Revenue
One concern people have with the idea of higher street parking fees is the burden this would place on the poor. This kind of worry is, I think, often overstated — middle class people underestimate the extent to which poor people do less driving than the middle class and are in fact the primary victims of driving-oriented public policy.
But another point I would make about this is that a great many of things we would like to do to help poor cost money. And so to do them, you need to find ways to secure revenue. And revenue-enhancing measure is going to be politically difficult to pass and is going to cause some hardships. One consequence of this is that it’s good to look at revenue measures that also accomplish other policy objectives. Auctioning carbon permits will help avert catastrophic climate change and raise funds that can be used to, among other things, further help the cause. Charging market rates at parking meters alleviates parking shortages and reduces idling, thereby reducing emissions and congestion. Congestion pricing for roads reduces traffic jams. Unlike many other kinds of taxes, these car-related are measures that will increase economic efficiency and boost growth.
As an illustration, the DC Council is going to consider a bill to raise parking meter fees and use the money to continue funding the important and effective “housing first” anti-homelessness program that, otherwise, will get the axe due to the economic downturn. The increased fees would probably be useful on their own terms even if the money was just buried in mines because of its beneficial impact on the parking/traffic situation, but the fact that the revenue can actually be put to use on crucial social services further bolsters the case for the step.
75 Responses to “Revenue”
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December 7th, 2008 at 6:27 pm
It would be good if the $$ were buried in mines!?!?!?!??! are you freaking retarded?
I will start with the assumption that on-street parking is and should be a public good.
The only outcome of your “buried in mines” policy would be that the rich would get to enjoy a public good, while the poor and middle class would be sh*t out of luck.
The parking goes to whoever is willing to pay the highest price. In Lord Yglesias’ world this is whoever would get the highest utility out of the parking space, but in actuality it is whoever has the most $$…
Guess trust fund babies (TFB’s) like Lord Yglesias don’t under stand how the other 90% live. TFB’s don’t understand that for most people taking public transit increase their commute time. TFB’s don’t understand that for most people that extra time would be valuable as it means extra time with the kids, wife, etc.. TFB’s don’t understand that don’t a public good is meant to be avaliable to the maximum number of people, and not supposed to be avaliable only to people with the maximum amount of $$….
It really saddens me that Lord Yglesias is regarded as a voice of the Progressive Movement. If that is true call me a liberal, and not a progressive!
December 7th, 2008 at 6:27 pm
One more time: it isn’t an issue of “costing the poor” money. It is an issue of basic fairness, in that our society should not be structured purely for the benefit of those who have more money than time and plenty of money at that. Everyone should have a reasonable shot at getting one of those **short term** (30, 60, or 90 minute) downtown parking spaces.
This system worked quite well in Chicago, served everyone’s interests, and provided basic fairness from the invention of the parking meter until 1995 or so when King Richard II started aggressively farming the parking lot developers for campaign contributions. Do you really think it is the job of liberals to trample on basic societal fairness in favor of the very rich, the parking lot developers, and the politicians who extract cash from them? Is it really the job of liberals to force the extreme ECON101 philosophy on entire metropolitan populations when the failures of that philosophy are so brutally on view at this very moment?
Cranky
December 7th, 2008 at 6:33 pm
> TFB’s don’t understand that for most people taking
> public transit increase their commute time. TFB’s don’t
> understand that for most people that extra time would be
> valuable as it means extra time with the kids, wife, etc..
I was with you up to that point: I don’t see how you can have essentially free long-term parking in the core of a successful urban area. When you talk parking meters you are generally talking short-term (30-90 minute) street spaces.
Cranky
December 7th, 2008 at 6:35 pm
Look, speaking here as a staunch, vehement anti-driving ideologue, please stop. Having a dilettante passing on talking points with an air of authority really just isn’t as helpful as you might think.
December 7th, 2008 at 6:57 pm
My concern is not merely the burden on the poor, but on the middle class as well. I already ride public transportation to work because it would cost upwards of $500 per month to park within a 1 mile radius of my workplace. Living in Los Angeles, I am among the lucky in that there is a realistic public transportation option available to me. In much of the metro area, however, public transportation is so poor that it can take up to an hour to travel 5-10 miles. In a city where in is not uncommon for people to have no choice but to live far from where they work, most face an unfortunate choice between paying an exorbitant price in money or an exorbitant price in time.
Increasing the cost of parking is a regressive solution to over-reliance on vehicles that fails to account for the structural reasons why individuals use vehicles. Further, pricing parking such that only the rich can afford to drive is only a guarantee that most people will have a harder time getting from place to place at all. It is bad enough that, at the university where I work, you can tell the upper-middle class and rich from the rest based on who cruises in with their own vehicle and who wastes half of their day getting to and from school on overcrowded buses that not only wait in traffic but stop every half-block.
Such measures may ultimately reduce the use of motor vehicles, but in a way that expresses exactly the worst parts of American capitalism. And as long as people continue to believe that the solution to the over-use of cars is to make car use unaffordable for all but the upper classes, the improvements that are desperately needed to public transport in much of the country (west coast!!) will keep being pushed off. Until public transportation is ready to pick up the slack, though, those of us with sub-median incomes need to get to and from work, and for many of us that involves parking somewhere.
December 7th, 2008 at 7:14 pm
As far as burying congestion and parking fees in jars in deep underground mines, this seems like a poorly remembered mutation of the point about short term demand stimulus … but its got it the wrong way around.
