Latest Cato Research on Energy and Environment https://www.cato.org/ en Where’s the Greenium? https://www.cato.org/publications/research-briefs-economic-policy/wheres-greenium David F. Larcker, Edward Watts <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Environmental, social, and governance (ESG) measurement, corporate social responsibility (CSR) activities, and socially responsible investing (SRI) are increasingly important research topics in both academic and professional areas. This recent research focus has been primarily due to the increased number of assets invested following ESG principles, now reportedly more than one‐​quarter of the $88 trillion of assets under management globally. While there is growing evidence of an association between ESG and CSR activities on security pricing, comparatively little is known about the channels through which ESG factors may affect asset prices.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>A question of primary importance in this area is whether ESG investments have value to investors beyond the expected risk and return attributes of a&nbsp;security. For instance, if we were to present investors with a&nbsp;high‐​ESG security and a&nbsp;low‐​ESG security whose risk and returns are identical, would investors pay more for the high‐​ESG security? While standard arguments suggest that these securities should price identically, there is a&nbsp;growing literature that argues otherwise. Several studies present theoretical models where investors are willing to give up financial benefits to invest in environmentally friendly or socially responsible assets.</p> <p>There is evidence of these effects showing that both investors and managers value green investments for their societal benefits. In experimental markets, investors respond positively to reports of green investments even when they are independent of future cash flows and risk, suggesting a&nbsp;tradeoff between wealth and societal benefits. The critical question is whether such experimental results generalize to actual market settings.</p> <p>In our analysis, we focus on U.S. municipal issuers because these entities have been one of the largest issuers of green bonds. This setting is ideal for exploring our research question because these securities are explicitly issued to fund environmentally sustainable projects. As important, the way municipalities issue bonds provides a&nbsp;novel experiment to assess whether investors value the societal benefits associated with ESG activities. We leverage three unique institutional features of the U.S. municipal securities market to implement a&nbsp;methodological approach that is less prone to the standard correlated omitted‐​variable critique of prior ESG research.</p> <p>The first is that municipal issuers commonly price multiple tranches of securities, both green and nongreen securities, on the same day with similar maturities. This occurs for several reasons, such as issuer requirements to track their use of funds to comply with IRS requirements and limits to bond issuance by state constitutional mandates.</p> <p>The second feature of municipal bonds is that the credit for these green bonds is identical to the credit for their nongreen counterparts. Green bonds are identical to ordinary municipal bonds in all ways except that the use of proceeds is allocated to fund “environmentally friendly projects” (e.g., sustainable water management and energy production). The only effective difference between a&nbsp;green bond and a&nbsp;nongreen bond is the use of proceeds. Thus we can attribute any differences in security pricing to investor preferences for nonmonetary security features rather than differences in expectations about future cash flows or risk.</p> <p>Finally, there are strong reasons to believe that our setting is one where we are most likely to find a&nbsp;greenium (if it exists), though it is a&nbsp;relatively small and specialized asset class. Specifically, the average issuance size (supply) in our sample is small ($5.36 million on average) compared with corporate green‐​bond issuances, which are often hundreds of millions (or even billions) of dollars. Since the size of green issues is small, there is ample opportunity for green investors to be the marginal trader (which would not be the case for very large green issues in a&nbsp;market setting where green investors do not have the capacity to buy most of the offering). Thus our focus on small issues of green municipal securities is very likely to provide a&nbsp;powerful test of whether a&nbsp;greenium exists.</p> <p>The primary result of our paper is that the greenium, or the premium that green assets trade to otherwise identical nongreen securities, is precisely equal to zero. Our results are based on a&nbsp;sample of 640 matched pairs of green and nongreen issues given out on the same day, with identical maturity and rating, and issued by the same municipality. We observe an economically trivial difference in yield (and spread) between green and nongreen bonds of approximately 0.45 basis points (indicating a&nbsp;slight green‐​bond discount). In fact, in approximately 85 percent of matched cases, the differential yield is exactly zero. These results provide strong evidence that investors are unwilling to sacrifice returns to support environmentally friendly projects, and thus the greenium is equal to zero.</p> <p>We also examine how much investment bankers charge for issuing green securities (or the underwriter’s discount) in comparison to nongreen securities. This is important for two reasons. First, it indicates whether banks consider green securities as riskier or more challenging to underwrite. Second, one of the primary challenges attributed to the growth of green bonds in municipal markets is the perceived cost of issuance. For our matched sample, we find that the underwriting cost charged for issuing green bonds is higher than nongreen bonds. Specifically, borrowing costs are on average approximately 10 percent higher for green securities than almost identical nongreen securities. The combination of equivalent yield and higher transactions costs is not consistent with the existence of greenium.</p> <p>Concerns over greenwashing have arisen among investors due to the absence of a&nbsp;universal set of standards on whether a&nbsp;security is actually green. In response to these concerns, several agencies have created a&nbsp;new form of economic certification to ensure that issuers of green bonds are using the financing proceeds for environmentally friendly purposes. The Climate Bonds Initiative is the leading provider of these services and has been used by a&nbsp;number of municipalities to provide third‐​party certification. We explore the pricing effects of this certification and find no evidence that this leads to incremental yield benefits to municipalities. This finding mitigates concerns that greenwashing is responsible for our documented lack of premium. Additional tests relate to the underlying use of proceeds, and bond‐​specific green ratings also support these inferences.</p> <p>In our final sets of tests, we explore various nonissuance cost‐​related benefits associated with green issuances. Specifically, some issuers have suggested that green issuances help to broaden the issuers’ base of investors. We find evidence consistent with this, as green issues have a&nbsp;lower amount of ownership concentration by approximately 12–20 percent. Other market participants have also suggested that while a&nbsp;greenium does not currently exist, as the market matures and gains momentum, a&nbsp;greenium may emerge. We hypothesize and find that those states that value environmental sustainability issue more green bonds and pay these slightly higher costs for their perceived future benefits. Despite this effect, even in states with the highest level of green preferences (and therefore issuance), we still find no evidence of a&nbsp;current greenium.</p> <p>Our analyses also provide new policy‐​relevant insights on the pricing of green securities of municipal markets and the benefits of third‐​party certification. Based on prior research that claims to document a&nbsp;greenium, some policy analysts are calling for more green‐​bond issuance to reduce the cost of government borrowing. Our results suggest just the opposite conclusion. Not only is there no pricing differential but investment banks also appear to charge slightly more to issue green bonds on average. As there are other costs associated with green‐​bond issuance, our results suggest that municipalities increase their borrowing costs by issuing green bonds.</p> <p><strong>NOTE:</strong><br>This research brief is based on David Larcker and Edward Watts, “Where’s the Greenium?,” <em>Journal of Accounting and Economics</em> 69, no. 2–3 (April–May 2020), <a href="https://www.sciencedirect.com/science/article/abs/pii/S0165410120300148" target="_blank">https://​www​.sci​encedi​rect​.com/​s​c​i​e​n​c​e​/​a​r​t​i​c​l​e​/​a​b​s​/​p​i​i​/​S​0​1​6​5​4​1​0​1​2​0​3​00148</a>.</p> </div> Wed, 01 Jul 2020 03:00:00 -0400 David F. Larcker, Edward Watts https://www.cato.org/publications/research-briefs-economic-policy/wheres-greenium Can Federal Assets Cover the National Debt? https://www.cato.org/blog/can-federal-assets-cover-national-debt Randal O&#039;Toole <p>The federal debt is <a href="https://www.treasurydirect.gov/govt/reports/pd/pd_debttothepenny.htm">$26.3 trillion</a> and growing, having increased by a&nbsp;trillion dollars in just 40&nbsp;days prior to last Friday. There’s too much complacency about the size of that debt, and much of this complacency can be traced to a&nbsp;<a href="https://www.instituteforenergyresearch.org/fossil-fuels/coal/federal-assets-above-and-below-ground/">2013 study</a> by the Institute for&nbsp;Energy Research estimating the value of federal land and energy resources to be around $200 trillion.</p> <p>Since then, that study has been cited in <a href="https://www.forbes.com/sites/timworstall/2013/11/05/the-us-government-is-absolutely-not-16-trillion-in-the-hole/%236aa58fa23013"><em>Forbes</em></a>, <a href="https://business.time.com/2013/02/05/the-federal-governments-128-trillion-stockpile-the-answer-to-our-debt-problems/"><em>Time</em></a>, <a href="https://www.marketwatch.com/story/to-pay-off-national-debt-trump-would-have-to-sell-sell-sell-2016-04-06"><em>MarketWatch</em></a>, and by various <a href="https://www.pragcap.com/the-us-government-is-not-16-trillion-in-the-hole/">bloggers</a>, as well as President Trump’s <a href="https://www.redstate.com/leon_h_wolf/2016/04/05/trump-advisor-well-pay-debt-selling-every-asset-united-states-owns/">staff</a>, all of whom argue that don’t need to worry about the size of the debt because we can pay it off by selling federal assets. Unfortunately, this is based on a&nbsp;serious misreading of the IER study, mainly that the study used <em>gross resource values</em>, not the prices the federal government could get for its resources.</p> <p>For example, the study assumed that oil is worth $100 a&nbsp;barrel, which is the price at a&nbsp;refinery. From this must be deducted the costs of finding, extracting, and transporting the oil to the refinery. The federal government’s share of the oil it sells was about $12 a&nbsp;barrel in 2013 and, with declining oil prices, about $9 a&nbsp;barrel in 2019.</p> <p>The Institute for Energy Research may have understood the difference between gross and net values, but none of the people quoting them did. Moreover, I&nbsp;haven’t seen any indications that the institute bothered to correct these misinterpretations.</p> <p>Worse, federal resources include so much oil, natural gas, and coal that it will take hundreds of years to extract it all. Federal coal reserves in the contiguous 48 states alone represent 1,300&nbsp;years of American coal consumption. This means we can’t simply multiply the price of coal per ton by the number of tons owned by the federal government; we have to discount future coal mining by an appropriate interest rate.</p> <p>Using a&nbsp;3 percent discount rate, and assuming federal oil, gas, and coal is produced at a&nbsp;rate equal to half of all U.S. production (which is far faster than it is being produced today), all energy resources owned by the federal government are worth around $2 trillion, not $200 trillion. At a&nbsp;4 percent discount rate, the value is reduced to $1.5 trillion. Even these numbers are questionable because more than 80 percent of the federal government’s oil is shale oil, which is the most expensive to extract, so royalties paid by oil producers for that oil will probably be lower than for other energy minerals.</p> <p>Further, it is easily possible that energy substitutes for oil, gas, and coal will become available and economical long before the federal resources are exhausted. You can see my detailed calculations along with other caveats in this <a href="https://ti.org/pdfs/APB59.pdf">four‐​page paper</a>.</p> <p>To this can be added the value of federal lands. The federal government owns about 623 million acres of land. A&nbsp;<a href="https://www.bea.gov/system/files/papers/WP2015-3.pdf">2015 paper</a> from the Bureau of Economic Analysis estimated the 464 million acres of land in the contiguous 48 states was worth an average of $4,100 per acre, for a&nbsp;total of $1.8 trillion.</p> <p>There are problems with this number as well. First, about a&nbsp;third of these lands are in national parks, wilderness areas, and wildlife refuges that Congress would never dare to sell. To collect total revenues of $1.8 trillion, the remainder would have to be worth $7,200 an acre.</p> <p>Perhaps half of the remainder are forest lands, but such lands are generally not worth $7,200 or even $4,100 an acre. Weyerhaeuser recently sold 630,000&nbsp;acres of forest lands in Montana for <a href="http://investor.weyerhaeuser.com/2020-03-26-Weyerhaeuser-completes-sale-of-Montana-timberlands">$230 an acre</a>. Even in the Oregon Coast Range, which has some of the most productive timberland in the world, land typically sells for under <a href="https://www.landwatch.com/Lincoln-County-Oregon-Land-for-sale/pid/337788219">$4,000 an acre</a>. Timber and timberland values are low because, <a href="https://www.fs.usda.gov/sites/default/files/legacy_files/media/types/publication/field_pdf/forestfacts-2014aug-metric-fs1036-508complete.pdf">says the Forest Service</a>, the United States is growing timber far faster than it is cutting it.</p> <p>Some of the remaining land might be considered agricultural and is used for grazing cattle and other domestic livestock. But the United States has 1.1 billion acres of private agricultural lands and only uses about <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=&amp;ved=2ahUKEwi8y_WFwafqAhXSsZ4KHUJVCHAQFjAAegQIAxAB&amp;url=https%3A%2F%2Fwww.bloomberg.com%2Fgraphics%2F2018-us-land-use%2F&amp;usg=AOvVaw1UQt3QzSMueTwoY3tnLL0O">350 million</a> of them to grow all the crops we need to feed ourselves and our livestock plus export food and grow corn for ethanol. Most federal lands in Alaska, incidentally, are also in national parks and/​or are tundra that certainly can’t be sold for $4,100 an acre.</p> <p>In short, the federal government is even less likely to get $1.8 trillion for its land than it is to get $2.0 trillion for its energy resources. Selling all of these resources will cover, at most, 14 percent of the national debt as it stood last week, and probably a&nbsp;lot less. This means no one should be complacent about the size of the national debt thinking that the federal government has the resources to cover it.</p> Mon, 29 Jun 2020 13:41:04 -0400 Randal O'Toole https://www.cato.org/blog/can-federal-assets-cover-national-debt Take Back Cities for People and the Automobiles They Use https://www.cato.org/publications/commentary/take-back-cities-people-automobiles-they-use Randal O&#039;Toole <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>The pandemic has reminded us that our society has to be resilient to face all sorts of unexpected events, and this is doubly true for transportation. The good news is that the United States already has the most resilient transportation system in the world. The bad news is that some people are trying to take it away from us.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Transportation needs to deal with all kinds of unexpected events, including terrorist attacks such as 9/11, natural disasters such as Hurricane Katrina and southern California wildfires, economic downturns such as the 2008 financial crisis, and of course pandemics such as COVID-19. The most resilient transportation in all of these cases is motor vehicles and highways.</p> <p>Terrorists seek to horrify the populace and disrupt the economy. When they choose a&nbsp;transportation target, it is almost always some form of mass transportation such as&nbsp;subways or high‐​speed trains. Even a&nbsp;crowded highway isn’t dense enough to cause much horror and, unlike rail lines, which can take weeks to repair, nearly all highways have alternative routes.</p> <p>When Hurricane Katrina struck in 2005,&nbsp;123,000 people&nbsp;in New Orleans lived in households that had no automobiles. When the levy failed, those with cars got out; many of those without cars were forced to stay and more than 1,000 people died. A&nbsp;few weeks later, when Hurricane Rita hit the Texas Gulf Coast, where auto ownership rates were much higher,&nbsp;3.7 million people&nbsp;were able to evacuate in a&nbsp;couple of days.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Fifty years ago, people’s concerns about automobiles were justified. </p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Mass transportation systems such as Amtrak and public transit are particularly vulnerable to recessions. Because they are so labor‐​intensive, a&nbsp;decline in revenues can force&nbsp;major cutbacks in service. Highways, once built, are there when you need them; they aren’t going to go away because revenues to the agency that built them has temporarily declined.</p> <p>Before the current pandemic, research found that people who ride transit are nearly&nbsp;six times more likely&nbsp;to suffer from acute respiratory diseases than those who do not. Masks help, but — as&nbsp;the CDC recently advised — the safest way to travel during an epidemic is in your own private automobile.</p> <p>Despite the tremendous advantages of autos over mass transportation, a&nbsp;powerful anti‐​auto movement remains. A&nbsp;New York Times&nbsp;article recently urged cities to “take back streets from the automobile,” as if people in cars are less important than people who aren’t in cars.</p> <p>In the decade before the pandemic, Los Angeles Metro lost a&nbsp;third of its bus riders. Metro’s solution?&nbsp;Make traffic congestion worse. “It’s too easy to drive in this city,” said Phil Washington, Metro’s CEO, about the city that is perennially at or near the top of the list of the&nbsp;worst congested areas&nbsp;in the country. He wants to turn lanes now open to all traffic into exclusive bus lanes so that his empty buses can zip by frustrated motorists.