The LA Times reports that Los Angeles is considering “privatizing” ten public parking garages to fill a budget shortfall. The story is, unfortunately, a reminder of how infrastructure “privatization” is often little better than the status quo, and how media reporting of the issue can doom real reform.
Whereas pure privatization would mean selling the buildings and underlying land to anyone for any use, this scheme is actually a 50-year outsourcing of the garages’ management (mostly, at least) and profits (again, mostly). The new “owners” could only use the structures to park cars, and using them to house people and businesses that would increase the walkability of the areas where the garages are located is out of the question.
True privatization would also bring in more money for the city, which is the stated goal of the privatization. The garages would be worth more if they were being sold with complete development rights, and the tax revenues from whatever’s built on them (not to mention possible increases in adjacent properties’ values) would probably exceed the “small negotiated share of future proceeds” that the city “could retain.”
The only possible benefit I can see to this plan is that parking rates will move upwards towards the true market price. But even that would be too much for the city to stomach, as the city would “retain authority over parking rates at the garages” – and who wants to guess which way they’ll be pressured to push prices?
The potential downfall of this plan, however, is that the public may forever associate privatization with this pseudo-corporatism, as happened in Russia in the early 1990’s and Chicago’s parking meter privatization scheme last year, which could impede future, more truly libertarian urban reforms.
There’s a lot to be said for Amtrak’s mismanagement, but a lot of it is technical and inaccessible to the layman. This, however, is unconscionable: Amtrak still does not offer wireless internet – either free or paid – on any of its trains. Megabus and Bolt Bus (whose tickets between DC and NYC are about $20), however, have had wireless for about two years, and I’m pretty sure some Chinatown buses have had it for longer. Amtrak’s normal tickets on the Northeast Corridor are about four times the cost of tickets on Bolt Bus and Megabus. Tickets on the Acela are about eight times the cost of bus tickets, and the service is heavily marketed towards business travelers who put a high price on their time. But no internet. It’s apparently coming to Acela in about six months and the rest of the Northeast Corridor by the end of 2010. Had intercity buses and airlines not introduced wireless internet, I seriously doubt Amtrak would have ever had the business sense to do it.
Just in case you were under the impression that Obama’s high-speed rail commitment was genuine, the Boston Globe would like to disabuse you of that notion:
The railroad tracks from Boston to Washington – the busiest rail artery in the nation, and one that also carries America’s only high-speed train, the Acela – have been virtually shut out of $8 billion worth of federal stimulus money set aside for high-speed rail projects because of a strict environmental review required by the Obama administration.
Because such a review would take years, states along the Northeast rail corridor are not able to pursue stimulus money for a variety of crucial upgrades.
Instead, the $8 billion is going to be split up to ten ways amongst other regions, such as California, the Gulf Coast, and the “Chicago Hub.”
I love the irony of environmental standards stopping the Obama administration from making the one high-speed rail investment that has any chance of getting people out of their cars.
Last night on the Daily Show, Jon Stewart and Transportation Secretary Ray LaHood were making fun of New York bank executives’ recent excuse for missing a meeting in Washington due to “inclement weather” – i.e., fog at a private airport in Westchester. LaHood mentions that they could have taken Amtrak – the US government runs Amtrak, so this is to be expected – but then he says something that illustrates just how out of touch he really is: Greyhound. Who the hell takes a Greyhound bus from New York to DC as opposed to a Chinatown bus, Megabus, or Bolt Bus? I can understand your average DC legislator who’s never ridden a bus in his life, but shouldn’t the friggin’ Secretary of Transportation realize that the cubside buses are far more popular and efficient?
I think this is symptomatic of a broader problem with the Obama administration’s transportation policy: it’s naive and neglected. Ray LaHood himself is a token Republican cabinet member who, by his own admission, has no particular interest in transportation. Obama’s chief transportation initiative is a showy national high-speed rail system that only the rich will be able afford to ride, and yet he refuses to take even the most timid steps to combat suburban sprawl and the automobile’s dominance.