For a Pigovian or “green” tax or fee, where the purpose of the tax or fee is to reflect an externalized cost into the market system, its collecting the tax or fee then handing it back as a social dividend that is beneficial. Indeed, it is preferable to using the taxes or fees to fund something unrelated, because the “correct” green tax or fee is not determined by the funding needs of any arbitrary program.
Now, it may be that some of the fee can be used in a way that reduces the external cost, so that that a smaller fee is required. So if the parking fees are spent in a way that reduces the subsidy tilt in favor of road transport, that could reduce the parking fee required to allocate scarce parking.
For example, using parking fees collected to finance a fare-free zone for those who arrive in an urban center on a common carrier, or who park in gateway parking outside the urban center, can benefit congestion-reducing transport of all sorts, both public and private, without requiring a complex revenue sharing scheme between the commuter transport and the urban transport within the fare-free zone.
December 7th, 2008 at 7:15 pm
By the way, Matt, my condolences on the death of your dream that Obama was going to build solar powered magnetic levitation urban trolleys in the next 24 months with his stimulus plan. Instead, it looks like he’s going to spend it largely filling potholes and changing lightbulbs.
December 7th, 2008 at 7:22 pm
The fierce urgency of now demands nothing less than pissing away a trillion or so dollars on patching up a fundamentally failed infrastructure!
December 7th, 2008 at 7:30 pm
Corey says:
Increasing the cost of parking is a regressive solution to over-reliance on vehicles that fails to account for the structural reasons why individuals use vehicles… at the university where I work, you can tell the upper-middle class and rich from the rest based on who cruises in with their own vehicle and who wastes half of their day getting to and from school on overcrowded buses that not only wait in traffic but stop every half-block.
Does Corey notice the contradiction here?
It is true that charging for parking imposes greater burdens on those among the poor who drive than on the rich. Charging for housing does the same. So does charging for food. Corey, Jimbo, and Cranky seem to believe that parking is a more fundamental human need than food or shelter.
There are certain advantages to the market form of economic organization. There are also reasons not to use it in some cases. We don’t meter the air we breathe. We’d be better off, in my opinion, if we moved a long way toward non-market allocation of health care. On the other hand, I think the market is the best way to allocate fine wines and Big Macs. Corey, Jimbo, and Cranky need to explain why parking is among those goods that should be outside the market system. Pointing out general weaknesses of market allocation, such as the greater ability of rich people to buy things compared to poor people, doesn’t cut it, unless they think that poor people also deserve equal access to grand cru Bordeaux.
The argument from inaccessibility without a car also doesn’t cut it, since Matt was talking about downtown DC which is extremely accessible by transit.
December 7th, 2008 at 7:30 pm
Written like a true Trust Fund Scum Bag who expenses any parking fee.
Kidding. Sorta
But seriously, “reduces idling”?
December 7th, 2008 at 7:37 pm
Matt is applying some basic welfare economics here – the theory of social and private costs and benefits. The classic example used by Pigou, the economist who first came up with this theory, was that of trains in England. They provided a private benefit to their owners and consumers – transportation. In return for these private benefits, they had to pay up in some private costs – they had to buy trains, build rails, fuel the trains with coal, etc. But they did not have to pay for the social costs of running the trains either. When the trains killed livestock or a spark set farmland ablaze, society suffered real, tangible costs – and those enjoying the benefits of trains did not have to account for these costs.
When there is a divergence between social costs and private benefits, we say there is a negative externality. Now, there are many solutions to externalities. One solution to the train problem in England was to sue the train companies. Another fanciful solution which turned out to have some practical uses, proposed by Coase, was for the farmers and other affected people to negotiate with the train companies. Ultimately, the farmers would either pay the trains to run elsewhere, or the trains would compensate the farmers for their losses. And if these private solutions failed, the final solution – and a popular one these days – is a tax on the person imposing the costs on society.
In case it isn’t clear, this parking situation is an obvious case of a negative externality. When you get free parking, you enjoy the private benefits of getting to work more quickly, etc. But you aren’t paying for the negative externality you impose on society by snapping up that parking lot. To take a very extreme and unrealistic example, what if you parked next to a pharmacy, and a guy on the verge of a heart attack was driving around looking to refill his heart medication? If he died, his death would be a cost to society – but it is not one you incorporate into the private costs of parking to you.
Now, that is a very extreme example, but the same logic can be applied to letting rich people park ahead of poor people. The reason people are rich is that they often get paid more than poor people (yes, bear with me here). And the reason they get paid more is because they often contribute more to the economy than poor people do. You might be outraged at this statement, but look at it another way. Should a janitor have parking instead of a doctor just because the janitor arrived first? Should Bill Gates or Steve Jobs have to cruise around for parking while all the slots are occupied by the unemployed out Christmas shopping? The point of these ludicrous examples is not to make light of poor people’s plight, but to observe that rich people’s time is more valuable than poor people’s, and as such, society benefits more by prioritizing the parking of rich people.
And the democratic thing about a parking tax is that it benefits not just the rich people, but society. If you are in a medical emergency, you won’t care if it’s $10 an hour to park somewhere – you’ll park and hurry to the hospital. If you have to get to your daughter’s ballet recital or pick up important documents from a government building, you will pay the high price if you believe it is worth it. The point of having a high price is to ensure that only important uses are prioritized. In many cases, the rich have more important things to do with their time – but everyone has some crucial moment in their lives where every second matters.
