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Free Minds & Free Markets

How to Fix New York's Totally F*cked Subway System

End the subsidies and raise the fare.

The New York City Subway is the circulatory system for the global capital of finance and media, and today this 114-year-old engineering marvel is coming apart. Stalled trains, signal breakdowns, and constant line closures are complicating the lives of New Yorkers, who ride the trains more than five and a half million times a day.

The MTA, the public agency that runs the subways, is woefully mismanaged, fiscally irresponsible, and politically captured. Thanks to the clout of the Transit Workers Union, subway workers on average make $155,000 in total annual compensation, or more than twice as much as the passengers they serve.

The political response to this crisis has been mainly to devise new ways to collect more money for this troubled operation, such as a new "millionaires tax" or by imposing additional tolls and surcharges on cars.

But a major lesson from the first 114 years of subway history is that giving the MTA more money from outside sources is like bringing an alcoholic to an open bar. The path to real reform and accountability is to make the subway live off its customers once and for all.

"The rider should be paying the full cost with the exception of low income folks, where there's going to be some subsidy," says Baruch Feigenbaum, who's the assistant director of transportation policy at the Reason Foundation, the 501c(3) nonprofit that publishes Reason.com and Reason TV. "That is the most efficient system. It's also the best system for the rider, because if the rider is the one paying the cost, then the transit agency is serving the rider. If Albany is bailing out the transit system, then it's going to be whatever Albany wants."

Lately, "whatever Albany wants" has included budget items big and small that don't have any impact on service and reliability, such as the $5 million that the MTA spent bailing out three ski resorts in upstate New York and the $1.4 billion Fulton Street Transit Center.

And this is a theme that extends all the way back to the system's early days. The subway's troubles are deeply rooted in the decline of the fare as its primary revenue source.

When the subway opened in 1904, it was five cents a ride, which was more than enough to finance operations. But when inflation eroded the value of a nickel, the city refused to permit fare increases. By 1920, 500 other U.S. cities had raised fares on their transit systems. Meanwhile, New York City's populist mayor, John Hylan, campaigned on the preservation of the nickel fare, calling it "as sacred and binding as any contract ever drawn in the history of financial transactions the world over."

The fare did eventually go up, but not enough to keep pace with inflation, and the subway's revenue shortages became an endemic problem.

Decades later, the city and state discovered a new way to plug up the shortfall: forcing drivers to pay for transit.

In 1968, Governor Nelson Rockefeller orchestrated a backroom deal to reallocate revenues from nine major bridges and tunnels to transit. Last year alone, drivers paid $1.1 billion in tolls that were diverted to subways and buses.

The state created more hidden funding streams in the years that followed, and taxes and subsidies now comprise a larger share of the MTA's revenue than fares. These include a special sales, corporate, and payroll tax, plus fees on real estate transfers, car rentals, drivers license renewals, and vehicle registrations. And the state just imposed a brand new surcharge on taxis and ride shares coming into Manhattan, with the money going to the MTA.

These subsidies violate a central tenet of good transportation policy, which is to make each mode of travel self-sustaining.

If fare subsidies were to come to an end, could the subway survive on its customers alone? It could in 1904, when the system opened. And it could in 1982, when the MTA studied the issue, and journalist Peter Samuel wrote about it in Reason.

The key is getting riders directly invested in slashing wasteful spending and reining in wildly inflated salaries by making them feel the horror—not just of signal malfunctions, train rerouting, and line closures—but that they've paid top dollar for the privilege of such dreadful service.

Written, shot, and edited by Jim Epstein. Interview and narration by Nick Gillespie. Interview cameras by Mark McDaniel and Todd Krainin.

"New Baby" and "Subway Song" by Nicola Paone, Public Domain, archive.org.

"Fun in a Bottle", "Fast Talkin," and "C-Funk - Funkorama" by Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 3.0 License http://creativecommons.org/licenses/by/3.0/

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  • JoeBlow123||

    "Thanks to the clout of the Transit Workers Union, subway workers on average make $155,000 in total annual compensation, or more than twice as much as the passengers they serve."

    That's an impressive amount. My brother works 80 hours a week at one of the big 4 accounting firms in Manhattan and lives in some dump in Brooklynn because he ain't paid too handsomely. I always told him he shoulda been a subway driver.

  • Rat on a train||

    Apply with WMATA for a job standing on the platform holding a clipboard. I see plenty of them. I'm sure they get paid well without any of the hassles of driving.