I came across this video interview of economist Sandy Ikeda by the Mackinac Center. Sandy currently blogs at thinkmarkets and has contributed guest posts to Market Urbanism. I thought Sandy did a great job discussing many of the topics we cover in this site. Sandy is particularly insightful when it comes to the “dynamics of intervention” as it relates to how the planning philosophy in the early days of the automobile created living patterns now disdained by modern planners. Today, Smart Growth planners want to use top-down coercive methods to correct the wrongs of past planners top-down follies, but will they get it right this time? Check it out:
Maybe the delay in posts led you to believe the Rothbard Series was complete. The good news is that there are a few more posts to go, and the ones coming up next should be the most interesting to urbanists.
If you haven’t kept up with our discussion, Murray Rothbard’s classic For A New Liberty can be downloaded free from Mises.org as pdf, web page, and audio book read by Jeff Riggenbach, and you can read the first five posts:
Not long ago, I posted a video from a friend showing one traffic intersection in Cambodia that appears to function well without any signaling. Here are some other resources on the emergent order of traffic without signals:
I caught some flak from a commenter who considered it “disingenuous” to present the video of the intersection as evidence “of a workable intersection.” Of course I had to remind the commenter that I don’t consider these types of intersection something that I advocate as a “free market” solution:
Don’t mistake me as an advocate of a world without traffic signals. I am quite certain that some sort of traffic signaling would likely emerge from a free-market street system. But, my bigger point is that when information is dispersed widely among decision-makers without government monopoly, sustainable solutions emerge from the uncoerced behavior of individual agents over time.
This is a case where governance is needed, but not necessarily provided by government. Some sort of cooperation would emerge among road operators, just like with technologies such as USB, DVD, or plain old electrical outlets and light bulbs. A coercive government authority is not needed to dictate to manufacturers to use certain standards, manufacturers choose to produce industry-standardized equipment simply because it is what the customer desires. If a lighting manufacturer decided to make a bulb that did not fit into standard sockets, who would buy it? Probably nobody.
I see roads as no different. Road customers will likely choose to avoid intersections as nerve-wracking as the one in the Cambodia video if they have a more stress-free option. Thus road operators will work to optimize flow through their intersections while minimizing unpleasantly stressful situations.
Of course, Professor Rothbard communicates this more elegantly. I find the railroad example particularly interesting:
The principle that property is administered by its owners also provides the rebuttal to a standard argument for government intervention in the economy. The argument holds that "after all, the government sets down traffic rules — red and green lights, driving on the right-hand side, maximum speed limits, etc. Surely everyone must admit that traffic would degenerate into chaos if not for such rules. Therefore, why should government not intervene in the rest of the economy as well?" The fallacy here is not that traffic should be regulated; of course such rules are necessary. But the crucial point is that such rules will always be laid down by whoever owns and therefore administers the roads. Government has been laying down traffic rules because it is the government that has always owned and therefore run the streets and roads; in a libertarian society of private ownership the private owners would lay down the rules for the use of their roads.
However, might not the traffic rules be "chaotic" in a purely free society? Wouldn’t some owners designate red for "stop," others green or blue, etc.? Wouldn’t some roads be used on the right-hand side and others on the left? Such questions are absurd. Obviously, it would be [p. 208] to the interest of all road owners to have uniform rules in these matters, so that road traffic could mesh smoothly and without difficulty. Any maverick road owner who insisted on a left-hand drive or green for "stop" instead of "go" would soon find himself with numerous accidents, and the disappearance of customers and users. The private railroads in nineteenth-century America faced similar problems and solved them harmoniously and without difficulty. Railroads allowed each other’s cars on their tracks; they inter-connected with each other for mutual benefit; the gauges of the different railroads were adjusted to be uniform; and uniform regional freight classifications were worked out for 6,000 items. Furthermore, it was the railroads and not government that took the initiative to consolidate the unruly and chaotic patchwork of time zones that had existed previously. In order to have accurate scheduling and timetables, the railroads had to consolidate; and in 1883 they agreed to consolidate the existing fifty-four time zones across the country into the four which we have today. The New York financial paper, the Commercial and Financial Chronicle, exclaimed that "the laws of trade and the instinct for self-preservation effect reforms and improvements that all the legislative bodies combined could not accomplish."3
3. See Edward C. Kirkland, Industry Comes of Age: Business, Labor, and Public Policy, 1860-1897 (New York: Holt, Rinehart, and Winston, 1961), pp. 48-50.