At the moment, most municipalities around the world allocate parking not so much on price but on queuing. Generally, queuing is an inefficient way to allocate scarce resources. The 1970s oil crisis was just a glimpse of how life might be under this kind of rationing. Granted, it might feel fairer, but the most important uses are left to rot, and the winners are the few lucky enough to get there first.
If we really feel this strongly about parking, then I think it is more important that we get rid of the price system in basic goods and necessities. Make public transport free. Force bakers to give bread out at no cost. Thrift stores should be giving out their clothes, not selling them. Gas should be free too. We can go on and on, really. If we do not accept the realities of pricing in parking, why accept them anywhere else?
Matt’s point about just dumping the money somewhere is meant to emphasize that a tax internalizing the externalities of parking is not meant to generate revenue. It is meant to ensure only the most socially important uses are made of parking. The tax revenue is just a nice side-benefit. I don’t really see that as a justification for dumping the money, though. It makes more sense to me if we just use it to benefit those who suffer from reduced access to parking – by building more public transportation, and providing other public services to the poor. I think any Pigovian tax (be it higher parking fees or a carbon tax) should be revenue neutral, and the revenues mostly poured back into society through services for the affected. And if no use can be found for the revenue, just rebate it back to the poorest in a negative income tax or tax credit of some sort.
December 7th, 2008 at 8:14 pm
> And the reason they get paid more is because they often
> contribute more to the economy than poor people do. You
> might be outraged at this statement, but look at it another
> way. Should a janitor have parking instead of a doctor just
> because the janitor arrived first? Should Bill Gates or
> Steve Jobs have to cruise around for parking while all the
> slots are occupied by the unemployed out Christmas shopping?
> The point of these ludicrous examples is not to make light
> of poor people’s plight, but to observe that rich people’s
> time is more valuable than poor people’s, and as such,
> society benefits more by prioritizing the parking of rich
> people.
>
> And the democratic thing about a parking tax is that it
> benefits not just the rich people, but society.
Very smooth job of assuming your conclusion in your arguments. As with the “preferred customer” lines at airport security checkpoints that are operated by the TSA, a federal agency, I see no reason why Bill Gates or Steve Jobs should have priority over me or the poorest driver in a search for open-street city or open mall-lot parking.
And for whatever it is worth, prior to his marriage Bill Gates was often spotted around midnight at Seattle 7-11s waiting in line to buy ice cream and chips, so he apparently didn’t think his personal space was more valuable than anyone else’s. He had the option of sending an employee out to shop for him, shopping at an exclusive grocery store with private parking, buying the 7-11 and ordering its manager to close from 11-12 every night for his convenience, etc. But once he put himself in the public square his high value to Microsoft Corporation had exactly zero bearing on the worth of his time as a Citizen.
And for the ECON101 people: utility is not equal to money. In order to graft ECON101 principles into the real world economists usually assume that U = $, but that is one of the more obvious breakdowns of conventional economics compared to real human beings.
Cranky
December 7th, 2008 at 8:21 pm
BTW, a lot of people here seem to live in American cities very much different from the ones where I have lived, driven, and parked. In my experience (and this is before the politicians really learned how to farm the parking lot builders around 1995), in the most desirable area(s) of a city parking meters have very short maximum times. Generally these were 30 minutes at the most congested/desirable spot (even 15 minutes in some cases), 60 minutes 1/2 mile radius out, 60 minutes in the one mile radius from the desirable location.
3-5 miles from the desirable spot (say, 23rd and Clark in Chicago) you might find 6- or 12-hour meters with 50 cent or $1 fees, but those were a long walk from the places people wanted to be. I have never seen 50 cent, 12-hour meters – or any 12-hour meters – in the desirable spots of any US city I have ever visited.
(Prior to 1990 or so one could game this a little by “feeding the meter”, but after meter enforcers started carrying handheld computers to record license plates and radios to call the booters that game ended and it was one time slot per park)
Cranky
December 7th, 2008 at 8:25 pm
Jimbo Slice: I’ve never seen a parking meter that lets someone park there for 8+ hours in the middle of the day so I don’t understand why you’re talking about commuters.
December 7th, 2008 at 8:36 pm
As touching as Cranky and Jimbos completely fake populism is, I don’t believe for a second that charging $1.50/hour instead of $1/hour will prevent the poor from parking.
December 7th, 2008 at 8:44 pm
> As touching as Cranky and Jimbos completely fake
> populism is, I don’t believe for a second that charging
> $1.50/hour instead of $1/hour will prevent the poor from
> parking.
In the Kingdom of Richie Daley, when parking is privatized (or street parking is simply removed, which is mostly what happened, the price when from 50 cents for 30 minutes (call it $1/hour if you want) to $15 for the first hour.
Cranky
December 7th, 2008 at 8:46 pm
And what does that have to do with the price of tea in China?
December 7th, 2008 at 8:49 pm
I don’t believe for a second that charging $1.50/hour instead of $1/hour will prevent the poor from parking.
I work with a bunch of people who make $10/hr and they won’t pay anything. There is a municipal lot that costs $75/month and I don’t know anyone who pays it. It’s free for two hours and then you get fined and they get up every two hours and shuffle spots in the parking lot.
