The Tao of economic incentives

I haven't yet read Gernot Wagner's new book But Will The Planet Notice: How Smart Economics Can Save the World, but I heard him interviewed by Leonard Lopate, and the approach he's promoting seems very sensible. If there is a major economic incentive encouraging people to do negative things (drive, accept plastic bags, buy food sweetened with high fructose corn syrup), is it easier to fight that behavior directly, or to change the incentive?

We can think of this as an application of the Tao, or of Ueshiba's notion of enveloping your adversaries. If you prefer, you can think of it as leverage: if someone is using a lever to magnify their force on an object, is it better to push back on the object, or on the other person's foot? You can also think of it as getting past the superficial story to the real story underneath. The best kind of compromise is when it doesn't matter whether anyone gets what they said they want, but everyone is getting what they really want.

One example of incentives working in transit is Hasselt, Belgium, which is usually held up as a paragon of free public transit, but where it seems that the key was actually converting the government-sponsored inner ring road from an incentive to drive to a "Groene Boulevard" where buses and bikes have priority. However, in order to pass both free transit and the Groene Boulevard, their promoters had to convince the citizens of Hasselt that it was "their" town, their mobility plan, and their bus system. Getting to the levers is not easy, and neither is controlling them once you do.

Us, them and our MTA

One of the most successful and persistent arguments against congestion pricing and then bridge tolls was, "Those crooks at the MTA don't deserve another penny." It's a hard one to refute. Here's an organization that's run by an unelected man who answers to an unelected board. Most of these people are uninformed real estate fat cats who collect Ferraris and are driven around in limos. The main qualification seems to be whether the governor owes you a favor.

Bus and subway riders understandably felt like they had no say. The Second Avenue Subway was repeatedly abandoned - after the Second and Third Avenue Els were torn down, resulting in a dramatic reduction in service. In the 1970s "deferred maintenance" period, the trains and platforms rotted and filled with trash and graffiti. Crime went unpunished and undeterred. Commuter railroads serving the wealthy suburbs got higher subsidies than the subways and buses.

Meanwhile, fares continued to rise and as they paid more and got less, passengers began to wonder where all the money was going. They got no clear answers from a self-perpetuating bureaucracy led by unaccountable officials. In 2003, State Comptroller Alan Hevesi famously found that the MTA kept two financial plans: one to fool the public and one for the board to know what was really going on. So it makes sense that people don't want to fund "those crooks at the MTA." As Dave Olsen found with Whidbey Island and Hasselt, even if transit doesn't make a profit, it can be well-funded through taxes - if the people feel like it's "our transit system."

It's gotten better. Some have argued that the "two sets of books" allegation was actually unfounded, but even so, the MTA seems to have cleaned up its act since then. After the storm of negative publicity they began putting more and more financial information on line. Governor Spitzer reorganized the agency to give Executive Director Lee Sander more power, and now Governor Paterson has combined the positions of Chairman and Executive Director into a "Chairman and CEO" position held by Jay Walder, who has moved towards even more openness. More importantly, the MTA leadership has been seen to serve at the pleasure of the governor, and to leave when the Governor is under pressure.

Here's the kicker, though: if the MTA has gotten more accountable and transparent, it doesn't seem to have improved its reputation. In poll after poll on congestion pricing and the Ravitch plan, New Yorkers showed skepticism as to whether the money raised from tolls would go to improved subway or bus service. This mistrust is skilfully exploited by pandering politicians to avoid restoring cuts to the agency from prior years. This week, some of these have added oversight to the MTA and the other "authorities," but they give no credit for any progress that's been made, and it remains to be seen whether these reforms will have any success.

Another part of the problem, I think, is that we expect to have to fund state agencies out of taxes. There are probably some agencies out there that are self-funding through user fees, fines or something like that, but those are usually spun off as nonprofits, for-profit corporations or public utilities. The MTA isn't an executive department, so people don't seem to expect it to have a steady stream of tax funding. It can't be "our transit system" if it's some authority.

Interestingly from the "us vs. them" point of view, there was a project called "FixMTA" for a while this year, and they've since changed their name to "OurMTA." They have a nice vision of accountable transit, but so far I don't see a way of getting there. The name, though, points towards a solution.

Here's a way to achieve that vision: state agencies are seen as straightforward extensions of the governor's power, and the public understands that if they have a problem, it's the governor's responsibility. They may be dissatisfied with the way the governor does things, but they seem comfortable with the idea that they can vote him out in the next election (although I'm still baffled as to why people kept re-electing Pataki). This works for the State Department of Transportation, the Department of Labor and all the other executive departments.

