May 18th, 2009 at 4:43 pm
Do Roads Pay for Themselves?
You sometimes hear it said that road construction pays for itself, or some similar claim, usually followed by a hand wave in the direction of the fact that gasoline tax revenues go into a federal trust fund that finances transportation projects.
The thing about the trust fund is true, but the rest is wrong as Chris Bradford spells out in detail. The idea that roads are self-financing via gas taxes mostly involves acting as if there’s no cost associated with operating and maintaining highways. That, however, obviously isn’t the case. It’d be easy to pay for mass transit out of the farebox, too, if you didn’t cost operating cost and repairs.
36 Responses to “Do Roads Pay for Themselves?”
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May 18th, 2009 at 5:08 pm
MR YGLESIAS loves to compare our public transportation system against other country’s systems.But i would be interested to compare our highway and road system against other country’s.
I would especially like to find out how they finance their roads . I have heard that their roads are more expensive to build, but last much longer. I would be interested to find out if this is true.
If anyone knows anthing about road systems in, not just Europe , but other continents as well, could you please enlighten us with your knowledge and/or your experience with these roads.
THANK YOU
May 18th, 2009 at 5:12 pm
I would be more in favour of public transportation, if there was conclusive, reliable data to prove that factoring in all costs (construction, maintenance, operations), transit is more cost-effective on a per mile traveled, per person, basis.
The capital cost of the personal automobile does not count; it is a personal possession, not just a capital good. That’s why some people have sports cars or SUV’s.
I have, however, yet to see that data. Transit advocates have not been able to publish any such proof.
May 18th, 2009 at 5:13 pm
Your grammar sucks, Pete. What exactly is your point and how does it relate to Matt’s post?
May 18th, 2009 at 5:15 pm
Yeah, the gas tax thing is usually number two after the “everyone already has a car” argument. A usually unspoken argument is that the nay-sayers don’t want to risk having to walk a block on occasion.
I came to this stunning conclusion when a columnist for my local rag vacationed in NYC the same month I did. Coincidentally, we followed the same route from our hotels near Bryant Park, to Grand Central, to Coney Island. He then returned home to whine about the walking portion of his trip. Fortunately, the paper prints just about everyone’s letters to the ed, so my insensitive, insulting (and, I hope, illuminating) rebuttal saw print.
Is it coincidental that I didn’t see many wide-loads walking the streets of midtown?
May 18th, 2009 at 5:18 pm
Well, if anyone knows about trust funds, it’s Matt!
(Sorry, low-hanging fruit)
May 18th, 2009 at 5:18 pm
cmholm,
Any chance of a link to that letter? Sounds promising.
May 18th, 2009 at 5:22 pm
He leaves out law enforcement on roads, pollution and noise caused by vehicles on roads, and of course, injuries and deaths that occur on roads (which are much more dangerous than mass transit). To say nothing of the inconvenience of walking past or across other people’s parking lots.
Mass transit is also traditionally expected to carry people who can’t afford cars, while society is pretty much OK with denying cars to people who can’t afford cars. That makes it politically difficult to raise fares to the level where they would actually equal the cost of operating and parking (let alone owning and maintaining) a car for the same trip, because people who can’t afford that level of transportation expenses are precisely the core of the mass transit ridership and constituency. At the same time, people who *can* afford cars are the core of the roads-and-cars constituency, and wealthier people have disproportionate political influence, so it’s difficult to make cars pay their real costs either.
Nobody (well, Matt, but I really mean no politician) speaks for the people who could afford a car, but voluntarily live and work in high-density areas and use transit, because there aren’t enough of them.
Furthermore, isn’t the whole argument the same kind of time-shift error as thinking Social Security is a savings program? I.e. gas taxes pay for the *next* road, not the one the taxpayer is actually driving on when paying the taxes.
May 18th, 2009 at 5:24 pm
contrarian here – but what about when the strict sense of when you push a road into a non-developed area and then all sorts of new development follows – doesn’t the road end up paying for itself then?