December 7th, 2008 at 8:53 pm
Jer– but the point of MY’s advocacy is to charge sufficiently much that people will reduce their parking. It’s meaningless if it isn’t enough to hurt. Indeed, pain, rather than revenue, is the point.
Matt– this argument, again, would be much more convincing if you weren’t someone in the extremely privileged position of being a nondriver.
December 7th, 2008 at 9:03 pm
There is a municipal lot that costs $75/month and I don’t know anyone who pays it. It’s free for two hours and then you get fined and they get up every two hours and shuffle spots in the parking lot.
Huh? You pay $75/month for the privilege of having two hours of free parking per day? I’ve never heard of such an odd pricing scheme.
December 7th, 2008 at 9:06 pm
Anthony, so do you think that $.50 is not a big enough increase to have any effect, and does this mean you disagree with Cranky and Jimbo that such an increase will leave only the rich able to park?
December 7th, 2008 at 9:06 pm
Tyro, I took it to mean that the lot was 2-hours free parking, or unlimited parking for $75/mo.
December 7th, 2008 at 9:08 pm
> And the reason they get paid more is because they often
> contribute more to the economy than poor people do.
This is backwards. Wealthy folks contribute more to the economy because they have more money, and they have more money because they’re paid more or inherited more.
As for providing goods and services to society, much of the wealthy-folk don’t work or need to work. They “invest” full-time. Their resources and wealth works for them. This isn’t contribution of goods and services – and if you return to “contribution of money”, see the paragraph above. You’re wrong either way.
> You might be outraged at this statement,
No, not really.
> but look at it another way. Should a
> janitor have parking instead of a doctor just
> because the janitor arrived first?
Sure, why not? We’re talking about short-term parking to visit stores and shop, not commuter parking. I don’t buy into the idea that we should allocate public goods specifically to provide their benefits to professionals. That’s a weird idea.
December 7th, 2008 at 9:12 pm
“Let’s fuck over poor people.”–Lord Yglesias
Does Lord Yglesias even have a driver’s license?
December 7th, 2008 at 9:16 pm
A lot of these arguments hinge on the (correct) view of street parking as “public property.” Why should people pay private-garage-like rates for parking in a public place on public streets? At the same time, parking is a scarce resource in a congested area, and we have to stop simply assuming that we are owed 2 hours of essentially free parking during peak hours.
Look, I love all the free, permitless street parking in Manhattan. But all it does is encourage people like me to drive into the city knowing that I can “beat the system” by finding street parking somewhere for free, rather than park outside the city and take the Park & Ride into downtown.
As far as the problem of $10/hr workers who need parking for their jobs, we’re essentially claiming that virtually-free all-day parking is a subsidy for cities to keep lower-paid jobs in specific downtown areas, so as to discourage employers from feeling the need to move out, or crimping their profit margins by paying employees enough money to make it worth their while to work there, given the hypothetical parking costs.
December 7th, 2008 at 9:17 pm
Why not scale the price of a parking spot relative to the average price of a good or service in the nearest 4-5 stores?
We can probably assume the poor are priced out of the priciest stores anyhow. There’d be the weirdness of two adjacent spots having slightly different prices, and it would be a nightmarish mess to initiate and develop and implement, but it solves many of these fairness issues. Cap the maximum price of parking per hour at one half of the minimum wage, cap the minimum at $1 per hour or $0.50 per hour, whichever seems more sensible, and there you go.
December 7th, 2008 at 9:29 pm
At least in LA, enforcing the abuse of disabled placards or just making those cars follow the same metered time limits rules as everyone else would free up hundreds of spots in Westwood, Santa Monica and downtown.
In California what constitutes a condition that warrants a disabled placard is vague and nurses and physician assistants can attest to the disability on the application form. Unsurprisingly, 11% of all licensed drives in the state have some type of disable placard. I doubt the poor make up a large percentage of the dbag scofflaws who are abusing the system.
December 7th, 2008 at 10:20 pm
the fact that the revenue can actually be put to use on crucial social services further bolsters the case for the step.
And, when a few years down the road, somebody suggests ending that program and spending the money somewhere else, do you think anyone will remember the link between the two acts?
December 7th, 2008 at 10:48 pm
I drive to work and I get up early so I can get a metered sport, I pay $0.25 for 30 minutes, max 10 hours and I put in 10 hours just to be safe (For you philosopher folks thats 10 hours x $0.50/hr = $5/day). If I am late I have to park in the private lot a few blocks down, its $25/day.
I don’t make the big $$ or have a trust fund so that $20/day difference is a real to me. To people like you and Lord Yglesias its just a few half-cap mocha latte frio vente at Starbucks which you will buy anyways, and its worth it because we would have “market” pricing.
December 7th, 2008 at 11:11 pm
I don’t make the big $$ or have a trust fund so that $20/day difference is a real to me.
‘Kay.
Well, I don’t have those things either. Interesting fact: when I realized what parking was going to cost me in downtown, I got rid of my car.
December 7th, 2008 at 11:11 pm
In most cities, you couldn’t do that Jimbo. So I’m not sure what the argument you are making is. Or were you just a jackass?
December 7th, 2008 at 11:13 pm
Once again, Lord Yglesias tends to propose only painful measures that will not inconvenience Lord Yglesias. It is, on a small scale, exactly the same as the Very Serious People who always want to reduce Social Security and Medicare benefits.
