HSR Urbanists: “We Are All O’Tooles Now”

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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-

Ryan Avent in an article plagued with this pseudo-logic:

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.

and:

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.

In the Infrastructurist article quoted above, Yonah Freemark smear’s Ed Gaeser’s back of the envelope critique of high speed rail (I admit, a little sloppy) with a hand-waving claim sounding eerily similar to the type Mr. O’Toole is so often criticized for making, “High Speed Rail Pays For Itself”.

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.

On top of that, Freemark ignores all the other opportunity costs Randal O’Toole conveniently omits when claiming roads pay for themselves.  These omissions include:  opportunity cost of investment capital, opportunity cost of right of way land used, legal costs of eminent domain and related delays, inevitable cost overruns, accounting for optimism bias, and interest on bonds.  In my opinion, the largest of these is the opportunity costs of investment capital, which I would guess at over 15 percent compounding annually (vs a non-compounding 5% generously assumed by Glaeser and Freemark) for all costs during the 10 years (just a little optimistic?) of construction, and 8-10 percent once ridership is stabilized.  Responding to Matthew Yglesias’ hasty endorsement of Freemark’s analysis as “A real cost-benefit analysis of HSR”, Tyler Cowen similarly noted:

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’.”

Rothbard the Urbanist Part 5: Diversity and Discrimination

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This 5th installment of the Rothbard Series dovetails well with the most recent post on segregation by guest blogger, Stephen Smith, as well as a post back in July over at Austin Contrarian. 

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, and you can read the first four parts:

Rothbard the Urbanist Part 1: Public Education’s Role in Sprawl and Exclusion
Rothbard the Urbanist Part 2: Safe Streets
Rothbard the Urbanist Part 3: Prevention of Blockades
Rothbard the Urbanist Part 4: Policing

In the comments of the first post of this series on public education’s roll in segregation, the discussion delved into the topic of discrimination.  Bill Nelson and I shared our thoughts on discrimination by co-op boards, while another guest inquired about my statement, “elitist institutions often exclude others to their own detriment”  (Rothbard’s words further below make a similar case)  I also referred the guest to a great article on the economics of discrimination and a snippet from an article discussing how private streetcar companies fought discrimination:

The Market Resists Discrimination

The resistance of southern streetcar companies to ordinances requiring them to segregate black passengers vividly illustrates how the market motivates businesses to avoid unfair discrimination. Before the segregation laws were enacted, most streetcar companies voluntarily segregated tobacco users, not black people. Nonsmokers of either race were free to ride where they wished, but smokers were relegated to the rear of the car or to the outside platform. The revenue gains from pleased nonsmokers apparently outweighed any losses from disgruntled smokers.

Streetcar companies refused, however, to discriminate against black people because separate cars would have reduced their profits. They resisted even after the passage of turn-of-the-century laws requiring the segregation of black people. One railroad manager complained that racial discrimination increased costs because it required the company to “haul around a good deal of empty space that is assigned to the colored people and not available to both races.” Racial discrimination also upset some paying customers. Black customers boycotted the streetcar lines and formed competing hack (horsedrawn carriage) companies, and many white customers refused to move to the white section.

In Augusta, Savannah, Atlanta, Mobile, and Jacksonville, streetcar companies responded by refusing to enforce segregation laws for as long as fifteen years after their passage. The Memphis Street Railway “contested bitterly,” and the Houston Electric Railway petitioned the Houston City Council for repeal. A black attorney leading a court battle against the laws provided an ironic measure of the strength of the streetcar companies’ resistance by publicly denying that his group “was in cahoots with the railroad lines in Jacksonville.” As pressure from the government grew, however, the cost of defiance began to outweigh the market penalty on profits. One by one, the streetcar companies succumbed, and the United States stumbled further into the infamous morass of racial segregation.

From Jennifer Roback, “The Political Economy of Segregation: The Case of Segregated Streetcars.” Journal of Economic History 56, no. 4 (December 1986): 893–917.

So, now we get to hear what Professor Rothbard had to say about discrimination:

Street Rules

One of the undoubted consequences of all land areas in the country being owned by private individuals and companies would be a greater richness and diversity of American neighborhoods. The character of the police protection and the rules applied by the private police would depend on the wishes of the landowners or street owners, the owners of the given area. Thus, suspicious residential neighborhoods would insist that any people or cars entering the area have a prior appointment with a resident, or else be approved by a resident with a phone call from the gate. In short, the same rules for street property would be applied as are now often applied in private apartment buildings or family estates. In other, more raffish areas, everyone would be permitted to enter at will, and there might be varying degrees of surveillance in between. Most probably commercial areas, anxious not to rebuff customers, would be open to all. All this would give full scope to the desires and values of the residents and owners of all the numerous areas in the country.