In the comments of my most recent post, insightful commenter, OldUrbanism pointed out some items that need attention:
The last two factors, legal costs associated with eminent domain and opportunity costs of land, are in fact often included in typical project cost estimates for both public and private projects. The former is fairly straightforward, as it is a project-related cost. The latter, opportunity cost of land, is simply the purchase price of land.
In the case of this example, where land acquisition costs are assumed as part of the project cost, OldUrbanism is exactly correct. I’m truly embarrassed for being sloppy in that statement and will correct it.
Of course, I still stand by my exposure of the ignorance of land opportunity cost by those who assert that existing highways “pay for themselves.” I invite you to check out the discussion of that matter (and other items) with OldUrbanism in the comments of the post.
—————
The other day, Reason Foundation’s Samuel Staley had some very generous things to say about Market Urbanism:
I just ran across the Market Urbanism web site, and it has a lot of really good analysis and resources available for anyone following urban policy issues. The sub-title of the web site is “Urbanism for Capitalists/Capitalism for Urbanists”. The blog includes lots of references to F.A. Hayek, free markets, and even takes the Cato Institute to task for advocating “socialism for roads.”
and
This site is well organized and designed. I think it’s a great addition to the debate and discussion, and its refreshing to see a new voice enter into the fray.
Thanks Samuel!! I share Reason’s objective of “Free Minds and Free Markets.”
I just have to admit I found it a little ironic that he had such nice things to say after I blasted reason.org on twitter for their recent pro-government infrastructure pieces (here, here and here).
————– Ed Glaeser wrote a book review for the New Republic discussing his mixed opinions towards Jane Jacobs and Robert Moses. Of course, my opinions of Glaeser’s piece are also mixed: wrong on infrastructure, right on NIMBYism.
I probably won’t make any friends today, but now I’ve read one too many urbanist (many who’s ideas I usually respect) use unsound logic to support high speed rail. This argument often includes something like this: “…and furthermore, highways and airports don’t come close to paying for themselves, therefore high speed rail need not meet that hurdle either.”
Here’s some examples of the typical contradiction many usually-reasonable urbanists are making when arguing for high speed rail-
Government is going to build more capacity. Given that, what is likely to be the best investment, all things considered?
Available alternatives, as it turns out, are not all that attractive. Roads do not appear to pay for themselves any more than railways do. Receipts from the federal gas tax come close to covering federal highway expenditures, but gas is used on highways and non-highways alike, indicating that at the federal level, highways are subsidized.
I respect Mr Cowen very much, but I think it’s long past time we stopped listening to libertarians on the issue of whether or not to build high-speed rail. Who will ask whether road construction remotely passes any of the tests they’re so prepared to push on rail? And if we begin charging an appropriate fee on drivers to maintain existing roads and reduce congestion, what do they all think will happen to land use patterns and transportation mode share?
Some have emailed to ask me why I dislike Randal O’Toole so much. The main reason is because people like Avent will always be able to point to the government highway-lover from CATO and rashly proclaim all libertarians have forever lost credibility when it comes to transportation and land use. Of course, Avent’s narrow-mindedness on this topic deserves contempt too.