December 7th, 2008 at 11:14 pm
I drive to work and I get up early so I can get a metered spot
There you have it… Jimbo is a driver so wants cheap parking for his poor virtuous hard-working self. Matt is not a driver (how virtuous!) so he is in favor of raising parking fares to spend on his many pet programs.
What an enlightening exchange this post has turned out to be. Excellent parroting of self-serving positions, gentlemen.
December 7th, 2008 at 11:34 pm
And don’t forget to include “right” in your analysis, right. He posts a snide little aside moving the conversation along – not at all.
I have little more to add to the wonderful “free market” solution discussed above. The fact is that poor people aren’t really driving that much. It is the middle class who can afford $10/day or $20/day (or more) to park.
Parking may be a “public good” as outlined above, but so are the airwaves. We have determined that such a public good cannot be allocated reasonably by letting everyone have at it for free. This is why a market solution works. Whining that MY doesn’t drive misses the point. As a trust fund scumbag he could but chooses not to.
This is a simple “tragedy of the commons” problem and an example of one of the ways Econ 101 is actually useful (as opposed to the idiots on the right who insist that it be used to cut spending in a recession).
December 7th, 2008 at 11:36 pm
Jer–
I suspect it will be largely inconsequential, but I haven’t read any solid analysis of the impact, so I don’t have a lot of grounds to speak to the specifics. It’s not a fee I have to pay very often, so I don’t think I’m the best one to say. I want to be very careful of avoiding the trap that “it won’t affect me very much” is taken to mean mean “it won’t have an effect.”
I do think that the ability of increased meter rates to put downward pressure on traffic will be directly correlated to the pressure it puts on peoples’ wallets, and that this pressure will probably be felt regressively to drivers’ income.
But will $.50 make a difference? I don’t know.
December 8th, 2008 at 12:37 am
By this same logic we need a market solution to schools. The schools are over-crowded since we let ever family have at it for free, especially those retarded kids who suck up resources left and right and will never be productive members of society.
Heck why do we even have public ambulances? If someone needs to get to the hospital there should be a market based solution . Let them buy their fare, and if they don’t have the $$ well then let the ride go to a rich guy who wants to get to Starbucks for his half cap latte mocha frisco.
The point is that your theories sound great in textbooks and Econ 101 where you can learn the tragedy of the common or externalities, but the point is in the real world there are many factors at play, it is necessary that you consider negative consequences for all individuals before moving forward.
As usual Trust Fund Scumbag Lord Yglesias does not, and instead sees a great opportunity to try apply some of the concepts he learned about in the Ivory Tower.
BTW: What has a greater marginal social cost, me driving 10 miles a day, 5 days a week, 50 weeks a year and taking up a 15 sq ft piece of pavement… or Lord Yglesias flying off around the world, causing ground level air pollution, causing noise pollution, causing stratospheric air pollution, and taking up a couple hundred acres of prime city land?
December 8th, 2008 at 12:48 am
I wonder if Petey is happy with the quality of posters most taken with his colorful terminology?
December 8th, 2008 at 1:01 am
Aside from Lord Yglesias’ enthusiasm for regressive tax measures that don’t impact him at all, I question this:
Charging market rates at parking meters alleviates parking shortages and reduces idling, thereby reducing emissions and congestion. Congestion pricing for roads reduces traffic jams.
Bullshit. Really. People are still going to drive to their work if it costs fifty cents or a dollar to park. They’ll just hate you for fucking them over. As they should.
December 8th, 2008 at 4:38 am
Cranky Observer:
As with the “preferred customer” lines at airport security checkpoints that are operated by the TSA, a federal agency, I see no reason why Bill Gates or Steve Jobs should have priority over me or the poorest driver in a search for open-street city or open mall-lot parking.
And I see no reason why they should be able to afford a nicer college than me. Or healthier organic food instead of the cheap junk food many poor Americans eat. The list can go on and on, if you want. The point is that we allocate scarce resources using the price system because it gives people who place the highest value on something first shot at it. If you don’t believe the service is valued at X, then wait in line like everyone else. And if you do, you’re welcome to pay for it, regardless of who you are.
Besides, as I have argued, if we make these Pigovian taxes/fees revenue neutral and rebate them to the poor, they can still choose to park if it is worth that much to them. And if they don’t, they have a little more money in their wallet for something else. The point is not to discriminate between rich and poor – it is to discriminate between high- and low-value uses of scarce resources.
Granted, I am making assumptions based on economic theory – but this is not like the harebrained stuff of macroeconomics. This is pretty simple stuff which most policymakers would take into account when crafting policies. To reject this is to essentially reject most of economics and/or its applicability to policymaking. Homo economicus does not exist, but neither are we completely unaware of our relative utilities. You have to do more than just make assertions to reject this assumption about human response to incentives.
And for whatever it is worth, prior to his marriage Bill Gates was often spotted around midnight at Seattle 7-11s waiting in line to buy ice cream and chips, so he apparently didn’t think his personal space was more valuable than anyone else’s.
And so we can conclude that even rich people derive utility from being just another person in the crowd every now and then. He might enjoy cruising around for parking even. That doesn’t invalidate the general rule that human beings respond to incentives and their circumstances. If he urgently needed to get something for his daughter’s Christmas present at the last minute, he would definitely pay a large sum just to cut down on his time costs. (How large, of course, depends on his utility function and indifference curves, but no serious economist pretends to know any individual’s evaluation of utility.)
