Don Oltmannd
Outlined below are my answers to the questions shown. I addressed the others in another post.
Would you cast a fairly wide net in capturing costs? i.e. would you try to capture environmental and health costs directly with the user fees/taxes?
User fees should capture all the costs associated with a commercial type activity, whether it is run by private enterprise or a government enterprise fund. They should include the incremental environmental and medical costs associated with the activity. They should also include other ancillary costs, e.g. gasoline should include the cost of the U.S. Naval presence in the Middle East that is devoted to keeping the oil sea lanes open.
Would you try to get the user fee to be exactly proportional to the cost or would "what the market will bear" be the guide?
If the activity is a not for profit operated for the benefit of society, i.e. highways, airways, transit systems, etc., because private enterprise cannot make money on it or government won't permit it, user fees should be sufficient to recover the cost of the facilities, including local property taxes, environmental impact fees, etc.
A commercial activity, i.e. airplanes, buses, trucks, trains etc., should pay user fees, usually embedded in fuel taxes, that are commensurate with the shared cost of using any common facilities. The facilities should pay local property taxes, etc. if they are not otherwise captured in the user fees.
How would you apply eminent domain to a parallel start-up, private venture toll road or airport? Would you charge a fee to compensate those who wind up near the wake of the road, railroad or airport?
Utilities in most states use eminent domain to obtain the easements necessary to construct power lines, gas lines, water lines, etc. They have to make a convenience and necessity case for the rights of way to the regulators. The largest electric and gas utilities in the U.S. are investor owned.
The same concept would apply to anyone that wants to build a private toll road, airport, etc. In fact, it applies in Texas, were toll roads are sprouting like weeds.
The Pennsylvania Turnpike, New Jersey Turnpike, etc., as well as Texas' toll roads were built by quasi government bodies, usually an authority set-up build and operate the toll facility. They are responsible for financing, building, and operating the facility. They are usually independent of the sponsoring state government(s), except the state guarantee's the authority's bonds, and usually has representatives on the oversight board. It also enables the authority to issue tax free municipal and authority bonds. Taxpayers only get stuck with the cost of these projects if they are financed with general obligation bonds, as opposed to revenue bonds, which would be rare for a toll road, bridge, etc., and the issuer defaults on the interest or principal of the bonds.
Interestingly, the original stretch of the Pennsylvania Turnpike was built on a right of way constructed in large part by the New York Central Railroad. Management of the Central, I have forgotten the year, was ticked off at the Pennsylvania Railroad, and it decided to build a competing rail line through southern Pennsylvania. Much of the right of way was graded and, if I remember correctly, some of the tunnels, which later became the accident prone tunnels on the PA Turnpike, were bored in preparation for the rail line. Ultimately, peace was made and the NYC abandoned the project.
I spent decades in the electric utility business. When I began my career the company was a regulated monopoly. It had no meaningful competition. As a result, it was the epitome of inefficiency. But in 2000 deregulation and competition came to Texas. It had dramatic impacts on the company and its customers. They were too numerous to discuss here, but one statistic is telling. Employment dropped from more than 17,250 employees to less than 10,000. And the lights did not flicker. Competition forced management to become more efficient.
The unnecessary employees were a hidden tax on the company's customers. Their pockets were picked daily to support the company's inefficiencies. And in doing so the customers lost a bit of their freedom to decide how to spend their money. This is exactly what subsidizing transportation does. It robs the people who don't or cannot use it of their freedom to decide how to spend their dollars.
Well, we have connected all the subsidies in a very complicated set of linkages that no one of us can understand. For example, transportation subsidies connect to real estate subsidies (using tax policy to subsidize individual home ownership), which yields a map of where people live and work that makes efficient transportation much more difficult.
Maybe we are looking at it from the wrong way. Maybe we should ask for less transportation in general, rather than seeking more efficient transportation.
What would happen if the govt somehow encouraged people to live near where they worked? Or encouraged businesses to build near where they knew there were available workers?
What happened to the "cluster" concept from 1950, where we would live and work in huge skyscrapers and take an elevator to work? To visit other clusters we would take a train. To visit areas between clusters we would pass a debit card over an unattended car and "borrow" it, with fuel and insurance, etc., to self-drive us. The space between clusters would be woods/desert/farms/parks/mines/lakes/airports/etc.
Why do all cities/counties aspire to "growth" in the face of universal historical evidence that larger cities/counties impose ever larger taxes/fees on their people for ever less satisfactory services/living conditions?