It might be charged that all this will allow freedom "to discriminate" in housing or use of the streets. There is no question about that. Fundamental to the libertarian creed is every man’s right to choose who shall enter or use his own property, provided of course that the other person is willing.

"Discrimination," in the sense of choosing favorably or unfavorably in accordance with whatever criteria a person may employ, is an integral part of freedom of choice, and hence of a free society. But of course in the free market any such discrimination is costly, and will have to be paid for by the property owner concerned.

Suppose, for example, that someone in a free society is a landlord of a house or a block of houses. He could simply charge the free market rent and let it go at that. But then there are risks; he may choose to discriminate against renting to couples with young children, figuring that there is substantial risk of defacing his property. On the other hand, he may well choose to charge extra rent to compensate for the higher risk, so that the free-market rent for such families will tend to be higher than otherwise. This, in fact, will happen in most cases on the free market. But what of personal, rather than strictly economic, "discrimination" by the landlord? Suppose, for example, that the landlord is a great admirer of six-foot Swedish-Americans, and decides to rent his apartments only to families of such a group. In the free society it would be fully in his right to do so, but he would clearly suffer a [p. 207] large monetary loss as a result. For this means that he would have to turn away tenant after tenant in an endless quest for very tall Swedish-Americans. While this may be considered an extreme example, the effect is exactly the same, though differing in degree, for any sort of personal discrimination in the marketplace. If, for example, the landlord dislikes redheads and determines not to rent his apartments to them, he will suffer losses, although not as severely as in the first example.

In any case, anytime anyone practices such "discrimination" in the free market, he must bear the costs, either of losing profits or of losing services as a consumer. If a consumer decides to boycott goods sold by people he does not like, whether the dislike is justified or not, he then will go without goods or services which he otherwise would have purchased.

All property owners, then, in a free society, would set down the rules for use of, or admission to, their property. The more rigorous the rules the fewer the people who will engage in such use, and the property owner will then have to balance rigor of admission as against loss of income. A landlord might "discriminate," for example, by insisting, as George Pullman did in his "company town" in Illinois in the late nineteenth century, that all his tenants appear at all times dressed in jacket and tie; he might do so, but it is doubtful that many tenants would elect to move into or remain in such a building or development and the landlord would suffer severe losses.

While Rothbard had some good things to say on how the free market enables diversity in terms of racial discrimination and diversity among and within districts, he missed the opportunity to specifically address ideas relating to Jane Jacobs’ generators of diversity within urban districts other than stating, “commercial areas, anxious not to rebuff customers, would be open to all.”  Jacobs generators of diversity:

  1. The district, and indeed as many of its internal parts as possible, must serve more than one primary function; preferably more than two.  These must insure the presence of people who go outdoors on different schedules and are in the place for different purposes, but who are able to use many facilities in common.
  2. Most blocks must be short; that is, streets and opportunities to turn corners must be frequent.
  3. The district must mingle buildings that vary in age and condition, including  a good proportion of old ones so that they vary in the economic yield they must produce.  This mingling must be fairly close-grained.
  4. There must be a sufficiently dense concentration of people, for whatever purposes they may be there.  This includes dense concentration in the case of people who are there because of residence.

Obviously, Jacobs wasn’t referring to racial diversity, and I’m glad she wasn’t because the abuse of the concept has gotten tiresome to me.  She was referring to the types of diversity in the built environment that are necessary to make a urban places vibrant. Nonetheless, Rothbard’s analysis of racial discrimination and diversity could be applied to the built environment, because a landlord would have market incentives to provide as much space as is economically optimal to as many potential tenants as possible, likely forgoing personal preferences and prejudices. Thus, mixing of uses is likely to occur when a landlord is unlikely to discriminate one use over another or give undeserved preference to one type of tenant over another.

I can see a system of fully private ownership emerging into two very distinct patterns: – aglomerative consolidations and bottom-up dispersion of ownership, each existing in certain circumstances.

  • One could argue that Jacobs’ generators of diversity would likely exist within large privately-owned districts, but a landowner would likely need to consolidate a significantly-sized district in order to properly capture the positive externalities associated with diversely mixed uses.  At the same time, large, privately-owned gated communities would likely exist in less centralized locations where private space and separation could meet the desires of those who are willing to pay a premium for the extra space.
  • In other locations it would be optimal for land to be owned by smaller dispersed entities.  In this case, diversity would simply emerge bottom-up through the free-market process, as it had prior to zoning.  I could imagine that, left unhampered by government coercion, diverse patterns that meet people’s specific needs and natural pursuit of interaction would inevitably emerge through dispersed and competitive ownership of smaller parcels.  (See Mathieu Helie’s Emergent Urbanism)

I would think the larger-scale commercial activity and gated communities will occur in the former, and just about everything else, the later. 

