Matt Yglesias is one of the best mainstream bloggers on land use/transportation that I know of. As one blogger (who I don’t recall right now) once said, his urban planning and transportation posts could be blogs in their own right. However, it’s puzzling that in an article for Cato Unbound, he comes up with such a pathetic rejoinder to the O’Toole/Cox/Poole “vulgar libertarian” transportation cabal, who don’t seem to have ever met a road they didn’t like:
Or consider the fact that Randall [sic] O’Toole is indignant about the prospect of public expenditures on mass transit systems, but appears to have little to say about public funding of highways. This, too, looks more like a case of narrow business interests than sterling free market principles.
While Yglesias’ instincts are right – current transportation markets in America are highly distorted – the reason they’re distorted has little to do with the ways highways are financed. Based on some basic figures, Randal O’Toole concludes that the vast majority of road funding – over 80% – comes out of user fees. Now, of course there are still some subsidies there, but it’s really nothing compared to the subsidies that mass transit systems receive, which in America never even come close to covering operating costs, never mind capital expenditures. Now, there are some problems with the 80% number, such as the government’s favorable access to bond markets and the legacy of infrastructure that wasn’t paid for with user fees, but all in all, it’s hard to argue that roads have a subsidy advantage over mass transit.
However, that’s not to say that Yglesias doesn’t have a point when he says that libertarians and conservatives have blind spots when it comes to how they see transportation. But the real government benefit that the road/car system has over mass transit is density: there are innumerable regulations at every level of government in the United States which favor low-density, single-family detached housing over the denser forms that dominated non-rural areas before the 20th century. Successful roads as we have in America require this low density to remain (almost) financially solvent – it would be very difficult to cope with people’s road needs if they were allowed to build as densely as they would without maximum density zoning rules and minimum parking regulations.
As a thought experiment, imagine your local town/neighborhood with twice the density. Chances are, the roads would quickly become very congested. They would have to be widened, which would require money, and even more money than normal, because the government would have to purchase valuable land next to existing roads. (That is, assuming that eminent domain is not used.) The gas tax would have to be raised, and soon the costs would get out of hand. On the other hand, mass transit would become more profitable rather than less, because much less track needs to be laid to satisfy the same demand, and mass transit systems have much more excess capacity than roads. If densities are limited, though, then this alleviates both stress on roads that go through valuable urban property (which are expensive and difficult to widen) and forces people to drive farther, thus paying more in user fees.
There’s a legitimate case to be made against American transportation and land use policy, but condemning highway subsidies ain’t it.
This post was written by Stephen Smith, who writes for his own blog called Rationalitate.
Those who say libertarians have blind spots when it comes to transportation are not reading what they say. People like Wendell Cox, Robert Poole, and yours truly are promoting more toll roads, seeking a phase out of gasoline taxes (which are a user fee but not a very good one), and oppose the use of sales taxes or other general funds for roads.
We would be happy if all transportation were funded solely out of user fees. Would that mean more highways or more transit? We don’t know and we don’t care. If new highways pay for themselves, that’s an indication that we need more. If new transit can pay for itself, that’s an indication we need more.
The idea, however, that there is some regulatory conspiracy forcing low-density development and that higher densities would “more profitable” (how can it be more profitable when it isn’t profitable today?) is a fantasy. There are few or no regulations regarding density in much of Texas, for example, and low density the lifestyle of choice for most of the people in Texas cities. Meanwhile, though transit is profitable in Hong Kong and parts of Japan. It loses huge amounts of money in Manhattan. If people didn’t drive to Manhattan and pay bridge tolls that are used to subsidize the subways, the transit system would fail tomorrow.
Density isn’t the solution. Opening up transit systems to competition and encourage private operators to find innovative ways to provide transit will work better.
Those who say libertarians have blind spots when it comes to transportation are not reading what they say. People like Wendell Cox, Robert Poole, and yours truly are promoting more toll roads, seeking a phase out of gasoline taxes (which are a user fee but not a very good one), and oppose the use of sales taxes or other general funds for roads.
We would be happy if all transportation were funded solely out of user fees. Would that mean more highways or more transit? We don’t know and we don’t care. If new highways pay for themselves, that’s an indication that we need more. If new transit can pay for itself, that’s an indication we need more.
The idea, however, that there is some regulatory conspiracy forcing low-density development and that higher densities would “more profitable” (how can it be more profitable when it isn’t profitable today?) is a fantasy. There are few or no regulations regarding density in much of Texas, for example, and low density the lifestyle of choice for most of the people in Texas cities. Meanwhile, though transit is profitable in Hong Kong and parts of Japan. It loses huge amounts of money in Manhattan. If people didn’t drive to Manhattan and pay bridge tolls that are used to subsidize the subways, the transit system would fail tomorrow.
Density isn’t the solution. Opening up transit systems to competition and encourage private operators to find innovative ways to provide transit will work better.