May 18th, 2009 at 5:28 pm
Which do you think is more expensive: hauling 100 passengers in one big car, or hauling 100 passengers in 100 cars?
Um, no. The cost of the automobile is part of the cost of driving, as is registration, insurance, repairs, gasoline, parking, etc. You can’t simply omit costs you don’t want to deal with.
May 18th, 2009 at 5:29 pm
Him: http://www.mauinews.com/page/content.detail/id/35032.html
Me: http://www.mauinews.com/page/content.detail/id/35254.html
Memory is a bitch. He was coming from Queens, not the city.
May 18th, 2009 at 5:31 pm
REGARDING COMMENT #3 BY DREWW
YOU are right my spelling and grammer do suck, but i have been trying to improve it lately. I am sorry if it bothers you.But you should have seen it a month ago.
My point was that if we are going to talk about how to finance roads in America we should look to see how other countries finiance theirs.After all people constantly compare our public transport against other country’s systems on this blog. Would it not make sense to see how other countries roads compare to ours.
I think that this would relate to MR YGLESIAS’S post.I am sorry if you could not make the connection . As you said my grammer is not the best and maybe you did not get my point
Best regards to you DREWW
May 18th, 2009 at 5:36 pm
From the linked article:
“about three-quarters of which goes to the state’s highway fund,
70 cents of every gas tax dollar Texans send to Washington comes back for road use.”
Of the 30% diverted, it mostly goes to subsidizing things like imaginary Bullet Trains and buses operations.
“Other states quite commonly divert gas taxes to other uses.
Second, the current program also requires states to divert a substantial portion of highway-user fees from the Highway Account to scenic easements, historic preservation and bike- and pedestrian-trails programs.”
Link
And, remember, state use of gas (and federal) is exempt from gas tax, as it will also be exempt from global warming fees. An immoral and direct violation of the trust environmentalists have place in progressives. So, we get on average another 30% loss in revenue (and an unnecessary increase in global warming).
Yet, even after these government extractions, highways are indeed underfunded by about 40%.
May 18th, 2009 at 5:45 pm
Um, no. The cost of the automobile is part of the cost of driving, as is registration, insurance, repairs, gasoline, parking, etc. You can’t simply omit costs you don’t want to deal with.
No, that’s a logical absurdity. Sure, if you buy a very basic Skoda, most of the value of the purchase can be seen as a capital cost. But surely, you could not possibly count the entirety of a $100,000 Porsche as a capital cost comparable with busses? Or even a $45,000 SUV, a lot of which has little to do strictly with transportation needs, but rather comfort and luxury? I mean, in logistical terms, what is the difference between 2 or 3 people being transported in a shitty Yugo and the same people being transported in a Mercedes E-Class? None. The difference is the comfort and luxury premium people willing pay for.
Seriously, is anyone going to argue that $4000 leather-and-wood packages are transportation costs? The upgraded V6 engine? The active suspension? And even air conditioning, which is no available on most public transit? These are all comfort premiums, and must be discounted from the equation when calculating transportation costs. They are premiums users willingly pay for above the basic level of transportation provision, i.e., leatherette seats, cheap plastics, bumpy ride, that characterise public transportation, especially busses.
For a basic run-of-the-mill Toyota Corolla you could perhaps count 80%, 85% of the cost of the car as capital cost. For something like the Camry a bit less. For something like the Town & Country, a lot less. And for something like the Ford Explorer or some other SUV, very much less.
May 18th, 2009 at 5:46 pm
Re: To say nothing of the inconvenience of walking past or across other people’s parking lots.
Huh? What’s inconvenient here? I mean, why is this more inconvenient than walking anywhere else? And I can see how this represents a monetary expense of any kind for the person doing the walking.
May 18th, 2009 at 5:52 pm
And there is also the question of how much the cost of a car is attributable to consumer preference over public transit.
Let’s take this thought experiment for a moment: say, we have a bus route between A & B that takes exactly 45 minutes. It runs every 20 minutes. Now, let’s pretend say that the same trip, by car, is also exactly 45 minutes.
