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Saturday, April 26, 2008

Taking a Toll

In the past, I've wondered if policies that allow a certain segment of the population to "buy out" of constraints designed to reduce carbon emissions, traffic congestion, etc. will find much popular support. This is an objection to the imposition of toll roads in LA along those lines, i.e. based upon the notion of fairness:

Diamond lanes for the rich, by Tim Rutten, Commentary, LA Times: ...When the Metropolitan Transportation Authority voted Thursday to convert carpool lanes to toll routes on as many as three Los Angeles freeways, ... Mayor Antonio Villaraigosa called the move "a great opportunity to think outside the box," and added: "Part of the reason Los Angeles has not been able to grapple with gridlock is because we've been unable to make the tough decisions."

Right. It takes unconventional and courageous thinking to come up with a plan that clears a highway lane for the well-off, while the middle class and working poor are left to inhale each other's $5-a-gallon exhaust fumes... making the daily lives of the hundreds of thousands of moderate-income commuters ... even more intolerable...

The worst thing about this ill-considered decision to allocate freedom of movement according to income is that it represents local public policy made for the worst of all possible reasons -- simply because there's federal money available to do it. ...

Federal transportation authorities have lately become enamored of imposing congestion pricing through toll roads, and have been offering the states funds to experiment with the concept. .... As a consequence, existing carpool lanes on ... will be converted to toll routes, with the highest charges levied at peak commuting times.

Carpool lanes are a sensible and equitable way to encourage responsible behavior. People who choose to ride to work with other people or those who purchase low-emission, high-mileage vehicles have the opportunity to travel more conveniently while reducing congestion, pollution and fuel consumption.

Note the word choose.

Congestion pricing will reduce traffic as well, but it will do so by allocating a precious resource by income. In California, we long have used everybody's tax money -- mainly from gasoline purchases -- to build and maintain roads.

Moreover, in Southern California, the middle class and working poor have no choice but to use the freeways to get back and forth to work and school because, decade after decade, public officials have encouraged urban sprawl while neglecting public transit. For most commuters today, the highway is the only way. ...

Now the MTA proposes to address the all-too-real problem of gridlock on the cheap -- and on the backs of working people.

Since when was that "a hard decision"?

It's the sort of thinking that will make Los Angeles and Southern California the sort of place [Michael] Harrington described in "The Other America" -- one where "life is lived in common, but not in community."

Economics analysis tells us that using a Pigouvian tax (or its equivalent) to solve these types of problems has desirable properties, and we can use the revenue from the tax to give rebates to lower income households so as to offset the losses from higher prices, tolls, etc., (see here). But when should you trade optimal for feasible?

For example, the connection between rebates given, say, once a year on tax forms and the frequent payment of the tolls, higher gas prices, etc., may not be direct enough to offset the perception of unfairness. If the connection is weak, or when equity considerations are important for some other reason, there may be something to the idea that, from a political point of view, non-price allocation mechanisms might be easier to implement, though I suppose the political difficulty depends upon the degree to which those who are most affected by price based allocation mechanisms - moderate and low income households - have a voice in the political process.

    Posted by on Saturday, April 26, 2008 at 02:07 AM in Economics, Policy, Politics, Regulation | Permalink  TrackBack (0)  Comments (41)

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