And Infrastructurist’s take seems to be favored by Avent, Yglesias, and others:
The construction of a high-speed rail line would require a large environmental sacrifice – construction crews would need to shape the land, poor concrete, lay the tracks, and build the stations. This work would release millions of tons of carbon dioxide into the atmosphere. But building a new highway such as Texas’ planned I-69 would require similar work and would almost certainly be just as ecologically damaging. On a somewhat smaller scale, the same can be said for new terminals or runways at airports.
In a rapidly growing state like Texas, though, a serious need for a transportation capacity upgrade is bound to arise over the next decades – especially between the state’s two biggest cities. The construction of this infrastructure would require carbon emissions on a large scale–but since we don’t yet have competing plans for highway or airport capacity expansions if the high-speed system is not built, the most meaningful question for us is the rail system’s environmental effects in operations rather than construction.
So, in other words, building either of the options, roads or rail both require “a large environmental sacrifice”, but all other options must be kept off the table, so let’s just sweep that under the rug. Yet, there is an other option to consider for those who really think something should be done about carbon: STOP WASTING MATERIAL AND ENERGY ON CONSTRUCTION OF INFRASTRUCTURE BOONDOGGLES THAT SUBSIDIZE TRANSPORTATION! That still goes double for roads and airports, where congestion and carbon emissions could be reduced through revenue-generating measures such as congestion tolling.
To me, the high-speed rail logic just doesn’t sound much different from what O’Toole might say (just interchange some words and continue to ignore facts):
Not only did the Interstate Highway System cost much less and move much more than our visionary rail network is likely to do, interstate highways have the virtue of being 100 percent paid for out of user fees. The rail system would require subsidies for pretty much all of the capital costs, most or all of the periodic rehabilitation costs, and at least some of the operating costs.
He backs this bold claim with a calculation that shows how a hypothetical Dallas-Houston high speed corridor would cost $810M annually for construction and maintenance, while providing $840M in benefit. Surely, we will see many more people use this analysis as evidence to back claims that high speed rail is good without proper scrutiny. However, this analysis doesn’t even pass the O’Toole-level test of credibility, because it claims it pays for itself with 150M annually in carbon savings. I can understand making the case for analyzing carbon savings as a “benefit” to society, but one must compare against all other options for use of cash to reduce carbon emissions – at least against a no-build + congestion toll option. Just think of all the alternatives one might consider with a $810M annual budget for carbon reduction. At say $20/ton, that comes to 40 million tons a year.
I’m not sure what discount rates he is using but even if we put that problem aside this screams out: don’t do it. Given irreversible investment, lock-in effects, and required hurdle rates of return, this still falls into the "no" category. And that’s an estimate from an advocate writing a polemic on behalf of the idea. I’m not even considering the likelihood of inflation on the cost side or the public choice problems with getting a good rather than a bad version of the project. How well has the Northeast corridor been run?
The urbanist in me would love a vast high speed rail network – it would centralize density at rail nodes and aid agglomeration. But it just won’t be viable until government first stops wasting money subsidizing automobile and air travel. In the meantime, HSR advocates commit an intellectual fraud similar to ones Randal O’Toole and his ilk make regarding roads when they make claims that HSR can pay for itself.
If Ryan Avent is expecting to keep any credibility on infrastructure spending using these words:
In this country, we do not build transportation infrastructure for profit. Perhaps this is upsetting to the libertarians among us, but that’s how it is and how it should be.
Then, perhaps he should think twice next time he thinks of laying into Randal O’Toole for attempting to reconcile infrastructure spending using similarly shoddy arguments. Otherwise, similar to O’Toole, all the HSR advocates are saying is, “Never mind billions of dollars that must be appropriated from people of future generations. Never mind that most of those footing the bill will never ride high speed rail if they’re not fortunate enough to afford a ticket or don’t live in one of the chosen cities. Never mind the drastic effects of the construction on the environment. High speed rail would be a pretty neat thing for some cities, so ‘build baby build’.”