Now, let’s take the middle-class American family. Will they drive, or will they take the car, especially if their car is a leather-lined Volkswagen with very good, comfortable suspension? I think it is the latter. This is clearly a case of pure consumer preference. And that premium of preference must be imputed into the calculation of transportation costs.
And you also add the possibility, if say the bus was frequented by unsavory elements (I have had such experiences myself on busses); that would widen the premium further.
May 18th, 2009 at 6:25 pm
My preference for mass transit varies with traffic & parking conditions, I’m shamed to say. And the availability of a car, since our household has just one.
May 18th, 2009 at 6:38 pm
Thank you for finally linking to Chris Bradford. He does our fine city a real service. Trust me, as a lobbying firm employee who had to sit through the state House debate over TxDot, I can tell you that Texans, no matter how “progressive”, just don’t understand transportation.
May 18th, 2009 at 7:05 pm
Myles SG,
I would be more in favour of public transportation, if there was conclusive, reliable data to prove that factoring in all costs (construction, maintenance, operations), transit is more cost-effective on a per mile traveled, per person, basis.
That’s the wrong way to think about it. Transportation modes operate as a system – it’s not as if there is some metro area that has no roads, only trains.
Everyone taking the train is a car off the road during commuting hours, so the reduction in congestion (that is, the shorter commute times and reduced congestion) that the drivers get to experience needs to somehow be accounted for.
Also, you write “per mile traveled, per person,” but that’s a problem, too. A region with a good transit system can be built much more densely than on with a highway-only system, which results in shorter commutes for the rail-riders. The metric you’re looking for is “per trip.”
May 18th, 2009 at 7:07 pm
If everyone riding the two buses that go by during those 45 minutes drives instead, the commute by car now takes 60 or 70 or 90 minutes.
May 18th, 2009 at 7:07 pm
Awwwww….that picture reminds me of living in Houston. Good ole Sam Houston Tollway. I never understood why they couldn’t figure out how to limit the rust.
May 18th, 2009 at 7:16 pm
If everyone riding the two buses that go by during those 45 minutes drives instead, the commute by car now takes 60 or 70 or 90 minutes.
That’s not my point at all. My point is to illustrate the micro-economic personal preference. Whether that has an effect macro-economically is beside the question.
I wished to illustrate that on an absolute basis, ceteris paribus, people prefer cars. What you have tried to argue is that this preference has negative externalities, in terms of longer commutes (which is a macro phenomenon); you haven’t, however, at all refuted my point that there exists a preference at all, a preference of car to bus, everything else being equal.
Now, we can debate the externalities of this preference, but there is no question that given that a preference even exists, we must discount the value of this preference, a premium so to speak, from any accounting of road transportation costs. That is one thing.
Another is that public policy must account for this preference. In fact, the status quo of American public policy does account (if not over-accounts) for this very real preference, in terms of public policy bias toward roads. However, the scenario preferred and envisioned by Yglesias is one which has no accounting for this preference, which liberals like Yglesias would like to deny even existing.
That’s one of the problems I have with this debate; the massive unrealism and wishful thinking.
May 18th, 2009 at 7:21 pm
@ tom in NC,
Yuuup… I’m still living in Houston and before I read anything, I instantly recognized Beltway 8 in the photo. Have you seen the new Katy freeway? It is a remarkable testament to the ‘build it bigger’ mentality and is a huge change from the old configuration. Regardless of the merits of rebuilding it the way they did, you can’t help but be struck by its sheer scale.
May 18th, 2009 at 7:22 pm
That’s one of the problems I have with this debate; the massive unrealism and wishful thinking.
Quoted for unintentional irony.
May 18th, 2009 at 7:55 pm
To answer your question, the autobahn in Germany is built with a thicker layer of concrete, which lasts longer, but is obviously more expensive in initial costs. I saw this on an A&E special about the autobahn. Maybe it was History channel. I was probably called “Hitler’s highway”, in which case most assuredly the History channel, aka Hitlervision.
