Urban[ism] Legend: Transportation is a Public Good

On the air TV isn’t non-excludable. Britain charges a television licence fee, and prosecutes non-payers

Part of this is just semantics. Most people don’t speak like economists, and the phrase “public good” means something very different. Your microeconomics professor might mark the quiz question wrong, but very few people participating in the public discourse where these decisions are being made actually use this language.

As for Don Bordeaux, his claims about the influence of highways and highway subsidy therefore undermines the case for transit subsidies misses a key point – transit and highways are not the same thing. We can lump them all together under the umbrella of ‘transportation,’ but they operate in very different ways that have key implications for his argument.

We can lump them all together under the umbrella of
‘transportation,’ but they operate in very different ways that have key
implications for his argument.

Tell me more, because it doesn’t jump out at me.

How would you implement excludability on the public street in
front of my apartment? It’s a one lane city street with row homes on both
sides and no off street parking.

I haven’t been to your street, but I can think of a few easy way: gates,
horses, etc…. But first I would ask you, “if you and your neighbors owned
your street, and decided to limit access, how would you go about it?” I’m
certain you could figure it out.

There is no relationship and certainly no 1:1 relationship between publicly-provided goods and public goods. From my perspective, there can be great reasons for my government to provide things which are not a public good. Simultaneously, as your chart illustrates, there are privately-provided public goods like search engines.

I’ll assume the answer to the first question is “Yes, all roads are excludable.”? And we can think out the implementation, sure. (This is much longer than I originally intended, oops!)

My street is a tiny block next to a main arterial in Philadelphia, so we even have motivation: protecting our very limited parking. The street is two-car-widths wide, one for driving, one for parking. I count 27 homes facing the block, and space for about 20 cars on the street, so things are already tight. On a Friday night, when the bars nearby pick up, things are only worse in the neighborhood.

So, let’s say everyone on the block gets together and forms a non-profit corporation, the Crown Street Authority. Motorized gates at each end, every resident gets a RFID pass for drive-through, drop-off access. Parking spaces could be auctioned off, but luckily we have 7 old ladies who don’t drive. (Just keeping things civil for now. I can’t imagine the fights if the rich yuppies on the block won all the spots because the working-class locals couldn’t put up that kind of money. Maybe we could create a more-balanced, rotating system if demand exceeds supply?)

We can’t keep the gates permanently locked though, for safety’s sake and other access. Police, fire trucks, and ambulances of course get a free pass. Everyone gets a few vouchers for visitor and handyman access, perhaps?

Now, our location blocking access between Bedford Street (a local street like ours) and Prince Avenue (the main arterial) could be a real moneymaker. But we could also sign a mutual access deal with the Bedford Street Maintenance Corporation for reciprocal drive-through rights. A network of local street authorities could be pretty self-sustaining, with mutual access deals and coordination of resources.

So far, this could work I suppose. We all pay into the CSA’s general fund. Maintenance costs would be fairly low, since it’s a small street with even lower traffic levels than currently. We’d probably get our snow plowed faster than the current situation, and I’d never come to find my (purchased or rented) parking space taken.

There are still issues and questions though:

So far we’ve only talked about cars, but the public ROW on Crown Street goes up to the front of every property line – Sidewalks are included in the public realm. Could an authority like ours purchase the pedestrian ROW too, and limit walking access to outsiders? (Or to outsiders we don’t like, to raise all sorts of civil rights issues?) Could we limit bikes, scooters, segways, and any other non-autos we deem unacceptable? Could we, and should we be able to, turn our city block into a gated community?

In a similar vein, should our powers extend to other pieces of public infrastructure in the ROW: power, gas, sewer, and so on. Would we have to purchase these lines too? Would we have to maintain them/pay the quasi-public operator ourselves to maintain them? ((Note: The public/private distinctions here aren’t so clear. In Philly, the gas company (PGW) and electirc company (PECO) are private but have a monopoly. The Water Dept (PWD) is a public agency, but is independent of the city budget as it collects its own revenues))

Conceivably, not everyone on our block might want to participate. If I don’t own a car, do I have to pay into the fund? Can I pay a lesser fee only for visitor passes? These issues can be sorted out I suppose. What if I don’t want to pay, but I go ahead and park in front of my house anyway. How would enforcement be handled? Public shaming? Calling a tow truck? Would tow companies know which calls are legitimate, and which calls are just neighborly bickering? Would law enforcement have to enforce what these block authorities decree?