</p> <p>Cities across the country are participating in a&nbsp;movement to make congestion worse. Sometimes called “road diets,” sometimes “complete streets,” the goal is to take lanes away from motor vehicles.</p> <p>The results can be deadly. When a&nbsp;2008 wildfire burned near Paradise, California, in the Sierra Nevada foothills, the city realized it needed&nbsp;better evacuation routes. Instead, it put its only four‐​lane street on a&nbsp;road diet, removing two of the lanes. When a&nbsp;fire burned through the city in 2018, more than 80 people died,&nbsp;many in their cars&nbsp;while they were stuck in traffic.</p> <p>Fifty years ago, people’s concerns about automobiles were justified. Cars were energy hogs, spewing pollution that darkened the skies of our cities, and killing 50 people per billion vehicle miles in highway accidents.</p> <p>Those problems were&nbsp;reduced&nbsp;not by forcing people out of their cars but by making cars cleaner, safer, and more energy‐​efficient. Compared with 1970, autos use only half the energy, emit only 3&nbsp;percent as much toxic pollution, kill 78 percent fewer people per billion vehicle miles in accidents, and improve each year. Irrationally, opposition continues as if automobiles were still as bad as they were in 1970.</p> <p>In spite of anti‐​auto policies, 80 percent of passenger travel and 90 percent of urban travel is by automobile. It’s time to take back cities for people and the automobiles that have liberated them to reach more productive jobs, better homes, lower‐​cost consumer goods, and greater recreation and social opportunities. That means fighting the road dieters, congestifiers, and others who think that the primary goal of transportation policy should be to force people out of their cars.</p> </div> Sat, 27 Jun 2020 09:56:50 -0400 Randal O'Toole https://www.cato.org/publications/commentary/take-back-cities-people-automobiles-they-use Trump’s $1 Trillion Infrastructure Plan https://www.cato.org/blog/trumps-1-trillion-infrastructure-plan-0 Randal O&#039;Toole <p>It’s an election year, so it must be time for some grandiose infrastructure proposals. Representative Peter DeFazio (D-OR), chair of the House Transportation and Infrastructure Committee, has come out with a <a href="https://www.infrastructurereportcard.org/house-transportation-and-infrastructure-committee-leaders-unveil-the-invest-in-america-act/">$494 billion five‐​year transportation proposal</a>, which is a&nbsp;huge boost from Congress’ <a href="https://en.wikipedia.org/wiki/Fixing_America%27s_Surface_Transportation_Act">2015 five‐​year spending package</a> of $305 billion. Congress writes a&nbsp;new highway &amp;&nbsp;transit package about every five or six years; the 2015 one expires on September 30 of this year.</p> <p>In response, the Trump administration is rumored to finally be coming out with his <a href="https://www.reuters.com/article/us-usa-trump/trump-team-prepares-1-trillion-infrastructure-plan-to-spur-economy-idUSKBN23N0D7">$1 trillion infrastructure plan</a>. Candidate Trump famously promised to spend $1 trillion on infrastructure in <a href="https://www.bloomberg.com/news/articles/2016-08-02/trump-says-he-ll-spend-more-than-half-trillion-dollars-on-infrastructure">2016</a> in response to Hillary Clinton’s proposal to spend half a&nbsp;trillion on infrastructure. Campaign background documents clarified that he didn’t expect the federal government to spend $1 trillion but merely to give private investors incentives to spend that much money. Nothing much happened with that plan after he took office.</p> <p>Now that the 2015 highway &amp;&nbsp;transit package is about to expire, the Trump administration is planning to build its infrastructure plan around its renewal. On one hand, the administration wants to spend less money that DeFazio’s plan. On the other hand, it wants to reach the magic number of $1 trillion. To do both of these things, it will propose not a&nbsp;five‐​year plan but a&nbsp;ten‐​year plan that spends less each year than DeFazio’s plan but more in total.</p> <p>Specifically, the draft Trump package would spend $810 billion on highways &amp;&nbsp;transit over ten years. To round the total up to $1 trillion, another $190 billion is thrown in for rural broadband, 5G cell services, and other non‐​transportation infrastructure.</p> <p>Even $81 billion a&nbsp;year is far more than the federal government collects in highway user fees. When Congress created the Interstate Highway System in 1956 and dedicated federal gasoline taxes and other motor vehicle excise taxes to that system, Tennessee Senator Al Gore — the former vice-president’s father — insisted that it be on a&nbsp;pay‐​as‐​you‐​go basis, in other words, that the highways would only be built as fast as the money came in for them.</p> <p>Gas taxes are supposed to be user fees, but because we call it a&nbsp;tax, it got caught up in the pledges not to increase taxes many Congressional&nbsp;candidates made in the 1990s. As a&nbsp;result, the federal gas tax hasn’t been increased since 1993. Considering inflation and increased fuel economy, that means drivers are paying only about 40 percent as much today for every mile they drive as they did in 1993.</p> <p>Instead of raising gas taxes, Congress increased deficit spending. In 1996, Congress abandoned Gore’s pay‐​as‐​you‐​go rule and decreed that the federal government should spend as much money as was&nbsp;<em>projected</em>&nbsp;to come in, not how much it actually collected. This became important in&nbsp;the 2008 financial crisis, when gas tax and other highway revenues declined. Since then, Congress has supplemented those revenues with something like $140 billion in deficit spending.</p> <p>The Trump plan would have less deficit spending than the DeFazio plan, but considerably more than the 2015 transportation bill. While the 2015 bill required about $100 billion in deficit spending over five years, considering that the pandemic is reducing highway revenues the Trump bill is likely to require about $400 billion over the first five years and more after that.</p> <p>In 1991, Congress created a&nbsp;program called <a href="https://www.transit.dot.gov/CIG">New Starts</a> to fund up to 50 percent of the cost of <a href="https://www.transit.dot.gov/funding/grant-programs/capital-investments/current-capital-investment-grant-cig-projects">light‐​rail</a> and other <a href="http://object.cato.org/sites/cato.org/files/pubs/pdf/pa727_web.pdf">obsolete</a> transit lines. By increasing traffic congestion and promoting high taxes and wasteful spending, this program has probably done more damage to American cities than any federal program since the urban renewal projects of the 1950s.&nbsp;</p> <p>The DeFazio bill would increase the federal government’s share of New Starts money to 80 percent. More wisely, the Trump plan would cut this program altogether and spend money instead on rehabilitating existing rail lines. Since the transit industry has a $100 billion infrastructure backlog, rehabilitation makes more sense than building new lines, but in many cases it would be better to simply replace trains with buses when the rail lines wear out.</p> <p>Although the Trump plan would end New Starts, one draft of the plan would create a&nbsp;brand‐​new program promoting intercity passenger trains. Since they are just as obsolete as light rail, this would merely trade&nbsp;in one wasteful program for another.</p> <p>None of these plans take into account the effect&nbsp;of the pandemic, which is likely to accelerate the decline in transit ridership and growth of auto driving. Transit ridership was already falling before the pandemic, and the pandemic&nbsp;reduced ridership for some transit agencies by more than 95 percent. Many of these riders will <a href="https://ti.org/pdfs/APB53.pdf">never go back</a> to transit. Any infrastructure bill passed by Congress needs to account for these changes and the <a href="https://ti.org/pdfs/APB43.pdf">futility</a> of trying to get people out of their cars when cars are the safest way to travel during an epidemic.&nbsp;</p> <p>Trump’s promise of a $1 trillion infrastructure plan conflicted with his promise to “drain the swamp” or reduce federal bureaucracy. We don’t need a&nbsp;federal program for 5G cell networks; private industry will do that. We don’t need a&nbsp;federal program for rural broadband; having slower internet is one the trade‐​offs people accept for living in rural areas. We don’t need to continue, much less expand, a&nbsp;federal program for the obsolete transit industry. Finally, we don’t need to use deficit spending to subsidize highways; highway users will pay for the roads they drive on if we ask them to, especially if they know the money they are paying isn’t be diverted to transit boondoggles.&nbsp;</p> Thu, 25 Jun 2020 15:25:18 -0400 Randal O'Toole https://www.cato.org/blog/trumps-1-trillion-infrastructure-plan-0 Cato Journal article, “A Review of the Regional Greenhouse Gas Initiative,” is cited on Pennsylvania Cable Network https://www.cato.org/multimedia/media-highlights-tv/cato-journal-article-review-regional-greenhouse-gas-initiative-0 Tue, 23 Jun 2020 10:55:13 -0400 Cato Institute https://www.cato.org/multimedia/media-highlights-tv/cato-journal-article-review-regional-greenhouse-gas-initiative-0 Build Up or Build Out? Solving the Housing Crisis https://www.cato.org/multimedia/events/build-or-build-out-solving-housing-crisis Scott Beyer, Randal O&#039;Toole, Scott Lincicome, Vanessa Brown Calder <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Rising prices have created housing crises in many urban areas, particularly in the Northeast and on the West Coast. Experts agree that government regulations are the problem, but which regulations should be relaxed or repealed to make housing more affordable? Scott Beyer argues that restrictive zoning within cities is the problem and that such zoning should be lifted to allow developers to build up—that is, build more high‐​density housing. Randal O’Toole argues that restrictive zoning in rural areas outside the cities is the problem and that such zoning should be abolished to allow developers to build out—that is, build more low‐​density housing. Scott Lincicome argues that restrictive zoning in all areas should be relaxed, as should local, state, and federal regulations that needlessly inflate housing construction costs. Join us for a&nbsp;lively debate about property rights, housing demand, and housing supply.</p> <p><strong>Event Resources:</strong></p> <ul> <li><a href="https://www.cato.org/publications/policy-analysis/new-feudalism-why-states-must-repeal-growth-management-laws" target="_blank">The New Feudalism: Why States Must Repeal Growth‐​Management Laws</a></li> <li><a href="https://www.cato.org/publications/policy-analysis/planning-tax-case-against-regional-growthmanagement-planning" target="_blank">The Planning Tax: The Case against Regional Growth‐​Management Planning</a></li> <li><a href="https://catalyst.independent.org/2020/02/19/census-figures-show-statistical-case-for-building-more-housing/" target="_blank">Census Figures Show Statistical Case for Building More Housing</a></li> <li><a href="https://www.cato.org/books/american-nightmare-how-government-undermines-dream-homeownership" target="_blank"><em>American Nightmare: How Government Undermines the Dream of Homeownership</em></a></li> </ul> </div> Wed, 17 Jun 2020 07:03:50 -0400 Scott Beyer, Randal O'Toole, Scott Lincicome, Vanessa Brown Calder https://www.cato.org/multimedia/events/build-or-build-out-solving-housing-crisis Johan Norberg discusses whether public transit should be free on Free to Choose Media’s Dead Wrong https://www.cato.org/multimedia/media-highlights-tv/johan-norberg-discusses-whether-public-transit-should-be-free-free Wed, 03 Jun 2020 11:10:12 -0400 Johan Norberg https://www.cato.org/multimedia/media-highlights-tv/johan-norberg-discusses-whether-public-transit-should-be-free-free Veronique de Rugy discusses the airline industry on American Radio Journal https://www.cato.org/multimedia/media-highlights-radio/veronique-de-rugy-discusses-airline-industry-american-radio Mon, 01 Jun 2020 12:54:39 -0400 Veronique de Rugy https://www.cato.org/multimedia/media-highlights-radio/veronique-de-rugy-discusses-airline-industry-american-radio Veronique de Rugy discusses the airline industry on The Lars Larson Show https://www.cato.org/multimedia/media-highlights-radio/veronique-de-rugy-discusses-airline-industry-lars-larson-show Wed, 20 May 2020 11:14:48 -0400 Veronique de Rugy https://www.cato.org/multimedia/media-highlights-radio/veronique-de-rugy-discusses-airline-industry-lars-larson-show Randal O’Toole’s Downsizing Government article, “Public Transit’s Decline,” is cited on NPR’s Texas Standard https://www.cato.org/multimedia/media-highlights-radio/randal-otooles-downsizing-government-article-public-transits Fri, 15 May 2020 12:56:57 -0400 Randal O'Toole https://www.cato.org/multimedia/media-highlights-radio/randal-otooles-downsizing-government-article-public-transits John Glaser participates in the webinar, “Cooperation or Cold War: Navigating U.S.-China Relations during COVID and Climate Change,” hosted by the Quincy Institute for Responsible Statecraft https://www.cato.org/multimedia/media-highlights-tv/john-glaser-participates-webinar-cooperation-or-cold-war-navigating Thu, 14 May 2020 12:41:40 -0400 John Glaser https://www.cato.org/multimedia/media-highlights-tv/john-glaser-participates-webinar-cooperation-or-cold-war-navigating Shut Down Public Transit Now! https://www.cato.org/publications/commentary/shut-down-public-transit-now Randal O&#039;Toole <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Across the country, sit‐​down restaurants and bars have been ordered to close.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>National parks are shut down. Tens of thousands of small businesses are on the verge of bankruptcy. All of these restrictions are supposed to be for our own good.</p> <p>So why are public transit systems still running buses and trains?</p> <p>A recent&nbsp;<a href="https://www.dropbox.com/s/h9i8obshl6qdnde/4-13-20%20MIT%20Study,The%20Subways%20Seeded%20the%20Massive%20Coronavirus%20Epidemic%20in%20New%20York%20City,%20DOE,%20HarrisJE_WP2_COVID19_NYC_13-Apr-202.pdf?dl=0" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=https://www.dropbox.com/s/h9i8obshl6qdnde/4-13-20%2520MIT%2520Study,The%2520Subways%2520Seeded%2520the%2520Massive%2520Coronavirus%2520Epidemic%2520in%2520New%2520York%2520City,%2520DOE,%2520HarrisJE_WP2_COVID19_NYC_13-Apr-202.pdf?dl%3D0&amp;source=gmail&amp;ust=1588674791093000&amp;usg=AFQjCNEApThGG7sHqbiYBhL8qDfLYGNydA">study</a>&nbsp;found that New York City subways were “a major disseminator — if not the principal transmission vehicle — of coronavirus infection.” It’s no coincidence that 45 percent of all transit travel in the United States during the first two months of 2020 was in the New York‐​northern New Jersey urban area, and 45 percent of all coronavirus deaths have also been in that area.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>If we cared about people’s safety, then transit agencies should have shut down at the same time we closed other non‐​essential businesses and asked people to stay at home. </p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But we didn’t have to wait for that study: A&nbsp;<a href="https://cris.vtt.fi/en/publications/pandhub-prevention-and-management-of-of-high-threat-pathogen-inci" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=https://cris.vtt.fi/en/publications/pandhub-prevention-and-management-of-of-high-threat-pathogen-inci&amp;source=gmail&amp;ust=1588674791094000&amp;usg=AFQjCNHOOkSF4kSZTXpRG4JzSTBtyZF1tg">2018 study</a>&nbsp;found that “mass transportation systems offer an effective way of accelerating the spread of infectious diseases,” while a&nbsp;<a href="https://bmcinfectdis.biomedcentral.com/articles/10.1186/1471-2334-11-16" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=https://bmcinfectdis.biomedcentral.com/articles/10.1186/1471-2334-11-16&amp;source=gmail&amp;ust=1588674791094000&amp;usg=AFQjCNFOZ9X-_vMT08-o10bf8uBg_esv0g">2011 study</a>&nbsp;found that people who use mass transit were nearly six times more likely to have acute respiratory infections than those who don’t.</p> <p>Transit agencies say they are helping “essential workers” conduct their business. But if they are so essential, wouldn’t it be better to make sure they have a&nbsp;safe way of getting to work? If we cared about people’s safety, then transit agencies should have shut down at the same time we closed other non‐​essential businesses and asked people to stay at home.</p> <p>Instead of shutting down when the recent pandemic hit, transit agencies&nbsp;<a href="https://www.metro-magazine.com/government-issues/news/737890/coalition-of-transit-agencies-demand-at-least-25b-in-federal-aid?utm_source=email&amp;utm_medium=enewsletter&amp;utm_campaign=20200324-NL-MET-Express-BOBCD200318002&amp;omdt=NL-MET-Express&amp;omid=1108537216&amp;oly_enc_id=4680G4294556D0Y" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=https://www.metro-magazine.com/government-issues/news/737890/coalition-of-transit-agencies-demand-at-least-25b-in-federal-aid?utm_source%3Demail%26utm_medium%3Denewsletter%26utm_campaign%3D20200324-NL-MET-Express-BOBCD200318002%26omdt%3DNL-MET-Express%26omid%3D1108537216%26oly_enc_id%3D4680G4294556D0Y&amp;source=gmail&amp;ust=1588674791094000&amp;usg=AFQjCNGR-d4S4V9Bn-47C4zFWct-SYxGFg">demanded</a>&nbsp;that Congress give them $25 billion so they can continue spreading disease during the pandemic. Congress agreed to this without any debate.</p> <p>Effectively, Congress rewarded the agencies for spreading disease. It would have been better to use that money to help transit‐​dependent essential workers buy a&nbsp;car so they could have a&nbsp;safe way of getting to work.</p> <p>The problem is that the transit lobby has successfully made public transit a&nbsp;sacred cow that politicians fund without almost no questions asked. Yet data published by the federal government reveal that most of the claims transit advocates make for public transit are wrong.</p> <p>Transit is supposedly greener than driving, yet&nbsp;<a href="https://tedb.ornl.gov/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=https://tedb.ornl.gov/&amp;source=gmail&amp;ust=1588674791094000&amp;usg=AFQjCNHVbgdhIDVob3AYVDhrZ-8Cu9GQrw">Department of Energy data</a>&nbsp;show that transit uses more energy per passenger mile than the average SUV, and much more than the average car.</p> <p>Transit is supposedly vital for getting low‐​income people to work, yet&nbsp;<a href="https://data.census.gov/cedsci/table?q=b08119&amp;tid=ACSDT1Y2018.B08119" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=https://data.census.gov/cedsci/table?q%3Db08119%26tid%3DACSDT1Y2018.B08119&amp;source=gmail&amp;ust=1588674791094000&amp;usg=AFQjCNESACvDIWU_Ijpf0-53_e-h8QFjKw">Census Bureau data</a>&nbsp;show that the people most likely to use transit are those who earn more than $75,000 a&nbsp;year.