--- On Fri, 8/29/08, Jordan Hayes <jmhayes at j-o-r-d-a-n.com> wrote:
> Here's what I don't get: Wojtek wants more transit,
> but he doesn't want
> taxes to pay for it ... he wants 'rich white
> fatheads' to pay for it.
[WS:] You misinterpret my argument. I make a clear distinction between funding and controlling the intensity of use. I stated time and again that some form of general tax is a more efficient funding mechanism than user fees. That holds for all public goods, including transportation.
However, the intensity of use of public goods must be regulated in one way or another for the sake of efficiency. For instance, unregulated access to roads generates congestion and loss of efficiency to everyone. This is an example of the "tragedy of the commons" discussed on this list. Regulation is necessary to avoid such "tragedies."
Regulation can take two broadly defined forms - administrative regulations or differential pricing (i.e. varying transaction costs.) An example of the former is residential parking permit, an example of the later is road tolls. Parking permits are prefered to tolls, because they are a more efficient means of regulation of residential parking i.e. securing parking space for local residents by keeping all others out.
However, administrative means would be less efficient in regulating access to roadways, because determining who should have the priority under what condition would impose enormous transaction costs. Tolls are far more efficient in that respect, because they relegate that decision to individual users ("Is saving x minutes of driving time worth y dollars in tolls?"). The only determination that a regulating agency must make in this situation is to set the price right, i.e. not too low to avoid congestion and not too high to avoid underutilization.
Regulation of access through pricing can be extended to the entire transportation system as a whole - i.e. by varying transit fares and road tolls to achieve better utilization of all modes of transportation. For example, higher tolls during rush hours will force more people to use transit, which in turn will reduce road congestion, while increased ridership will improve the utilization of transit vehicles - so the system as a whole can be more efficient.
To recap - congestion pricing can be a very effective meachanism of controlling the use of transportation system and thus increasing its efficiency - if done right. But this is NOT the same as funding transporation projects via user fees - which I do NOT think is efficient. In short - congestion pricing to improve efficient use of both roads and transit - good; user fees to cover capital of operating costs of ransportation infrastructure - bad.
Wojtek