California Initiatives and Transit

Kevin Drum posted his recs on California initiatives, and while they are close to mine, he commits an error that really makes me crazy, and in a followup Mark admires, says two things better than which he should know. Kevin doesn’t allow a lot of chances to beat up on him, so here goes:

The first is the gong he repeatedly rings, “We.Don’t.Have.Any.Money.” California per capita income is about $40k; it’s the eleventh richest state in the US. California government doesn’t have any money, in Kevin’s sense. But a government and the society occupying its jurisdiction are not at all the same thing. California has lots of money, but so far its citizens have chosen to spend about 11 percent of it on their state government, which is only average for the US. This is too bad, because the climate, urbanization, and economy of California justify a much higher fraction: we have more opportunities to come out ahead buying goods and services through the public sector than most other states. To turn down an option because it’s intrinsically bad is fine; to turn it down because the state fiscal machinery has been wrecked by a bad constitution, bad districting, an irresponsible governor, and term limits is just silly, and merely ensures the continuation of wasteful failure to have a government sized to give us the best package of good stuff. Using “we” carelessly to mean both our society and our government budget of the moment in a sentence like Kevin’s is really careless.

Opposing the high speed rail bond, he makes two mistakes. The first is to say “there are better ways to spend the money.” This line is vacuous unless used of a specific, live alternative to the option on the table. Of course there are: every single policy proposal that ever reaches the level of viability represented by an initiative on the ballot is inferior to something else that will never happen, or is a long way from reaching the choice set of the moment. The argument, if accepted, is automatically and trivially fatal to anything under discussion. Anyway, if it’s true, and the item on the table has merit, why not just go for both?

The second is to talk about the proposed rail line as though it should cover its costs at the farebox. This is not ideological, it’s just technically wrong: public transportation is a declining marginal cost good with a big fixed cost. Charging marginal cost for these goods will never cover their costs, and marginal cost is the right cost for reasons so fundamental I have to trust readers to know why (a lot of normative economics can be summed up in the directive “get the prices to match marginal costs”). The question about a rail service (or a park, or a museum) is whether the area under the demand curve is larger than the total cost (and it may be that high speed rail fails this test), not whether charging average cost will yield break-even revenue. These goods are market failures, and will not be provided efficiently under this kind of market test no matter how much right-wingers bleat bromides about making government businesslike. No–one wants the army to be businesslike in this sense, or the police.

Kevin’s mode of attack on HSR would be just as effective against all the public transportation in any city that has it, or is building it. Putting it aside, we need to look at these systems as public investments with ongoing public subsidy (just like the police station and cars, and the cops) and decide if they are worth having on their merits, not by an irrelevant and misplaced pricing test. For example, you could go to New York, Boston, Chicago, London (where the good Brits are trashing their transit by overcharging for it), or Paris, and show the terrible, ghastly quality of life these vicious socialist networks inflict on their citizens…for some reason a lot of misguided tourists and residents seem to like those places, but go figure…

No public transit, by the way, passes a conventional benefit-cost test unless future quality-of-life benefits peculiarly hard to capture by multiplying quantities by prices are recognized: public transportation doesn’t just displace some car trips at the margin, it allows a whole new way of living. Just to pick one example, it frees parents from having to chauffeur their children everywhere for twenty years, and allows kids and parents both to have much more interesting and enriching lives High-speed intercity rail at LA-SF distances turns the trip from (i) a stupefying six hours keeping a car between two white lines during which you can’t read or write or nap, or (ii) more than three useless and unpleasant hours of going to the airport, sitting in the airport, sitting in an cramped noisy airplane seat, and getting where you really want to be, into (iii) four hours of something humane and useful (read, websurf, write, chat snooze) in a comfortable seat, or walking to the bar car for a beer.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.