Oltmannd
The builders of the IRT, BMT, and IND may have been motivated in part to build their systems because it would enhance their land holdings. But the key point is that they developed and operated their systems for many years using funds raised in the capital markets as opposed to relying on taxpayer handouts. Much of the money, by the way, came from Europe, since the U.S. was a net debtor nation until after the turn of the century.
They were forced to sell the systems for a variety of reasons. Fares became a political issue, as was the case in most cities, and the owners could not generate enough revenue to cover their costs. Unions were another problem. No business could have withstood their abusive labor practices. I lived in New York during the Quill era and saw them first hand. It was during this time - 1966 - that the transit unions brought the city to a standstill through an illegal strike. The only thing that saved Quill from going to jail was that he died three days after the strike was settled.
One could argue that building the North River tunnels, as well as the East River tunnels, and Pennsylvania Station was done to further the interests of the stockholders of the Pennsylvania Railroad. Of course! That's what business is all about. It is the best argument for the free market system. It produces more winners than losers, but there are losers.
Conquering Gotham by Jill Jonnes, which I just finished, provides some valuable insights into the building of the tunnels (North and East Rivers) and Pennsylvania Station. I recommend it.
I would eliminate all subsidization of commercial activities, as well as cultural and entertainment subsidies, with the exception of start-up activities that are essential for the welfare of the body politic as a whole. I have been around long enough to realize, however, that this is unlikely to happen. Subsidies are so deeply embedded in our system, especially transportation, that it would be nearly impossible to wean ourselves of them. Too many vested interests! And the absence of a true national crisis that would be necessary to bring about radical change!
In a developing country, which is what the U.S. was when the National Road, Erie Canal, etc. were built, government subsidies were probably necessary to kick start these transport projects, which were probably necessary to open up the country, although there is no evidence that it would not have happened eventually. But subsidies should always be a last resort and, if they are necessary, they should be terminated as soon as possible.
"Often a gov't entity will trade off some property tax to get a new plant that will increase income tax more than that lost by the property tax subsidy. The net is positive even when all the piece parts aren't."
It can be positive or negative depending on where and how it plays out. But for the nation as a whole, it is mostly a zero sum game. Moreover, there is no evidence that plants would not be built if subsidies were eliminated. If it is a good business proposition, it will be built. Here are two examples of how tax abatements (subsidies) distort economic decisions.
Arlington, Texas gave GM a slew of enticements to build an assembly plant there. The effect for Arlington was just as you described it. The tax abatements (subsidies) given to GM were offset by increases in property tax payments generated from the properties that were built to house the plant's workers. The argument usually put forth by those favoring subsidies is the taxpayers, in the long run, will be winners. Fair enough for Arlington's taxpayers. But the Michigan community that lost its plant or the chance to get the plant would probably disagree.
A couple of years ago a major Dallas oil company, one of the richest in the U.S., wanted a new corporate headquarters. Management implied that it would leave Dallas for one of the suburbs if the Dallas City Council did not come up with more than $100 million in tax abatements to stay in Dallas. A goodies war between Dallas and the suburbs erupted. Ultimately, Dallas forked over the subsidies.
Whether the Dallas taxpayers will remain whole is arguable. It depends on how long they live in Dallas. The James boys would have been proud of this holdup, except they would have pointed to the fact that they had the decency to stick a gun in their victim's faces when robbing them.