  • Rich||

    "The rider should be paying the full cost .... That is the most efficient system. It's also the best system for the rider, because if the rider is the one paying the cost, then the transit agency is serving the rider."

    Hmm. Perhaps *all* government services should be pay-as-you-go.

  • TrickyVic (old school)||

    "" It's also the best system for the rider, because if the rider is the one paying the cost, then the transit agency is serving the rider.""

    The rider will be serving the MTA. That monster has become too big to control.

    """The rider should be paying the full cost .... ""

    Yeah, if it was the full cost of Subway, yes. But it would be the full cost of MTA projects and bailouts like the ski resorts. So the full cost would be more than a cab ride.

  • Rhywun||

    So the full cost would be more than a cab ride.

    If people saw the real cost they would demand reform. Can't have that.

  • sharmota4zeb||

    Someone publicized the problems with NYC subways before the mayoral election, but it became bigger news once the Democrats won the election and started asking for more tax dollars.

  • sharmota4zeb||

    There is a reason so many employed people are moving from New York City to northern New Jersey.

  • SimonP||

    You're right, there is a reason. It's cheaper and there's more space. You know why it's cheaper? Transit into the city sucks.

  • SimonP||

    These subsidies violate a central tenet of good transportation policy, which is to make each mode of travel self-sustaining.

    Sigh. This again.

    The assertion is transparently ridiculous, as we can tell just by asking how to make walking or biking properly "self-sustaining." No, this criterion has nothing to do with good transportation policy. It's just another libertarian/conservative canard that betrays a profound ignorance of transportation policy.

    The reason we can't expect fares to sustain transit is that transit provides ample benefits that are not internalized by users. That includes benefits to users of these other modes who "subsidize" transit. We will always have less transit than we want, if we expect fares to cover the costs.

    It's just baffling to me that you would comment on the MTA without noting the bizarre way that control has been delegated to state-level government. True, this was originally done with the consent of the NYC mayor, but if you want to explain the MTA's status as a corrupt, incompetent money-sink of an agency, you need to understand how it's been used as a slush fund benefiting suburban commuters and upstate legislative priorities by corrupt governors.

  • StackOfCoins||

    The assertion is transparently ridiculous, as we can tell just by asking how to make walking or biking properly "self-sustaining."
    That's a false comparison. Walking and biking produce such minimal wear on infrastructure, that nature will destroy streets or sidewalks long before foot traffic will. Heavy machinery is totally different, and operators or users of machinery that exacts a greater toll on infrastructure should expect to shoulder than burden in fees.

  • SimonP||

    Sidewalks still cost money, don't they? So do bike lanes.

    If transportation modes need to be "self-sustaining," what costs should users be expected to cover?

  • Juice||

    Sidewalks still cost money, don't they? So do bike lanes.

    And surely users cover the costs in their property taxes, sales taxes, etc. And then after a sidewalk is built, how much maintenance is needed because of damage due to foot traffic or bicycles? Virtually none.

  • Juice||

    Fucking shit. Reason, fix you're bullshit comment system once and forever, like a fucking sidewalk.

  • Juice||

    Sidewalks still cost money, don't they? So do bike lanes.

    And surely users cover the costs in their property taxes, sales taxes, etc. And then after a sidewalk is built, how much maintenance is needed because of damage due to foot traffic or bicycles? Virtually none. But users keep on paying those taxes anyway.

  • SimonP||

    And surely users cover the costs in their property taxes, sales taxes, etc.

    So you're talking about subsidies for sidewalks.

  • Agammamon||

    You can only walk on sidewalks? Bike on bike lanes? Since when?

  • Flayed Aubergine||

    You can also drive on parkways and park on driveways.

  • Agammamon||

    Walking and biking are self-sustaining. I require no subsidies to do either.

  • SimonP||

    It's just fascinating to me that you morons are focusing on this relatively unimportant observation in my comment rather than the more substantive, primary critique.

    But, sure, certainly we can imagine a world without sidewalks, crosswalks, pedestrian lights or any other pedestrian-serving infrastructure. Ditto bikes. People just walk or bike on the street with everyone else. They cause minimal wear and tear on the street, so they're self-sustaining, right?

    Well, wait. We've made an assumption about what cyclists or pedestrians would do, where they would go. In this hypothetical, they're apparently walking on surfaces engineered to withstand much heavier, more damaging traffic. But they needn't do that. Maybe they're walking and biking wherever there's room - lawns, shoulders, things like that. In which case, they are causing damage, damage that we have to address somehow.