Almost exactly a year ago I recommended replacing the MTA with a state Department of Metropolitan Transportation. That way it would be similar to the existing state cabinet-level departments: funded and accountable. Taxation with representation. Our transportation system.

Other Tappan Zee Bridge possibilities

In my post on the Tri-State Transportation Campaign's strategy for redirecting the Tappan Zee replacement and expansion towards transit and transit-oriented development, I wrote that, yes, I can see the strategy, and if it works it could transform Rockland from New York's answer to Raleigh, NC into a place where someone might actually want to walk around, with downtowns that function. If it works.

What if it doesn't work? Well, last year the State DOT split the environmental impact studies into a "highway phase" and a "transit phase." Of course, the highway phase comes first, and the transit phase may never happen. Tri-State's own intern, Paul Murphy, warned about the possibility. It's a trick that's been pulled many times.

If the transit phase never comes to pass, we'll have a bridge that's five lanes in each direction including one for "high occupancy/toll" vehicles, and there will probably still only be 1500 bus passengers per day. This would raise the private-auto mode share from 98.3% to 99.7%. It will probably also cost $23 billion dollars, a truly staggering amount, of which only $3.3 billion has been found.

Tri-State's Steven Higashide writes about finding federal money as though there's a limitless supply. There isn't. Even though the feds can theoretically print money, they are constrained by the influence of budget hawks, and the share that any given state gets is limited by inter-regional power plays. That means that this $20 billion has to come from somewhere. It will probably come from transit funds, including money that would otherwise have been available for the Second Avenue Subway, Metro-North to Penn Station, citywide BRT, Northeast Corridor upgrades, and every other deserving project you can think of. Like Boston's Big Dig, this could wind up sucking the cash out of every transit project for years, leaving us unable to build anything but a series of unconnected, slow, inefficient bus tunnels.

Even if, as Higashide writes, funding could come from user fees like Thruway tolls, parking fees or gas taxes, those fees could also potentially be used to fund transit, but would not be available if they're taken by the Tappan Zee Bridge project. Some of the other options are much worse: tax increment financing districts and income taxes would take money from people who may not even drive.

What bothers me a little bit is that it seems like Tri-State is actually trying to help the State DOT to find funding for this project. It's true that the transit costs are slightly more than half: $8.9 billion out of the total $16 billion estimated in preliminary financials (PDF). So you might expect people to feel that transit advocates ought to find some of the cash.

But let's look at another possibility: what if nobody can find enough funding and the bridge never gets built? If no one pays for anything, it would eventually just be condemmed, and shut down for years like the Poughkeepsie Bridge. But if we can find $3.3 billion, that's enough to cover the cost of the rehab. And if transit advocates can find another $2.5 billion, it would pay for a fully grade-separated busway from Suffern to Port Chester.


Commenter "Anon" on the Tri-State blog doesn't think that BRT on the existing bridge would fly. "You are not going to get the Suburban populations of Rockland and Westchester to give up a general use lane to bus only especially considering the current backups." At this point, probably not.

But what would happen, land-use-wise, if we did nothing? Would these counties continue to sprawl? I doubt it. Sprawl needs roads to survive. If you don't build any more road capacity, it will stagnate and fester. If you take away road capacity, it will wither. Westchester and Rockland have pretty much run out of room, and will have to densify if they get any more population growth. Since the general consensus is that the price of gasoline is going to go up, we'll probably see more people switching to transit and moving from sprawl to walkable neighborhoods, either in Rockland or elsewhere. Finally, whatever form the ARC tunnel takes, it will make commuting by train from Rockland much easier, fostering transit-oriented development there. Without the bridge widening, a constituency for transit will grow steadily until there is broad-based support for funding and building a real solution. That possibility is the most promising to me.

It all hinges on whether funding for the $7.1 billion in highway components will be found. If the State DOT finds it, the best position for Tri-State to be in is the pleasant helper; they can then envelop and redirect. If the State DOT doesn't find the money, all Tri-State has to do is to wait and be ready to influence Plan B.

But what if it is Tri-State's help that gets the funding? Between the overall cost and the uncertainty of the transit component, I worry that this project will do more harm than good. While it's certainly impressive to get the State DOT to support transit-oriented development workshops, I don't think that those are worth the downsides. It's a very dangerous game that Tri-State is playing, and I sure hope they have an ace or two up their sleeves that I don't know about.

