Monday, November 27, 2006

Don't Get Me STARTED on Subsidies to Transport

Okay, now I'm pissed off.

An exchange, reproduced from my good man S. Carlson's blog, Coldspring Shops. Also, a response to a gentle reader, commenting on an earlier post on trains.

The comment, from the good John Bruce, on my post:

One reason the Palmetto doesn't cost Prof. Munger $420 for the same distance -- I'm sure you understand this, Mr. Super -- is that taxpayers nationally are forking over the difference in per-passenger Amtrak costs that Prof. Munger doesn't have to pay. Among other things, there are folks in Nevada or South Dakota who will never, ever have any reason to ride business class on the Palmetto, but helped Prof. Munger pay the costs of his trip.

On top of that, I believe a CBO study has pointed out that the premium Amtrak services, such as business class, sleeping and lounge cars, actually lose more money than the basic coach service. I can see funding Amtrak as a bare-bones necessity, but setting things up so a well-heeled PoliSci prof at Duke can have a glass of wine as he travels, much of which is on our nickel, is something else. The food service on Amtrak, of course, is one of the most egregious loss-producers. How much did I pay for Prof. Munger's wine on last year's 1040, I wonder?

Whoa, whoa, whoa: We are spending $100 billion on a war to protect gas prices so you can fuel your SUV! I wonder how much I am paying so you can sit in traffic and watch taillights ahead of you. How much revenue are we getting from that? You use the roads for free! At least I paid something to use the railroad. You are just stealing my money, in your car, man.

We spend billions and billions improving the road bed and facilities for cars, and our revenues are....ZERO. We get some money from gas excise taxes, but most states use those for other purposes. Why not a call for toll roads, or making roads pay their own way? You are comparing apples and hookers.

The real problem, from an economic point of view, is of course the difference average and marginal costs. The marginal cost of providing seat space for my oversized butt, and my NYT and coffee, was less than the $29 extra in revenue. So, they made money on the business class sale. Now, sure, in terms of average costs, they lose a lot.

But, again, how much do we lose on roads? The "tickets" on most roads are zero! And thousands of our best young people are fighting to subsidize gas prices. We wouldn't care any more about the middle east than we appear to care about Darfur, without the oil. Maybe that is reprehensible, but our subsidies to cars, and to air, are huge. They just aren't factored into the operating costs of cars and planes. Almost makes me want to advocate a Pigouvian excise tax!

I said, almost.

UPDATE: Dirty Davey, as usual gets it right, in a comment: I'm sure Amtrak will turn a profit for the government at the same time I-95 does.

Why is that so hard for otherwise wise people to understand? I'm just all upset. I'ma'go drive my Lincoln Town Car on the interstate, and spend some of John Bruce's money using up asphalt. And he is going to get NOTHING for it, not a penny. At least I paid for part of my own wine, pal! (I have to admit that I do enjoy the Mt. Hollywood blog of John's, but I have to say, in a pathetic bid to get added to the list of insults on the top right column there: JOHN BRUCE CAN BITE ME!)


Stephen Karlson said...

SWAK === Starts With A K.

It could be worse, you could be a Midwestern Thanksgiving traveller waiting your turn to pay in cash while the regular commuters zip through the open-road-tolling scanners at approximately (*) half what your cash outlay will be.

(*)There's a security deposit on the scanners, as well as a minimum balance requirement.

Simon Spero said...

There are a lot of better ways to finance roads than general taxation or excise taxes. Toll roads and/or lanes are the most obvious approach, but systems like Shadow Tolls/DBFO are promising ways to impose at least a modicum of market discipline.

Gabriel Roth has published a lot in this area:

, Street smart : competition, entrepreneurship, and the future of roads (Gabriel Roth ed., Transaction Publishers, 2006)

Gabriel Roth,Liberating the Roads: Reforming U.S. Highway Policy (Cato Institute Policy Analysis No. 538, March 2005)

Gabriel Roth, A Road Policy For the Future, Regulation, Vol. 26, No. 1, pp. 54-59 (Spring 2003)

FHWA, The Selective Use of Shadow Tolls in the United States (Prepared by Urs Greiner, Inc., 1999)

Anonymous said...

I have more observations here. But I would also suggest, if you like Amtrak, just keep riding. As Blake said, the fool who persists in his folly will become wise!

John Bruce (Dartmouth 69)

Nathanael D Snow said...

Why not privatize the roads and let advertising pay for them, like ads pay for google and the other 10% of the internet. There's a lot of unpainted asphalt out there.
Or road owners could collect revenues by attracting desirable merchants to locate along their roads, and charging access fees.
Vanderbuilt had a free ferry running NJ to NY with concessions paying for all. Why couldn't roads work the same way?