----- Original Message ----- From: "Max B. Sawicky" <sawicky at bellatlantic.net>
>I think the problem is not one of capacity, but a general
>political bias against a system that appears to lose money,
>thanks to much foolish talk about the evils of public borrowing
>(ahem). There shouldn't be a capacity problem because if the system
>provides external benefits, it should be possible for the
>Gov to capture those with general taxation.
I don't think my point relates to the issue of deficit spending per se (although I understand your analogy), but to the issue of what levels of government usually fund mass transit versus those that will benefit from any additional taxes generated.
Local government pays for mass transit generally, but the additional economic benefits generated, except for the subset of sales taxes and property taxes, do not go to local government. In states like California with regimes like Prop 13, the problem is even worse. Economic growth with anything other than retail is actually a net loser for local government, since it generates more demands on local services without the new revenue needed to service it. (That's one reason slow growth politics is so popular there.)
The advantage of local government actually owning the property around mass transit hubs is that they either directly collect the increased rents or can sell the property at its new higher value due to mass transit deployment. And frankly, why shouldn't the public directly expropriate the externalities, rather than letting private real estate interests do so? I'm enough of a believer in Henry George to see that point. Why only get a bit of the externalities instead of the whole thing?
I've actually thought a good campaign for the Left would be to say to the "taking crowd" (those who complain about regulations reducing the value of property) that we'll make a deal-- 100% compensation for all losses due to government regulation in exchange for a 100% tax on all private gains due to government regulation and infrastructure built. The public would come out way ahead on that deal.
-- Nathan Newman