    So, really, the idea that cycling and walking are "self-sustaining" just follows from a lot of convenient assumptions we've implicitly made. We're imagining a world where we don't bother to segregate them at all and expect them to use streets along with drivers. But that is neither the world we have nor necessarily the one we would have absent subsidy.

  • Sir Chips Alot||

    all that nonsense does not say a thing. The subway should be privatized and it will need to pay its own bills. Period. End. of. Story. Stop the prog speak.

  • Mark22||

    The reason we can't expect fares to sustain transit is that transit provides ample benefits that are not internalized by users. That includes benefits to users of these other modes who "subsidize" transit.

    Like what? Decreasing demand for those other modes is already accounted for in market pricing, so it doesn't justify subsidies. Now, what other "ample benefits" is public transit supposed to provide?

    I can think of plenty of externalities that public transit imposes on the rest of society: taking prime real estate off the market and underutilizing it, creating a politically powerful class of government-dependent overpaid employees, etc.

  • Tony||

    Require registration fees for public masturbators.

  • Don't look at me.||

    ???????????????????????????

  • Tony||

    Well you can't just set up a hot dog stand anywhere you please.

  • Rhywun||

    Dude, "totally f*cked" was maybe in the 70s and 80s. The current problems are *nothing* in comparison - and remember that ridership is at levels not seen since the end of WWII, and that includes the modest recent declines. I've been riding for 20 years and the current situation is better than it was then.

    None of this is meant to deny the obvious structural and financial problems. I'm just tired of the phoney doom-and-gloom articles.

  • StackOfCoins||

    Reason does not care about black people.

  • tlapp||

    Let NY wallow in it's DeBlasio run socialist quagmire. It will be worth it to hold it up as an example for the rest of the nation why not follow that path.

  • SimonP||

    The MTA is run by Cuomo, not BdB. Nice try though.

  • Unicorn Abattoir||

    When the subway opened in 1904, it was five cents a ride, which was more than enough to finance operations. But when inflation eroded the value of a nickel, the city refused to permit fare increases.

    And if you take the subway, it still feels like a nickel ride.

  • Empress Trudy||

    If your answer is simply 'charge whatever people will pay to ride it, it's a stupid idea. All that does in encourage the corruption and malfeasance that got them there.

  • Mark22||

    "The rider should be paying the full cost with the exception of low income folks, where there's going to be some subsidy," says Baruch Feigenbaum, who's the assistant director of transportation policy at the Reason Foundation, the 501c(3) nonprofit that publishes Reason.com and Reason TV

    I can't tell whether Feigenbaum is naive or disingenuous: the system couldn't possibly be financed this way, in particular if opportunity costs for the real estate were taken into account. "Paying the full cost" is not an end in itself, it's a way of letting the market decide what services should continue and what services should disappear because the cost/benefit doesn't work out.

  • freda||

    When I was growing up in Brooklyn in the 40s and 50s we had a saying: "That and 15¢ will get you on the subway". Those days and my Brooklyn are gone forever.

  • Number 2||

    "In 1968, Governor Nelson Rockefeller orchestrated a backroom deal to reallocate revenues from nine major bridges and tunnels to transit."

    In fairness, this was not entirely a scheme to have drivers fund the subways. Rocky was acting to break the power and influence of the infamous Triborough Bridge and Tunnel Authority and its even more infamous chairman, Robert Moses. It effectively put Triborough under the control of the Metropolitan Transit Authority and, ultimately, the Governor. The funneling of Triborough tolls (the source of Triborough's power and influence) to the subways was a byproduct.

  • Incredulous||

    First off, do away with the fucking Transit Workers Union mafia. Problem solved.

    How the fuck can any system work when this type of criminal enterprise can blackmail an entire city and hold them hostage by striking, threatening to strike, engaging in work slowdowns or staging "sick outs.?

  • Incredulous||

    First off, do away with the fucking Transit Workers Union mafia. Problem solved.

    How the fuck can any system work when this type of criminal enterprise can blackmail an entire city and hold them hostage by striking, threatening to strike, engaging in work slowdowns or staging "sick outs.?

  • Incredulous||

    First off, do away with the fucking Transit Workers Union mafia. Problem solved.

    How the fuck can any system work when this type of criminal enterprise can blackmail an entire city and hold them hostage by striking, threatening to strike, engaging in work slowdowns or staging "sick outs.?

  • AD-RtR/OS!||

    You want to "fix it" - SELL IT!

  • Colossal Douchebag||

    The problem is, the group with the most control over the subway thinks it is working better than ever.

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