Tag Oil

Krugman: Stranded in Suburbia

Paul Krugman wrote an op-ed this morning how the US living and transportation patterns will not cope with high oil prices as well as European cities: Changing the geography of American metropolitan areas will be hard. For one thing, houses last a lot longer than cars. Long after today’s S.U.V.’s have become antique collectors’ items, millions of people will still be living in subdivisions built when gas was $1.50 or less a gallon. Infrastructure is another problem. Public transit, in particular, faces a chicken-and-egg problem: it’s hard to justify transit systems unless there’s sufficient population density, yet it’s hard to persuade people to live in denser neighborhoods unless they come with the advantage of transit access. Over the long-run the US can adapt it’s living patterns to expensive oil by curbing it’s habit of subsidizing roadways. However, only if density restrictions soften accordingly. If drivers were responsible for the full costs of their location and transportation decisions, they would gradually locate to more European-like locations. This will naturally increase the demand for transit. Private investment and entrepreneurship under such conditions should be able to provide innovative solutions to the chicken-and egg problem Krugman is concerned about.

The Great Depression and America’s Addiction to Government Roads and Oil

One of my favorite new blogs, Rationalitate brought up a topic that I have spent much time thinking about, The Great Depression and Public Roads: In a time before the widespread adoption of income and sales taxes, property taxes made up the lion’s share of local government revenues: two-thirds of all revenue according to Dick Netzer, and over 90% of all taxes levied in cities of more than 30,000 according to David Beito. …property owners and renters were subsidizing roads for the benefit of the wealthy. Real estate developers who ran private forms of mass transit (mostly streetcars) and who were in direct competition with government-financed roads were some of the biggest payers of taxes, which makes the transfer especially ironic. It is a tragic coincidence that big government policies became popular during the same era as the automobile. History books champion Roosevelt and his New Deal, but few are willing to attribute our dependence on oil to the progressive policies that exploded during the Depression and continued through Eisenhower’s Interstate Highway System and on to this day. The big government solutions to “create jobs” drew resources from productive sources to fund projects that burdened future generations with the costs of maintenance, debt repayment, and auto dependency, as well as the abandonment of urban areas and rail infrastructure for an extended time. This is a topic that deserves more attention. One could write a book on it.