May 18th, 2009 at 8:02 pm
No, it isn’t. You are making apples to oranges comparisons, and you know it. You failed to take into account anything more than time and comfort. You failed to take into account costs, which is a large motivator for consumers. To then pass that off as a microeconomic evaluation is pathetic.
No, you wished to make simplistic comparisons to obfuscate the debate. On an absolute basis, ceteris paribus, people prefer to live in Mansions in Beverly Hills to townhouses in Long Island. What’s your point, other than you probably aren’t very smart but you managed to google some latin?
No, commute times aren’t a macro problem at all. In fact, they were part of your original dishonest equation.
Let’s take this thought experiment for a moment: say, we have a bus route between A & B that takes exactly 45 minutes. It runs every 20 minutes. Now, let’s pretend say that the same trip, by car, is also exactly 45 minutes
You make no case for why your variables are the way they are, other than it suits you. You use time as a microeconomic function here, but dismiss it as macro later? Dishonest. You ignore costs completely? Dishonest.
That’s one of the problems I have with this debate; the massive stupidity and dishonesty.
May 18th, 2009 at 8:19 pm
The key thing to understand is that you can’t discuss transportation modes in the abstract or in general: which mode will be the most efficient depends on the specific facts of any given possible application. And once you get down into that level of detail, it quickly becomes apparent that multi-mode systems are going to be the most efficient.
By the way, there is very little evidence of any inherent preference over modes. Time and cost can explain most of what we observe, and of course all modes can come in more luxurious versions to the extent some people are willing to trade off costs for luxury.
May 18th, 2009 at 10:05 pm
No, commute times aren’t a macro problem at all. In fact, they were part of your original dishonest equation.
Look, we are trying to establish a theoretical basis here. Just as microeconomic models do not reflect that actual events of the market, on an individual basis (people not being homo economicus all the time), so this model about transportation mode preference does not need to be absolutely realistic down to the last person.
At the end of the day, we can establish this: a) on a pure comfort and luxury basis, people prefer cars, all others being equal; now, b) In the real world, all others tend not to be equal. In outer suburbs, cars are faster than busses. In inner neighbourhoods, busses tend to be faster than cars.
Now, the matter of cost. The average white-collar, professional middle-class family living in one of the decent suburbs in America is, as far I have been able to tell, prosperous enough that the question of car vs. bus cost is not a very pertinent one. For poor people, it matters. For middle-class people, not so much. What matters to the middle-class person, in terms of transit, is suburban rail. The model, in which the person parks his car at the train station and then boards the train for work downtown, has in my experience been very popular with the middle class everywhere it has been applied. But to argue that say, urban transit, or bus transit for that matter, has any value to the middle class is ludicrous.
Of course, what happens currently is that suburban rail, charging realistic prices, can be profitably supported, or at least break even. In my city, the suburban rail fares, at something like $5 per trip (they do offer much more reasonable monthly/annual packages and so forth), essentially subsidies urban transit.
Now, back to the topic. My point is that the matter of cost as it applies to the middle-class person doesn’t really factor into the debate about “transit” as we mean it. Nobody really gives a damn about the DC subway. Or at least, I can’t see why the DC subway or the DC bus system would matter at all to a lobbyist living in Fairfax County. But Yglesias, and other assorted liberals, love urban subways and urban bus systems. The economic benefit they generate are negligible, as they don’t transport any particularly productive workers, largely.
May 18th, 2009 at 10:13 pm
In any case, I have always found something very impressive about urban expressways, especially seen at night. There is something very moving about, say, the Sheikh Zayed Highway or the Tokyo expressways seen at night, surmising the might of the force of human engineering.
May 18th, 2009 at 10:19 pm
You can put paid to the “roads pay for themselves” nonsense without having to resort to the equally nonsensical “tax gap” analysis from the Bradford article.
Most roads are local roads, and local roads are predominantly built using property tax money. And it makes sense to pay for local roads using property taxes, as property owners benefit directly from being served by a good local road network. However, property owners don’t benefit so directly from being served by a nearby arterial highway, particularly if the highway is predominantly used by motorists passing through the area.