Samantha wrote: Phoebe Vet wrote: Businesses don't pay taxes, their customers or clients do by virtue of being the business' source of revenue. Therefore, the customer is actually paying their share of road subsidies when they make a purchase.Whether business customers pay their share of the road costs or subsidies depends on their tax bracket and lifestyle. If they buy goods and services from a viable business, they are paying a small portion of the entity's tax liability, which goes into the general fund, from whence transfers to the Highway Trust Fund, in the case of federal taxes, are drawn. Salaries, wages, interest, etc. are taxable to the recipient. If a person works for a business, as an example, his salary is paid by the entity's customers, as are all business expenses. He is responsible for filing a personal income tax return for the compensation received. Employee compensation has nothing to do with the taxes paid by a business, other than it is a deductible expense. Businesses with taxable income; that is to say, those that make a profit, pay federal income tax and state income tax in those states that levy a business income tax. They pay other taxes as well, e.g. inventory taxes, payroll taxes, franchise taxes, etc. With one exception the tax, which is a business cost, is included in the price of their goods and services. Thus, the customers really pay the tax. If a business has an inelastic price curve, the owners (stockholders, partners, proprietors, etc.) pay the taxes. An inelastic price curve means that the business cannot raise its prices high enough to cover the taxes and pass them on to its customers. There are many reasons why a business might not be able to raise its prices. One could be loss of market share in a market where a minimum market share is necessary for survival. This happens, but it is rare. One of the worst ruses perpetrated by politicians is the assertion that businesses, especially corporations, pay taxes. Most of them know that the public doesn't understand the difference between personal income taxes and business income taxes. Or who really pays them. So they hang the burden on corporate America because they rightly believe that they will get less push back from the public.If all transportation subsidies were eliminated, public transit systems, e.g. Charlotte Area Transit System, etc. could be sustainable without public monies. If motorists were required to pay the full cost of driving at the pump, they would be shocked at the cost. Transit would be a viable alternative for many of them, as per my example of Dallas Area Rapid Transit, which would cost less per mile than driving. The biggest challenge for such a system would be low income people. It could be managed by raising the earned income tax credit, which would give them the money to pay the higher transit fares. Until the late 1940s most transit systems in the U.S. were owned and operated by private enterprise. The New York City subway system was built by private enterprise. And the North River tunnels that made possible Pennsylvania Station, not to mention the station itself, were built by the Pennsylvania Railroad. After the 1940s, because of subsidies paid to alternative modes of transportation, as well as a variety of economic and social pressures, private transit systems failed, and they were taken over by local governments.
Phoebe Vet wrote: Businesses don't pay taxes, their customers or clients do by virtue of being the business' source of revenue. Therefore, the customer is actually paying their share of road subsidies when they make a purchase.
Businesses don't pay taxes, their customers or clients do by virtue of being the business' source of revenue. Therefore, the customer is actually paying their share of road subsidies when they make a purchase.
Whether business customers pay their share of the road costs or subsidies depends on their tax bracket and lifestyle. If they buy goods and services from a viable business, they are paying a small portion of the entity's tax liability, which goes into the general fund, from whence transfers to the Highway Trust Fund, in the case of federal taxes, are drawn.
Salaries, wages, interest, etc. are taxable to the recipient. If a person works for a business, as an example, his salary is paid by the entity's customers, as are all business expenses. He is responsible for filing a personal income tax return for the compensation received. Employee compensation has nothing to do with the taxes paid by a business, other than it is a deductible expense.
Businesses with taxable income; that is to say, those that make a profit, pay federal income tax and state income tax in those states that levy a business income tax. They pay other taxes as well, e.g. inventory taxes, payroll taxes, franchise taxes, etc. With one exception the tax, which is a business cost, is included in the price of their goods and services. Thus, the customers really pay the tax.
If a business has an inelastic price curve, the owners (stockholders, partners, proprietors, etc.) pay the taxes. An inelastic price curve means that the business cannot raise its prices high enough to cover the taxes and pass them on to its customers. There are many reasons why a business might not be able to raise its prices. One could be loss of market share in a market where a minimum market share is necessary for survival. This happens, but it is rare.
One of the worst ruses perpetrated by politicians is the assertion that businesses, especially corporations, pay taxes. Most of them know that the public doesn't understand the difference between personal income taxes and business income taxes. Or who really pays them. So they hang the burden on corporate America because they rightly believe that they will get less push back from the public.
If all transportation subsidies were eliminated, public transit systems, e.g. Charlotte Area Transit System, etc. could be sustainable without public monies. If motorists were required to pay the full cost of driving at the pump, they would be shocked at the cost. Transit would be a viable alternative for many of them, as per my example of Dallas Area Rapid Transit, which would cost less per mile than driving. The biggest challenge for such a system would be low income people. It could be managed by raising the earned income tax credit, which would give them the money to pay the higher transit fares.
Until the late 1940s most transit systems in the U.S. were owned and operated by private enterprise. The New York City subway system was built by private enterprise. And the North River tunnels that made possible Pennsylvania Station, not to mention the station itself, were built by the Pennsylvania Railroad. After the 1940s, because of subsidies paid to alternative modes of transportation, as well as a variety of economic and social pressures, private transit systems failed, and they were taken over by local governments.
Not quite. Most of the transit lines in NYC, and likely elsewhere, were built or at least funded by developers looking to make money developing land they bought. The viability of the transit line, by itself, was a questionable venture, but when summed with the profit from real estate development, the sum was positive. Once the transit lines started losing money - which they did rather quickly - the owners sold them off, often to the local gov't.
