Roadblocks to Efficient Transportation

Autos, Transit, and Cities, by John R. Meyer and Jose A. Gomez-Ibanez, Cambridge Mass: Harvard University Press, 1981, 360 pp., $20.00.

After reading Autos, Transit, and Cities, I am convinced that the authors are not free-market economists per se. In other words, they do not recommend a free-market solution to a public policy problem because they personally believe that the free market is the most equitable method for allocating resources. Instead, they rigorously analyze as much data as possible, trying, without any preconceived notions, to determine the most efficient and effective way to solve the questions under study.

The questions? Should automobile use be encouraged or discouraged? How can the automobile be improved so as to better serve urban transportation needs? How does transit policy affect land use? How can aesthetic values be balanced with progress? How can traffic congestion be relieved? How can the transportation needs of the poor, elderly, and handicapped be met? In analyzing these areas, the authors debunk many long-standing myths of the effects of US transportation policy since World War II and develop a comprehensive set of alternative policies.

The authors first review the history of governmental policies in the areas of urban roads and public transit. For example, the federal government built highways with tax money in the 1950s and early 1960s in order to reduce auto congestion. But the public responded by buying more autos and moving farther away from the central city—creating a need for still longer and wider highways. Congestion increased, and in the late 1960s policymakers switched their focus and their funds to mass transit in an attempt to get people out of their cars. Finally, in the 1970s environmental issues such as air pollution came to the fore, and the government channeled tax dollars to the EPA to try to solve that problem.

Meyer and Gomez-Ibanez conclude, first of all, that the federal government's attempt to solve only one problem at a time was too simplistic an approach and that a "sustained, systematic, simultaneous effort on many fronts" is really needed. Second, they conclude that more realistic pricing to reflect the true cost of services used must be a key element in any new approach to the urban transportation problem.

The authors then suggest some specific changes. Costs of conventional mass transportation could be reduced through improved productivity. Service could be enhanced by making better use of the various forms of paratransit, such as dial-a-ride, taxis, jitneys, and car pooling.

However, certain roadblocks to implementing these changes exist. Labor productivity can be improved by using part-time drivers for other tasks during off-peak hours, substituting capital for labor, and contracting out certain tasks. But this could be done with much greater flexibility if federally mandated labor protection clauses that now burden most transportation systems were removed. Route structures can be oriented toward consumer demand by removing resources from low-ridership routes and concentrating efforts on high-density corridors—but only if local governmental controls over route changes and line abandonments are eased. Paratransit, such as taxis or jitneys, would be available to supplement conventional 40-foot buses if regulation over entry and competition in these industries were eased. Changes in prices for transit services are currently subject to similar local government constraints.

In the authors' discussion of the various policy issues mentioned earlier, some interesting facts emerge. For example, federal mileage standards are not the cause of recent mpg improvements in cars. The authors marshal data showing the market price of gasoline effectively encouraged energy conservation through better mileage regardless of what was ordered by the government.

Meyer and Gomez-Ibanez also say that, for various reasons, the automobile is here to stay as the major urban transportation vehicle. Tolls, parking fees, and other peak-period pricing schemes are examined as potential ways to charge consumers for their part in increasing congestion on highways and downtown streets during times of heaviest usage. While the authors seem to favor such approaches because they help consumers realize the full costs of their road usage, they acknowledge that it is difficult to convince local politicians to accept such plans for a publicly operated highway, unless a plan can be designed that would seemingly benefit all constituents (so that no votes are lost).

If the authors were full-fledged laissez-faire adherents, they would have pointed out at this juncture a major difference between public and private roads. When highways are run by governments, the political incentives are overwhelmingly against economically sensible policies. The peak-load pricing proposals that they discuss have been recommended for decades by economists. Nothing mechanical, technological, or budgetary really prevents their adoption on public highways. But they have not been adopted. In contrast, on privately owned highways, the natural effect of commercial incentives would lead directly to the adoption of these policies. Meyer and Gomez-Ibanez fail to make this point, and it is one of the drawbacks of this book that the virtues of a regime of private property are largely neglected.

Even when all other arguments are rebutted, publicly subsidized transit is still defended by some on the grounds that society has a responsibility to provide basic transportation to the poor, elderly, and handicapped. But Meyer and Gomez-Ibanez examine the results of many public transit projects that were justified on these grounds and conclude that this argument is essentially a red herring. Few of these people actually benefit from the transit systems being provided, and many could be better off if, for example, competition were allowed to flourish in the taxi industry.

Having analyzed key policy areas in detail, Meyer and Gomez-Ibanez draw an overall conclusion that the marketplace can respond to transportation needs. The key to reducing transportation costs and problems, they note in their final paragraph,

is achieving disciplined use of the different transportation modes—having each do what it does best. In Western societies, market prices conventionally perform this discipline or allocative chore. The central public policy issue is whether society wishes to use market prices to a greater extent for this purpose or to proceed on the historical path of using arbitrary government allocations instead, with all the attendant waste of resources that almost surely will ensue.

There are two necessary ingredients in a full solution to the transit problem. One is a public that is aroused and upset by government-created crises in transportation and other areas and seeks to restore liberty and private property in order to end these crises. The other is knowledge and confidence among professionals, specialists, and opinionmakers that the market works. Autos, Transit, and Cities shows that the market can work in urban transportation if it is allowed to. Although the proposals in the book fall considerably short of full privatization of America's urban transportation system, implementation of the book's recommendations would be a significant step in the right direction.

Mary Gingell received her M.B.A. from Harvard in 1981. She is manager of commuter services for the Southern Pacific Transportation Company.