</p> <p>Transit supposedly deserves subsidies because highways are subsidized. Yet Department of Transportation data indicate that subsidies to driving average about a&nbsp;penny per passenger mile while subsidies to transit average&nbsp;<a href="https://www.transit.dot.gov/ntd/ntd-data?field_product_type_tid=1181&amp;field_data_product_year_value%5Bvalue%5D%5Byear%5D=2018&amp;combine=" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=https://www.transit.dot.gov/ntd/ntd-data?field_product_type_tid%3D1181%26field_data_product_year_value%255Bvalue%255D%255Byear%255D%3D2018%26combine%3D&amp;source=gmail&amp;ust=1588674791094000&amp;usg=AFQjCNHxD7XHWYPRWiKRVmJkDm9i2FysjQ">$1.01 per passenger mile</a>.</p> <p>The coronavirus is one of several black swans — unexpected events that shock the economy — that have taken place in the last two decades. Others include 9/11, Hurricane Katrina, and the 2008 financial crisis.</p> <p>All of these events have demonstrated that we need a&nbsp;resilient transportation system, one that is relatively immune from terrorist attacks; protects its users from infectious diseases; helps people flee and recover from natural disasters; and isn’t crippled by a&nbsp;loss of revenues during recessions and depressions.</p> <p>That system is not public transit, which has been a&nbsp;target for terrorists, a&nbsp;spreader of diseases, has proven helpless in the face of hurricanes and other disasters, and suffers a&nbsp;financial crisis in every recession. Most people intuitively understand this, which is why transit ridership has declined in each of the last five years despite increasing subsidies.</p> <p>It is time to shut down transit agencies now before they can spread COVID-19 any further.</p> <p>Then we will need to have a&nbsp;serious debate about how to make our transportation system as resilient as possible when the pandemic is over.</p> </div> Wed, 06 May 2020 09:15:45 -0400 Randal O'Toole https://www.cato.org/publications/commentary/shut-down-public-transit-now Randal O’Toole discusses his blog post, “Why Are Transit Systems Still Running?,” on KKSF’s The Bob Zadek Show https://www.cato.org/multimedia/media-highlights-radio/randall-otoole-discusses-blog-post-why-are-transit-systems-still Fri, 01 May 2020 11:07:38 -0400 Randal O'Toole https://www.cato.org/multimedia/media-highlights-radio/randall-otoole-discusses-blog-post-why-are-transit-systems-still Be Cautious with the Precautionary Principle: Evidence from Fukushima Daiichi Nuclear Accident https://www.cato.org/publications/research-briefs-economic-policy/be-cautious-precautionary-principle-evidence-fukushima-daiichi-nuclear-accident Matthew J. Neidell, Shinsuke Uchida, Marcella Veronesi <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>As a&nbsp;regulatory tool, the precautionary principle has met with mixed reactions. While many variants exist, a&nbsp;generally accepted definition is that activities should not proceed when the threats of damage are not fully understood. A&nbsp;major concern with this principle is that by focusing solely on the risk from one action, it fails to consider the risk from an alternative action. Something abandoned out of precaution is replaced by something else, which may also carry risk. From an economic perspective, the precautionary principle fails to consider the tradeoffs inherent in policy decisions.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>We provide a large-scale, empirical evaluation of the tradeoff that came from invoking the precautionary principle using the nuclear power plant shutdowns resulting from the accident at Fukushima, Japan. The accident, which resulted from a tsunami caused by the fourth-largest earthquake in recorded history, led to a nuclear meltdown at the Fukushima Daiichi nuclear power plant. Driven by long-standing concerns over the unknown effects from radiation risk, this rejuvenated the anti-nuclear movement. Within 14 months of the accident, nuclear power production came to a complete halt in Japan.</p> <p>The decrease in nuclear energy production did not come without a cost: higher electricity prices. To meet electricity demands, the reduction in nuclear energy production was offset by increased importation of fossil fuels, which increased the price of electricity by as much as 38 percent in some regions. These higher electricity prices led to a decrease in electricity consumption, particularly during times of the year that have the greatest heating demand. Given that interior climate control provides protection from extreme weather events, we find that the reduced electricity consumption caused an increase in mortality. Our estimated increase in mortality from higher electricity prices significantly outweighs the mortality from the accident itself, suggesting that the decision to cease nuclear energy production caused more harm than good.</p> <p>We produce these results using the following strategy. First, we document that the shutdown of nuclear power plants increased electricity prices, with strong variation throughout the country depending on the initial energy mix within a region. For example, regions with almost no nuclear energy before the accident experienced electricity price increases around 10 percent, whereas regions with higher dependence on nuclear experienced price increases up to 40 percent. The highly regulated nature of residential electricity markets in Japan means that supply factors contributed to these price changes, suggesting the price changes are exogenous to consumer demand for electricity. Second, we explore how the price changes affected electricity consumption. For example, we compare electricity consumption in Tokyo in January 2012 to electricity consumption in Tokyo in January 2011. We find that electricity consumption decreased roughly one to two months after price changes occurred. The decreases in electricity consumption are more pronounced during the winter, suggesting there is less protection from the weather during the coldest times of the year.</p> <p>Third, we explore the consequences from the reduced electricity consumption by estimating how it moderates the temperature-mortality relationship. Similar to previous research, we find that extreme temperatures affect mortality, in particular during very cold temperatures, although the effects from higher temperatures are small given the high rates of air conditioning penetration. We then interact temperature with electricity prices to explore how electricity prices moderate the relationship between temperature and mortality. We find increased mortality effects from extreme cold weather, suggesting the decreased consumption of electricity that resulted from higher electricity prices increased mortality.</p> <p>To put these estimates in context, we calculate that the higher electricity prices resulted in at least an additional 1,280 deaths during 2011–2014. Since our data only covers the 21 largest cities in Japan, which represents 28 percent of the total population, the total effects for the entire nation are even larger. Meanwhile, the number of deaths due to the Fukushima Daiichi nuclear accident is much lower. No deaths have yet to be directly attributable to radiation exposure, although projections estimate a cumulative 130 deaths. An estimated 1,232 deaths occurred as a result of the evacuation after the accident. Therefore, the deaths from the higher electricity prices likely outnumber the deaths from the accident in only four years if we extrapolate our estimates to the entire country, and almost certainly outnumber the deaths over a longer time period given that the higher electricity prices persisted beyond the end of our study. This suggests that ceasing nuclear energy production has contributed to more deaths than the accident itself.</p> <p><strong>NOTE:</strong><br>This research brief is based on Matthew J. Neidell, Shinsuke Uchida, and Marcella Veronesi, “Be Cautious with the Precautionary Principle: Evidence from Fukushima Daiichi Nuclear Accident,” NBER Working Paper no. 26395, October 2019, <a target="_blank">http://www.nber.org/papers/w26395</a>.</p> </div> Wed, 29 Apr 2020 03:00:00 -0400 Matthew J. Neidell, Shinsuke Uchida, Marcella Veronesi https://www.cato.org/publications/research-briefs-economic-policy/be-cautious-precautionary-principle-evidence-fukushima-daiichi-nuclear-accident Trump EO: The Moon and Other Celestial Bodies Should Be Open to Private Resource Development https://www.cato.org/publications/commentary/trump-eo-moon-other-celestial-bodies-should-be-open-private-resource Doug Bandow <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Despite the current chaos caused by the coronavirus, Washington still must consider the future. Which explains the president’s new executive order that would allow private resource development on the moon and asteroids. It clearly rejects the “common heritage of mankind” rhetoric deployed by the United Nations on behalf of the Law of the Sea Treaty, which four decades ago created a&nbsp;special UN body to seize control of seabed resources.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p><strong>The Future of Space Exploration</strong></p> <p>The EO issued earlier this month explained that</p> </div> , <blockquote class="blockquote"> <div> <p>Successful long‐​term exploration and scientific discovery of the Moon, Mars, and other celestial bodies will require partnership with commercial entities to recover and use resources, including water and certain minerals, in outer space.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The measure began the process of revising an uncertain legal regime which currently discourages private sector development.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Despite the current chaos caused by the coronavirus, Washington still must consider the future. </p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The administration pointed to the 1979 Agreement Governing the Activities of States on the Moon and Other Celestial Bodies (known as the Moon treaty) and the 1967 Treaty on Principles Governing the Activities of State in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies (typically called the Outer Space Treaty). Neither is friendly to entrepreneurs or explorers with a&nbsp;commercial bent.</p> <p>In response, the president announced that</p> </div> , <blockquote class="blockquote"> <div> <p>Americans should have the right to engage in commercial exploration, recovery, and use of resources in outer space, consistent with applicable law. Outer space is a&nbsp;legally and physically unique domain of human activity, and the United States does not view it as a&nbsp;global commons. Accordingly, it shall be the policy of the United States to encourage international support for the public and private recovery and use of resources in outer space, consistent with applicable law.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p><strong>Space is a&nbsp;Long‐​Term Prospect</strong></p> <p>The document’s main directive is for the Secretary of State, in cooperation with other agencies, to “take all appropriate actions to encourage international support for the public and private recovery and use of resources in outer space.” The secretary is to “negotiate joint statements and bilateral and multilateral arrangements with foreign states regarding safe and sustainable operations for the public and private recovery and use of space resources.”</p> <p>Obviously, the administration’s attention is directed elsewhere at the moment. However, the potential benefits of turning to space are significant. The value of scientific research is obvious and continues to drive government agencies such as NASA. Launch services and space tourism have caught the interest of private operators. Such activities offer fewer legal and practical difficulties than attempting to establish some sort of long‐​term presence in the great beyond.</p> <p>More complex development of space is a&nbsp;longer‐​term prospect. However, that makes it even more imperative to encourage innovation by creating institutions and incentives that encourage responsible development of what truly is the “final frontier.”</p> <p><strong>Space Entrepreneurs&nbsp;</strong></p> <p>Even now visionaries are imagining the possibilities of space. Last year two long‐​time space entrepreneurs, Jeff Greason and James C. Bennett, wrote a&nbsp;detailed study for the Reason Foundation on the potential for economic development of this different world, so vast and mysterious to most of us. Among possible activities:</p> </div> , <blockquote class="blockquote"> <div> <p>tapping space‐​based clean energy sources, mining asteroids for useful raw materials, developing safe venues for scientific experiments, upcycling/​sequestering hazardous but valuable debris currently in space, tapping sources of water already in space, to decouple into oxygen and hydrogen for space fuels and oxidizers, and to provide radiation shielding mass, and using the low‐​gravity, low‐​temperature and other properties of space for many activities, including manufacturing and research.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Greason and Bennett advocate an important role for NASA but propose to achieve that by redirecting existing funds rather than increasing expenditures. They see gradual growth in private sector activities, which have become increasingly significant in recent years, though focused on launches. The authors write: “our current radical transformation in space transport as private actors and market forces have slashed the costs of accessing space. These advancements have already greatly reduced costs for not only NASA, but also civilian (mostly satellite) and military space transport as well.”</p> <p>To expand the private role in space Washington should focus on establishing a&nbsp;positive legal framework. The U.S. Commercial Space Launch Competitiveness Act was a&nbsp;start, though its greatest emphasis was on launch activities. However, the legislation included a&nbsp;short section on “Space Resource Exploration and Utilization.”</p> <p>Congress instructed the president to:</p> </div> , <blockquote class="blockquote"> <div> <p>(1) facilitate commercial exploration for and commercial recovery of space resources by United States citizens; (2) discourage government barriers to the development in the United States of economically viable, safe, and stable industries for commercial exploration for and commercial recovery of space resources in manners consistent with the international obligations of the United States; and (3) promote the right of United States citizens to engage in commercial exploration for and commercial recovery of space resources free from harmful interference.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p><strong>Legal Clarification Needed</strong></p> <p>Needed now is a&nbsp;specific legal code to cover commercial activities in space. What is the legal status of areas used for mining, experiments, or other activities? How to sort out disputes over territories claimed? To what resources can companies gain title? What contract law applies to transactions involving space? And to agreements concluded in space? How about criminal law covering participants in a&nbsp;gradually expanding space presence?</p> <p>A new international framework also is needed. Existing agreements do not suffice.</p> <p>The Moon Treaty restricted use of the Moon (and other celestial bodies) “exclusively for peaceful purposes.” The prohibition on military activities is broad, though obviously unenforceable: “Any threat or use of force or any other hostile act or threat of hostile act on the Moon is prohibited. It is likewise prohibited to use the Moon in order to commit any such act or to engage in any such threat in relation to the Earth, the Moon, spacecraft, the personnel of spacecraft or manmade space objects.”</p> <p>This pact included a&nbsp;long list of unobjectionable, even obvious, admonitions: consider the interests of future generations, be guided by “the principle of cooperation and mutual assistance,” alert other countries to conflicting uses, consider making Moon materials collected available to other states, don’t disrupt the environment, and “adopt all practicable measures to safeguard the life and health of persons on the Moon.”</p> <p><strong>Commercialization in Space</strong></p> <p>What about commercialization? The agreement offered little guidance but appeared hostile. It was adopted when the redistributionist “New Economic Order” was being pushed by the long‐​gone Group of 77 at the UN, which represented largely socialist dictatorships which sought to guilt the West into transferring vast resources to their treasuries. Indeed, the Moon Treaty embodied many of the same principles behind the Law of the Sea Treaty’s section governing seabed mining. The latter emerged when the prospect of trillions of dollars worth of minerals littering the ocean floor bedazzled big spending, highly indebted Third World governments. Naturally, they demanded “their” share of the action.</p> <p>Years of negotiation yielded an almost comical Rube Goldberg system, in which the least capable states would rule. The Authority would control seabed mining. The Enterprise would mine “the common heritage of mankind” on behalf of the world’s most corrupt, least developed, and largely undemocratic regimes. Rules were established to limit mining, transfer technology, and redistribute wealth. The Soviet Union was granted three seats, the U.S. only one. There was no veto for America. High on the agenda of the two UN conferences developing the treaty which I&nbsp;attended was constant maneuvering by conference leaders hoping to grab post‐​ratification jobs at The Authority—later headquartered in Jamaica but without much to do since seabed mining never took off.</p> <p>The Moon Treaty similarly declared that the Moon and other celestial bodies would be “the common heritage of mankind.” There would be no security of property or tenure: “Neither the surface nor the subsurface of the Moon, nor any part thereof or natural resources in place, shall become property of any State, international intergovernmental or non‐​governmental organization, national organization or non‐​governmental entity or of any natural person.”</p> <p>Those who ratified the document pledged to “undertake to establish an international regime … to govern the exploitation of the natural resources of the Moon.” Such an entity, imagine a&nbsp;heavenly version of The Authority, would be directed to ensure “orderly” development and “rational management” of resources and of course “an equitable sharing by all,” by which the “interests and needs of the developing countries” would be given “special consideration.” Meaning interlunar, and perhaps even interstellar or intergalactic income redistribution.</p> <p>Obviously, an outer space LOST would be a&nbsp;very bad idea. Although the Moon Treaty hangs over space development, it can be easily ignored, having received but 18 ratifications, none by states capable of exploring space. America, China, and Russia neither signed nor ratified the agreement. India signed but did not ratify. The only European nations to ratify are Austria, Belgium, and the Netherlands. None of them appears ready to go to the Moon, let alone beyond.