Friday, April 21, 2006


One for the money....

In 1964, 95 percent of the [mass] transit industry was privately owned. Even while, the annual ridership had fallen to 8.3 million trips, or 62 trips per urban resident in 1964, these private companies still managed to be profitable.

Only the cities New York, San Francisco and others had taxpayer supported city-owned transit agencies. That was, until Congress passed the Urban Mass Transportation Act in 1964. The act was quite generous. It created many adverse effects and incentives for private foreclosure and sell-out of the transit companies to the public sector. With such generous federal largess, it gave publicly funded transportation agencies a direct market advantage.

Fast forward to modern day:

Randal O'Toole, in a January 2006 policy paper for Cato Institute, pointed out that "total inflation-adjusted subsidies to tansit--buses and trains--have more than doubled since 1990, yet total ridership has increased by less than 10 percent".

Additionally, he compares this to the increase in urban driving by 42 percent during the same time period.

Question: How did we get here? Why is this? Why do we continue to fund these sort of projects?

O'Toole recommends returning transportation funding to state and local agencies, rather than through federal packaging. This and other reform would minimize these adverse incentives that it currently creates.

What do you think?

Is the stat from 1964 from the O'Toole report? And does it mention whether these private firms were recieving subsidies?

And does it say hwo the federal govt decides who gets the money?
I've missed you guys...
I am reading Knowledge and Decisions by Thomas Sowell to do a book review for Cordato's course at State, and that book is a monster. It's like 400 pages long and it's taking me an average of 5 minutes a page to read it. The paper is due Wednesday and I'm on page 210. But my brain is fried and I've got to regurgitate some of it so that I don't overflow.

Segue, the discussion on transportation.

The free-market atmosphere of 1914-15 and the mass production of the auto led to "jitney" (slang for nickel) services. It was an easy entry-exit market requiring few skills and was profitable for even part-time (rush hour) operations. The more operators (often just other people driving to work themselves) the more various the routes, the closer the product got to what the customer wanted.
They were shut down under protectionism of street railways. (Read: The streetrails hired the government to use its force against competitors to the detriment of customers.)
The railcars were further from what the customers wanted (being inflexible). More people started to buy cars of their own.
In candlemaker fashion whole industries were created, like parking garages, and suburbs, and later drive thru restaurants...

Why didn't people just start carpooling? And why isn't carpooling today more successful?
Because there is no price mechanism to communicate the effeciency of these services to prospective customers.

He quotes extensively from George W. Hilton, "American Transportation Planning," The Politics of Planning, ed. A. Lawrence Chickering.

Further notes of interest:
Optimal number of passengers to a vehicle: 8.
Average number of seat on today's busses: 40
"If only one fifth as many passengers were carried per bus, there would be five times as many small busses, meaning five times as many jobs for bus drivers (he previously stated that the protected status of the industry resulted in drivers being overpaid) and only one fifth the waiting time between buses for passengers."

Imagine these truths applied to the Wolfline, for example. How often did that darn thing make you late for class?

Nathan, see you after finals, or when I overflow again. ;)
Yep, that is the stat from the O'Toole report. It is my understanding that there was no federal subsidies to local transportation agencies. In 1964, they started to pick up the capital expenses.

I am not sure if some localities or states subsidized these groups.

There is a process called New Starts that "measures" the transportation projects according to the regional needs. They then recommend the different projects and funding levels to the president for his recommendation (i think they have simialr approach from congress).

That New Starts evolved out of the original 1964 bill.
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