Thursday, October 21, 2010

Poor people with cars

In the comments on my last post, Joel writes:
I know that the image of NJ drivers are BMW driving upper middle class yuppies. However, I have put in many miles in NJ and I can tell you that many parts of NJ have residents that are treading water in 1980s vintage automobiles. Warren County and large chunks of south Jersey have poverty problems and the land usage makes demand for NJT bus service sparse. These people are finished if fuel climbs.

I am not saying that raising tolls and the gas tax would be bad. I am simply saying that most of our transit advocates have transportation myopia that causes them to misunderstand their respective markets. Christie has done his best to protect the people that don't have much and he is doing it again.

I'm glad that you're not saying that raising tolls and the gas tax would be bad, Joel. (I'd be interested to know when and how you think they should be raised.) But you raise an important point, and I'm going to use it as a springboard to discuss a persistent problem in leftist transportation discussions: compassion.

I'm a compassionate kind of guy, and like many leftists, a lot of my politics are motivated by compassion. But a lot of leftists get paralyzed by their compassion - or maybe it offers them an excuse to avoid something they didn't particularly want to do anyway. They lose perspective, lose the ability to distinguish between different levels of pain, and between short-term disruptions and long-term inequities. For some reason it happens a lot when the topic of poor people who drive cars comes up.

Let me give an example, taking Joel's argument to its extreme: I live in Queens. I just heard about this great job in Chicago. Obviously, none of you are going to suggest that the government pay for my commute; I should either move to Chicago or get a job here.

But what if my Senators and the Senators from Illinois get a great idea for economic development: ten dollar flights to Midway! The federal government covers the difference between the ticket price and the airline's cost per passenger. I take the job in Chicago and start flying back and forth every weekday.

A year goes by and it's a hugely popular program. The city is talking about building a new airport in Brooklyn to accommodate the demand. The US has occupied Iran to ensure a steady supply of jet fuel. But it's straining the federal and state budgets, and the government is looking at either raising taxes or cutting other programs to pay for it.

Suppose that someone gets bold enough to suggest that the program could pay more of its own costs if the fare were raised to twenty dollars. But that would mean paying a hundred dollars a week for me. It would add up to almost five thousand dollars over a year! My job only pays thirty thousand, so it would be a devastating blow to me. How am I going to pay for the mortgage on my house, the payments on my car, and my kids' tuition at private school?

My point, to be clear, is that any subsidy will eventually have a significant number of people who are dependent on it. Ending a subsidy like this will disrupt people's lives, causing economic suffering. But just as we currently live fine without ten-dollar flights to Chicago, we would be able to live fine if they were given and taken away. And just as people were able to live fine in Warren County without cheap gas and free highways, some day they'll be able to do that again. Maybe all the people who moved to Warren County to take advantage of the cheap gas and free highways will have to move back to the cities, but they won't necessarily move back to the slum conditions that many of them left behind.

Making the transition is important. A lot of the pain associated with eliminating subsidies is transitional. This can be mitigated with proper support: a favorable job market, a good safety net. Interestingly, when there is enough support, transitions like this are often not even perceived as painful. It's another chapter in someone's life, even an adventure.

We also need to realize that subsidies can hurt as well as help, and compare the pain of getting rid of a subsidy against the pain of keeping it. Think about the budget mess and fuel shortages that ten dollar flights to Chicago would cause, let alone the suffering that it would cause if we occupied Iran. Similarly, it would probably cause a lot more suffering over the long term to continue subsidizing sprawl in Warren County than to stop.

Note the difference between my argument and a libertarian one. I am not saying that all subsidies are evil and must be eliminated. I am saying that they must be justified, and that those that can't be justified should be eliminated. I'm not saying that they should be justified with some kind of cold monetary cost-benefit analysis, but in terms of how they fit with our priorities, and how compassionate they are. I'm also not advocating pain and suffering, I'm advocating adequate transition support.

Again, I'm not trying to make Joel the bad guy here. I don't know what he thinks should be done in Warren County. But "These people are finished if fuel climbs," sounds like an argument for letting these subsidies persist indefinitely, which is not an answer.