</p> <p><strong>The Outer Space Treaty</strong></p> <p>The Outer Space Treaty, in contrast, has been ratified by 109 countries, including all of the major potential players in space. However, the pact primarily covers two issues. First, it is a&nbsp;disarmament agreement, banning deployment of nuclear weapons in space and reserving the Moon and other celestial bodies for peaceful uses. There are to be no military bases, weapons testing, or military maneuvers.</p> <p>Second, the treaty encourages safe, responsible action as states explore the heavens. It blesses “exploration,” “scientific investigation,” and “international cooperation,” and forbids countries from claiming sovereignty over celestial bodies. States the treaty: “outer space, including the Moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.”</p> <p>Nevertheless, sovereignty is retained over objects launched into space. Moreover, the treaty declares that:</p> </div> , <blockquote class="blockquote"> <div> <p>the activities of non‐​governmental entities in outer space, including the Moon and other celestial bodies, shall require authorization and continuing supervision by the appropriate State Party to the Treaty.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Which suggests that commercial activities could be carried out under the authority of member nations.</p> <p>However, there are no suggested rules. Rather, the text is filled with predictable hortatory sentiments about serving mankind which have no practical import. For instance, Article I&nbsp;states: “The exploration and use of outer space, including the Moon and other celestial bodies, shall be carried out for the benefit and in the interests of all countries, irrespective of their degree of economic or scientific development, and shall be the province of all mankind.” On the issue of conflicting uses by different parties, the pact merely calls on countries to “undertake appropriate international consultations before proceeding with any such activity or experiment.”</p> <p>In succeeding years efforts have been made to develop some detailed guidelines, but with little success. The last meeting of the UN Committee on the Peaceful Uses of Outer Space two years ago produced little.</p> <p><strong>Cooperative Brainstorming Needed</strong></p> <p>The best option would be to bring together those nations with the potential for exploring and commercializing space to draft what for seabed mining was called the reciprocating states agreement. That pact created a&nbsp;system for resolving conflicts among ocean floor mining claims. It was never used, since mining never proved financially viable. However, the agreement would have facilitated any commercial activity by creating a&nbsp;mechanism to resolve disputes among companies and governments.</p> <p>In the longer‐​term Washington should work with the same governments to develop a&nbsp;more formal international framework, perhaps to be blessed by the UN Security Council, which is dominated by industrialized powers interested in space. Given the LOST debacle, a&nbsp;global conference filled with countries mostly hoping to exact tribute for giving their blessing for other nations’ space activities should be avoided. Such efforts should accelerate as prospects of commercialization grow more realistic.</p> <p>Admittedly, commercial activities beyond launching services and tourism look far into the future. However, a&nbsp;number of companies hope to develop a&nbsp;variety of space operations, including on asteroids. For instance, both Deep Space Industries and Planetary Resources were established to do the latter, though have undertaken other, currently more practical, operations. Matt Williams of the website University Today noted that “people like Peter Diamandis (founder of X&nbsp;Prize and HeroX) and science communicator Neil DeGrasse Tyson have been saying for years that the first trillionaires will make their fortunes from asteroid mining.” Amazon’s Jeff Bezos founded the space‐​oriented firm Blue Origin and said he wanted “to build space hotels, amusement parks and colonies for 2&nbsp;million or 3&nbsp;million people who would be in orbit.” Tesla’s Elon Musk created Space Exploration Technologies, or SpaceX, which today is focused on designing advanced rockets and spacecraft, but obviously could eventually expand in new directions.</p> <p>Some critics compare such activities to discredited colonialism, but unless they know something the rest of us don’t there are no space peoples to conquer and rule. The brutal subjugation of entire populations is why colonialism was a&nbsp;moral outrage and afront to human dignity. People have a&nbsp;unique moral status. There is nothing similarly sacred about the not so pristine surface of the Moon or an asteroid. With due regard for environmental and safety concerns, exploration and commercialization should be encouraged. Indeed, at a&nbsp;time of shrinking government space budgets—if nothing else, recovering from the COVID-19 pandemic will leave little spare change for grandiose, long‐​term visionary projects—private financing might be the only way to advance space development.</p> <p>Today Washington is very busy dealing with a&nbsp;deadly pandemic. But the crisis will soon pass. Officials should then look to the future, including the possibility of space exploration and commercialization. That will require a&nbsp;proper legal framework to complement the entrepreneurial vision already evident in the U.S. The president’s new executive order is a&nbsp;good step forward. But much more needs to be done to prepare for what hopefully will be a&nbsp;future filled with dramatic steps ever further into space.</p> </div> Tue, 28 Apr 2020 13:08:19 -0400 Doug Bandow https://www.cato.org/publications/commentary/trump-eo-moon-other-celestial-bodies-should-be-open-private-resource Top‐​Down Regulations for COVID-19? https://www.cato.org/blog/top-down-regulations-covid-19 Chris Edwards <p>Governments often fail because they tend not to learn lessons. They make similar mistakes over and over for reasons described <a href="https://www.cato.org/sites/cato.org/files/pubs/pdf/pa777.pdf">in this study</a>.</p> <p>The FDA <a href="https://www.cato.org/blog/government-failure-coronavirus-testing">botched</a> its COVID-19 response by using its regulatory powers to monopolize the development of virus tests. I&nbsp;have not heard any apologies for the failure or that any officials have been fired. As a&nbsp;<em>Wall Street Journal</em> <a href="https://www.wsj.com/articles/health-chiefs-early-missteps-set-back-coronavirus-response-11587570514">investigation</a> of HHS leadership suggests, the gross testing failure has led to lots of finger pointing, but not institutional reforms.</p> <p>After the testing debacle, one might think that federal leaders would hesitate to impose further one‐​size‐​fits‐​all solutions for COVID-19. But no—the <em>Wall Street Journal</em> <a href="https://www.wsj.com/articles/democrats-push-for-coronavirus-workplace-safety-rules-11587478606">reports that</a> House Democrats want to require OSHA “to order all companies to implement comprehensive plans to protect workers who continue in their jobs during the pandemic. The new, emergency standard would have to be issued within seven days after any legislation is signed into law.”</p> <p>Thus, in seven days federal bureaucrats would apparently write‐​up a&nbsp;Giant Safety Plan to impose on millions of businesses in hundreds of industries across our huge and diverse nation. That makes no sense.</p> <p>Federal policymakers seem to have little comprehension that their actions often sideline the vast brain power and innovation that lives outside of Washington. At the stroke of a&nbsp;pen, federal regulations nullify the experimentation, dynamism, and speed that America’s private sector can mobilize to solve problems.</p> <p>As they consider imposing COVID-19 safety regulations, policymakers should ponder the pro‐​active steps that businesses are already taking or actively considering, as discussed in another <a href="https://www.wsj.com/articles/the-corporate-coronavirus-plan-to-reopen-make-it-up-as-you-go-11587404618?mod=searchresults&amp;page=1&amp;pos=1"><em>Wall Street Journal</em> article</a>. Businesses are separating workspaces, taking temperatures and screening health at work entrances, testing employees before they get to work, closing lunch rooms, installing workspace partitions, adjusting shifts, modifying production lines, changing entrances and exits, closing facilities and tracing contacts if workers test positive, placing materials down rather than handing them to others, sanitizing workspaces, having safety experts instruct workers, spacing bathroom urinals, wearing electronic bands to alert workers if others are too close, and providing masks, gloves, and hand sanitizer.</p> <p>A central plan quickly thrown together in Washington could not impose a “best” way for millions of businesses to install these sorts of changes. Every business is unique. Here are some reasons why allowing businesses to address their own safety challenges is superior to top‐​down federal mandates:</p> <p><strong><em>Trial‐​and‐​Error</em></strong>. The <em>Journal</em> story puts a&nbsp;negative spin on diverse business approaches to safety as a “patchwork” and “ad hoc.” But anyone who studies innovation knows that trial‐​and‐​error processes are crucial to economic and societal improvements. Private institutions change direction all the time as they try different things and receive feedback from stakeholders. To discover the best ways to adjust each workplace for COVID-19, businesses need the freedom to experiment and to change course.</p> <p>Government regulations undermine the steady improvements that are the hallmark of markets and free societies. Imposing COVID-19 safety regulations would reduce business incentives to implement new and better approaches. The question around every workplace would change from “Are we doing this safely and can we do it better?” to “Are we conforming to the OSHA rules?”</p> <p><strong><em>Horizontal Learning</em></strong>. Volkswagen is reopening some of its European factories after making 100 workplace changes. VW has <a href="https://www.morningstar.com/news/dow-jones/202004229328/volkswagen-creates-website-with-coronavirus-advice-for-suppliers">been flooded</a> with requests from other businesses about the safety procedures it is using, and so the company has posted its ideas online. American businesses are also studying Chinese businesses that were able to open safely. This sort of horizontal learning is superior to the often‐​ill‐​informed edicts from Washington. Similarly, horizontal sharing of resources during crises is better than vertical intervention, as <a href="https://www.cato.org/blog/covid-19-top-down-confusion-vs-horizonal-cooperation">discussed here</a>.</p> <p><strong><em>Costs and Benefits</em></strong>. In theory, federal bureaucrats are supposed to design regulations by comparing the costs and benefits of various possible rules, but the process is a&nbsp;crude way of making decisions in an economy, even after rules have been studied for years. In the current crisis, regulators would have little time to even try and make balanced decisions. Business leaders know their own facilities, employees, and customers, and they can make better reopening decisions based on their local knowledge.</p> <p><strong><em>Flexibility</em></strong>. The nature of the COVID-19 threat will change over time. Scientists may learn more about virus transmission on surfaces and in the air. Drugs may be developed to reduce the health risks. New safety approaches and technologies may be developed. As such, businesses need the freedom to adjust their safety procedures over time. Regulations would lock‐​in rules that may be quickly outdated as conditions change.</p> Thu, 23 Apr 2020 16:53:30 -0400 Chris Edwards https://www.cato.org/blog/top-down-regulations-covid-19 The Simon Abundance Index 2020 https://www.cato.org/blog/simon-abundance-indexr-2020 Marian L. Tupy <p><span><span>Today marks the 50th anniversary of the first celebration of Earth Day. </span></span><a href="https://humanprogress.org/simonproject"><span><span><span><span>The Simon Project</span></span></span></span></a><span><span> is happy to announce the release of </span></span><a href="https://humanprogress.org/article.php?p=2620"><span><span><span><span>The Simon Abundance Index 2020</span></span></span></span></a><span><span>. This year’s Index covers the period between 1980 and 2019. </span></span></p> <p><span><span>The main findings of the report are as follows: </span></span></p> <p><span><span>Between 1980 and 2019, the average time price of 50 basic commodities fell by 74.2 percent. That means that for the same length of time that a person needed to work to earn enough money to buy one unit in our basket of 50 commodities in 1980, he or she could buy 3.87 units in 2019. The average individual level of abundance, in other words, rose by 287.4 percent. That amounts to a compound annual growth rate of 3.63 percent and implies a doubling of abundance every 19.45 years. </span></span></p> <p><span><span><span><span><span><span><span><img alt="A close up of a piece of paper&lt;/p&gt;&#10;&lt;p&gt;Description automatically generated" height="846" src="https://lh3.googleusercontent.com/ntKjCP6odZi_xQ2RRONIVf2Y7RX9HurzOluGl4Civ3xGTAahvRQJ7aZoVhPjq2vUknqkLS_Fb-vUoPh2LVoN9_dLRtckZXBJcpki3OsLpSoNnSSkkVNcgr4yO_8T5Giani9Sc-UjU9MG8wPkrQ" width="530" /></span></span></span></span></span></span></span></p> <p><span><span>The price elasticity of population (PEP) allows us to measure sensitivity of resource availability to population growth. Between 1980 and 2019, the world’s population increased from 4.458 billion to 7.677 billion or by 73.2 percent. The time price of commodities fell by 74.2 percent. As such, the time price of commodities declined by 1.014 percent for every 1 percent increase in the world’s population. Put differently, over the last 39 years, every additional human being born on our planet appears to have made resources proportionately more plentiful for the rest of us.</span></span></p> <p><span><span>The Simon Abundance Index uses the time price of commodities and change in global population to estimate global resource abundance. The Index represents the ratio of the change in population over the change in the time price, times 100. It has a base year of 1980 and a base value of 100. In 2019, the Index reached a level of 670.9. That is to say that the Earth as a whole was 570.9 percent more abundant in 2019 than it was in 1980.</span></span></p> <p><span><span><span><span><span><img alt="" height="469" src="https://lh5.googleusercontent.com/5rOjIID-i5AFQyGqfl-sjnzo1exGWGJbplXwnoaxks0DKD2Gb4d8lNyDa89O1rQ91osnJiXacmlrdtBud3vlsSD-n329PzUN1-cFluzgUrmlAN_LCSAGCTNZ8TjqvgnWcm0P7gkDZJm8LWHVmQ" width="624" /></span></span></span></span></span></p> <p><span><span>The accompanying video can be found </span></span><a href="https://www.youtube.com/watch?v=gQaHf09ZIvY"><span><span><span><span>here</span></span></span></span></a><span><span>.</span></span></p> Wed, 22 Apr 2020 12:29:52 -0400 Marian L. Tupy https://www.cato.org/blog/simon-abundance-indexr-2020 Doug Bandow discusses the oil price collapse on Al Jazeera Arabic https://www.cato.org/multimedia/media-highlights-tv/doug-bandow-discusses-oil-price-collapse-al-jazeera-arabic Wed, 22 Apr 2020 11:37:52 -0400 Doug Bandow https://www.cato.org/multimedia/media-highlights-tv/doug-bandow-discusses-oil-price-collapse-al-jazeera-arabic Negative Oil? Really? https://www.cato.org/multimedia/cato-daily-podcast/negative-oil-really Emma Ashford, Caleb O. Brown <p>The bumpy ride for oil markets is far from over. How does the dramatic demand shock in the oil market change relations among large and influential oil‐​producing countries? Emma Ashford comments.</p> Tue, 21 Apr 2020 16:00:47 -0400 Emma Ashford, Caleb O. Brown https://www.cato.org/multimedia/cato-daily-podcast/negative-oil-really Emma Ashford discusses the oil price collapse on Al Jazeera English https://www.cato.org/multimedia/media-highlights-tv/emma-ashford-discusses-oil-price-collapse-al-jazeera-english Tue, 21 Apr 2020 12:34:21 -0400 Emma Ashford https://www.cato.org/multimedia/media-highlights-tv/emma-ashford-discusses-oil-price-collapse-al-jazeera-english Emma Ashford discusses the oil price collapse on WBAL’s News Now with Bryan Nehman https://www.cato.org/multimedia/media-highlights-radio/emma-ashford-discusses-oil-price-collapse-wbals-news-now-bryan Tue, 21 Apr 2020 12:31:45 -0400 Emma Ashford https://www.cato.org/multimedia/media-highlights-radio/emma-ashford-discusses-oil-price-collapse-wbals-news-now-bryan Randal O’Toole’s blog post, “New York MTA Forbade Employees from Protecting Themselves by Wearing Masks,” is cited on The Armstrong & Getty Show https://www.cato.org/multimedia/media-highlights-radio/randal-otooles-blog-post-new-york-mta-forbade-employees Tue, 21 Apr 2020 11:19:01 -0400 Randal O'Toole https://www.cato.org/multimedia/media-highlights-radio/randal-otooles-blog-post-new-york-mta-forbade-employees New York MTA Forbade Employees from Protecting Themselves by Wearing Masks https://www.cato.org/blog/new-york-mta-forbade-employees-protecting-themselves-wearing-masks Randal O&#039;Toole <p><span><span><span>Last week, I&nbsp;<a href="https://www.cato.org/blog/why-are-transit-systems-still-running">pointed out</a> a&nbsp;<a href="https://www.dropbox.com/s/h9i8obshl6qdnde/4-13-20%20MIT%20Study,The%20Subways%20Seeded%20the%20Massive%20Coronavirus%20Epidemic%20in%20New%20York%20City,%20DOE,%20HarrisJE_WP2_COVID19_NYC_13-Apr-202.pdf?dl=0">recent report</a> that blamed much of the spread of COVID-19&nbsp;in New York City on the subway system. Recently, I’ve collected a&nbsp;series of memos suggesting that New York’s Metropolitan Transportation Authority (MTA) is specifically culpable in this spread.</span></span></span></p> <p><span><span><span>During the <a href="https://en.wikipedia.org/wiki/2012%E2%80%932013_flu_season">2012 influenza epidemic</a>, the MTA issued a&nbsp;<a href="https://ti.org/pdfs/2012MTAMemo.pdf">policy directive</a> stating that the agency would keep a&nbsp;six‐​week supply of sanitizer wipes, sanitizer gel, and N95 respirators on hand for use by employees. The directive specifically stated that the masks would be available for bus drivers, station attendants, train conductors, and cleaners,&nbsp;among others.</span></span></span></p> <p><span><span><span>The first COVID-19 death in America was <a href="https://www.nbcnews.com/news/us-news/1st-coronavirus-death-u-s-officials-say-n1145931">reported</a> by Washington state on February 29, 2020. Rather than make its supposed six‐​week stockpile of masks available to its employees, MTA issued a&nbsp;<a href="https://ti.org/pdfs/March6MTAMemo.pdf">memo on March 6</a> <em>forbidding employees</em> from wearing masks, even if they had their own masks. The memo worried that, if bus operators and station attendants were allowed to wear masks, it could lead to “panicked purchasing of facemasks … thereby putting health care providers and their communities at greater risk.”