Enveloping the Tappan Zee Bridge replacement study

Over the past year or so I've been very critical of the State DOT's plan to rebuild the Tappan Zee Bridge, and of the Tri-State Transportation Campaign's support of this plan. In the comments to Tri-State's most recent blog post on the plan, the Campaign's Steven Higashide took the time to respond.

Cap’n, this project will result in a much improved transit system that has the potential to target development in the Hudson Valley around transit stations instead of in open space. As you may know, at our urging NYSDOT has begun a training program for towns to do just that (the program is managed by Regional Plan Association, Project for Public Spaces, and Reconnecting America, all highly professional organizations). The new bridge will also provide pedestrian and bicycle access, which the current bridge does not. The existing bridge has 4 general purpose lanes in the peak direction already, so the expansion is primarily adding transit capacity.

While we support this project, we don’t support it passively. We continue to work with the study team and in the stakeholder working groups to improve the project. For example, in the Draft EIS the study team is now examining a busway option that replaces the Rockland HOT lanes/Westchester bus lanes with a separate dedicated transitway.

Another "Anon" commentator wrote this:

No new bridge, no radically improved transit for the I-287 corridor. You are not going to get the Suburban populations of Rockland and Westchester to give up a general use lane to bus only especially considering the current backups. I seriously doubt that commuter rail could be added to the existing bridge. Moreover, the bridge likely needs to be replaced one way or another as it was built on the cheap in the first place. If the bridge is going to be replaced, 3 additional lanes (IIRC, only one additional general use lane) are going to represent a marginal increase in cost for the project.

My recent post on the Tao Te Ching's recommended approach to conflict came out of my thoughts about Tri-State's approach. A more recent thinker, Morihei Ueshiba, the founder of Aikido, echoed the water metaphor in his own writings, and developed this idea further:

If your heart is large enough to envelop your adversaries, you can see right through them and avoid their attacks. And once you envelop them, you will be able to guide them along the path indicated to you by heaven and earth.

Ueshiba also stressed the value of redirecting an opponent's energy towards the good of all:

Opponents confront us continually, but actually there is no opponent there. Enter deeply into an attack and neutralize it as you draw that misdirected force into your own sphere.

This is the way I understand Tri-State's approach. The State DOT is not an opponent, they have just misdirected their force, and Tri-State is enveloping the DOT with their hearts and helping them to redirect that force towards bicycle and pedestrian access, bus rapid transit and transit-oriented development.

They may have something of a point, actually. I actually went back and looked at an earlier analysis that I did of the plans, and was a bit comforted. According to the DOT's 1999 survey, up to 7042 vehicles crossed the bridge per hour in the eastbound morning peak, and 98% of them were private cars and trucks. By their analysis, each lane can move between 1700 and 1900 cars per hour (fitting with Adirondacker's recent comment), so the planned configurations would be able to carry between 7600 and 8075 cars, depending on how many people drive in the HO/T lanes.

On the transit side, in 1999 there were 1350 people per day traveling by bus across the bridge (possibly four buses per hour with about 30 people each). Alternative 3B, the "BRT only" proposal, would transport 2100, but the theoretical maximum that a dedicated bus lane could transport per hour (basically a continuous line of packed buses) is 9000. Alternative 4D, "BRT plus commuter rail," is planned to carry 6800 people per hour, but the maximum is 39,000.



This means that the planned "BRT" by itself would not cause that much of a mode shift (just from 98% private auto to 80%), but Alternative 4D as planned would bring it way down to 54%. Alternative 3B maxed out to 9,000 passengers per hour would bring modeshare to 45%, and Alternative 4D maxed to 39,000 passengers per hour would bring it down to 12%.

So, yes, I can see Tri-State's strategy, and if it works it could transform Rockland from New York's answer to Raleigh, NC into a place where someone might actually want to walk around, with downtowns that function. If it works.

Of course, all this criticism of Tri-State is meant in a supportive way. One thing you can do in a supportive way is to buy tickets to their annual benefit dinner next week. They do a lot of really good work.

The Tao of conflict

Of all gentleness and submissiveness in the world
Nothing compares to water,
And to tackle stiffness and toughness there is nothing better,
There is no easier substitution.

Be submissive to overcome dominance,
Be gentle to overcome toughness,
There is none in the world who knows not,
There is none who can follow.

Therefore the master says,
"Accepting the nation's shame, is being stately;
Accepting the nation's adversities, is being majestic."
Righteous words seem contradictory.

Tao Te Ching, collaborative Wikisource translation, verse 78.