This is why I asked about how wide a net you'd cast in capturing the true costs. Often a gov't entity will trade off some property tax to get a new plant that will increase income tax more than that lost by the property tax subsidy. The net is postive even when all the piece parts aren't.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Paul:
I didn't say a word about subsidies.
The logic with which I took issue was the claim that businesses don't really pay taxes because their revenue comes from their customers.
Unless they are counterfeiters, everyone's revenue comes from someone else. I just carried it to it's absurd conclusion.
Perhaps the sarcasm made it hard to understand. I will try speak more clearly in the future.
Dave
Lackawanna Route of the Phoebe Snow
Samantha is taking the Libertarian position of "let's start with a clean slate and try and reduce all subsidies, in transportation and other industries, in an effort to reduce market distortions, rather than throwing up our hands that 'all modes are subsidies', placing subsidies on top of the existing subsidies to try and correct those distortions."
I was going to respond that I don't subscribe to the pure, Libertarian, subsidy-free view, if for any other reason that as long as the government provides some services, through taxes, through grant of regulated monopoly, or other means, there is probably enough interdependence in the economy that the Libertarian ideal of purely free markets is a theoretical construct.
On the other hand, I feel confident enough in presenting this opinion that I don't have to ask "if I understand (Samantha's) meandering logic" when I don't really believe that Samantha's logic meanders at all, merely that I am uncomfortable with it because it challenges my world view. I would not say "oh never mind, my head hurts" when my head isn't really hurting from mental exertion, but again, were my head to hurt in some metaphorical sense, it would be from guarding my head from the entry of thoughts against which I am prejudiced rather than have reasoned arguments.
What is so complicated about anything Samantha, Paul Milenkovic, Don Oltmann, or Phoebe Vet is saying? Samantha takes a hard line against subsidies, Paul and Don are more accepting of subsidies but want to take a critical look at how they are spent, and Phoebe and others take the view that an entirely inadequate amount of subsidy is directed to trains. There are arguments pro and con on each of those positions, no one's logic meanders, and no one's head hurts from any of this.
I am certainly not against Amtrak subsidies, but when I am in the train advocacy circles where the "All modes are subsidized" argument comes up and the view is expressed that all "Amtrak reform" proposals reflect either ignorance about the rail mode or malice towards it, my hand reaches to cover my wallet. After the give and take between Samantha and Phoebe, I started out in the middle, but the fact of the matter is that Samantha is keeping her head about this and Phoebe is starting to spit pins, which suggests that Samantha has the facts on her side.
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
Samantha:
Let me see if I understand your meandering logic.
That means that my purchase, which also pays the salary of the checkout clerk, therefore is paying the checkout clerk's income tax, so I am paying the clerks share of the road tax that comes from the general fund. That isn't fair.
But wait. Some other poor schnook is paying MY salary by virtue of their purchases, so I am not really paying MY own taxes, or for that matter the profits of the store.
But then THAT person ... oh never mind, my head hurts.
Mass transit benefits society in general. It is an apropriate use of tax dollars.
I think from a good economics point of view subsidies to any industry always create bad decisions. They are awarded to prop up inefficient industries and distort the market so I understand where you are coming from. I would see the problem with transport however is that we have moved so far away from a free market that I'm not sure we could ever get back to it. Of course you could simply just remove subsidies (phased of course) but due to subsidies our entire transport infrastructure is lopsided. How do we take account of history? I am personally in favour of spending money to correct mistakes. I view government subsidies in the past that have made countries road dependant as a mistake. Perhaps that's just becuase I'm a rail fan!? I hope not. Anyway I feel that the best way to respond is to invest in rail to correct past mistakes. By investing significantly rail can capture enough of a market share (it is a great way to travel after all!) to be profitable to some degree - you'd have to eliminate all subsidies to make it truely profitable. This is the case in Britain where more and more rail companies are moving towards profitability. An amazing example is my local Scotrail. The company has routes which would make your Amtrak long distance look like the honey pot. However they have a good mix of routes which allows an overall balance. However the key point is to get to a stage of no subsidies you have to put in serious money to really make the rail network viable. I think it's worth it based as I said on the unfairness of past policies. I don't however see anyone in America who is willing to spend that kind of money and until they do it will always be a conflict between subsidies and no service at all.