</span></span></span></p> <p><span><span><span>Admittedly, as of March 6, there was still some debate among epidemiologists about whether healthy people needed to wear masks to protect themselves from the virus. But it is one thing to not mandate that masks be worn; it is quite another to forbid employees from wearing them. MTA also apparently failed to follow its own policy directive to maintain a&nbsp;six‐​week supply of respirators.</span></span></span></p> <p><span><span><span>Nine days later, on March 15, MTA <a href="https://www.nydailynews.com/coronavirus/ny-coronavirus-lirr-worker-mta-tests-positive-20200315-cbnr376s7beodksvwack7zj5by-story.html">reported</a> that the first of its employees had tested positive for the coronavirus. However, it wasn’t until <a href="https://www.nydailynews.com/coronavirus/ny-coronavirus-masks-front-line-workers-20200330-3vs2xn7znrg67om6l7kzvy6dwi-story.html">March 30</a> that MTA rescinded its order forbidding employees from wearing masks. It may only have been a&nbsp;coincidence that MTA’s CEO, Patrick Foye, had <a href="https://www.masstransitmag.com/safety-security/article/21131718/new-york-mta-to-distribute-75000-masks-to-workers-pat-foye-tests-positive-for-the-virus">tested positive</a> for COVID-19 the day before or that the <a href="https://www.nbcnewyork.com/news/local/2-veteran-mta-employees-die-from-covid-19-complications-union/2346416/">first death</a><a href="https://www.nbcnewyork.com/news/local/2-veteran-mta-employees-die-from-covid-19-complications-union/2346416/">s</a> of two MTA employees from coronavirus had taken place on March 26. </span></span></span></p> <p><span><span><span>On April 9, MTA <a href="https://www.nbcnews.com/news/us-news/mta-workers-say-agency-hasn-t-done-enough-protect-them-n1179996">announced</a> that it had acquired 75,000 masks and had made them available to its workers “since March 1.” Technically, that was true, but it didn’t begin distributing them until around March 31. When employees complained that MTA had not made the masks available before then, MTA officials grumbled that it was “a transportation organization, not a&nbsp;medical provider.” So much for the 2012 policy directive.</span></span></span></p> <p><span><span><span>On April 16, MTA finally issued a&nbsp;bulletin <a href="https://ti.org/pdfs/April16MTAMemo.pdf">mandating</a> that both employees and passengers wear masks. But by that time, more than 70 MTA employees had died of the coronavirus and at least 6,000 were in quarantine. </span></span></span></p> <p><span><span><span>The MTA also signed a&nbsp;<a href="https://ti.org/pdfs/Stipulation.pdf">stipulation</a> with the local transit union agreeing to pay out $500,000&nbsp;in death benefits to any active employees who died after contracting the coronavirus, without debating whether the coronavirus was the actual cause of death or whether the employee had been infected when on duty. Employees who had lost friends to the virus suspect that the agency agreed to this to minimize the chance of&nbsp;lawsuits for much larger amounts due to its failure to protect its own employees.</span></span></span></p> <p><span><span><span>Now that the virus may be <a href="https://www.dailymail.co.uk/news/article-8234741/New-York-coronavirus-deaths-decline-Gov-Cuomo-declares-state-past-peak.html">winding down</a> in New York, several city council members are urging Governor Cuomo to <a href="https://nypost.com/2020/04/18/gov-cuomo-urged-to-shut-down-nyc-subways-to-stop-coronavirus-spread/">shut down the subways</a>. In retrospect, however, it is clear that Cuomo should have shut MTA down as soon as he realized the pandemic would be serious. </span></span></span></p> <p><span><span><span>As I&nbsp;<a href="https://www.cato.org/blog/why-are-transit-systems-still-running">noted</a> last week, academic studies published in <a href="https://bmcinfectdis.biomedcentral.com/articles/10.1186/1471-2334-11-16">2011</a> and <a href="https://cris.vtt.fi/en/publications/pandhub-prevention-and-management-of-of-high-threat-pathogen-inci">2018</a>, among others, made it clear that, in the event of a&nbsp;pandemic, transit systems would likely be a&nbsp;major source of infection. One even found that people who rode transit were nearly six times more likely to have acute respiratory infections than those who didn’t. </span></span></span></p> <p><span><span><span>Rather than shut down, however, MTA and <a href="https://www.startribune.com/thank-you-for-not-riding-public-transit/569742452/?refresh=true">other transit agencies</a> continue to operate, insisting that they are providing a&nbsp;vital service for “essential workers.” The reality is that those essential workers would be much safer getting to work in private automobiles than taking transit.</span></span></span></p> Mon, 20 Apr 2020 09:22:26 -0400 Randal O'Toole https://www.cato.org/blog/new-york-mta-forbade-employees-protecting-themselves-wearing-masks Transit: The Urban Parasite https://www.cato.org/publications/policy-analysis/transit-urban-parasite Randal O&#039;Toole <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>The costs of supporting the nation’s urban transit industry are rising, yet ridership is declining. Data released by the Federal Transit Administration in December 2019 indicate that 2018 transit ridership fell in 40 of the nation’s top 50 urban areas, and, over the past five years ridership has fallen in 44 of those 50 urban areas. Data released by the Census Bureau in September 2019 indicate that the nation had 6.3 million more jobs in 2018 than 2015, yet the number of people who took transit to work declined by 146,000.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>These declines have taken place in spite of huge increases in spending on public transit. In 2018 alone, subsidies to transit grew by 7.4 percent, increasing from $50.5 billion to $54.3 billion. Yet much greater increases will be needed to keep transit moving in many urban areas. A&nbsp;recent Department of Transportation report indicated that the transit industry has a $100 billion maintenance backlog, mostly for its rail lines, and expenditures will have to increase by at least another $6 billion a&nbsp;year to fix this backlog within 20&nbsp;years.</p> <p>At the same time, the justifications for spending this much money subsidizing a&nbsp;declining industry are disappearing. Most low‐​income workers have given up on transit as a&nbsp;method of commuting and have purchased cars. Instead of helping low‐​income people, transit’s major growth market is people who earn more than $75,000 a&nbsp;year. In all but a&nbsp;handful of urban areas, transit uses more energy and emits more greenhouse gases per passenger mile than the average automobile. Far from relieving congestion, transit agencies are seeking to increase congestion in order to promote their businesses.</p> <p>For all these reasons, it is time to end subsidies to transit and consider privatizing it instead. Private operators can provide transit at a&nbsp;lower cost than government agencies and will offer service that is responsive to transit riders, not political whims. To encourage this, Congress should end the transit capital improvement program (New Starts) and begin to phase out other federal subsidies to transit.</p> </div> , <h2 class="heading"> Introduction </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Data recently released by the Federal Transit Administration (FTA) reveal that taxpayer subsidies to transit grew by more than $3.7 billion, or 7.4 percent, between 2017 and 2018. Despite this increase, ridership fell by 215 million transit trips, or 2.1 percent. The massive increase in spending didn’t even result in an increase in transit service, as measured in vehicle‐​revenue miles, which declined by 0.9 percent.</p> <p>Preliminary data from the FTA also indicate that 2019 will be the fifth straight year of declining transit ridership, with ridership falling 7.8 percent since 2014 and, in many urban areas, falling by 20 to 30 percent. After adjusting for inflation, annual taxpayer subsidies to transit grew by 15 percent between 2014 and 2018, yet that increase did not prevent the decline in transit ridership. Fares are covering an ever‐​diminishing share of the costs of transit: just 23 percent in 2018. Economists would suggest this indicates that transit users don’t place a&nbsp;high value on this service.</p> <p>This raises questions about whether it is worthwhile for federal, state, and local governments to continue to subsidize transit. Transit advocates argue that it relieves congestion, saves energy, reduces greenhouse gas emissions, and provides mobility for low‐​income people and others who don’t drive a&nbsp;car. In essence, they claim that cities and transit have a&nbsp;symbiotic relationship, and that urban taxpayers who don’t ride transit nevertheless should pay to subsidize transit systems so that those systems can provide them with important benefits, such as lower traffic congestion.</p> <p>A more realistic look at the data suggests that, outside of New York and perhaps a&nbsp;half‐​dozen other urban areas, these benefits are tiny to nonexistent, especially when compared with the costs. Transit is no longer more energy efficient than driving: the energy efficiency of automobiles is increasing, while the energy effi­ciency of transit is declining. Transit no longer serves large numbers of low‐​income people, as most of them have purchased auto­mobiles. Transit systems with declining ridership do little or nothing to relieve urban congestion; nearly empty buses often increase congestion.</p> <p>In short, the relationship between transit and most urban areas is not a&nbsp;symbiotic one but a&nbsp;parasitic one. Like any parasite, transit saps the vitality of the entities it is parasitizing, in this case by demanding huge subsidies from taxpayers. Like many parasites, some transit agencies even seek to reshape the regions they parasitize to make them more congenial for the health of transit even though such changes impose higher costs of living on the residents of those cities.</p> <p>Transit advocates have reached the point where they act as though the purpose of cities and their residents is to benefit transit. In fact, transit should benefit residents by enhancing their mobility and well‐​being. If transit is not doing that, and people no longer value it, then it should not be subsidized.</p> </div> , <h2 class="heading"> Ridership Is Falling </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The transit industry is in crisis, as ridership has fallen for the fifth straight year. Counting the year ending December 31, 2019, the FTA reports that 2019 ridership was 7.9 percent below 2014 ridership. While the 2019 numbers are still preliminary, the FTA’s final 2018 report indicates that transit carried 215 million fewer trips in 2018 than in 2017, a&nbsp;2.1 percent drop. Ridership in 2018 declined from 2017&nbsp;in 40 out of the nation’s 50 largest urban areas.<sup><a href="#_ednref1" id="_edn1">1</a></sup></p> <p>Bus ridership began falling first, with ridership decreasing every year since 2012. By 2019, bus ridership reached its lowest level of any year since 1939. But rail ridership has been falling since 2016, and in 2018 it fell by a&nbsp;larger percentage than bus ridership.<sup><a href="#_ednref2" id="_edn2">2</a></sup></p> <p>Ridership declines in many urban areas were much greater than the average rate of decline. Since 2013, Los Angeles has lost 23 percent of its riders, Miami 29 percent, St. Louis 24 percent, and Cleveland 33 percent. Ridership in Chicago, Philadelphia, and Washington—three of the nation’s biggest transit regions—all fell by 12 percent or more.<sup><a href="#_ednref3" id="_edn3">3</a></sup></p> <p>Transit is bucking the trend in only a&nbsp;handful of the nation’s major urban areas. Number one is Seattle, where ridership has grown by 8&nbsp;percent in the past five years. As will be described below, the primary reason for this is a&nbsp;massive increase in jobs located in downtown Seattle.</p> <p>More modest growth has been seen in Houston, Richmond, and Columbus, Ohio. Transit agencies in these cities revamped their bus systems, increasing bus frequencies on popular routes, reducing or eliminating service on unpopular routes, and relocating routes to replace historic hub‐​and‐​spoke systems, which made sense when most jobs were downtown, with grid systems, which make more sense now that most jobs are in the suburbs.<sup><a href="#_ednref4" id="_edn4">4</a></sup> While these examples are worth emulating, such overhauls will provide a&nbsp;one‐​time boost in ridership but will not solve the industry’s long‐​term problems. Houston was the first major city to do such a&nbsp;redesign, and ridership grew for several years but now appears to have leveled out.</p> </div> , <h2 class="heading"> Transit’s Growing Irrelevance </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Table 1&nbsp;shows that New York is the only urban area in the United States where transit plays a&nbsp;dominant role in people’s daily lives. Transit carries more than half of all employees to work in New York City and almost a&nbsp;third in the New York urban area (which includes northeastern New Jersey, most of Long Island, Westchester, and Danbury, Connecticut). The average resident of the region rides transit well over 200 times a&nbsp;year.</p> </div> , <figure class="figure overflow-hidden figure--default figure--no-caption responsive-embed-no-margin-wrapper"> <div class="figure__media"> </div> </figure> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>It is important to distinguish New York from other urban areas because New York is so different from any other American region: what happens in New York, at least from a&nbsp;transportation view, has almost no applicability anywhere else. With almost 28,000 people per square mile, New York has, by far, the highest population density of any major city in the country, and with more than 71,000 people per square mile, Manhattan is the highest‐​density part of a&nbsp;city.<sup><a href="#_ednref5" id="_edn5">5</a></sup> Lower Manhattan has two million jobs, which is 4&nbsp;times that of any other job concentration in the United States and more than 10 times the number of downtown jobs in all but six other cities.<sup><a href="#_ednref6" id="_edn6">6</a></sup></p> <p>The economic and population boom in New York since 1990 led to a&nbsp;68 percent increase in the region’s transit ridership between 1991 and 2014. This increase helped conceal problems with the transit industry in other parts of the country, which only became obvious after 2014, when even the New York ridership began to decline.</p> <p>Reflecting the long‐​term decline in the impor­tance of transit in most other parts of the country, New York’s share of the nation’s transit riders grew from 33.5 percent in 1991 to 44.5 percent in 2019. Outside of New York, 2019 ridership was 12 percent lower than in 2014.<sup><a href="#_ednref7" id="_edn7">7</a></sup></p> <p>San Francisco–Oakland is a&nbsp;distant second to New York, as transit carries about 18 percent of Bay Area employees to work and the average resident rides transit 126 times a&nbsp;year. Transit also plays an important, although hardly dominant, role in Chicago, Philadelphia, Washington, Boston, and Seattle: it carries 10–15 percent of commuters, represents 2–4 percent of overall motorized travel, and averages 60–90 annual trips per resident. Honolulu almost makes this grouping, as its transit carries the average resident on 78 trips a&nbsp;year; however, it only carries 8&nbsp;percent of commuters to work and many transit trips there are taken by tourists.</p> <p>In a&nbsp;few more urban areas, including Los Angeles, Minneapolis–St. Paul, Baltimore, Portland, and a&nbsp;few college towns, transit plays a&nbsp;measurable, although hardly important, role, carrying 5–7 percent of employees to work and the average resident on 30–50 trips per year. Everywhere else, transit is almost completely irrelevant.</p> </div> , <h2 class="heading"> Costs Are Rising </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Ridership isn’t falling because of declining resources. In fact, taxpayer subsidies to transit rose by more than $3.7 billion, or 7.4 percent, between 2017 and 2018.<sup><a href="#_ednref8" id="_edn8">8</a></sup> Total subsidies were $54.3 billion in 2018, or more than $5.50 for each trip and $1.01 per passenger mile. By comparison, subsidies to driving are about a&nbsp;penny per passenger mile.<sup><a href="#_ednref9" id="_edn9">9</a></sup> Of the increase, $1.9 billion went to increased operating costs, mostly for higher labor costs. Nearly $700 million went for benefits, while salaries and wages increased by $235 million.</p> <p>The other $1.8 billion in increased costs went to capital costs. The FTA counts capital costs in two categories: <em class="Text-Emphasis_Italic">existing systems</em> and <em class="Text-Emphasis_Italic">extended systems</em>. Capital spending on extended systems represents genuine capital improvements, while spending on existing systems represents replacement of worn‐​out infrastructure and vehicles. In 2018, spending on replace­ment grew by $1.1 billion, while spending on capital improvements grew by $0.5 billion.</p> <p>The increase in spending on capital replace­ment was needed because in recent decades transit agencies have been building new infrastructure without replacing the existing infrastructure as it wears out. The FTA calls this the <em class="Text-Emphasis_Italic">state‐​of‐​good‐​repair backlog</em>. A&nbsp;Department of Transportation report released in November 2019 estimates that this backlog was $106 billion (in 2019 dollars).<sup><a href="#_ednref10" id="_edn10">10</a></sup> The FTA says that, as of 2015, the transit industry hadn’t been spending enough on capital replacement to keep the backlog from growing further, much less enough to shrink it.</p> <p>It isn’t even clear that the transit industry is serious about eliminating the state‐​of‐​good‐​repair backlog. According to the FTA, the backlog for guideways (such as rails) is $23 billion.<sup><a href="#_ednref11" id="_edn11">11</a></sup> Yet in 2018, transit agencies <em class="Text-Emphasis_Italic">reduced</em> spending on guideway repairs by $131 million, while they increased spending on new guideways by $217 million.<sup><a href="#_ednref12" id="_edn12">12</a></sup> They did increase spending on station replacements, probably because stations are more visible to the public than guideways, and repairing or replacing them creates an appearance that the agencies are fixing problems. Yet worn‐​out tracks create a&nbsp;serious safety hazard, while worn‐​out stations merely look unattractive.</p> <p>Even if it were properly allocated, the 2018 increase in spending on capital replacement was so small that, at that rate, it would take more than 75&nbsp;years to eliminate the backlog. It will be necessary to increase spending on capital replacement by at least $6 billion more a&nbsp;year in order to eliminate the backlog in 20&nbsp;years.<sup><a href="#_ednref13" id="_edn13">13</a></sup> One way to do this would be to shift all the money now being spent on capital improvements to capital replacement—a measure that transit agencies are unwilling to consider. Unless that happens, the cost of sustaining transit systems will continue to rise even if ridership continues to fall.