Sunday, October 10, 2010

Mystery of the Disappearing Streetcar

Actually, not a mystery at all, as our good friends at "Market Urbanism" show. An interesting story.

9 comments:

J Scheppers said...

Interesting Article, but I think it still focuses on how market distortions were the main causal force in the transportation mode survival. I think the inherent efficiency of personal cars and trucks that drove the creative destruction.

In looking at the market distortions today we should understand that financing of your home now covers the huge majority of the initial transportation infrastructue costs. While Sam Staley of Reason Foundation notes that 55% of roadway infrastructure cost are covered directly by user fees, we should also acknowledge that the roadway infrasture cost is only 10% of the transportation cost with the other 90% covered by private sources. I would reason the subsidy from non-users should be closer to 2 to 5%.

I would also add the following lists of freeriders or less than 100% coverage of costs on the Roadway transportation network:

1. Storm drainage -roads provide a key conduit to remove rain from private properties at no cost.

2. Potable water - water purveyors while paying for the piping do not pay for easements in public roads.

3. Sewage removal, Electrical Power, Telephone, Cable TV/Internet, Natural Gas - See justification in Potable water.

4. Bicycle and Pedestrian Facilities. These have no user fees that I am aware of being collected, yet are provided exclusive lanes and walkways.

5. Transit pathway - From highway ROW reserved for multimodal purposes that are finance from the highway trust fund and then used for commuter rail, high speed rail, transit lines, HOV/Bus lanes. In most cases it is the roads that most transit buses run on. The road/sidewalk provides the key first and last link between the bus stop and the destination.

It is also the road that takes the freight to and from the ship, barge, train allowing those modes to take advantage of their competitive advantage.

Let us not forget examples such as the infrastructure that is modified to accomadate other modes such as extra hieght on Habor bridges to allow shipping.

If your are looking for subsidies, road patrons love them and compete for them vigorously with billions of dollars of examples. But if you are looking for truly multimodal the road and it's right-of-way are center stage.

Stephen Smith said...

Hi,

I'm Stephen Smith, the author of the article, and I wanted to thank Mike for linking to it and respond to one part of J Scheppers' comment:

I'm familiar with Sam Staley's work, as well as the work of other pro-sprawl/pro-car pundits at Cato and Reason (Foundation, not magazine) like Wendell Cox and Randal O'Toole, and that 55% figure you cited is woefully overstated. For one, their work deals only with federal and state highway funds. Local governments, though, build a tremendous amount of roads out of general revenues (collected from sales taxes, property taxes, wag taxes, etc.). Some of the user fees get kicked down to them, but very little. Seattle's DOT apparently only gets 4% of its revenue from user fees. These are the roads that you use the most, and these are the reasons you have your car - road trips are nice, but nobody would own a car if all they could do with it was visit their parents a few times a year and maybe spend a few weeks a year on vacation.

Furthermore, all these accounts leave out opportunity cost, which is what a real free market actor tries to cover, not accounting costs, which are what Sam Staley and others are calculating. This isn't that significant in the case of state/federal roads and highways, which run through land that's not terribly useful, but urban land is incredibly valuable - just think how much a small street in Midtown Manhattan would be worth if you had full development rights, and you can see that opportunity costs (especially in cities) for roads must be absolutely astronomical.

And furthermore, we should remember that you don't just have to pay for the roads - you also have to pay for somewhere to park. Unless you live in America (or Canada or Australia), that is, where your local government forces all business to provide so much parking that the price is competed down to zero, and your parking is essentially subsidized by everybody.

I haven't even gotten into the ways that anti-density regulations make paying for the roads out of user fees easier, but this comment has already become way too long - I have a whole blog about this, so it's hard for me to stop when I get going, but if you're interested in all the other ways that the government biases sprawl against dense development and cars against mass transit (private or public), check it out at marketurbanism.com.

Stephen Smith said...