Samantha-
An interesting idea - though I'm not sure how well it would go down with cities and states. There's a lot of history of direct subsidization of transportation - particularly construction - by cities and states.
The Erie canal was built to enhance commerce at the port of NYC. The Boston and Albany RR was built to keep Boston in the game with NYC. The disateroust Main Line canal in PA was built to keep Phila in the game.
The National Road was built by the Feds to open the west to development.
Every toll road in the east prior to the interstate system was built by a state authority. Every major bridge in the country was build by a state or joint gov't authority.
All of these were done to enhance commerce in the area - the idea the net commerce increase less the cost of doing the project was a net "win" for the state, city, area.
How would you apply emminent domain to a parallel start-up, private venture toll road or airport? Would you charge a fee to compensate those who wind up near the wake of the road, railroad or airport?
Would this prohibit a city/state/region from undertaking a subsidized transportation project to improve local commerce? e.g. "you built your auto plant here and we'll build you an interstate interchange for free".
Blue Streak
Entrance fees do not cover the full cost of running the National Park Service. It gets an infusion of general funds. It should. It is not a commercial enterprise, and I don't think that it should be, although one could make an argument for privatizing it.
My concern is masking the true cost of commercial activities with subsidies and, therefore, distorting the price, which frequently leads to sub-optimum behavior as per my post.
If you are a middle class person who pays federal income taxes, owns a home and thus pays property taxes and owns a car, or at least drives one; you are paying the full or nearly full cost of driving. If you don't pay federal income tax, or pay a very low rate, then your driving is subsidized by more affluent motorists.
If the powers that be rolled the federal subsidies, cost of county roads, cost of city streets, etc. into the price of gasoline, as opposed to hiding them in transfers and other taxes, the price of gasoline would reflect its true cost. But governments would be able low their tax rates, i.e. a very small lowering of federal and state income taxes, a more substantial reduction of county and city property and sales taxes, that would offset the increase in the price of gasoline.
If the price of transport reflects the true cost of each transport mode, users are likely to make better decisions about which one to use. A likely outcome would be increased of rail use in short corridors with a corresponding decrease in driving and flying.
Higher fuel prices would result in some poorer citizens being unable to drive to tourist attractions, including the national parks. If society agrees that everyone should be able to travel to these sites, less affluent persons could be given a tax credit so that they could get to them.
Heaps of people would oppose changing the current system of subsidizing transport. The only way that it could be changed is through a process similar to the recent military base closings. A commision would have to be formed and the process would have to be taken out of the political sphere. What is the chance of it happening? Not very good! But that does not mean that it shouldn't.
The vested interest that would oppose your idea the most is the tourist industry. At those prices I would never visit our national parks and other attractions. (another subsidized item).I am afraid that without subsidized transport that what cheap transport has enabled would disappear and a gradual balkanization would occur.
Under "What Would You Build" I was asked whether I would eliminate all transportation subsidies. Discussed below in some length, because the subject is complex, is my answer.
Over a reasonable period, say five years, all transport subsidies, with the possible exception of some start-ups, should be eliminated. Doing so would result in a better allocation of scare economic resources and help rationalize transport choices.
Subsidies may be appropriate for new commercial activities that benefit society as a whole, but once they have been weaned, the subsidies should be phased out. Unfortunately, those who receive them, as well as the politicians who grant them, become addicted to them. It is nearly impossible to get rid of the subsidies.
Users would be required to pay the taxes and the fees, which are mainly embedded in the price of fuel, to cover the cost of the facilities and services that they use. The earned income tax credit would be expanded to help the working poor, as well as the mobility impaired, etc. offset the burden of higher transit costs.
Airports, train stations, bus stations, transit systems, etc. would pay property taxes. There is no rational reason why they should be exempt. Most of them use local services, i.e. police, fire, sanitation, etc.
Subsidies frequently send the wrong pricing signal. As a result, buyers and sellers make sub-optimum choices. Most motorists, for example, don't know how much it really costs to drive. As a result many of them buy larger than needed gas guzzling vehicles that contribute to a chain of negative outcomes. They cause the U.S. to import more foreign oil. This acerbates the balance of payments problem, which is a factor in the decline of the U.S. dollar. The weakened dollar is a significant factor in the dramatic run-up in the cost of petroleum, which in turn feeds inflation. It hits the poor and elderly the hardest. This is just one example of the upstream and downstream impact of subsidies.