This is where gas taxes come in. Gas taxes don’t generally go toward local roads, nor were they originally intended to do so. Gas taxes are meant to help pay for the arterial road system that is used predominantly by gas-burning passenger cars and trucks.
So of course there’s a tax gap between what it costs to build and maintain an arterial road and what you get from the taxes on the gas that is actually used on that road. That’s how the system is designed. You pay for local roads through property taxes, and you subsidize arterial roads through gas taxes (even though only a part of your driving is going to be on those arterial roads). People trying to make a big deal out of a tax gap are probably pushing to get alternate sources of revenue so that they can build more highways.
May 18th, 2009 at 10:30 pm
Urban highways look lovely to rich suburbanites who use them to zip through the city. They don’t live in the neighborhoods they ripped up, and they don’t have to live near them today.
May 19th, 2009 at 12:10 am
The economic benefit they generate are negligible, as they don’t transport any particularly productive workers, largely.
If Miley’s nose were any higher in the air, pigeons would be able to shit into his sinuses.
Joe from Lowell: braying fop Miley imagines himself as a sheikh, not a coolie. The coolies don’t do “productive work”, see.
May 19th, 2009 at 3:26 am
What’s up with you and the ludicrous expression “braying fop?” I don’t have a English accent, much less a RP one, and thus to bray would be physically impossible for me.
I do have friends who do bray; but they are on altogether another plane from me, and are far more vicious and immovable in their conservatism (frankly, more Thatcherism than conservatism). You would be shocked at how viciously right-wing, if not outright reactionary, the British (upper) middle classes are capable of being.
Sometimes I find it humorous that Americans think so ill of my ilk; little do they know that I am among the gentler breeds compared to some of the more vicious species to be found in the Home Counties.
May 19th, 2009 at 7:53 am
At the end of the day, we can establish this: a) on a pure comfort and luxury basis, people prefer cars, all others being equal . . .
Again, to my knowledge there is simply no empirical evidence to support this claim. And it doesn’t even make sense on a speculative level: cars are relatively cramped and require the passengers to stay in one position, and the driver has the added burden of having to drive. Why would people inherently prefer that sort of riding experience over potentially having more space, the ability to move around, the ability to choose rest, play, or getting some work done, and so on?
No, the appeal of cars is their flexibility in terms of routing. But if all else was truly equal in terms of time and cost to riders, if anything other land transportation modes would have the inherent advantage over cars, not the other way around.
May 19th, 2009 at 9:56 am
The average white-collar, professional middle-class family living in one of the decent suburbs in America is, as far I have been able to tell, prosperous enough that the question of car vs. bus cost is not a very pertinent one.
The average *actually* middle-class family is up to its eyebrows in debt and maintaining a car or two is a big part of why. The average Real American *upper*-middle-class (which is actually a euphemism for people who don’t want to admit they’re rich) family you’re actually talking about (read: white, about the 80th income percentile) might not mind the cost of cars, but democratic institutions really should be serving the majority, not the quite well off who don’t need the help.
I think it hasn’t quite gotten through your head that those “unsavory” people on buses *are also people* and have the same rights in a democratic system of government as an SUV-driving McMansion dweller in a “decent” suburb. Each. And there are a *lot* of them.
Incidentally, I ride buses quite a lot (often enough to know that many do, in fact, have air conditioning) and I’ve never *actually seen* any behavior more obnoxious than talking loudly, even from drunks (which there are surprisingly not that many of, but even when I’m on the bus with them, I’m still glad they aren’t behind the wheel instead). But maybe Myles just knows by looking at people which ones are “unsavory elements”.
May 19th, 2009 at 10:34 am
But maybe Myles just knows by looking at people which ones are “unsavory elements”.
Of course. Savoriness is directly proportional to albedo.
But you knew that.
May 19th, 2009 at 11:28 am
I don’t have a English accent, much less a RP one, and thus to bray would be physically impossible for me.
On the internets, one sounds how one writes, and the voice you’ve adopted is that of a Wodehouse silly-arse — which would be funny if you were merely a fictional character, as opposed to a real person acting out an ongoing self-parody.