And for the ECON101 people: utility is not equal to money. In order to graft ECON101 principles into the real world economists usually assume that U = $, but that is one of the more obvious breakdowns of conventional economics compared to real human beings.
Utility doesn’t have any real cardinal meaning. It’s more of an ordinal thing. If I were to offer you $500 to stop commenting on this blog and you accepted, I could and probably would say “Ah, so Cranky Observer values the option of commenting on Matt Yglesias’s blog at something less than $500.” And if you rejected it, I would say the precise opposite. Likewise, if someone will park if the meter is priced at $1 an hour, but not if it is priced at $10 an hour, I would say that he values the parking space somewhere between $1 and $10 an hour.
Picking out the most valuable uses by hand without reference to pricing is hard – how can you let someone park only in an emergency? What criteria would we use to determine the definition of an emergency? It is really quite difficult, which is why we usually resort to pricing in allocating scarce resources. If you value the parking space more than its price, you clearly have something important to do. And if you don’t, tough luck, but your rebate check means you can still spend that money on something else. The most important detail, really, is what constitutes an appropriate market-clearing price, which is hard to determine because most municipalities have a monopoly on parking lots, at least on the street.
salient:
This is backwards. Wealthy folks contribute more to the economy because they have more money, and they have more money because they’re paid more or inherited more.
That’s kind of orthogonal to my argument – they get paid more why? Surely not for shuffling paper around, unless they’re an investment banker (and a lot of those folks are rightfully out of a job these days). Doctors get paid more than janitors because saving lives is more valuable than cleaning floors. Teachers get paid more than construction workers because building minds is more important than building offices.
You are arguing that contributions to the economy can only be measured in consumption, which is actually probably strictly correct from a Keynesian/macroeconomic point of view. However, where do those people get that money to consume from? Either someone with a lot of money gives it to them – which just brings us back to the same question – or they have a high-paying job. And why do they have a high-paying job? Most – not all – of the time, it is because they do work which we place a high value on.
As for providing goods and services to society, much of the wealthy-folk don’t work or need to work. They “invest” full-time. Their resources and wealth works for them. This isn’t contribution of goods and services – and if you return to “contribution of money”, see the paragraph above.
That is also not strictly true, if only because as it turns out, people who save are actually pretty darn useful to an economy! The rich are probably why America’s savings rate isn’t closer to -10% than it currently is (somewhere around 0%, last I heard). And by savings, I don’t just mean savings/checking accounts, but any sort of investment – be it in T-bills or equities.
People who buy government bonds or invest in companies – or alternatively, people who save their money in banks which in turn do the same – are contributing to the economy because companies and governments need money to do things. And when these companies and governments succeed, surely those who made it possible ought to be rewarded too? Or are we going to argue that the people who make Medicare and Social Security possible through buying T-bills ought not to be rewarded? That those who first saw the potential of Microsoft and Ford not be rewarded? You can argue that there is a huge degree of luck involved in investment – that’s I think rather incontestable – but all the same, those who make things possible should reap at least some of the gains.
Sure, why not? We’re talking about short-term parking to visit stores and shop, not commuter parking. I don’t buy into the idea that we should allocate public goods specifically to provide their benefits to professionals. That’s a weird idea.
The point (as I said earlier) isn’t so much to provide benefits to the well-off as it is to prioritize high-value uses. If you value the use of that parking spot more than its price, you are welcome to it. If you don’t, then you have to keep looking or find alternative means of transport. It just so happens that professionals are likelier to place a high value on parking, because their time is valuable. But they are not the only ones who benefit. Anyone with an urgent need can and should pay the fee if they really need the space.
Jimbo:
By this same logic we need a market solution to schools. The schools are over-crowded since we let ever family have at it for free, especially those retarded kids who suck up resources left and right and will never be productive members of society.
Schools are the exact opposite because they have a positive externality. Returning to our earlier economic analysis, schools have social benefits which entrepreneurs would not account for in their analysis of the costs and benefits of starting a school. Schools raise the value of human capital. Even those in favor of a market-based solution support public funding of education because they recognize its social benefits. Schools ought to be subsidized to internalize the otherwise unrealized benefits of education.
If there was no equality of opportunity, then markets would be inevitably biased to inherited wealth and disregard the merit of poor but capable people. Education equalizes things. That in itself makes it a merit good with externalities worth subsidizing.
Heck why do we even have public ambulances? If someone needs to get to the hospital there should be a market based solution . Let them buy their fare, and if they don’t have the $$ well then let the ride go to a rich guy who wants to get to Starbucks for his half cap latte mocha frisco.
Likewise, healthcare has externalities involved which are generally not accounted for. If a poor but talented person falls sick, they should have recourse to the emergency room. Otherwise, the poverty cycle would continue.
The point is that your theories sound great in textbooks and Econ 101 where you can learn the tragedy of the common or externalities, but the point is in the real world there are many factors at play, it is necessary that you consider negative consequences for all individuals before moving forward.
And that is exactly what economics teaches. This kneejerk dismissal of economics as irrelevant to the real world is really ridiculous, because when properly applied, it actually has useful things to say. The Republicans and conservatism in general have given markets a bad name, but that doesn’t mean there is nothing useful to learn from economics. It is just a tool of policy analysis, and the simplistic conclusions attributed to it are often not what it actually deals with.
