Megan McArdle was so upset by my post dinging Schwarzenegger for the transit cuts in his budget that she dipped a toe in the waters of sarcasm.
Her post commits several common errors in the discourse around this issue.
The first is to treat demand as though it’s a number. It’s not a number, it’s a function, and for most things there’s more at low prices and less at high prices. Of course the empty seats on a transit vehicle show there’s not enough demand – at the price being charged. What’s important about those seats is that the economic cost of letting someone in them is practically zero, and what’s important about demand is that at a lower price, there would be riders. How many? Hard to tell, but BART charged $2.75 for my trip; at 50c I bet (and we should find out, not just opine) lots of people would figure out how to ride instead of driving. If that happened, we would have created at least 50c worth of value for each one of them at practically no cost. This is called being efficient and not leaving well-being (deadweight loss) on the table, and it’s achieved by being smart instead of prating ideologically (she doesn’t, but she sort of channels people who do) that a transit system (or a museum, or a park) has to operate as a profitable enterprise. You can smother those things with libertarian rhetoric, but when the dust clears, they’re still market failures and efficiency still demands public action.
She ignores the costs her driving imposes on everyone else, including (at busy times) the piece of road she occupies that someone else can’t, (a congested road, like a full subway car, is not non-rival) the thousands of other drivers who have to go a little slower each to accomodate her, the air pollution her car causes, and its contribution to global warming. Of course it’s more convenient to drive if you’re given the street and a place to park when you get where you’re going and everyone else handles the pollution for you. That’s what should be fixed; I happen to be an apostle of the proposition that when people pay the real cost of their behavior, we shouldn’t care what behavior they exhibit.
Her conjectures about the geographic impossibility of good transit anywhere but New York run aground a little on the examples of San Francisco (and Seattle), which are surrounded on three (two) sides by water, quite compact and dense, developed early, but which have mediocre public transit; and Paris, London, and Milan, which are unbounded, radial, and have excellent transit networks (which are still overpriced). Lousy and inadequate public services are generally the result of misguided political choices, bad leadership, and a small-minded electorate, not geography or luck.
I’m sorry Megan gets “impatient at even very small delays”; I too am a New Yorker and however type A she is, I’m A+, so there, but I learned something very useful from a colleague years ago, which is that if you always carry a book, you never mind waiting; in fact, you’re never waiting because you’re reading. I bet that trick has added years to my life, and zillions of utile-hours to my accumulated happiness. I’m especially sorry she finds most of the people in her city unpleasant, because that must be such a downer; I’ve lived in Boston, New York, and Berkeley/SF and used public transit a lot there and in other places and my experience has been entirely different, but of course tastes differ. Similarly, “long driving is more convenient and comfortable than taking a train?” My train experience is almost all in Europe, where I can read, write, bore my friends with phone calls, get up and walk to the bar for a snack; this is a lot more convenient and comfortable and a lot less stupefying than keeping a car between two white lines stuck in my seat. And safer. Again, de gustibus etc. More generally though, I’m sure we both agree that solipsism is neither analysis or argument.
She is correct that land development patterns (zoning and such) are intimately related to transit costs and practicality. My California students have a lot of trouble letting go of the idea that living on a half-acre in a house with two more bedrooms than occupants and a three-car garage is simply identical to fundamental happiness. There was a brief period where this trick could be made to work in big cities like LA, but it’s gone. The problem is that if everyone takes up a paved space a hundred feet long and twelve feet wide whenever they’re moving about, and two spaces (at work and at home) of three hundred square feet when they’re not, it’s simply impossible to build enough parking and lane-miles to cope. The usual version of this “argument” is “Americans are just not going to give up their cars.” If that’s true, we might as well start gathering up stuff from our coastal areas, but I’m writing about things that could actually prevent a planetary disaster, not reasons why we can’t or don’t want to prevent it.
Much interesting recent research highlights the degree to which we misperceive our own tastes, which is both catnip and infuriating to economists. This is a good place to start reading about the problem. This phenomenon is different from misperceiving a fact situation, for example, when people want to live in the suburbs but don’t realize what a terrible deal for their children that is, and that they will be drafted for years as chauffeurs because kids in the suburbs can’t get anywhere by themselves until they have a car and a license.
I don’t understand her point about pushing revenue down near zero with marginal cost pricing. Right, if you can’t price discriminate, the efficient price from society’s perspective yields you very little farebox revenue. So? In a park, it yields you none, but we still have parks. Certainly, the other side of the case for public transit has to be that the total benefits of having it (including stuff like, say, saving the planet for our grandchildren) exceed the total costs, and until we rethink land development patterns a lot of transit won’t pass this test. But its interesting that many of her commenters who start out on her side wind up arguing that the trouble with transit in a lot of places is actually that there isn’t enough of it; buses too infrequent and they don’t go enough places. It’s certainly a consistent tragedy of public transit that it has network externalities in spades: until you can get almost anywhere on it, at any time of day or night (true only in New York and Chicago to my knowledge) you sort of need a car, and then you start driving it a lot, and we can’t get over this big potential barrier between where we are and the valley of happiness.
Finally (or not), those declining marginal cost businesses that make money: right, they make too much money (and don’t produce enough value); that’s why we regulate monopolies, to get them to sell at marginal cost and serve society instead of maximizing their revenue. I said these industries couldn’t make money and be efficient, not that they couldn’t make money.