</p> </div> , <h2 class="heading"> Fares Rising, Service Declining </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Despite the increase in costs, service, as measured in vehicle‐​revenue miles, declined by 0.9 percent.<sup><a href="#_ednref14" id="_edn14">14</a></sup> Despite the decline in ridership, fare revenues grew by 0.3 percent in 2018, which, however, only covered 1&nbsp;percent of the increase in costs.</p> <p>The revenue increase was possible because the average fare per trip grew by 2.5 percent.<sup><a href="#_ednref15" id="_edn15">15</a></sup> This suggests that at least some transit agencies have entered a&nbsp;death spiral, meaning that they respond to declining ridership by increasing fares and cutting service, which further reduces ridership and forces more fare increases and service cuts.</p> <p>Transit agencies rely on fares to cover a&nbsp;third of their operating costs, yet a&nbsp;new movement has sprung up for free transit. As part of this movement, on November 29, 2019, transit riders were encouraged by various activists to hop turnstiles or otherwise ride transit without paying. Supposedly, this would strike a&nbsp;blow against capitalism even though transit is one of the most socialized industries in the United States (and almost everywhere else in the world).<sup><a href="#_ednref16" id="_edn16">16</a></sup></p> <p>In support of this movement, California State Sen. Scott Wiener argues that taxpayers should pay for a&nbsp;higher percentage of transit’s costs because “transit is a&nbsp;public good and should have taxpayer support.”<sup><a href="#_ednref17" id="_edn17">17</a></sup> In fact, transit is not a&nbsp;public good, at least in the economic sense of the term. A&nbsp;public good is one that is nonrivalrous (i.e., one person’s consumption of the good doesn’t reduce another’s consumption of it) and nonexcludable (i.e., no one can be physically denied use of the good). Government often provides public goods because, given those two characteristics, private providers would be hard‐​pressed to have enough paying customers.</p> <p>However, transit does not suffer from either of those characteristics. If I&nbsp;sit in a&nbsp;transit seat, you can’t sit there, too; thus it is rivalrous. Putting gates on the entrances to transit stations and doors on the entrances to buses and other transit vehicles makes transit excludable. Hence, private providers can provide transit services (and in some cases do so)—if there is sufficient demand.</p> <p>Wiener could mean something else when he uses the term “public good,” but it is not clear what. Perhaps he simply means that it is currently provided by public agencies. But just because something happens to be supported by tax subsidies today doesn’t mean it deserves those subsidies or that they should continue forever, especially when transit use is declining.</p> <p>Other people (including people responding to Wiener’s statement) claim that everyone benefits from transit, so therefore everyone should contribute to it through subsidies. I&nbsp;will argue that the supposed benefits of transit—reducing congestion, saving energy, reducing greenhouse gas emissions, helping low‐​income people, and promoting economic development—are either tiny or nonexistent. Besides, it could easily be argued that everything benefits everyone in some way or another, but that doesn’t mean everything should be subsidized by the government.</p> <p>More recently, Curbed—a staunchly pro‐​transit website produced by VoxMedia—argued that “free transit isn’t enough” and that “transportation needs to be a&nbsp;right” because people need “access to opportunity.”<sup><a href="#_ednref18" id="_edn18">18</a></sup> If that’s true, then the most effective government policy would be to give everyone in the country a&nbsp;free car. The most recent studies from the University of Minnesota Accessibility Observatory show that, in America’s major urban areas, a&nbsp;20‐​minute auto drive allows people to access twice as many jobs, and a&nbsp;30‐​minute auto drive allows them to access four times as many jobs, as a&nbsp;60‐​minute transit ride.<sup><a href="#_ednref19" id="_edn19">19</a></sup></p> <p>Even from the viewpoint of transit riders, there are several problems with free transit. First, if transit agencies are 100 percent depen­dent on tax dollars, they will be far more responsive to politicians than transit riders. This means they will run transit when and where it is highly visible, but not where transit riders may need it the most. This can be seen in Los Angeles, where the county’s transit agency, Metro, has been building highly visible light‐​rail lines even as they lose five bus riders for every rail rider they gain. According to a&nbsp;survey from the Transit Center, even low‐​income riders would prefer improvements in transit frequencies over reduc­tions in fares.<sup><a href="#_ednref20" id="_edn20">20</a></sup></p> <p>Second, making ridership free won’t necessarily significantly increase transit ridership. Tallinn, Estonia, a&nbsp;city of 430,000 people, reduced its transit fares to zero in 2013, yet ridership increased by only 1.2 percent in the first year, and most of that increase resulted from people choosing to take transit rather than walk, not as a&nbsp;replacement for driving.<sup><a href="#_ednref21" id="_edn21">21</a></sup> After five years, ridership grew by just 5&nbsp;percent, which might have happened anyway.</p> <p>Third, funding transit out of fares rather than taxes imposes a&nbsp;discipline on transit agencies to keep costs low and transit affordable. When capital costs are funded exclusively out of taxes, transit agencies go wild, spending billions of dollars on rail transit systems that are not any better (and in many respects worse) than buses. When operating costs are funded largely out of taxes, transit agencies allow costs such as labor to balloon.</p> <p>Fourth, making transit free turns transit vehicles into rolling homeless shelters. Austin, Texas, experimented with a&nbsp;free transit system in 1989 and 1990. While ridership increased, much of the increase was because the elimination of fares attracted homeless people and other “problem riders.” Physical assaults onboard buses tripled after fares were eliminated, and consequently costs increased because of the need to hire additional transit security officers. For their own safety and that of the riders, 75 percent of bus drivers signed a&nbsp;petition to restore bus fares and the experiment ended after little more than a&nbsp;year.<sup><a href="#_ednref22" id="_edn22">22</a></sup> Other American cities that experimented with free transit had similar issues.<sup><a href="#_ednref23" id="_edn23">23</a></sup></p> <p>A 2011 survey of transit fares found that nearly three dozen cities in the United States offer free transit. All of them were in small urban areas and most were either resort communities or university‐​dominated cities.<sup><a href="#_ednref24" id="_edn24">24</a></sup> Despite the free fares, however, transit does not play a&nbsp;dominant role in the transportation systems of any of those cities or towns.</p> <p>In December 2019, the Kansas City, Missouri, council voted to make all transit in the area free. Councilmembers reasoned that fares were already so low that they brought in little more than 10 percent of the bus system’s operating costs and the city promised to make up the $9 million shortfall.<sup><a href="#_ednref25" id="_edn25">25</a></sup> This was a&nbsp;remarkable decision, given the 30 percent decline in bus ridership the system has experienced since 2012. Final implementation of this plan is still under consideration by the Kansas City Area Transportation Authority.</p> </div> , <h2 class="heading"> Transit Speeds Declining </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Los Angeles Metro blames the loss of transit riders on slowing transit speeds resulting from traffic congestion.<sup><a href="#_ednref26" id="_edn26">26</a></sup> This leads transit advocates to argue that transit buses deserve their own lanes in order to boost speeds and increase ridership.<sup><a href="#_ednref27" id="_edn27">27</a></sup> This is ironic, considering that the increase in traffic congestion in Los Angeles and many other regions is largely due to policies that devote most regional transportation dollars to building rail transit lines rather than improving roadway capacities.</p> <p>In fact, transit supporters are openly applauding projects that will increase traffic congestion in the hope that it will encourage some auto users to ride transit instead. “It’s too easy to drive in this city,” says Los Angeles Metro head Philip Washington. To get people back on the bus, he wants to “actually make driving harder” by converting lanes on streets that are now open to all traffic into exclusive bus lanes.<sup><a href="#_ednref28" id="_edn28">28</a></sup> Considering that the Los Angeles urban area is already one of the most congested cities in the world, and that almost 90 percent of its commuters get to work by automobile, it isn’t clear that adding additional congestion will change anyone’s driving habits.</p> <p>Federal Transit Administration data offer some support for the claim that ridership is affected by transit speeds. Average transit speeds can be roughly calculated by dividing vehicle‐​revenue miles by vehicle‐​revenue hours. By this measure, transit vehicles nationwide averaged 15.08&nbsp;miles per hour in 2018, down from 15.16&nbsp;miles per hour in 2017 and 15.20&nbsp;miles per hour in 2016. Los Angeles bus speeds averaged 10.4&nbsp;miles per hour in 2018, down from 10.5&nbsp;in 2017 and 10.6&nbsp;in 2016.<sup><a href="#_ednref29" id="_edn29">29</a></sup></p> <p>Using ridership and speed data going back to 1994, the correlation between Los Angeles Metro bus speeds and ridership is a&nbsp;respectable 0.65. Using data going back to 1991 and counting all transit in the country, the correlation is even higher, at 0.78. Of course, correlation doesn’t prove causation, and there may be other factors at work affecting both speeds and ridership. Moreover, reduced speeds don’t explain recent declines in rail ridership, as trains are generally not subject to highway congestion.</p> <p>In any case, rather than make congestion worse for nonbus riders (the great majority of people in every American city not named New York) in order to make it better for buses, it would make more sense to fund programs that would relieve congestion for <em class="Text-Emphasis_Italic">everyone</em>. This is especially true because simply having dedicated bus lanes doesn’t make buses move much faster, as most of their time is spent picking up and dropping off passengers. The 2018 database reveals, for example, that supposedly “rapid buses,” many of which use dedicated lanes, go an average of 10.1&nbsp;miles per hour, compared with 12.0&nbsp;miles per hour for regular buses.<sup><a href="#_ednref30" id="_edn30">30</a></sup></p> </div> , <h2 class="heading"> Transit Commuting Declined in 2018 </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Transit’s decline is also revealed in the Census Bureau’s American Community Survey, which is based on surveys of about 3.5 million households per year. The 2018 survey revealed that the nation had 1.8 million more workers in 2018 than in 2017, yet the number who took transit to work fell by 23,000. Nearly all of the decline was in bus transit, which lost 58,000 commuters, while rail transit commuting grew by 22,500.<sup><a href="#_ednref31" id="_edn31">31</a></sup> Since 2015, the United States has gained 6.3 million workers, yet transit lost 146,000 commuters.<sup><a href="#_ednref32" id="_edn32">32</a></sup></p> <p>This doesn’t mean that cities are better off building more rail transit, as many regions with rail transit saw overall declines in transit commuting. Some of the biggest declines in transit commuting took place in Baltimore (–11,000 transit commuters), Denver (–7,300), and San Diego (–7,500). Transit commuting also declined in Atlanta, Boston, Houston, Minneapolis–St. Paul, Nashville, Orlando, Phoenix, Portland, Salt Lake City, San Francisco–Oakland, and St. Louis.<sup><a href="#_ednref33" id="_edn33">33</a></sup> All of these are urban areas that have opened up new rail transit lines in recent years.</p> <p>This downward trend is a&nbsp;reversal of previous years, when the American Community Survey reported that the number of people commuting by transit grew, even if it didn’t grow as fast as other methods of commuting. Yet, even before 2018, overall ridership was declining because of a&nbsp;reduction in nonwork trips. Now, both transit commuting and ridership are moving in the same direction: downward.</p> <p>The fall in transit commuting meant that the <em class="Text-Emphasis_Italic">share</em> of workers commuting by transit also fell, and in 2018 was just 4.9 percent. Transit is an important method of commuting in only a&nbsp;few urban areas. While almost a&nbsp;third of workers in the New York urban area commute by transit, it carries more than 10 percent of workers in just six other major urban areas: Boston, Chicago, Philadelphia, San Francisco–Oakland, Seattle, and Washington. (Concord, California, is also on the list, but that is really a&nbsp;part of the San Francisco–Oakland urban area.)<sup><a href="#_ednref34" id="_edn34">34</a></sup></p> <p>In most of the rest of the country, transit borders on insignificance. Transit carries less than 5&nbsp;percent of workers in Denver, Los Angeles, and San Jose; less than 4&nbsp;percent in Atlanta, Cleveland, and Salt Lake City; less than 3&nbsp;percent in Austin, Charlotte, Houston, San Diego, and St. Louis; and less than 2&nbsp;percent in Dallas–Ft. Worth, Detroit, Orlando, and Tampa–St. Petersburg. The number of people who work at home was greater than the number of people who take transit to work for the first time in 2017, and the difference grew in 2018, with 5.3 percent of workers working at home.</p> </div> , <h2 class="heading"> Transit Increasingly Used by High‐​Income People </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>One justification for transit subsidies is that they help low‐​income people, but low‐​income people are dramatically reducing their use of transit. One study of Los Angeles ridership blamed the decline in bus ridership mainly on the increase in auto ownership among low‐​income workers.<sup><a href="#_ednref35" id="_edn35">35</a></sup></p> <p>The American Community Survey confirms that transit use among low‐​income workers is declining, while transit’s major growth market is among high‐​income workers. The 2017 survey was the first to find that the median income of transit riders was higher than the national median of all workers.<sup><a href="#_ednref36" id="_edn36">36</a></sup> This was true in urban areas all over the country, including Boston, Chicago, San Francisco–Oakland, Seattle, and Washington.</p> <p>In 2018, the median income of transit commuters rose to be higher than people who commute by any other method, including driving, walking, and cycling. Only people who worked at home had higher median incomes.<sup><a href="#_ednref37" id="_edn37">37</a></sup> Again, this was true in many major urban areas.</p> <p>The survey further revealed that people in every income class below $25,000 a&nbsp;year are decreasing their use of transit for getting to work and were 6&nbsp;percent less likely to commute by transit in 2018 than they were in 2010. Meanwhile, people earning more than $65,000 a&nbsp;year were 7&nbsp;percent more likely to commute by transit in 2018 than in 2010. The fastest growth in transit commuting is among people who earn more than $75,000 a&nbsp;year. People earning above $75,000 are especially disproportionately likely to ride transit in Boston, Chicago, New York, and San Jose.<sup><a href="#_ednref38" id="_edn38">38</a></sup></p> <p>Transit subsidies are also supposed to help provide mobility for people who don’t have cars. But the American Community Survey reveals that most workers who don’t have cars don’t take transit to work. The 2018 survey found that only 40 percent of workers who live in households without access to cars take transit to work. In fact, in many urban areas, including Charlotte, Dallas–Ft. Worth, Denver, Houston, Indianapolis, Kansas City, Miami, Sacramento, Salt Lake City, San Antonio, and Tampa–St. Petersburg, more people who live in households without cars nevertheless drive alone to work (possibly in employer‐​supplied vehicles) than take transit to work.</p> <p>Studies show that low‐​income people are rational to prefer driving over transit. One study found that unskilled people were 80 percent more likely to have a&nbsp;job and earned $1,100 more a&nbsp;month if they had a&nbsp;car. In fact, the study found that owning a&nbsp;car was more helpful to getting and keeping a&nbsp;job than getting a&nbsp;high‐​school‐​equivalent diploma.<sup><a href="#_ednref39" id="_edn39">39</a></sup></p> <p>As previously noted, this is because people can reach far more jobs and other economic oppor­tunities within a&nbsp;20‐​minute drive than they would within a&nbsp;60‐​minute transit trip. This is why some nonprofit groups now specialize in making low‐​interest loans to low‐​income people to buy cars. The borrowers may have poor credit ratings, but once they own a&nbsp;car they often quickly find a&nbsp;job and pay off their loans.<sup><a href="#_ednref40" id="_edn40">40</a></sup></p> </div> , <h2 class="heading"> Transit Doesn’t Protect the Environment </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Another reason often used to justify subsidies to transit is that it saves energy and reduces greenhouse gas emissions. Data in the 2018 National Transit Database reveal that this is no longer true (and hasn’t been for several years).</p> <p>The database indicates how many gallons of diesel fuel, gasoline, and other fuels are used by transit agencies, along with the number of kilowatt‐​hours used by electrically powered transit. The conversion of gallons and kilowatt‐​hours to common units of energy is straightforward based on factors provided by the U.S. Department of Energy.<sup><a href="#_ednref41" id="_edn41">41</a></sup> In calculating electrical energy, I&nbsp;tripled the amount of energy used by transit. This is to account for the average generation and transmission losses measured by the Department of Energy, meaning that it takes three British thermal units (BTUs) of fossil fuels or other power sources to deliver one BTU to electric customers.<sup><a href="#_ednref42" id="_edn42">42</a></sup></p> <p>Based on these calculations, American transit systems used an average of slightly more than 3,400 BTUs to move one passenger one mile in 2018. This number has increased every year since 2014, mainly because the average number of people onboard transit vehicles (calculated by dividing passenger miles by vehicle‐​revenue miles) has declined by nearly 20 percent since 2014. This happened because the transit ridership declined but transit agencies didn’t propor­tionately reduce their transit service.</p> <p>By comparison, the most recent data available indicate that the average car uses only about 2,900 BTUs per passenger mile, while the average light truck (SUVs, pickups, full‐​sized vans) uses 3,400.