Vidor:
Bullshit. Really. People are still going to drive to their work if it costs fifty cents or a dollar to park. They’ll just hate you for fucking them over. As they should.
Only if there are no other options. A congestion tax and/or higher parking fees are useless if the only transportation available is by car. If there are other options, then they can and should work.
Also, as someone else observed, if people’s jobs don’t compensate them enough to afford the commute, then they shouldn’t be working in the city center. City centers are valuable spaces because of the agglomeration economies involved in having talented people packed closely together. It is why the intellectual output of Harvard or Oxford is greater than that of Podunk U by more than a linear factor – because when you put a lot of able people together in a tiny area, you get outsized returns.
December 8th, 2008 at 6:34 am
Re: Granted, it might feel fairer, but the most important uses are left to rot, and the winners are the few lucky enough to get there first.
Not true, because there are also higher cost garages available that people who don’t care about the cost can use.
December 8th, 2008 at 8:23 am
Charging market rates at parking meters alleviates parking shortages and reduces idling
This part of your argument is ridiculous. It’s the parking meter equivalent of John McCain’s health care plan.
December 8th, 2008 at 8:45 am
> If you want to provide subsidized parking to commuters
> on a first-come basis, doing that with street parking is a
> bad idea: it encourages people to drive around looking for a
> spot, which increases congestion and other negative
> externalities.
Please post a Google Maps reference to **just one place** in the United States where (1) the location is desirable enough to cause parking shortage/congestion (2) street meters are set for longer than 60 minutes. Just one please.
Cranky
December 8th, 2008 at 9:31 am
Please post a Google Maps reference to **just one place** in the United States where (1) the location is desirable enough to cause parking shortage/congestion (2) street meters are set for longer than 60 minutes. Just one please.
I don’t know how to post a Google Maps reference, but the “LoDo” and Larimer Square districts in downtown Denver, CO have two-hour meters (meters run until 10 PM in those areas) and the streets are practically a parking lot on Friday and Saturday nights. Here’s a page on parking in downtown Denver: http://www.downtowndenver.com/Transportation/TPAccess.htm
December 8th, 2008 at 10:06 am
This is completely untrue.
December 8th, 2008 at 10:10 am
Scott P.:
Hm, I wonder why television and radio stations go through all the trouble of getting licenses from the FCC.
December 8th, 2008 at 10:49 am
if people’s jobs don’t compensate them enough to afford the commute, then they shouldn’t be working in the city center
Again, the airy wave of the hand dismissing anyone targeted by this regressive tax–you can be sure that the person writing the comment isn’t one of those people, though.
December 8th, 2008 at 10:59 am
Vidor:
And I suppose it is cruel that we don’t let everyone work in the city center? How else ought we to allocate scarce resources? Dismissing a tax simply because it is regressive is like saying we shouldn’t eat our vegetables because they don’t taste nice. Taste, like regressiveness, is only one variable in a complex situation. We gain efficiency from letting the most valuable land uses occupy the city center; we gain nutrients from consuming funny-tasting food. We fix the problem with vegetables by adding salad dressing; likewise, we fix the regressiveness by making transfer payments to the affected. The point is not to impoverish people just because we can – it is to encourage the most efficient uses of a scarce resource.
Your argumentum ad hominem has nothing to do with the substance of my claims, but since you folks seem to think only those with personal knowledge of something can ever have any right to speak about it… I don’t work in a city center at the moment, but when I did I took public transport – and I worked in an extremely congested city in Asia with hardly working public transit (where I’m originally from – unlike some people, I don’t have a trust fund to pay me to go gallivanting around the world; the only reason I am in America at the present is because of some generous benefactors).
December 8th, 2008 at 11:50 am
this argument, again, would be much more convincing if you weren’t someone in the extremely privileged position of being a nondriver
Where does this belief come from, that nondrivers are somehow a privileged elite? I’m a nondriver, and the apartment that I bought five years ago (30 minutes walk from downtown and across the street from a Metro station) cost less than any of the houses in the suburbs that friends of mine bought then, and while my apartment has more than held its value since then it’s still well below the median market value when compared to where my suburban peers are living. Then there’s my walk to work and occasional bus and subway use, which is substantially cheaper than buying and operating one or more cars.
Truth is, speaking as someone who’s done both, living carless in the District is actually cheaper than living in one of its auto-dependent suburbs. You may not like the tradeoffs (lack of living space, little to no access to anything not reachable by mass transit or walking, fifth-rate public schools, crime, and so on), but people who live in walkable District neighborhoods are no more an elite than people who live in Fairfax or Montgomery or Anne Arundel with their houses that have more than one bedroom and their schools that aren’t a sick joke.
December 8th, 2008 at 11:53 am
Matt writes:
“[Higher meter fees will] increase economic efficiency and boost growth.”
Efficiency I can see, but how do you know it will boost growth? For example, if parking costs are strictly higher, there will be strictly fewer cars parked. That seems to inhibit economic activity, though perhaps only slightly.
What compensating factor will increase growth?
December 8th, 2008 at 12:13 pm
mk:
I believe the argument is that people who might otherwise be deterred from making trips to the city center will now do so – and that these people have more valuable uses of those parking spaces than their current users. More efficient uses of city centers should spur growth. That is the argument – it could turn out to be flawed, but I think the logic behind it is sound enough to merit an experiment, especially in cities where there are plentiful alternatives to driving.