The bottom line is that compassion doesn't mean never doing anything that could possibly make someone suffer somewhere. It means keeping perspective, and doing what's necessary to reduce the overall suffering. And that includes measures to mitigate transitional suffering.

30 comments:

J said...

If our reason for subsidizing something is because we want to help the poor, then why should we subsidize it for everyone? Arguments against tolls and gas taxes seem like red herrings to me, because people who make them claim to speak for a theoretical demographic (which they actually only know about through personal experience, meaning they may perceive there to be more of these people than there actually are), but their solutions benefit themselves as well.

BruceMcF said...

Following up on what J said, the compassionate thing to do would be to take a slice of the revenues and put them into transport support for low income job holders: a card that receives a certain amount per week that can be used on gasoline, or bus tickets, or train tickets.

It could be a full payment up to the poverty line and then phase out, 2/3 payment up to twice the poverty line, and 1/3 payment up to three times the poverty line.

It cushions the pain while removing the subsidy to both longer distance commutes and commutes by car that is embedded in the system of all non-motorists subsidizing all motorists.

Cap'n Transit said...

Helping the poor is only one reason to subsidize transit. I've got the others at the top of every page on this blog.

Bruce, I'd rather see your proposed solution than subsidies that only encourage driving.

Alon Levy said...

I'd go even further than Bruce and say that instead of subsidizing transportation specifically, the government should provide a guaranteed minimum income to be spent on whatever people want to buy. Contrary to popular opinion, the vast majority of poor people would not spend the money on drugs; they'd spend it on what they think the need the most - better food, better housing, etc. Such a program would replace food stamps and other means-tested cash benefits, and cost in the low hundreds of billions per year.

A removal of other subsidies, including the various subsidies to driving, would end up raising the poverty line if poor people bore the cost, so low-income people would not be hurt. Only people who could afford to pay the full cost of their commute would be expected to do so.

J said...

@Alon, that would definitely be the ideal.

jazumah said...

Say hi to the bad guy! :)

I get the impression sometimes that transportation advocates forget that the car is a valid form of transportation. I do not think that it is always appropriate to milk drivers to fund mass transit improvements. Many people drive because it is the only reliable way to work. I think that it is important to pick a place where you can afford to live. If you need transit, you should live somewhere where it is available.

Considerable attention is paid to the impact of raising fares on public transit. However, many advocates are flippant about raising tolls and the gas tax (in general) as if it would have no impact on the users of fuel and toll facilities. I agree with the premise that subsidies need to be rationed carefully, but transit subsidies need to be held to the same scrutiny as road subsidies. Poor road users exist in significant quantities.

Public transit never used to lose so much money. Through government meddling, public transit became unprofitable. The reality is that both sides are subsidized too much. Highways that cost $150M/mile to build are simply too expensive for society to endure. Likewise, there are too many transit systems operating with a structural farebox recovery ratio of 40% or less. To society, it may be cheaper for someone to drive a $1,000 car than to provide them with public transit. Taxis look expensive because they are unsubsidized, but yellow cabs in NYC are priced about right.

I like the $10 flight to Midway analogy. This hypothetical program would generate so much ARTIFICIAL demand that it would soon kill such a program because basic economic theory says that when you price a good below cost, you generate more demand than you can afford to supply. In other words, you go bankrupt. The withdrawal of such a subsidy would have a big impact, but the demand is artificial. Theoretically, a low gas tax costs the state nothing to maintain.

Now, let's turn our attention to ARC. In the case of Christie, he is tired of seeing government grow to support things it should not be supporting. The goal is to limit taxation in order to curtail the growth of government. Key to this concept is the idea of user fees. By indexing user fees closer to service costs, artificial demand can be purged from the system. The only way to shrink government is to deprive it of new revenue. Unlike ARC, the GSP widening is PAID FOR through borrowing backed by user fees. You cannot compare the two, as the highways were never intended to pay for NJT in NJ. Frankly, the River Line is what happens when public transit interests have too much money available.