<sup><a href="#_ednref43" id="_edn43">43</a></sup> Moreover, both of these numbers are declining. Transit began using more BTUs per passenger mile than the average car in 2008, and it is poised to use more than the average light truck by 2019. Personal driving in the United States is almost equally shared by cars and light trucks, so transit’s per passenger‐​mile energy consumption is greater than the average of all automobiles, which is about 3,200 BTUs per passenger mile.</p> <p>As shown in Table 2, the results are even worse for transit on an urban‐​area basis. Among the nation’s 100 largest urban areas, transit is more energy efficient than cars only in New York, San Francisco–Oakland, and Honolulu, and more energy efficient than light trucks in those regions, plus Atlanta and Portland. Counting all 488 urban areas, transit is more energy efficient than the average car in just 4&nbsp;of them, and more energy efficient than the average truck in just 12 of them. In many urban areas, including Dallas–Ft. Worth, Indianapolis, Kansas City, San Antonio, and Sacramento, transit uses twice as much energy per passenger mile than the average car.</p> </div> , <figure class="figure overflow-hidden figure--default figure--no-caption responsive-embed-no-margin-wrapper"> <div class="figure__media"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="1dd921bb-7607-4e87-8e76-0b89a52855a8" data-type="interactive" data-title="WEB: 20200309_MIRON_O&amp;#39;Toole_Transit The Urban Parasite_Table 2"></div>!function(e,i,n,s){var t="InfogramEmbeds",d=e.getElementsByTagName("script")[0];if(window[t]&amp;&amp;window[t].initialized)window[t].process&amp;&amp;window[t].process();else if(!e.getElementById(n)){var o=e.createElement("script");o.async=1,o.id=n,o.src="https://e.infogram.com/js/dist/embed-loader-min.js",d.parentNode.insertBefore(o,d)}}(document,0,"infogram-async"); </div> </div> </figure> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Calculations of greenhouse gas emissions per gallon of fuel are also straightforward, as based on standard conversion measures. Emissions per kilowatt‐​hour depend on the sources of electrical power. Power producers in different states use different combinations of fossil fuels and other fuels to generate electricity, resulting in different outputs of greenhouse gases per megawatt. To account for this, I&nbsp;applied U.S. Energy Information Agency estimates of the pounds of carbon dioxide per megawatt‐​hour for the electricity generated in each state to transit agencies based on the locations of their headquarters.<sup><a href="#_ednref44" id="_edn44">44</a></sup></p> <p>Based on these calculations, transit nationwide does slightly better than the average car in greenhouse gas emissions. In 2018, transit emitted an average of about 198&nbsp;grams of carbon dioxide per passenger mile, compared with 209 for the average car and 253 for the average light truck. However, transit numbers are heavily weighted by the New York urban area, where 44 percent of transit ridership takes place. According to the Department of Energy, electricity generated in New York State emits less than half the national average of carbon dioxide per kilowatt‐​hour, so New York transit’s greenhouse gas emissions are unusually low.</p> <p>On an urban‐​area basis, transit’s greenhouse gas emissions are almost as bad as its energy consumption. Transit emits more greenhouse gases per passenger mile than the average auto­mobile in 93 of the 100 largest urban areas and more than the average light truck in 90 of those urban areas. Transit is more greenhouse gas friendly than cars in just 8&nbsp;of the nation’s 488 urban areas, and more than light trucks in just 14.</p> <p>These numbers count only the operating costs of energy and greenhouse gas emissions and are not a&nbsp;complete life‐​cycle analysis. Oper­ationally, for example, rail transit is often more energy efficient and produces less greenhouse gasses than buses or automobiles. But a&nbsp;full life‐​cycle analysis would produce very different results. One such analysis found that the full life‐​cycle energy and greenhouse gas emissions from autos was 63 percent greater than the operational costs, but for rail transit it was 155 percent greater.<sup><a href="#_ednref45" id="_edn45">45</a></sup></p> <p>Construction of both rail and roads uses large amounts of energy and generates large amounts of greenhouse gases. But over their lifespans, urban highways carry far more passenger miles than typical rail transit lines, so the energy cost per passenger mile of rail transit ends up being higher.</p> <p>For example, the environmental impact statement for the Interstate light‐​rail line in Portland estimated that the energy cost of construction would be 170 times the projected annual energy savings from operation.<sup><a href="#_ednref46" id="_edn46">46</a></sup> Since ridership on that line is well short of expectations, the actual payback period will be even longer.<sup><a href="#_ednref47" id="_edn47">47</a></sup> Even if the payback period were much shorter, since rail lines need reconstruction every 30 or so years, which requires nearly as much energy as the original construction, the annual savings will never repay the cost of construction and reconstruction.</p> </div> , <h2 class="heading"> Transit Spending May Slow Urban Growth </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Transit advocates often claim that transit stimulates urban development. But comparing transit capital spending with urban‐​area growth rates reveals that such stimulants are, at best, a&nbsp;zero‐​sum game. At most, all transit does is influence the <em>location</em> of new development, not the <em>amount</em>. Moreover, recent data indicate that urban areas that spend the most on transit improvements grow slower than ones that spend less.</p> <p>Transit supporters often claim that the opening of new rail lines is frequently followed by billions of dollars of urban redevelopment. What they neglect to mention is that the redevelopment is often supported by subsidies of its own, such as tax‐​increment financing, sales of properties for less than market value, and direct grants to developers.</p> <p>For example, the city of Portland has oriented all of its urban‐​renewal districts around its rail transit lines and, to subsidize development along those rail lines, it has issued nearly $1.8 billion in bonds to be repaid out of tax‐​increment revenues.<sup><a href="#_ednref48" id="_edn48">48</a></sup> That’s far from the only subsidy offered to developers: Portland’s regional planning agency, Metro, recently sold land appraised at $6.4 million for just $1,000 to a&nbsp;developer because the land was next to a&nbsp;light‐​rail station.<sup><a href="#_ednref49" id="_edn49">49</a></sup></p> <p>Valley Metro, Phoenix’s transit agency, claims that its light‐​rail line has stimulated $11 billion worth of new development. But a&nbsp;careful review of the list of developments supposedly stimulated by the rail line revealed that at least a&nbsp;third received government subsidies and most of the rest were government buildings. The light rail connects downtown Phoenix with the University of Arizona, and Valley Metro claimed that every new university building and every new downtown government office building were the result of light rail. The supposedly transit‐​oriented developments included 70,000 parking spaces, an automobile dealership, and several gas stations.<sup><a href="#_ednref50" id="_edn50">50</a></sup></p> <p>Cities often follow rail construction with rezoning that favors redevelopment. In fact, one of the factors for rating federal transit capital improvement grants is the support that cities will provide for so‐​called transit‐​oriented developments.<sup><a href="#_ednref51" id="_edn51">51</a></sup> The FTA and other agencies have written entire books on how cities can subsidize and incentivize transit‐​supportive development.<sup><a href="#_ednref52" id="_edn52">52</a></sup></p> <p>Transit advocates argue that the taxes generated by new development will help pay for the rail lines. At best, however, rail lines influence the location of development within a&nbsp;region but not the region’s overall growth rate, so no new taxes are generated.</p> <p>To assess the effects of transit capital improvements on urban growth, I&nbsp;compared per capita capital expenditures in the 1990s (starting in 1992, the earliest year for which data are available) with population growth from 2000 to 2009, and per capita capital expenditures of that decade with population growth in the 2010s (through 2018). I&nbsp;made this comparison for the nation’s 50 largest urban areas. Since some transit agencies serve multiple urban areas, I&nbsp;combined census data for the Boulder, Denver, and Longmont urban areas of Colorado and the Ogden, Provo, and Salt Lake City urban areas of Utah. Per capita capital expenditures in these urban areas ranged from under $200 per year in Indianapolis, Kansas City, and Tampa–St. Petersburg to well over $2,000 a&nbsp;year in New York, San Francisco‐​Oakland, and Seattle.</p> <p>The correlations between capital improvements in one decade with population growth in the next were weak to nonexistent. A&nbsp;correlation of 1&nbsp;or –1 is perfect; a&nbsp;correlation of less than 0.15 is no better than random.<sup><a href="#_ednref53" id="_edn53">53</a></sup> The strongest correlation was between capital spending in the 1990s with population growth from 2000 to 2009, at –0.31, meaning that more spending correlated with <em>slower</em> growth. The correlation between capital spending from 2000 to 2009 with population growth in the 2010s was 0.13. The correlation between spending in the 1990s with population growth in the 2010s was zero. Thus, spending more on transit doesn’t boost growth and may even reduce it.</p> </div> , <h2 class="heading"> Why Is Ridership Declining? </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Many reasons have been offered to explain the steady decline in transit ridership over the past several years. These include transit’s dilapidated infrastructure, cuts in transit service, slower transit speeds, growing car ownership, and the growth of ride‐​hailing services. All of these probably contribute in some ways, but one reason that has rarely been mentioned is probably more important than most of the others: the decline in the importance of downtown job centers.</p> <h3>Dilapidated infrastructure</h3> <p>As previously noted, the FTA estimates that the transit industry has about a $100 billion state‐​of‐​good‐​repair backlog, and most of this is in the half‐​dozen cities with rail transit systems that are more than 40&nbsp;years old: Boston, Chicago, New York, Philadelphia, San Francisco–Oakland, and Washington. These systems suffer frequent accidents and delays, and this unreliability has discouraged transit ridership. While this helps explain ridership declines in those regions, it doesn’t explain why ridership is declining in cities with newer rail systems or bus‐​only systems.</p> </div> , <h3 class="heading"> Transit service </h3> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Some writers have argued that transit ridership is dependent on the level of service: more service means more ridership, so declines in ridership must be due to declining service.<sup><a href="#_ednref54" id="_edn54">54</a></sup> This may have been true at one time, but the relationship between service and ridership appears to have broken down. Between 2014 and 2019, Washington increased service (measured in vehicle‐​revenue miles) by 10 percent but lost 12 percent of its riders; Atlanta increased service by 13 percent but lost 12 percent of its riders; Phoenix increased service by 22 percent but lost 9&nbsp;percent of its riders. In fact, between 2014 and 2019, 30 out of the top 50 urban areas increased service but lost transit riders.<sup><a href="#_ednref55" id="_edn55">55</a></sup> Not only is decreasing service not a&nbsp;primary reason for ridership declines, but spending money to increase service may simply be throwing good money after bad.</p> </div> , <h3 class="heading"> Slow speeds </h3> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The efforts by some transit agencies to blame declining transit use on slower speeds has already been mentioned. While this may be a&nbsp;problem in some areas, nationally it doesn’t explain the decline in ridership. Between 2017 and 2018, the average speeds of conventional bus service and light rail both increased, yet both lost riders.</p> </div> , <h3 class="heading"> Growing auto ownership </h3> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>As previously noted, a&nbsp;study in Southern California concluded that increasing auto ownership among low‐​income workers was a&nbsp;primary factor—if not the main reason—for declining ridership. Nationwide, the percentage of workers who live in households with no cars declined from 4.5 percent in 2014 to 4.3 percent in 2018. While that may seem small, when less than 5&nbsp;percent of urban travel is by transit and 90 percent is by auto, a&nbsp;slight increase in auto ownership can translate into a&nbsp;relatively large decline in transit ridership. The significant decline in transit commuting among low‐​income people reported by the American Community Survey suggests that much of the increase in auto ownership is among such people. While this should be seen as a&nbsp;positive benefit of increasing wealth, transit agencies see it as an incursion into what they consider their captive customers.</p> </div> , <h3 class="heading"> Ride hailing </h3> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Ride hailing, using such services as Uber and Lyft, began to grow in 2014, about the same time that transit ridership began to decline. Most ride hailing isn’t work‐​related, but ride hailing can explain why transit commuting is declining while commuting by taxi (which is where ride hailing would appear in the American Community Survey) grew much more in 2018 than transit commuting declined. However, this doesn’t explain why a&nbsp;few urban areas—most notably Seattle, but also Columbus, Oklahoma City, and a&nbsp;few others—seem to be exempt from the decline in transit ridership taking place almost everywhere else. The other event that happened after 2014 was a&nbsp;large drop in gasoline prices—prices in some areas fell by nearly 50 percent—which suggests that increased auto ownership and auto driving may be more responsible for transit decline than ride hailing.<sup><a href="#_ednref56" id="_edn56">56</a></sup></p> </div> , <h3 class="heading"> Downtown jobs </h3> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Many people think that transit ridership depends on population densities, but the most important factor is the number of downtown jobs. This is because most transit systems primarily have hub‐​and‐​spoke routes centered on downtown, so most urban residents can get to a&nbsp;downtown job in one transit ride, while getting to a&nbsp;job somewhere else usually requires two or more transit rides.</p> <p>Demographer Wendell Cox used 2010 census data to calculate the number of jobs in each of the downtowns in 52 major urban areas, using consistent criteria to define downtowns based on job densities in each census tract.<sup><a href="#_ednref57" id="_edn57">57</a></sup> Using his numbers, the correlation between 2010 per capita transit ridership and downtown jobs in those 52 urban areas is 0.87, a&nbsp;strong positive correlation. For comparison, the correlation between per capita transit ridership and population densities in those same urban areas is 0.54, which is fairly high but nowhere near as high as that of downtown jobs.<sup><a href="#_ednref58" id="_edn58">58</a></sup></p> <p>Cox hasn’t done a&nbsp;more recent analysis, but he did a&nbsp;similar calculation using 2000 census data, which can give us some sense of trends over time. His data indicate that the number of downtown jobs fell between 2000 and 2010&nbsp;in 29 of the 47 urban areas that were on both lists. During that time, New York gained nearly a&nbsp;quarter of a&nbsp;million downtown jobs, while the other 46 downtowns collectively lost 100,000 jobs.<sup><a href="#_ednref59" id="_edn59">59</a></sup></p> <p>Even in downtown urban areas where the number of jobs grew, they didn’t grow as fast as in the rest of those areas. In every urban area that is on both of Cox’s lists, the downtowns’ share of jobs declined between 2000 and 2010.<sup><a href="#_ednref60" id="_edn60">60</a></sup> This is a&nbsp;continuation of trends since 1920, after which the trend toward land‐​intensive moving assembly lines led downtown factories to move to suburban areas where land was less expensive. Not coincidentally, per capita transit usage peaked in 1920 at 287 trips per urban resident (compared with 37 trips today). Downtowns’ declining importance as regional job centers helps explain why transit is declining in so many areas.</p> <p>As of 2010, only six urban areas—Boston, Chicago, New York, Philadelphia, San Francisco, and Washington—had more than 240,000 downtown jobs, and those six were also the only urban areas where transit carried more than 10 percent of commuters to work. Seattle stands out as the urban area whose transit ridership is growing the fastest when most others are declining, and that is because Seattle’s downtown job numbers have been rapidly growing and recently reached the 240,000 threshold.</p> <p>According to the Downtown Seattle Association, the number of jobs in downtown Seattle grew from 219,325&nbsp;in 2010 to 313,589&nbsp;in 2018, a&nbsp;43 percent increase. Along the way, the number of downtown jobs first exceeded 240,000&nbsp;in 2013, and not coincidentally 2013 was the first year in which the American Community Survey reported that more than 10 percent of Seattle‐​area workers commuted by transit.<sup><a href="#_ednref61" id="_edn61">61</a></sup> Downtown Seattle now has 48 percent of all the jobs in the city of Seattle, a&nbsp;higher percentage than any other major city in America—even Lower Manhattan has less than 45 percent of the jobs in New York City.<sup><a href="#_ednref62" id="_edn62">62</a></sup></p> <p>While all of these factors may have contributed to declining transit ridership in at least some urban areas, it seems likely that reductions in the number of downtown jobs and the increase of ride hailing services are the two most important causes of declining transit ridership. Both of these issues are largely beyond the control of transit agencies.</p> </div> , <h2 class="heading"> Policy responses </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Some cities are taxing ride‐​hailing trips, based on the questionable claim that ride hailing is increasing traffic congestion. Uber and Lyft users in south Manhattan pay more per trip in taxes to support the subway system than subway riders themselves: starting in 2018, the tax on ride hailing is $2.75 per ride, compared with average 2018 subway fares of $1.33 per trip.