Saturday, January 9, 2010
Separating transit from charity
In the past I've talked about the consumer surplus: the fact that there are plenty of people who would be willing to pay a lot more than $2.25 (or $1.84 or whatever it comes out to) for a subway ride. If you ride the #6 train downtown in the morning, you'll be riding with bankers, executives, all kinds of people who make more than $100,000 a year. I don't know how many millionaires there are, but there are plenty who would be happy to pay $5 for a quick ride downtown. If we could get enough people to pay enough money, then the government wouldn't have to spend as much to subsidize the subway system.
The problem, of course, is that along with those bankers and executives are plenty of people who live below the poverty line and are heading downtown to make a very small amount of money. Tripling what they pay for the subway would cut into their income at a time when lots of people are struggling to make ends meet.
This is not a unique problem. We have a similar one for food. Food can be very expensive, especially here in New York, but there are lots of people who can't afford to buy enough food to live. For them, we have food stamps. They get a plastic debit card with a certain amount deposited to it every month, and they can use it to buy food. Grocers can charge what they want, and the government helps people buy it.
So let's do that for transit. The MTA is planning to implement some kind of new payment system. What if we make it at least partially compatible with the EBT cards? We could give everyone with one of those cards two rides a day. Same thing for anyone receiving unemployment benefits.
This has been done in the past. In Curitiba, the municipal government accepted recyclables from residents and paid them in bus tokens. The poorest people had the time to scavenge for recyclables and bring them to the collection centers, so they benefited the most from this policy.
Since these are for the poorest New Yorkers, who can't afford enough food for a healthy diet, the fare should probably be free. With more than a million food stamp recipients in the city, if everyone used the benefit it would come to $2 million a day, or $730 million per year.
But what about those who are not unemployed or poor enough to get food stamps, but who would still have a hard time paying $180 a month to ride the train? For them, I think an expanded TransitChek program would work. The government currently exempts TransitChek purchases from taxes, but it could go beyond that and contribute a percentage.
Of course, with the poorest taken care of, the MTA could raise fares to the market rate for the rest of the population. I don't know what market rate would be for the non-poor, but if it's $1.50 over the current rate, that's an extra $3.75 billion a year, more than enough to pay for the free rides for students, the unemployed and the poor, and probably senior citizens too.
That wouldn't mean that the city and state governments would have no responsibility to the MTA. They should be required to pay back the $34 billion that the MTA has borrowed because of the state aid cuts. Once that's taken care of, then maybe they can see if it would work to stop subsidizing things.
The bottom line is that transit should not be charity. Charity should be charity. If we want the government to offer cheap rides for the poor or the working class, we should subsidize it for just those groups, not hold down fares across the board.