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That is an excellent point indeed. I observed a similar situation during my last visit to Nairobi, where air so polluted by exhaust fumes that breathing is difficult, and visibility is impaired. Roads are in a dismal shape (except in Nairobi suburbs), traffic accidents abundant. What is more, the cops routinely set up traffic "check points" to extort bribes from the motorists.
Ironically, the country's 1-metre gauge rail is virtually left to rot. That is uttmost irony, because steam locomotive does not requite imported gas, it can run on locally obtained fuels (this is why some developing countries still use steam). To put things in a perspective, gasoline in Kenya cost as much as it does in Europe, whereas the pay is about $120 (KSh 6,000-7,000) a month.
However, the Kenyan tiny middle class is very fond of their autos - they are not only a status symbol, but above all an important safety measure separating them from the riff raff, as Nairobi is among the most crime-infested cities in the world.
It seems that automobile-based transportation has little to do with economic rationality, and in fact it is antithetical to pareto optimum. It has everything to do with social/economic institutions - oil/auto mfg monopolies, the growth of the middle class and the assertion of its class identity. A war on th ecar and the burbs is not just a war on monopoly capital, but on the middle class as well - a truly uphill battle indeed.
wojtek