Hi,

I'm Stephen Smith, the author of the article, and I wanted to thank Mike for linking to it and respond to one part of J Scheppers' comment:

I'm familiar with Sam Staley's work, as well as the work of other pro-sprawl/pro-car pundits at Cato and Reason (Foundation, not magazine) like Wendell Cox and Randal O'Toole, and that 55% figure you cited is woefully overstated. For one, their work deals only with federal and state highway funds. Local governments, though, build a tremendous amount of roads out of general revenues (collected from sales taxes, property taxes, wag taxes, etc.). Some of the user fees get kicked down to them, but very little. Seattle's DOT apparently only gets 4% of its revenue from user fees. These are the roads that you use the most, and these are the reasons you have your car - road trips are nice, but nobody would own a car if all they could do with it was visit their parents a few times a year and maybe spend a few weeks a year on vacation.

Furthermore, all these accounts leave out opportunity cost, which is what a real free market actor tries to cover, not accounting costs, which are what Sam Staley and others are calculating. This isn't that significant in the case of state/federal roads and highways, which run through land that's not terribly useful, but urban land is incredibly valuable - just think how much a small street in Midtown Manhattan would be worth if you had full development rights, and you can see that opportunity costs (especially in cities) for roads must be absolutely astronomical.

And furthermore, we should remember that you don't just have to pay for the roads - you also have to pay for somewhere to park. Unless you live in America (or Canada or Australia), that is, where your local government forces all business to provide so much parking that the price is competed down to zero, and your parking is essentially subsidized by everybody.

I haven't even gotten into the ways that anti-density regulations make paying for the roads out of user fees easier, but this comment has already become way too long - I have a whole blog about this, so it's hard for me to stop when I get going, but if you're interested in all the other ways that the government biases sprawl against dense development and cars against mass transit (private or public), check it out at marketurbanism.com.

Raționalitate said...
This comment has been removed by the author.
Raționalitate said...

Hi,

I'm Stephen Smith, the author of the article, and I wanted to thank Mike for linking to it and respond to one part of J Scheppers' comment:

I'm familiar with Sam Staley's work, and that 55% figure you cited is woefully overstated. For one, their work deals only with federal and state highway funds. Local governments, though, build a tremendous amount of roads out of general revenues (collected from sales taxes, property taxes, wag taxes, etc.). Some of the user fees get kicked down to them, but very little. Seattle's DOT apparently only gets 4% of its revenue from user fees. These are the roads that you use the most, and these are the reasons you have your car - road trips are nice, but nobody would own a car if all they could do with it was visit their parents a few times a year and maybe spend a few weeks a year on vacation.

Furthermore, all these accounts leave out opportunity cost, which is what a real free market actor tries to cover, not accounting costs, which are what Sam Staley and others are calculating. This isn't that significant in the case of state/federal roads and highways, which run through land that's not terribly useful, but urban land is incredibly valuable - just think how much a small street in Midtown Manhattan would be worth if you had full development rights, and you can see that opportunity costs (especially in cities) for roads must be absolutely astronomical.

I haven't even gotten into the ways that anti-density regulations like zoning and parking minimums make paying for the roads out of user fees easier, but this comment has already become way too long - I have a whole blog about this, so it's hard for me to stop when I get going, but if you're interested in all the other ways that the government biases sprawl against dense development and cars against mass transit (private or public), check it out at marketurbanism.com.

John Thacker said...

The article ignores the effects of the Public Utility Holding Company Act of 1935. Most of the electric streetcar companies were owned by electric utilities, since they started out as the largest users of power. (This arrangement arose in both directions-- some streetcar companies branched into selling their excess power to consumers, some electric companies branched into streetcars.)

Interesting cross-subsidization went on, in part because of the accounting rules and regulations meant that the electric company could sell power to its own subsidiary at varying rates. The Public Utility Holding Company Act of 1935 forced regulated utilities to sell off less-regulated subsidiaries, like streetcars. It was that that precipitated many of the lines being shut down.

John Thacker said...

Stephen Smith, your comment about "pro-sprawl/pro-car pundits at Cato and Reason (Foundation, not magazine) like Wendell Cox and Randal O'Toole" is woefully overstated. Randal O'Toole has repeatedly stated that he thinks that all transportation should be paid for by user fees, and that cities should eliminate minimum-parking requirements and charge market rates (instead of subsidized rates) for on-street parking. See his blog, for example.