Zoning as a tool of class exclusion

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by Stephen Smith

Discovering Urbanism has a nice post up about early 20th century urban planner Charles Mulford Robinson and his planning textbook, and it includes the following corrective to the notion that zoning originated as a way to separate polluting industry from places of residence and commerce:

There’s a common narrative about how zoning unfolded in America. First, planners needed to find ways to separate dangerous and unhealthy factories from the places where people lived. Once the legal basis for this tool was secured, it was eventually employed to separate businesses from residents. The final stage of zoning was to segregating different kinds of people from each other. That’s how we reached where we are today.

However, the Robinson textbook indicates that this progression was, if anything, reversed. In reality, residences at the time couldn’t be separated much from industry, because many of the working classes had to be within walking distance from their jobs. On the other hand, some of the very earliest uses of zoning were explicitly intended to separate “exclusive” neighborhoods from the lower classes, whether by requiring minimum densities or barring anything but detached single-family housing.

Originally posted on my blog.

Urban[ism] Legend: Traffic Planning

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Mathieu Helie at Emergent Urbanism posted a link to a interesting game created at the University of Minnesota. Mathieu explains it better than I can:

The game begins in the Stalinian Central Bureau of Traffic Control, where a wrinkly old man pulls you out of your job at the mail room to come save the traffic control system. You are brought to a space command-like control room and put to work setting traffic lights to stop and go. Meanwhile frustrated drivers stuck in the gridlock you create blare their car horns to get your attention, and if their “frustration level” rises too high you fail out of the level. As the road network gets as complicated as four intersections on a square grid, the traffic becomes completely overwhelming and failure is inevitable, but the old man reassures you that they too have failed anyway.

OK, you’ve played the game? If not, don’t go further until you have.

Now that you’ve played the game and failed to control traffic, compare that top-down system with this amazing video a friend sent to me from Cambodia. You’ve gotta see this:

Man, I love this video! I must have watched it a couple dozen times. I keep expecting a crash, in what to me (only being familiar with top-down planned traffic systems) looks like complete chaos. Yet pedestrians, bikes, motorcycles, scooters, rickshaws, and cars all make it to their destinations safely, and probably quicker than in the system in the game above. It must be similar to how capitalism must seem chaotic to people who have always lived in planned economies.

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.

Another article at Infrastructurist discusses the philosophical differences Dutch and American road designs, and gives an example:

A fascinating example is a major–20,000 cars a day!–intersection in the Dutch city of Drachten that used to look a lot a typical American intersection, with lots of bright paint and traffic signals and enormous signs telling you what and what not to do. Traffic planners tore that stuff out and went naked, just putting down a roundabout in the center. The sidewalks even disappeared as distinct structures. Everyone figured it out though. Fatalities at the intersection dropped markedly, as did travel times.

Also read Tom Vanderbilt: News for Traffic Signal Manufacturers

Rothbard the Urbanist Part 4: Policing

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I apologize for the extended delay between posts.  Personal (newborn) and professional priorities have prevented me from having the free time I once had. Unfortunately posts will probably continue to be sporadic until things settle down a little.

We are now at Part 4 in the multi-part series delving into the urbanist-friendly ideas in Murray Rothbard’s classic For a New Liberty.   (available free from Mises.org as pdf, web page, and audio book)  In case you missed them, here are the first three parts:

Rothbard the Urbanist Part 1: Public Education’s Role in Sprawl and Exclusion

Rothbard the Urbanist Part 2: Safe Streets

Rothbard the Urbanist Part 3: Prevention of Blockades

As we continue through Chapter 11 of For A New Liberty, Rothbard continues to make valid points regarding safety and policing in a fully private-landowner system.  This passage is notably interesting in its discussion of the successes of private railroads.  Whether competition in the private street market would create a vibrant marketplace similar to the early days of the railroad is an interesting topic for discussion.  I’d tend to agree with Rothbard, but of course some imagination is required to envision such a radically different society:

There is of course nothing new or startling in the principle of this envisioned libertarian society. We are already familiar with the energizing effects of inter-location and inter-transportation competition. For example, when the private railroads were being built throughout the nation in the nineteenth century, the railroads and their competition provided a remarkable energizing force for developing their respective areas. Each railroad tried its best to induce immigration and economic development in its area in order to increase its profits, land values, and value of its capital; and each hastened to do so, lest people and markets leave their area and move to the ports, cities, and lands served by competing railroads. The same principle would be at work if all streets and roads were private as well. Similarly, we are already familiar with police protection provided by private merchants and organizations. Within their property, stores provide guards and watchmen; banks provide guards; factories employ watchmen; shopping centers retain guards, etc. The libertarian society would simply extend this healthy and functioning system to the streets as well. It is scarcely accidental that there are far more assaults and muggings on the streets outside stores than in the stores themselves; this is because the stores are supplied with watchful private guards while on the streets we must all rely on the “anarchy” of government police protection. Indeed, in various blocks of New York City there has already arisen in recent years, in response to the galloping crime problem, the hiring of private guards to patrol the blocks by voluntary contributions of the landlords and homeowners on that block. Crime on these blocks has already been substantially reduced. The problem is that these efforts have been halting and inefficient because those streets are not owned by the residents, and hence there is no effective mechanism for gathering the capital to provide efficient protection on a permanent basis. Furthermore, the patrolling street guards cannot legally be armed because they are not on their owners’ property, and they cannot, as store or other property owners can, challenge anyone acting in a suspicious but not yet criminal manner. They cannot, in short, do the things, financially or administratively, that owners can do with their property.

Furthermore, police paid for by the landowners and residents of a [p. 205] block or neighborhood would not only end police brutality against customers; this system would end the current spectacle of police being considered by many communities as alien “imperial” colonizers, there not to serve but to oppress the community. In America today, for example, we have the general rule in our cities of black areas patrolled by police hired by central urban governments, governments that are perceived to be alien to the black communities. Police supplied, controlled, and paid for by the residents and landowners of the communities themselves would be a completely different story; they would be supplying, and perceived to be supplying, services to their customers rather than coercing them on behalf of an alien authority.

A dramatic contrast of the merits of public vs. private protection is provided by one block in Harlem. On West 135th Street between Seventh and Eighth Avenues is the station house of the 82nd Precinct of the New York City Police Department. Yet the august presence of the station house did not prevent a rash of night robberies of various stores on the block. Finally, in the winter of 1966, fifteen merchants on the block banded together to hire a guard to walk the block all night; the guard was hired from the Leroy V. George protection company to provide the police protection not forthcoming from their property taxes.1

The most successful and best organized private police forces in American history have been the railway police, maintained by many railroads to prevent injury or theft to passengers or freight. The modern railway police were founded at the end of World War I by the Protection Section of the American Railway Association. So well did they function that by 1929 freight claim payments for robberies had declined by 93%. Arrests by the railway police, who at the time of the major study of their activities in the early 1930s totaled 10,000 men, resulted in a far higher percentage of convictions than earned by police departments, ranging from 83% to 97%. Railway police were armed, could make normal arrests, and were portrayed by an unsympathetic criminologist as having a widespread reputation for good character and ability.2 [p. 206]

Of course, those who embrace a government monopoly on policing would proclaim privatization would result in some kind of privately-run police-state, but let’s examine a few examples in today’s society.  In the comments of a recent post, Benjamin Hemric and I discussed some examples of privately-run pedestrian environments.  Here’s what we came up with:

So, private streets wouldn’t result in tolls of valuable sidewalk space every 10 feet?  No, I think that’s an Urban[ism] Legend just waiting to be debunked.

You may have noticed that while some of these are examples of environments where exclusivity is maintained by the owner, most are examples of privately secured pedestrian environments that are accessible to anyone, without charge.  Private operators are keenly interested in maintaining the safety of the streets for their customers or tenants.  No mall owner would stay in business too long if its mall earned a reputation of muggings. Had Rothbard written a later edition, he may had mentioned shopping malls.  As I mentioned in a previous post, it seems clear that dense, vibrant, mixed-use places are very well equipped to police themselves at little cost to the residents and business owners.  Thus, wouldn’t a private society tend towards vibrant urbanity?

I think it would be interesting to discuss other examples of privately policed environments.  What examples can you think of?

At the same time, it seems that the most unsafe places I can think of are publicly maintained. Am I missing something, or does it seem obvious once we take the time to think it over?

1. See William C Wooldridge, Uncle Sam the Monopoly Man (New Rochelle, N Y Arlington House, 1970), pp 111ff.

2. See Wooldridge, op. cit., pp 115-17. The criminological study was made by Jeremiah P Shalloo, Private Police (Philadelphia Annals of the American Academy of Political and Social Science, 1933). Wooldridge comments that Shalloo’s reference to the good reputation of the railway police “contrasts with the present status of many big-city public forces, sanctions against misconduct are so ineffective or roundabout that they may as well not exist, however rhetorically comforting the forces’ status as servants of the people may be.” Wooldridge, op. cit., p 117.