Real estate developers think otherwise. Jonathan Levine, in his book Zoned Out: Regulation, Markets, and Choices in Transportation and Metropolitan Land Use makes a very persuasive case that developers, at least, feel overwhelmingly that they are constricted from offering the densities that the market demands, precisely because of local and state regulations against building densely on one’s own property. There’s also evidence that he presents that points to consumers being unsatisfied with their choices of density, though those sorts of surveys are problematic because of the difference between consumers’ revealed preferences and their stated preferences.
I presume you’re talking mostly about Houston, the so-called unzoned city. In that case, your statement that there are “few or no regulations regarding density” is false. As Michael Lewyn explains:
Parking regulations, as explained by Donald Shoup in his book The High Cost of Free Parking are almost as important (if not more important) than zoning regulations in determining the density at which a developer can feasibly build.
I’ll definitely agree with you that mandatory density isn’t the solution. However, liberalizing rules about how densely Americans can build (especially in cities and inner-suburbs) most definitely is part of the solution.
Real estate developers think otherwise. Jonathan Levine, in his book Zoned Out: Regulation, Markets, and Choices in Transportation and Metropolitan Land Use makes a very persuasive case that developers, at least, feel overwhelmingly that they are constricted from offering the densities that the market demands, precisely because of local and state regulations against building densely on one’s own property. There’s also evidence that he presents that points to consumers being unsatisfied with their choices of density, though those sorts of surveys are problematic because of the difference between consumers’ revealed preferences and their stated preferences.
I presume you’re talking mostly about Houston, the so-called unzoned city. In that case, your statement that there are “few or no regulations regarding density” is false. As Michael Lewyn explains:
Parking regulations, as explained by Donald Shoup in his book The High Cost of Free Parking are almost as important (if not more important) than zoning regulations in determining the density at which a developer can feasibly build.
I’ll definitely agree with you that mandatory density isn’t the solution. However, liberalizing rules about how densely Americans can build (especially in cities and inner-suburbs) most definitely is part of the solution.
Randal, the “conspiracy forcing low-density development” is no fantasy – it’s called “zoning”. However, zoning is no smoke-filled-room “conspiracy”. It’s an out-in-the-open, restriction of land use, which was born through the progressive movement and approved by the Supreme Court.
Perhaps not in isolated parts of Texas, but in most places zoning restrictions limit the density of new development with regards to FAR, units per acre, setbacks, etc. Without these limits, denser projects would be more profitable. Otherwise, zoning limits wouldn’t be “restrictions”, but mere features. I don’t know how you could say higher densities aren’t more profitable, if they must be restricted, thus hurting otherwise profitable development. As a developer, I rarely (probably never have, actually) encounter a project where it’s highest-and-best economical use is as-of-right.
Why can’t density be the solution? Certainly if it is restricted now, liberalizing land use would allow a more natural, and often denser land use pattern to emerge. Legalizing density allows market demand to be better accommodated in well-located developments.
However, I do agree about opening transit (and highways) to competitive forces, and applaud efforts to introduce market mechanisms to the otherwise socialist, taxpayer-funded systems.
Randal, the “conspiracy forcing low-density development” is no fantasy – it’s called “zoning”. However, zoning is no smoke-filled-room “conspiracy”. It’s an out-in-the-open, restriction of land use, which was born through the progressive movement and approved by the Supreme Court.
Perhaps not in isolated parts of Texas, but in most places zoning restrictions limit the density of new development with regards to FAR, units per acre, setbacks, etc. Without these limits, denser projects would be more profitable. Otherwise, zoning limits wouldn’t be “restrictions”, but mere features. I don’t know how you could say higher densities aren’t more profitable, if they must be restricted, thus hurting otherwise profitable development. As a developer, I rarely (probably never have, actually) encounter a project where it’s highest-and-best economical use is as-of-right.
Why can’t density be the solution? Certainly if it is restricted now, liberalizing land use would allow a more natural, and often denser land use pattern to emerge. Legalizing density allows market demand to be better accommodated in well-located developments.
However, I do agree about opening transit (and highways) to competitive forces, and applaud efforts to introduce market mechanisms to the otherwise socialist, taxpayer-funded systems.
Randal, the “conspiracy forcing low-density development” is no fantasy – it’s called “zoning”. However, zoning is no smoke-filled-room “conspiracy”. It’s an out-in-the-open, restriction of land use, which was born through the progressive movement and approved by the Supreme Court.
Perhaps not in isolated parts of Texas, but in most places zoning restrictions limit the density of new development with regards to FAR, units per acre, setbacks, etc. Without these limits, denser projects would be more profitable. Otherwise, zoning limits wouldn’t be “restrictions”, but mere features. I don’t know how you could say higher densities aren’t more profitable, if they must be restricted, thus hurting otherwise profitable development. As a developer, I rarely (probably never have, actually) encounter a project where it’s highest-and-best economical use is as-of-right.