ARC could overrun by $5B and that would be a lot of money to be serviced. The Port Authority can't get $1B at a rate that they want to pay. With no dedicated repayment source, you can bet the interest rate will be more than NJ wants to - or can - pay.

Personally, I believe that the gas tax WILL go up substantially very soon. I think that plans have already been made to use gas tax revenue as part of some future strategy as long as government doesn't grow.

Cap'n Transit said...

Joel, my point is that the subsidies need to be justified. I think transit subsidies are justified, for the reasons I lay out at the top of every page of this blog. Driving subsidies are not. That's the difference.

George K said...

But that is Joel's point-that there are some transit routes that are virtually empty. If a bus carries 3 people, that bus is actually worse than a car-it is releasing more pollution than a car and its greater size means it can cause more damage if it had an accident. This is especially true if those 3 people could've carpooled together.

Alon Levy said...

It may not be acceptable to milk drivers to pay for mass transit users, but it's even less acceptable to milk asthma sufferers to pay for drivers. Every gallon of gas burned in an urban area contributes about $2 to killing people through pollution, and adds $1 to global warming damage.

The average bus carries 9 people nationwide; in New York City, it's 18. Not 3. The breakeven point versus the average single-occupant car is about 6. But even that is misleading, because transit has higher capacity and lower speed than cars, both of which translate to people making shorter trips. Per passenger-km, a bus emits like an efficient car; per passenger, they're worlds apart.

George K said...

When I said "3 people on the bus", I was using it as an example of a route that is inefficient. While there are plenty of routes running articulated buses full of people (like the Bx12 in the Bronx), there are also some routes that run mostly empty (like the S55 on Staten Island), especially prior to June 27th, when we had the servce reductions.
I am by no means implying that mass transit is more polluting than a car-just that not every public transit route deserves to be subsidized.

busplanner said...

The complication with both roads and public transit is that, to succeed, you need a network. Parts of the network may be underutilized; other parts of the network may be overcapacity; but without the underutilized parts feeding the overutilized parts, the overutilized parts would soon become underutilized.

Of course, specific public (or private) investments in parts of the network may change demand in other parts of the network. That investment should be subject to debate.

But, as some have commented here, the approach may be to provide an income based subsidy for transportation. The problem is costing the transportation (roads and public transit) in a manner that truly reflects capital, operational, environmental, social, and other costs.

J said...

Joel, I would say that in this country most people need to be reminded that cars are not the only legit form of transportation. I personally think transit would be better off if gas taxes, tolls and congestion pricing only paid for roads, and were the sole source of funds for road building, as this would undermine the argument that drivers are being unfairly charged to fund transit and would also bring the cost of driving closer to its true cost.
While I'm dreaming it would be nice if transit agencies were actually run by someone competent.

George K said...

@busplanner:

That is not always the case. Some neighborhoods are solely served by underutilized services and some are solely served by overutilized services, which have nothing to do with each other.
For example, on Staten Island, the S46 on my side of Staten Island is always crowded with people going to places along the route. On the other side of Staten Island, the S55 runs almost empty, except for school hours.

jazumah said...

"I think transit subsidies are justified, for the reasons I lay out at the top of every page of this blog. Driving subsidies are not. That's the difference."

I understand your position and I disagree very strongly with it. I do not think that transit subsidies are justified everywhere. It makes transit look like pork when 24 passenger buses run around empty in places where it is not efficient to run them. I do not want people taxed to run ineffective transit systems. The farebox recovery on roads is 80%. I would be fully in favor of raising that to 100% in exchange for forcing transit agencies to get fares closer to the actual cost of providing service.


"I'd go even further than Bruce and say that instead of subsidizing transportation specifically, the government should provide a guaranteed minimum income to be spent on whatever people want to buy."

How do we incentivize work in this scenario? Currently, one can receive unemployment to bring their weekly income up to $405 per week even if they are working in NYS, but many prefer not to work and have the government pay everything.


"This is especially true if those 3 people could've carpooled together."

