Saturday, May 01, 2004

Transportation Policy

A case can be made that the US has no urban transportation policy worthy of the name. Roads and parking are, for the most part, not priced rationally -- with predictable results. Public transit is seen as a jobs program -- also with predictable results. Cities regulate taxis, creating legally sanctioned monopolies -- also with the predictable results that service is expensive and poor and that city coffers and wealthy owners make monopoly profits.

The Economist reports the New York City story: "Higher fares for an unfair racket ... If a city goes to the bother of regulating its taxi industry, it should presumably have the interest of residents at heart. How, then, to explain the system in New York? It benefits neither passengers nor drivers. Instead, most of the proceeds flow to a third group of 'medallion holders' -- the people who own the aluminum badges that give a taxi the right to pick up passengers on the street. The going rate for a medallion is now about $300,000, so they are usually owned by investment companies, investors or partnerships rather than the driver.

"These monopoly franchise rights were granted back in the Depression, when then notion of using rationing to fight deflation seemed like a good idea. In 1937, 11,787 cab licenses were handed out at $10 each. Remarkably, no more medallions were handed out until 1996 when the city desperate for money (again), sold off another 400 ..."

Why does anyone expect politicized systems to do any better?