December 8th, 2008 at 12:42 pm
A “public good”? Parking is a public freaking good? Are you kidding me? Parking is a commodity and should be priced as such. The cornerstones to American life aren’t “life, liberty and the pursuit of cheap street parking for my Ford Explorer.”!!!
You’ve got to be kidding me. Make the argument that broadband internet access is a public good. education is a public good. access to clean water, sanitation, even salting the damn roads. But street level parking? What next, I have a right to the public good of cheap coffee, so we better throw a trashcan through the window of a Starbucks?
The majority of people drive into a successful, walkable urban area that has useable mass transit are the people who can afford to pay market pricing. You’re not screwing the poor. You’re not even screwing most of the middle class. You’re screwing upper middle class who think they have a god given right to park their car wherever the fuck they want to for next to nothing.
December 9th, 2008 at 7:38 am
But another point I would make about this is that a great many of things we would like to do to help poor cost money. And so to do them, you need to find ways to secure revenue…
Except guess what? These things “we” would like to do for the poor will not get done any time soon, if ever. However, the poor will get smacked with the enhanced parking fees and tickets right away. It’s not like they can give up cars and switch to the mass-transit pie-in-the-sky either, because pie-in-the-sky doesn’t get you to work today. Working-class people will, however, be able to economize by cutting out discretionary car trips: not going to restaurants, not visiting friends. Oh well, if you’re not rich, you have no right to regalement.
Wealthier people will also have to pay higher parking fees, but since they’re wealthier the difference to them is insignificant. And to make up for that, they will enjoy more available parking spaces everywhere, plus that special ineffable delight the wealthy feel whenever they can station a cop in the middle of the public right-of-way to hold his hand up in front of a workie’s face and say, “No admittance for you, low-life!” Advantage rich guys! As always.
December 9th, 2008 at 7:44 am
johnleemk: The reason people are rich is that they often get paid more than poor people (yes, bear with me here). And the reason they get paid more is because they often contribute more to the economy than poor people do.
Every last sewer worker in America contributes far, far more to the national welfare than all the hedge-trading billionaires in the world put together. Kill off all the hedge traders, and what happens? Aside from parties in the street nationwide to celebrate their extinction, absolutely nothing. Kill off all the sewer workers and in two weeks flat there won’t be a habitable city in the entire country.
You might be outraged at this statement, but look at it another way.
You = Troll.
December 9th, 2008 at 7:58 am
Re: But street level parking?
The streets were (mainly) built with public funds. It’s not unreasonable to charge some minor fee for parking, but provate entities ought not be profitting from resources built with public money. (For a similar reason I strongly oppose converting existing freeways into tollways).
December 9th, 2008 at 5:27 pm
W. Kiernan, I think in your circles of the internet the appropriate retort would be “obvious troll is obvious.”
If we killed off every last sewer worker in the world within two weeks the sewer firms would have retrained at least enough people to form a skeleton crew. We’d have to pay our new sewer workers a lot more in order to attract them, but civilization wouldn’t fall apart. (Unless you mean we kill every person capable of working in the sewers, in which case it’s easier to say “we kill off every man and woman.”)
If we killed off every last hedge fund trader, companies in general would find it harder to finance themselves. They might survive, but in the long run we wouldn’t experience the kind of innovation and growth we’re used to, since unless hedge funds intentionally hire total idiots (which they don’t, unless we’re in another financial bubble), it will take longer to retrain people to work in the finance industry. And of course the effects would be much more magnified if we killed off every last worker in the finance industry.
This isn’t to say that finance is overrated, because it is. But overrated is not equal to completely worthless. The present recession is a sign that the finance industry needs to shrink (if it’s gotten so bloated that any idiot can do the job, that’s a very good sign it’s grown too big). But that doesn’t mean shrinking to nothing would be good.
To address your point more generally, there are many components in the price of labor (i.e. wages). There’s importance of the job, for one thing. There’s the danger of doing the job. And there’s how easy it is to obtain people who can do the job. Sewer workers should be highly paid, except that it’s easy to find someone who can do their job. Finance workers should be poorly paid, except it’s hard to find someone who can do their job (assuming normal times, not a financial bubble like the one we just went through).
And as Jason pointed out, we’re making some terribly strong but not necessarily justified assumptions about the wealth of people who drive into the city center presently. I’ve lived in two Asian cities and spent quite a bit of time in Auckland, NYC, and Boston – in all five cases it seemed to me that only or mainly rich people drove to the city center for work or shopping. And this was even true when public transit was not really an option – Auckland has hardly any public transit so most people drive, but it is also a rich city, so most people can afford it.
Seriously, W Kiernan, the poor eat in restaurants? Seriously now? Is that what we’re assuming? Do you have any idea what it means to be poor? In most parts of the world, yes even places with welfare states, being poor means not owning a car. Being poor means a big treat is going to the movies. Being poor means if you eat out at all, you eat out cheaply – McDonald’s in the developed countries, a roadside stall in the developing ones. Being poor means walking to school, walking to work and walking to see your friends.
That in America even the poor generally have a car either means you guys have a horribly out of whack definition of what it means to be poor, or you guys are far richer than you actually appreciate.
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