Even if everyone on our block participates, what if nearby blocks don’t form corporations? They’re too lazy, or too unorganized, or just too poor to afford it? They’re unplowed, pothole-ridden streets interfere with my access to my street, but would we have to compel them to form an Authority? Or maintain a “public option” for those who opt out of doing it themselves?

None of these organizational challenges are insurmountable, but they require a lot of organization. That’s my biggest issue with this concept. We’d need very dedicated volunteers, or paid staff to maintain these arrangements. We need long sets of bylaws, and legal professionals ready to form contracts between residents and the Authority and between authorities. Like I mentioned earlier, we could conceivably pool resources among nearby authorities to be more efficient; maybe the East Philadelphia Public Works Authority could handle all local streets in our area. But at that point, why not just have the Philadelphia Streets Department do it?

“If a road is not congested, then one person’s use does not effect anyone else”

I’m not an economist but I immediately thought of the costs of wear and tear, which definitely DO effect everyone else.

Using an empty road incurs wear which is probably a “rival” good but offset in time. For small vehicles in good weather this is (generally) negligible, but consider how durably roads must be engineered for likely boundary cases. So residential streets must be engineered to support a six-ton garbage truck, and everyone pays for this wear despite the garbage truck visiting only one morning a week. Or, more concretely: my neighbor and I pay the same to support the “public” street, despite the fact that his SUV has asphalt-shredding studded tires and my motorcycle doesn’t.

This difference is not negligible. Road engineers use a _fourth-power_ function with weight & speed to estimate wear. As a mental experiment, imagine an 8-foot wide recreational path for bikes and pedestrians, whose costs are so low that it could be built and maintained by volunteers using donated materials. If a loaded garbage truck were to drive down this “public roadway” at street speeds even a single time it would likely be destroyed, “congestion” be damned.

You thought it out very thoroughly, and brought up some great issues. I
don’t claim to have the answers of exactly what solution would be just and
what wouldn’t – it’s too complex for one person to know. In fact, if I
claimed to know the answer to such a complex problem, it would actually be a
strong case for authoritarianism.

My point is that it *could* be resolved if you and your neighbors were given
legal ownership of your street (perhaps not to everyone’s satisfaction), and
your street is thus excludable.

Exactly how privatization of streets, sidewalks, etc would happen is a
fascinating topic that I enjoy. In fact, I would speculate that many street
and most sidewalk owners would choose not to exclude people as it would harm
them more than help them based on Jane Jacobs’ theories. Nonetheless, they
would have the ability to do so.

“Nonetheless, I bet if that person were put in charge of a private road, they would figure out the logistics.”

Good gravy, YES.

The onboard electronics would be trivial: a spring scale on each axle, a speedometer, and an RFID pairing these data with an identifying token. We could get fancy and add some kind of wheel-noise monitor which would serve as a good proxy for street wear (Hey, go ahead and leave your snowchains on all year. YOU can pay for the damage!) (We could also anonymize the identifier tag to assuage privacy concerns, but really you’re already driving a vehicle with a publicly-displayed identification number past untold CCTVs so can we hang this trope up yet?)

This data would be fed to meters every [n] units/distance which is in turn tied to a network service that issues a periodic bill. This would capture nearly every external cost to driving a car on a road. The network could increase the rate at peak congestion times, which would solve the “rival goods” problem posed above, and maybe add another multiplier for extreme weather. Put a meter on the dashboard that shows you, in REAL TIME, how much your journey costs (beyond the already-privately borne costs of your car, natch). My personal bet is that capturing the engineering externalities would actually go a long way to reducing congestion, when people realize how very much cheaper small vehicles are.

As a bonus, we could eliminate truck scales.