Why can’t density be the solution? Certainly if it is restricted now, liberalizing land use would allow a more natural, and often denser land use pattern to emerge. Legalizing density allows market demand to be better accommodated in well-located developments.
However, I do agree about opening transit (and highways) to competitive forces, and applaud efforts to introduce market mechanisms to the otherwise socialist, taxpayer-funded systems.
Randall, the “conspiracy forcing low-density development” is no fantasy – it’s called “zoning”. However, zoning is no smoke-filled-room “conspiracy”. It’s an out-in-the-open, restriction of land use, which was born through the progressive movement and approved by the Supreme Court.
Perhaps not in isolated parts of Texas, but in most places zoning restrictions limit the density of new development with regards to FAR, units per acre, setbacks, etc. Without these limits, denser projects would be more profitable. Otherwise, zoning limits wouldn’t be “restrictions”, but mere features. I don’t know how you could say higher densities aren’t more profitable, if they must be restricted, thus hurting otherwise profitable development. As a developer, I rarely (probably never have, actually) encounter a project where it’s highest-and-best economical use is as-of-right.
Why can’t density be the solution? Certainly if it is restricted now, liberalizing land use would allow a more natural, and often denser land use pattern to emerge. Legalizing density allows market demand to be better accommodated in well-located developments.
However, I do agree about opening transit (and highways) to competitive forces, and applaud efforts to introduce market mechanisms to the otherwise socialist, taxpayer-funded systems.
Our hwy vs. transit arguments are based on yesterday’s facts and methods…Who’s studying what’s going on now? The best argument for rail may be in fact cooking up in Houston as we speak.
In Charlotte, the Road brigade were laughed out of town. To good measure. Close to 50% of all new red dirt on the ground three miles from downtown is 1/2 mile from the South Corridor light rail. (Check it out on Google Earth!) $1/2 billion of public investment just produced $2.1 billion (mostly in high density brownfield redevelopment). And that’s the short term return on the South Corridor. Then there’s also the handy fact that in one year of operation, we obliterated our projected ridership numbers…and are approaching the 2030 projections. Shows you just how out of date our science is.
Randal, you have to base your diagnoses and solutions on what is going on NOW.
Our hwy vs. transit arguments are based on yesterday’s facts and methods…Who’s studying what’s going on now? The best argument for rail may be in fact cooking up in Houston as we speak.
In Charlotte, the Road brigade were laughed out of town. To good measure. Close to 50% of all new red dirt on the ground three miles from downtown is 1/2 mile from the South Corridor light rail. (Check it out on Google Earth!) $1/2 billion of public investment just produced $2.1 billion (mostly in high density brownfield redevelopment). And that’s the short term return on the South Corridor. Then there’s also the handy fact that in one year of operation, we obliterated our projected ridership numbers…and are approaching the 2030 projections. Shows you just how out of date our science is.
Randal, you have to base your diagnoses and solutions on what is going on NOW.
IS the point then that a private solution will probably not emerge if we just auctioned off all the land the roads use (as opposed to only the roads)? That prices will not signal scarcity efficiently? That entrepreneurs will not use these price signals for innovation
and serving transportation needs especially using current technology?
If so, that should be a tough case to argue using established economic theory.
IS the point then that a private solution will probably not emerge if we just auctioned off all the land the roads use (as opposed to only the roads)? That prices will not signal scarcity efficiently? That entrepreneurs will not use these price signals for innovation
and serving transportation needs especially using current technology?
If so, that should be a tough case to argue using established economic theory.
IS the point then that a private solution will probably not emerge if we just auctioned off all the land the roads use (as opposed to only the roads)? That prices will not signal scarcity efficiently? That entrepreneurs will not use these price signals for innovation
and serving transportation needs especially using current technology?
If so, that should be a tough case to argue using established economic theory.
Yes, that’s my point. The reason being that even if the roads are privatized, the land besides them is still not properly privatized – density restrictions (in the form of zoning, minimum parking regulations, and other ad hoc land use regulations) still encumber the land, preventing it from being used most productively. And, by extension, prevent the land underneath the roads from being used most efficiently.
How is this at odds with established economic theory?
Yes, that’s my point. The reason being that even if the roads are privatized, the land besides them is still not properly privatized – density restrictions (in the form of zoning, minimum parking regulations, and other ad hoc land use regulations) still encumber the land, preventing it from being used most productively. And, by extension, prevent the land underneath the roads from being used most efficiently.
How is this at odds with established economic theory?
Yes, that’s my point. The reason being that even if the roads are privatized, the land besides them is still not properly privatized – density restrictions (in the form of zoning, minimum parking regulations, and other ad hoc land use regulations) still encumber the land, preventing it from being used most productively. And, by extension, prevent the land underneath the roads from being used most efficiently.
How is this at odds with established economic theory?
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