Where you and O'Toole differ is in your apparent beliefs of the results of these policies.

Seattle DOT is a bad point to choose, because Seattle also spends a lot of its money on transit as well. You're correct that local governments do take less from user fees than state or (especially) the federal government, but you should reference the FHWA's Highway Statistics Table HF-10. That 55% number does not ignore local governments. You're simply wrong about that. User fees cover about 67% of the money spent on highways from ALL sources, federal, state, and local, though a large portion of that is diverted to mass transit before being replaced by other funds.

Anonymous said...

Those FHWA figures have the "local" column so that they can account for funds kicked down by state and federal agencies, but it says nothing about the money paid by local authorities to repave local roads or pay the salaries of police who spend the vast majority of their time patrolling those roads. The federal highway statistics are vague and difficult to understand, so I don't blame you for making this mistake, but I promise you that the numbers for local spending are so opaque and difficult to find that no agency, federal or nongovernmental, will likely ever truly know the magnitude of the subsidization.

I should also point out that I'm not questioning Cox or O'Toole's libertarian bona fides - I have no doubt that they genuinely believe in their heart of hearts that America has a relatively free market in transportation and land use and that smart growth is the threat to that. I just disagree with their assertion that the way we live now is relatively laissez-faire. So while they don't argue that parking minimums should stay, they also don't spend a minute of their time examining their sprawl-promoting effects. And in fact O'Toole actually got annoyed when Tyler Cowen published his anti-parking minimums column in the NYT.

Also, I apologize for the double (triple? quadruple?) posting...it kept returning error messages so I kept trying until I realized they were all being posted.

- Stephen Smith

J Scheppers said...

Mr. Smith,

First, let me try to find somethings we agree on. I agree that mandatory parking requirements, Highway Right of Way Preservation for future Expansion, and the tendency of residents of a local political jursidiction to limit the activity of new productive uses of land in the jursdiction lead to less dense and less efficient development. I defer to Richard Epstien from U of Chicago (now at CUNY) on my understanding of many of these issues. I find Donald Shoup's work on parking has been well applied in Los Angeles and many areas where limited parking exists. I believe that I agree with you that there are market distortions, but I just don't think they are the driving force.

As for my Reason Fondation reference, my Staley reference was not the strongest since Dr. Staley was only reference to others' work, but I will defend Dr. Cox, Mr. O'Toole, and Dr. Staley. I pay attention to their work and think it has value. Pro-Sprawl seems harsh. The way I see it is that they defend efficiency of the predominent mode of travel used in the transportation market. I find it just as important to follow, Robert Bertini, Jennifer Dill, David Levinsion, Brian Taylor and Todd Littman with other perspectives.

As for comparisons of our sources, Seattle gets $13.4 million or 4% of there DOT budget from there local gas tax. They get the following from sources I would consider user fees:
Commercial Parking tax $21 m
Other Transportation Charges $24 m
Private Reimbursements - $1.7m
Federal Grants - $23m*
State Grants - $5m*
IF Other Charges - Trans $12m

*Likely user fee collected by USDOT or state.
Source: Seattle DOT budget page 437
http://www.seattle.gov/financedepartment/10adoptedbudget/UTILITIES_AND_TRANSPORTATION.pdf

As for State DOT budgets let us take Texas for example:

38.9% Federal Reimbursement*
19.1% State Motor Fuel Tax
8.7% Vehicle Registration fees
30% Bond issuance proceeds based on repayment by user fees or Traffic violation fines.

For a total of 96.7% user fees, plus equivilent of 6.4% of transportation budget in motor fuels tax went to education.

*Likely user fee collected by USDOT. Source Page 14 TxDOT 2009-2013 Strategic plan
http://www.txdot.gov/publications/government_and_public_affairs/strategic_plan/index.html

If my reference was "woefully overstated", could you help me assess quality and relability of your source.

If you state "I promise you that the numbers for local spending are so opaque and difficult to find that no agency, federal or nongovernmental, will likely ever truly know the magnitude of the subsidization." then, how can you be sure that you know Mr. Thacker and presumable myself are mistaken.