BINGO. Not every mobility solution requires a transit system. Carpools, vanpools, and car sharing all perform similar functions to transit and contribute to mobility. However, driver punishment schemes do not always take these solutions into account. Thankfully, we do in NY, NJ, CT, and PA.


"Every gallon of gas burned in an urban area contributes about $2 to killing people through pollution, and adds $1 to global warming damage."

Electric vehicle batteries are produced using components that require mining. Mining is energy intensive and disrupts the environment too. Hybrid buses usually have very large battery packs.


"I personally think transit would be better off if gas taxes, tolls and congestion pricing only paid for roads, and were the sole source of funds for road building, as this would undermine the argument that drivers are being unfairly charged to fund transit and would also bring the cost of driving closer to its true cost."

I am fine with this. I don't even mind some of that money being used for transit, as the right transit investments can significantly reduce the need for surplus road capacity. The problem is that these minimum income guarantee schemes and high taxation tend to lead to road and transit money going into the general fund to be allocated on politics rather than need. Congestion pricing in NYC was designed to cash NYC out of the transit system by replacing NYC's entire operating subsidy with toll revenue. The suburbs blocked it because they found it unfair that NYC would pay no operating subsidy to the MTA, but they would have to.

Transit does not work everywhere. This simple statement is hard for some to digest, but it is true

George K said...

The thing about transit is that there are some destinations where there are so few people going to that it makes no sense to run a transit line there. Some lines simply shouldn't be subsidized, because they carry too few people to justify their subsidies.
Think about it this way, in Staten Island, there used to be a route called the S60, which cost $13.52 per passenger to run on weekends, because ridership was very low. The neighborhood would've benefitted more from subsidized car service to nearby areas than by having the bus run. Saying blindly that all transportation subsidies are more worthy than road subsidies is incorrect.
There is also the problem of what is considered "mass transit". Obviously one person in a car can't be considered "mass transit", but at what point does a vehicle become "mass transit"? A person driving 6 people to a meeting is more "mass transit" than a bus with 3 people. You can't subsidize that bus with 3 people vs. the car with 6 people just because the bus is a bus.
And believe me, I believe that, where you are dealing with a large amount of people, mass transit should be encouraged over car use, but there are some cases where transit doesn't merit its subsidies.

Cap'n Transit said...

The thing about transit is that there are some destinations where there are so few people going to that it makes no sense to run a transit line there. Some lines simply shouldn't be subsidized, because they carry too few people to justify their subsidies.
Ah, but the area where this is true shrinks considerably when car travel is not subsidized.

Alon Levy said...

Joel, you're making two claims with neither evidence nor justification:

1. The farebox recovery on roads is 80%.

2. Electric vehicle batteries are produced using components that require mining. Mining is energy intensive and disrupts the environment too. Hybrid buses usually have very large battery packs.

Ad 1, the farebox operating ratio on major US roads is 65% if you add up user fees and costs; this figure excludes local roads, which are funded entirely out of property taxes. For comparison, the New York City Subway's operating ratio is 67%.

TXDOT did a more thorough analysis, which includes depreciation, and found that the best-performing highways in Texas had farebox recovery of about 50%, again on a par with the New York City Subway, and the worst had a ratio of 16%, on a par with small-city transit systems. To find the article, Google "Keep Texas Moving" and "Asset Value Index," as the original link was scrubbed in a website redesign, but is mirrored on multiple other websites.

Ad 2, I'd be perfectly happy with a ban on mountaintop removal and imports of metals from conflict regions. They wouldn't make batteries much more expensive, and would have zero effect on the cost of building mass transit. I don't think it's a problem if people can't dump their lifestyle's social cost onto the third world and urban ghetto dwellers.

jazumah said...

Alon, I'll accept your correction in #1. The NYC subway is now 67%, but that is way down from the mid-1990s high of 95% and doesn't reflect the system (bus/subway) average of 52%.

However, if we are going to talk about the use of finite resources and global warming, then we can't ignore the impact that underutilized transit systems have themselves. In many markets, hybrid buses are used to shift costs from the operating budget to the capital budget.