<sup><a href="#_ednref63" id="_edn63">63</a></sup> (Average fares are generally lower than published fares due to monthly passes and discounts for seniors, students, and others.) Starting in 2020, ride hailers in Chicago will pay a $1.25 tax and for those in downtown Chicago the tax will be $3; the average fare collected by the Chicago Transit Authority buses and trains was $1.27&nbsp;in 2018.<sup><a href="#_ednref64" id="_edn64">64</a></sup></p> <p>In fact, ride hailing is not a&nbsp;significant contributor to congestion. The claim that it does contribute to congestion is based on 2018 report by transit advocate Bruce Schaller, who claimed that ride hailing was increasing urban congestion by 180 percent, but the arithmetic used in his analysis is highly questionable. Schaller estimated that, for every personal auto trip ride hailing took off the road, it added 2.8 ride‐​hailing trips, thus the 180 percent increase.<sup><a href="#_ednref65" id="_edn65">65</a></sup> For this to be correct, all personal travel would have to be replaced by ride hailing.</p> <p>Schaller also estimated that ride hailing in nine major urban areas (Boston, Chicago, Los Angeles, Miami, New York, Philadelphia, San Francisco–Oakland, Seattle, and Washington) grew by 5.7 billion vehicle miles in 2017.<sup><a href="#_ednref66" id="_edn66">66</a></sup> But according to the Federal Highway Administration, people drove 1.4 trillion vehicle miles in those urban areas in 2016, and the number declined slightly in 2017, so 5.7 billion isn’t much of a&nbsp;contributor to congestion.<sup><a href="#_ednref67" id="_edn67">67</a></sup> This is especially true as surveys indicate that most ride hailing takes place during non‐​rush‐​hour periods.<sup><a href="#_ednref68" id="_edn68">68</a></sup></p> <p>The claim that ride hailing increases congestion is merely an excuse to tax it and to punish a&nbsp;competitor to transit. If transit were private, cities would be much less defensive of it.</p> <p>Cities and transit agencies also have few tools to increase downtown jobs. Besides the seven previously noted urban areas, no other city is close to having 240,000 downtown jobs. The closest, Atlanta, had less than 175,000 jobs in 2010.</p> <p>Seattle benefitted from Amazon’s and Microsoft’s decisions to locate tens of thousands of new jobs in downtown Seattle rather than the suburbs, where the companies were founded and headquartered. This decision may have been influenced by Seattle’s urban‐​growth boundary, which has made land in the suburbs much more expensive than it would be without the boundary, thus making the downtown relatively more attractive.</p> <p>While Seattle’s growth‐​management policies may have contributed to the increase in transit ridership, they have come with severe costs. When measured by hours lost in traffic congestion, Seattle—the nation’s 15th‐​largest urban area—is now the third‐​most congested urban area in the United States.<sup><a href="#_ednref69" id="_edn69">69</a></sup> Seattle also went from being one of the most affordable housing markets in the country in 1985, when King County first drew an urban‐​growth boundary, to one of the least‐​affordable housing markets today.<sup><a href="#_ednref70" id="_edn70">70</a></sup></p> <p>Cities and transit agencies are also actively seeking to increase urban densities, especially along transit corridors, by subsidizing high‐​density development along those corridors and, in many cases, deliberately creating artificial shortages of low‐​density housing. But surveys show that most people living in such developments drive almost as much as people living elsewhere in the same urban areas, so this strategy has been a&nbsp;failure. Beyond that, this strategy violates people’s freedom to choose the kind of housing they prefer.</p> <p>As previously noted, another transit agency tactic is to persuade cities to convert general purpose traffic lanes to dedicated bus lanes. This simultaneously speeds buses and penalizes auto drivers. Advocates claim that every bus deserves its own lane.<sup><a href="#_ednref71" id="_edn71">71</a></sup> This, however, is based on the assumption that buses are somehow more environmentally sound that autos, when in fact buses use far more energy and emit far more greenhouse gases per passenger mile than autos. The reality is that, even with congestion, automobiles are faster and more convenient than transit, so policies that increase congestion just waste people’s time without significantly changing travel habits.</p> </div> , <h2 class="heading"> A&nbsp;Realistic Look at Transit’s Future </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The recent declines in transit ridership are a&nbsp;continuation of trends that began before 1920: the most important of these are the increasing levels of auto ownership and the migration of jobs and people to the suburbs. Even ride hailing is just a&nbsp;21st‐​century version of the jitneys that threatened streetcar companies in the mid‐​1910s.<sup><a href="#_ednref72" id="_edn72">72</a></sup> Seattle’s experience notwithstanding, all of these trends appear to be irreversible in the long run.</p> <p>The main reasons that have been given for subsidizing transit—providing transit to lower‐​income people, reducing environmental costs, and relieving congestion—are obsolete:</p> <ul> <li>Large numbers of low‐​income people no longer rely on transit, and, in fact, increasing auto ownership has helped lift many people out of poverty because automobiles provide them with access to far more jobs and other economic opportunities than transit does. </li> <li>In all but a&nbsp;handful of urban areas, transit consumes more resources and does more harm to the environment than driving. </li> <li>Outside of New York and perhaps a&nbsp;half‐​dozen other urban areas, transit does little to relieve traffic congestion and may even increase it because dedicated transit lanes and railcars that frequently delay vehicles at grade crossings do more to increase congestion than to reduce it. </li> <li>Even if transit could achieve any of its high‐​minded goals, throwing money at transit has failed to get people out of their cars. The number of transit trips taken by the average urban resident has declined from 62&nbsp;in 1964, the year Congress started extending federal subsidies to transit, to 36 trips in 2019.<sup><a href="#_ednref73" id="_edn73">73</a></sup></li> </ul> <p>Federal subsidies to transit are especially questionable because most transit agencies do not engage in interstate commerce. When Congress passed a&nbsp;law in 1958 making it easier for railroads to cancel intercity passenger trains that cross state lines, several railroads proposed to also cancel commuter trains. This led Congress to pass the Urban Mass Transit Act of 1964, which offered federal funds to help states keep such trains operating. At the time, the justification for this was that some of the commuter trains serving Boston, Chicago, New York, and Philadelphia crossed state lines. But Congress extended its funding offer to any state or local government that operated transit services. In 1964, most transit was private and the industry as a&nbsp;whole was profitable, but within a&nbsp;decade it was almost entirely taken over by state or local governments and had become highly <em>un</em>profitable. Today, the vast majority of federal dollars allocated for transit go to transit agencies that do not cross state lines.</p> <p>Since 1965, federal, state, and local governments have spent close to $900 billion (in 2018 dollars) subsidizing transit operations, more than $100 billion of which has come from the federal government. Early records of capital spending are incomplete, but since 1988 the federal government has provided more than $350 billion (in 2018 dollars) in capital subsidies to transit, out of $450 billion spent by the transit industry. Total subsidies have therefore been well over $1.4 trillion, of which at least a&nbsp;third has come from the federal government.<sup><a href="#_ednref74" id="_edn74">74</a></sup></p> <p>Transit will clearly remain important in the New York metropolitan area. The question is: How will the region pay for it? The Metropolitan Transportation Authority’s (MTA) long‐​term debt is more than $43 billion.<sup><a href="#_ednref75" id="_edn75">75</a></sup> Its maintenance backlog is $60 billion.<sup><a href="#_ednref76" id="_edn76">76</a></sup> Its unfunded health care liability is more than $20 billion.<sup><a href="#_ednref77" id="_edn77">77</a></sup> Despite not having funds to close these gaps, the agency is planning to spend $13 billion extending the Second Avenue Subway another six miles at a&nbsp;cost of $2.2 billion per mile. As then MTA vice president Dave Henley admitted in 2009, “There will never be ‘enough money’” to put the system in a&nbsp;state of good repair.<sup><a href="#_ednref78" id="_edn78">78</a></sup></p> <p>Beyond New York City, New Jersey Transit needs $29 billion for the Gateway project that would rebuild century‐​old tunnels under the Hudson River and bridges near those tunnels. New Jersey’s congressional delegation would like the federal government to pay half of this cost and to loan the states the other half, with no revenue source in sight to repay the loan—a plan that is opposed by the Trump administration.<sup><a href="#_ednref79" id="_edn79">79</a></sup> Even if the federal government ultimately provides some funding, it doesn’t seem likely that enough money will be ever found to completely restore the region’s transit systems.</p> <p>New York City’s densities cannot be supported without transit, particularly the subway system. Buses running on the city’s surface streets simply cannot move as many people as 10‐​car subway trains that run up to 30 times per hour. Unless New York finds a&nbsp;way to fund its transit, it may have to accept lower population and job densities and a&nbsp;wholesale movement of residences and offices to the suburbs.</p> <p>Outside of New York, buses can replace most rail lines in the country and actually move more people per hour in the same amount of real estate. This is because, for safety reasons, rail lines can typically move no more than 20 railcars or trains per hour in mixed traffic (such as streetcars or light rail) and no more than 30 per hour in dedicated rights of way (such as subways), while a&nbsp;single bus lane can easily move hundreds of buses per hour. For example, Istanbul has an exclusive busway that moves more than 250 buses per hour, despite each bus stopping at 33 stations en route. While each bus has a&nbsp;lower capacity than a&nbsp;train, the increased number of vehicles per hour means the Istanbul Metrobus has an estimated capacity of 30,000 people an hour—more than almost any rail line in the United States outside of New York City.<sup><a href="#_ednref80" id="_edn80">80</a></sup></p> <p>Transit agencies should do several things in response to ridership declines. First, they should stop planning and building new rail transit lines. Buses can move more people per hour than most trains, at a&nbsp;far lower cost, and no city outside of New York has the job concentrations that would require a&nbsp;subway system.<sup><a href="#_ednref81" id="_edn81">81</a></sup></p> <p>Second, as existing rail lines wear out, transit agencies should replace them with buses. This would save billions of dollars in capital replacement costs.</p> <p>To save money operating those buses, transit agencies could contract out all bus operations to private companies. Several companies, including First Transit and Veolia, compete for such business, giving them incentives to keep their costs low. By Colorado state law, Denver’s Regional Transit District (RTD) must contract out half of all of its bus services. The contractors are unionized and pay taxes that RTD is exempted from. The contracted half of the service costs taxpayers just 52 percent as much, per vehicle revenue mile, as the half that is operated by RTD.<sup><a href="#_ednref82" id="_edn82">82</a></sup> Contracting out transit services in the seven urban areas where transit carries more than 10 percent of commuters could save taxpayers close to $4 billion a&nbsp;year.</p> <p>An even better solution would be to privatize transit. This would result in the concentration of transit services in dense cities and near job centers, where people use it the most, but the reduction or elimination of services in low‐​density suburbs, where relatively few people rely on transit.</p> <p>A number of private companies, including Bridj and Chariot, have attempted to enter U.S. transit markets but were unable to compete against heavily subsidized public transit systems.<sup><a href="#_ednref83" id="_edn83">83</a></sup> In San Francisco, San Jose, and Seattle, major employers such as Apple, Google, and Microsoft provide private transit for their employees, which indicates that public transit systems in those regions aren’t working very well.<sup><a href="#_ednref84" id="_edn84">84</a></sup> Privatization would lead to transit going where people need it, not where politicians want it.</p> <p>Congress should start by abolishing the transit capital improvement grant (New Starts) program, which encourages transit agencies to waste money building expensive, and generally obsolete, infrastructure that they won’t be able to afford to maintain. The one strategy that transit agencies have successfully used to increase ridership is to redesign their bus systems, something that can’t be easily done with fixed‐​rail systems. This limitation alone is a&nbsp;strong argument against new rail construction.</p> <p>Next, Congress should phase out other federal subsidies to transit and end federal subsidies to highways. The Highway Trust Fund was originally created to collect funds from highway users and spend those funds on highways. As such, it was at least a&nbsp;weakly effective mimic of markets. Since 1982, however, Congress has increasingly diverted a&nbsp;share of the funds to transit and supplemented both highway and transit funds with general funds. In the long run, there is probably no need for the federal government to be involved with highways or transit. In the short run, Congress can at least ensure that funds collected by the federal government from highway users—and no other funds—go to highways.</p> <p>A century ago, transit was a&nbsp;vital part of American urban economies. At least outside of New York City, that is no longer true. It’s time to stop wasting $54 billion a&nbsp;year pretending that it is.</p> </div> , <h2 class="heading"> Citation </h2> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>O’Toole, Randal. “Transit: The Urban Parasite.” Policy Analysis No. 889, Cato Institute, Washington, DC, April 20, 2020. <a href="https://www.cato.org/publications/policy-analysis/transit-urban-parasite">https://​doi​.org/​1​0​.​3​6​0​0​9​/​P​A.889</a>.</p> </div> Mon, 20 Apr 2020 03:00:00 -0400 Randal O'Toole https://www.cato.org/publications/policy-analysis/transit-urban-parasite Why Are Transit Systems Still Running? https://www.cato.org/blog/why-are-transit-systems-still-running Randal O&#039;Toole <p>Sit‐​down restaurants and bars have been shut down. Public officials are discouraging or even forbidding people from doing “unnecessary travel,” even if&nbsp;it is to visit a&nbsp;second home where they might be able to socially distance themselves better than in their first, more urban home. All sorts of other rules are being passed, all supposedly for our own good.</p> <p>So why are urban transit systems still running? A&nbsp;<a href="https://cris.vtt.fi/en/publications/pandhub-prevention-and-management-of-of-high-threat-pathogen-inci">2018 study</a> found that “mass transportation systems offer an effective way of accelerating the spread of infectious diseases.” A&nbsp;<a href="https://bmcinfectdis.biomedcentral.com/articles/10.1186/1471-2334-11-16">2011 study</a> found that people who use mass transit were nearly six times more likely to have acute respiratory infections than those who don’t. Not surprisingly, a&nbsp;<a href="https://www.dropbox.com/s/h9i8obshl6qdnde/4-13-20%20MIT%20Study,The%20Subways%20Seeded%20the%20Massive%20Coronavirus%20Epidemic%20in%20New%20York%20City,%20DOE,%20HarrisJE_WP2_COVID19_NYC_13-Apr-202.pdf?dl=0">study</a> published a&nbsp;few days ago found that New York City subways were “a major disseminator — if not the principal transmission vehicle — of coronavirus infection.”</p> <p>Transit agencies say they are helping “essential workers” go about their business. But if they are so essential, isn’t it important to find them a&nbsp;safe way of getting to work? If we truly cared about people’s safety, then transit services should have shut down at the same time we closed other non‐​essential businesses and asked people to stay at home.</p> <p>I don’t think it is a&nbsp;coincidence that 44 percent of all transit rides in 2019 took place in the New York‐​northern New Jersey urban area and, at last count, 45 percent of all COVID-19 fatalities were <a href="https://infection2020.com/">recorded</a> in this same area. When I&nbsp;pointed this out to Hawaiian transportation engineer Panos Prevedouros, he did a&nbsp;<a href="https://www.civilbeat.org/2020/04/us-reliance-on-mass-transit-explains-a-big-part-of-the-epidemic/">more detailed analysis</a> showing a&nbsp;strong state‐​by‐​state correlation between transit and coronavirus.</p> <p>Unfortunately, the transit lobby has successfully turned government‐​subsidized transit into a&nbsp;sacred cow. Transit is supposedly greener than driving when in fact it’s an <a href="http://ti.org/pdfs/APB33.pdf">energy hog</a>. Transit is supposedly needed to help poor people get to work&nbsp;when in fact the people most likely to commute by transit are those earning <a href="https://ti.org/antiplanner/?p=16493">more than $75,000 a&nbsp;year</a>.</p> <p>When the pandemic took away most of transit’s customers, instead of shutting down, which would have been the responsible thing to do, transit agencies demanded that Congress give them <a href="https://www.metro-magazine.com/government-issues/news/737890/coalition-of-transit-agencies-demand-at-least-25b-in-federal-aid?utm_source=email&amp;utm_medium=enewsletter&amp;utm_campaign=20200324-NL-MET-Express-BOBCD200318002&amp;omdt=NL-MET-Express&amp;omid=1108537216&amp;oly_enc_id=4680G4294556D0Y">$25 billion</a>, tripling federal support to transit this year. Thanks to transit’s sacred cow status, Congress <a href="https://www.transit.dot.gov/about/news/us-transportation-secretary-elaine-l-chao-announces-25-billion-help-nations-public">agreed</a> without any serious debate.</p> <p>Effectively, Congress rewarded the agencies for spreading disease. It would have been better to use that money to help transit‐​dependent essential workers buy a&nbsp;car so they could have a&nbsp;safe way of getting to work.</p> <p>Now transit agencies are beginning to fret that they’ll need <a href="https://nypost.com/2020/04/13/without-more-cash-the-mta-may-collapse-when-nyc-tries-to-reopen/">even more money</a> soon. Instead, it’s time to shut down transit systems for the duration, and start a&nbsp;debate about what kind of transportation we will need with the pandemic is over.</p> Fri, 17 Apr 2020 09:53:00 -0400 Randal O'Toole https://www.cato.org/blog/why-are-transit-systems-still-running