The Livable Communities Coalition

Working to improve Atlanta's quality of life through smart growth

Anti-transit myth #10: The free market prevails

Excerpted from Moving Minds: Conservatives and Public Transportation by Paul M. Weyrich and William S. Lind

Myth 10: Free Market Competition and Privately Operated Transit Is Better

Where the free market and private enterprise can be introduced to public transit, the public – riders and taxpayers – are likely to benefit.

However, as any free market economist will tell you, a free market demands a level playing field. If we want fair competition between transit and private automobiles, we would first have to level a playing field that, at present, is all hills and valleys.

Public transit is subsidized. According to the APTA 2000 “Public Transportation Fact Book,” in 1998, 65.7 percent of the expense of public transit – operating and capital costs – came from the taxpayer. The rest was from fares and other earnings. In dollars, the taxpayers’ annual contribution was $17.12 billion.

But what about highways? In 1994, the Office of Technology Assessment (OTA) estimated that total social costs for motor vehicle users range from $2,155 billion to $2,937 billion, with user fees covering $1,716 billion to $1,930 billion. That means highways received an annual subsidy of between $439 billion and $1,007 billion – the latter figure being more than a trillion dollars.

If we were to make transit and cars compete fairly, each would have to get the same subsidy or no subsidy. In addition, the price paid directly by the automobile driver and the transit rider would have to be paid the same way, so the payer could compare costs. It is not a level playing field, if for example, the fare every light rail rider pays on boarding the train includes the capital cost for the train itself, but the car owner only faces a similar capital cost when he buys a new car. Minds working the way they do, the car owner is not likely to remember that capital cost when he gets the car out of his garage. Driving will seem cheaper than taking transit.

If there were a practical way to create a level playing field between transit and automobiles, we’d be all for doing so and letting the best mode win. But so far no one has found the magical mechanism – magical because it would have to be retroactive, all the way back to the early 1920s, to make up for all those years when government-subsidized highways were destroying privately owned rail transit systems. In the world as it is, with automobiles receiving heavy subsidies in a myriad of ways, transit, to compete will have to be subsidized as well.

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