The matrix of subsidies in the U.S. is so complex that few people understand it. Here is an example. Motorists pay federal fuel taxes and fees to fund the federal highway system. But the taxes and fees don't cover the cost of the system. So the Highway Trust Fund is subsidized by transfers from the general fund. In 2007 it was nearly $34.5 billion. Well, actually it was approximately $39.1 billion; the difference being for public transit, etc., which has little to do with highways. But this is only the beginning of motorists' subsidies.
The price of gasoline and diesel does not reflect the cost of maintaining a naval presence in the Middle East, which is there, at least in part, to keep the oil sea lanes open. Nor does it include the cost of the environmental damage or incremental medical costs associated with burning prodigious amounts of fossil fuel for transport. Moreover, the price of gasoline does not reflect the cost of building and maintaining county roads or city streets. Nor does it include all of the costs of policing the nation's roadways or picking up the pieces after a traffic accident or the free parking for some employees in large cities.
Wow, motorists get a lot of government subsidies. Or do they?
In 2007 there were an estimated 204 million licensed drivers in the United States. The majority of them paid personal federal income taxes. And almost all of them paid at least a small portion of the business federal income taxes. Businesses, as a general rule, don't pay taxes. Their customers pay them. Every time someone buys a good or a service from a business, he or she helps pay the entity's federal taxes.
Income tax revenues go into the general fund from whence the Highway Trust Fund shortfall is drawn. Thus, motorists as a group subsidize themselves, although they don't know it, because the subsidy is not reflected in the price at the pump. There is, however, a caveat in this. Wealthier motorists pay more in federal income taxes than less affluent motorists and, therefore, cross subsidize poorer motorists.
In effect, because of their large base, motorists pay the cost of driving one way or the other. The same is largely true for the 678 million airline passengers carried in 2007. In the case of rail passengers, including transit riders in most locations, a relatively small percentage of the population uses the trains or public transit. Accordingly, they are more dependent on funds paid by people who do not or cannot use the system. Amtrak's long distance trains are the worst example. Their passengers get one of the highest subsidies of any common transport carrier in the United States.
If users paid directly (at the pump or ticket counter) the full cost of their transport mode of choice, they would know what it is really costing them to go. What they want and can afford would bubble to the top of the transport priority list. Although no one knows how the elimination of subsidies would change the transport scene, there are probably three or four plausible scenarios. In the most likely one for commonly used public transport, airplanes would be used for long distances, trains for relatively short high density corridors (commuter and intercity), and buses in lightly populated areas. Personal vehicles would remain the choice for most trips, e.g. commuting, shopping, leisure activities, family vacations, etc.
If the full cost of driving was rolled into the price of gasoline, it would push up the cost significantly. How much? I don't know. Nor I suspect does anyone else. But let's assume that it went to $5.50 per gallon. This would push the estimated direct cost of operating my Toyota Corolla to more than 35 cents a mile.
Light rail riders in Dallas pay $1.50 per ride and get an average subsidy of $3.66 per trip. If the subsidy was rolled into the fare, it would be $5.16 a ride. That's pretty steep. But on a per mile basis it could be less than driving. For a passenger riding from Plano to downtown Dallas, which is approximately 19 miles, the cost would be 27 cents per mile. Hm, that's considerably less than driving, especially for people who drive big SUVs and pick-ups. In fact, the end points differential might be great enough to attract private investors, since they could earn a return without charging as much as the per mile cost of driving. Of course, load factors, labor costs, parking variables, politics, mind sets, etc. would have to be factored into the question of whether a private operator could make money on the system.
Would shifting all of the costs of driving to the end user result in a light rail line instead of another lane of highway even if the cost was less? Not necessarily. People are motivated by more than cost. In a nation as rich as the U.S., at least in the aggregate, the people might opt for another highway lane, even though it would cost considerably more than building a rail line, because they can afford it. But without the mish mash of subsidies they would have the data to make a true cost comparison of the options and hopefully make a rational choice.
What is the probability of eliminating or reducing the matrix of U.S. transport subsidies? Not very high! Too many entrenched interests in the current system! But change is possible.
Melbourne, Australia privatized all of its commuter rail, tram (streetcar) and bus services approximately 10 years ago. The contract operators are able to deliver a better service than the government provided. They still require a subsidy, but the red ink is less than before privatization. How did they do it? The contract operators created a business like work environment that resulted in better productivity. How do I know? I lived in Melbourne from 1999 to 2004. I saw the results every day.
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