users of roads that carry 85 percent of American passenger travel and spend that money supporting transit systems that move barely 1 percent of all passenger travel. In 2008 alone, more than $15 billion in federal, state, and local highway user fees were spent on transit, which did highway users little good (see cell O17).

Yglesias says that government land-use policies have caused “regulatory impediments” to creating transit-friendly cities. I’ve previously invited Yglesias to join me in calling for the elimination of all government land-use policies, but he has remained silent about that. Instead, he would rather rant about things I didn’t say.

Since Yglesias is so fond of attacking me for things I haven’t said, let me return the favor by pointing out that one of the most common arguments that people like Yglesias use against highways (and he himself may not have made this argument) is what they call “induced demand.” That is, they say we shouldn’t build more roads (even if paid for entirely with user fees) because they will just lead people to drive more. This is supposed to be a bad thing because driving is supposed to be bad. But really, they are admitting that Americans want to use and are willing to pay for more roads, whereas in their demands for more subsidies to transit they are admitting that Americans are not willing to pay for their transit-oriented utopias.