A Fare Fight
MTA, the transit agency of Los Angeles County, recently voted to increase fares by 50% for most riders over the next few years. The deliberations over the fare increases were notable because of the highly public nature of the debate. Unlike transit agencies in other cities, where fare increases are usually presented to the public as a fait accompli, MTA’s governing structure allows for political grandstanding, which is exactly what the agency got from Mayor Antonio Villaraigosa. Villaraigosa staked out a populist stance against the MTA’s proposed fare increase, and proposed a more gradual increase that most observers declared dead-on-arrival. MTA, facing a $1.8 billion budget shortfall over the next decade, originally proposed a nearly 100% fare increase for most riders over the next three years, giving the mayor plenty of ammunition for his populist attack. Despite the posturing though, the debate did highlight the oft overlooked social equity goals of public transit. Because buses account for over 80% of the boardings in the MTA system and bus riders are overwhelmingly low-income, the fare increases shift even more responsibility for supporting the system to the riders with the least disposable income. As the L.A. debate highlights, the goals of public transit, especially in the U.S., are often contradictory, since public officials frequently tout the importance of access to transit for all income strata while simultaneously repeating the mantra of the need to be self-sustaining. In the end, MTA chose the highly sophisticated “split the baby” approach, opting for a reduced fare increase that pleases nobody. Such is the level of thinking in a country with a dysfunctional relationship to transit.
Transit advocates cringe at the upward spiral of fare increases that has occurred in most major cities due to the fear that higher fares drive away both the neediest and the most casual riders. The role of fares, however, in driving demand for transit is unclear. Michael O’Hare and Megan McArdle debated this issue a few weeks back, after O’Hare criticized California Governor Arnold Schwarzenegger for cutting the state’s transit budget by $1.3 billion. The predictable need to jack up fares after this loss of funds, theorized O’Hare, undermines the state’s other efforts to reduce greenhouse gas emissions by depressing demand for transit. An important ingredient in getting drivers off the road, according to O’Hare, is to push down the price of a bus or train ticket until the system is used at or near capacity. Since the marginal cost of an additional rider on public transit is practically zero (i.e., adding another person to a half full bus or train doesn’t increase operating costs), maximizing the utility of the system to the public requires drastically lower fares. After cutting through all of the verbiage devoted to declining marginal cost and natural monopolies, McArdle’s argument boils down to this: high fares have nothing to do with empty buses and trains. The real culprit is the relative inconvenience of public transit compared to driving.
McArdle is correct to point out that for our car-addicted populace, tinkering with transit fares will have little impact on their decisions. As drivers have demonstrated with their imperviousness to the most recent surge in gas prices, addicts do not typically respond to economic incentives. To treat addiction, you need to take away the drug. In this case, Vancouver, B.C. is once again a shining light. Vancouver enjoys the highest rate of public transit use in the Pacific Northwest, even higher than Portland, the darling of the transit world. Vancouver does not possess a revolutionary transit system and certainly can’t boast world class light rail. The key component to Vancouver’s success is vigilant planning which consistently prioritizes walking and transit over cars. As a former planning director for the city said, “We have a policy to not even expand one lane of roads coming in and out of our city.” The residents of Vancouver don’t ride the buses or SkyTrain because they’re cheap or luxurious (they’re neither). These options may not always be convenient either. But the alternative, driving, is worse. The barriers to driving are more than just financial. They’re physical; it’s a challenge to drive your car around downtown Vancouver.
The larger point in the debate over transit fares and budgets, which O’Hare articulates but McArdle never acknowledges, is that transit is a public good. The policy objective for a public good is to provide as much access to that service as possible, irrespective of how much revenue potential exists. How we, as a society, pay for that service is another matter. Transit, like any other public good, should not be free from resource constraints, as long as those constraints are government-wide. Instead, we continue to allow policy discussions about public transit, which is a crucial part of any strategy to lessen our dependence on fossil fuels and reduce greenhouse gas emissions, to get bogged down by debates over demand and revenue recovery, as if we’re opening a chain of coffee shops. If we're going to take on the monopoly of the car, our goals for public transit need to be expansive and our support unwavering. We'll save the economic theory for Starbuck's.
Photo Credit: Richard Brome/nycsubway.org
Comments
I warned you that I have a crush on "Jane Galt", so if you are going to say bad things about 'my girl', you will face the wrath of Singer! To wit, at the end of Jane's long post about marginal costs and natural monopolies, she says the following:
"But changing the price of public transit by itself is inadequate; a real solution would involve massive car and fuel taxes. And even those will be inadequate unless they are combined with heroic changes in land-use patterns to mimic the hyper-dense hub that makes New York mass transit work so well; people simply will not commute three hours each way, no matter how you mess with the price structure. The problem is not in our transit system, Horatio, it is in our fuel tanks."
That reads like something the writer of this blog could have written! So the lesson for all of us is "To the Vancouver Station" (http://en.wikipedia.org/wiki/To_the_Finland_Station).
Posted by: Jeff Singer | June 6, 2007 7:01 AM