Alon Levy said...

The bus/subway average is about 40% including depreciation; 52% is just the operating ratio. On the one hand, it's awful - in Tokyo every rail operator has a recovery ratio above 100%. On the other, when you compare this to the low recovery ratio of Texas roads, it doesn't look too bad.

Underutilized transit systems have a moderate impact, and the best way to reduce it is to invest more in transit and make driving more expensive, rather than the reverse.

The main hurdle is that some train systems are powered by coal, for example the Chicago L, and this makes them almost as bad as cars. But then again, the coal plant will have to be abolished anyway in the next 20-30 years, so that problem will solve itself. Bus systems are best used as rail feeders, so their emissions would be averaged with that of eventually zero-emission trains. The same proposition for electric cars is dicier, because even hybrids are so expensive their market share among new car sales is about 5% (for buses, it's 20%).

Eric said...
This comment has been removed by a blog administrator.
Alai said...

So what happened to the NYC subway between mid-90s and now?

George K said...

Sorry to necropost, but I just did some research and found some very poor urban areas with a high percentage of car-commutes. So the argument that you can get poor people to move to areas with better transit by eliminating driving subsidies doesn't work, because there is no part of the city where the people could relocate.

In the city of Camden, about 2/3 of all workers commute by car, and 1/6 of those people carpool, and Camden is a fairly dense city (See http://www.city-data.com/city/Camden-New-Jersey.html).

I guess, within those areas, you would have to try to improve public transit in certain neighborhoods, so that the people have a place to relocate to (maybe the government could give them vouchers to cover their moving expenses, so they can move to a more transit-oriented area)

Cap'n Transit said...

George, first of all there's no reason why we should expect them to stay in the same city. If they can't find a place with good transit in Camden, they can live in West Philly or someplace that has good transit.

If they already live in reasonably dense areas, then eliminating subsidies for driving will simply force them to use transit. That, in turn, will increase ridership on transit, reducing or even eliminating the need to subsidize transit.

George K said...

I don't know what the situation with Camden is, but could part of the problem be that jobs are too spread out in locations not easily accessable to transit, which leads to people driving to access relatively low-paying jobs? In Camden, only 51% of people 25+ have a high school diploma, and part of the problem could be that the jobs that are easily accessable by transit require more education.

If that is the case, then, in addition to removing subsidies from roads to encourage people to use transit, you would have to try to find ways to get these types of jobs to move to places where they could be easily accessed.

Cap'n Transit said...

Sure. Guess why jobs (other than mining and agricultural jobs) are spread out in locations not easily accessible by transit?

George K said...

I don't know. I would've originally said that it is because the surrounding areas aren't too dense, but Camden and Philadelphia are both fairly dense cities.

Cap'n Transit said...

It's because the roads are subsidized. If they weren't, even the white people would take transit, and the bosses would locate the jobs near transit.

George K said...

In Camden that might work, since many of the jobs are low-skilled jobs.
However, if you go to a more wealthy, college-educated area, you'll find that a lot of people will drive to their job, even on unsubsidized roads. The only reason why professionals take public transit in Manhattan take public transit is because it is super-dense and that leads to an environment where public transit use makes more sense from any perspective (whether time or money)
But even in the outer boroughs, where they sre still relatively dense (Brooklyn's population density is 36,000 people PSM (per square mile), Bronx's density is 33,000 PSM, Queens' density is 21,000 PSM, and Staten Island's density is 8,000 PSM), most professionals still drive to work.

Cap'n Transit said...

I don't understand why you think that that proves college-educated people will drive on unsubsidized roads.

George K said...

My point was that, generally, college-educated people have higher incomes than those without a college education, so it takes a higher price to discourage them from driving than a non-college educated person.

I see your point though. If gas was $4 or $5 per gallon, you'd still see a lot of people driving, but if gas taxes were raised to reflect the full cost of maintainance of roadways so that gas cost $20 per gallon, even higher-income people would give up their cars.