The only reason this isn’t happening — other than the “privacy” shibboleth, above, and bear in mind that libraries solved this problem a CENTURY ago — is that people have grown accustomed to thinking of roads as free-as-in-beer goods to which they are infinitely entitled. It’s funny to watch self-proclaimed Libertarians jump all over themselves to proclaim this entirely private system impossible.

I think about this a lot. Ever since I learned about the fourth-power rule.

Here is the economist’s answer (take it or leave it): all roads are excludable, *at some cost*. The excludability question, like all questions in economics, can only be answered at a given cost. There is no “inherent” sense to it. And furthermore, the costs of excluding will tend to *fall* over time with new technologies, which should weaken the case for government subsidization or provision. On this point generally, see: http://books.google.com/books?id=pEg2pC6entUC … but the trend is often for government to spend more on various public goods.

Logistically difficult is too vague. Too *costly* for the market is better. And for it to be a publicly-provided public good, we need to believe that government can overcome this logistical difficultly at a lower cost than the market. Sometimes, yes. But some things are just too costly for governments or markets to provide (given current technology), even though governments often go ahead and provide them anyway.

These are all valid concerns, however if control AND ownership is in the
hands of the local stakeholders, they suffer from their own follies. This
is different from the NIMBY model that ownership is common, but control in
the hands of the stakeholders, which relates to your concerns.

Basically, I’m just saying that owners will be exposed to any downsides to
their decisions, and thus would be incentivized to learn and do what works
best, which is often walkability, etc. I’m not saying mistakes wont be
made, but owners will be more keenly aware of the consequences of failure or
success of their decisions. In the end, people will locate where their
needs are best met locally, as opposed to trying to impose their ideals on
unwilling neighbors.

Someone likes neighborhoods with no kids? Fine, move to a locality that
forbids kids in it’s contractual bylaws. But don’t try to impose your
preferences via government coercion – in other words, NIMBY…

I would argue that through private ownership, people would sort out
according to their subjective preferences instead of fighting through the
public process. Will it be clean and perfect? No. Would it be better? I
think so. I admit, the transition is nearly impossible to imagine, but I
have some more refined ideas that maybe I’ll share some day.

(Also, much of the public works services could be outsourced to private
operators, which could take advantage of the economies of scale you are
concerned about. Hopefully, the higher costs of local operation would be
offset by lower taxes and better efficiency since it would no longer be a
government service.)

Good points – I just wanted to emphasize that there’s a difference between a true difference of opinion on what is and is not a public good, versus when something is just lost in translation between the economic usage of “public good” compared to the common, much less specific usage of the phrase.

The language of economics certainly does help clean that up, but we should be clear about true misconceptions versus stuff that’s just lost in translation.

In one specific case, roads could be non-rival: namely, if they’re so under capacity that they can’t be congested. If existing traffic wouldn’t compromise speed even on a simple two-lane local road with at-grade intersections – for example, most urban streets – then there is no point in pricing. At low traffic levels, roads are not a continuous good, whose supply can be closely tailored to traffic; they’re can only be supplied in multiples of about 700 vehicles per direction per hour. The closest thing to a continuous supply level is if you’re in a dense urban street grid – but then there’s a very good urbanist reason to have a dense grid, even if there are no cars.

Errr . . . okay. Glad to bring it to your attention, I guess.

this was a seriously good post! well said

Your statement:

The marshmallows are still rival goods, because
as soon as a I use a marshmallow it seriously harms everyone else’s ability
to use that marshmallow,

contradicts the scenario you postulate:

If I am driving on a local road at 4am I am not hindering anyone
else’s ability to use that road also.

Because by your analysis of the marshmallow mountain, you would have to
argue that driving on that local road at 4am prevents someone else from
driving on the exact piece of pavement you are using at any given point in
time.

Further, by your definition of rivalrous according to the marshmallow
mountain analogy, nothing physical could be nonrivalrous. You could even
say that by breathing air, I am preventing someone else from simultaneously
breathing those same molecules. Thus, it would render the concept as
meaningless.

I completely agree with you that govt seems to often(almost
always) oversupply roadways, but that doesn’t necessarily mean that in each
and every case an efficient system would only supply enough roadways to make
them rival at all times.

Correct. A roadway might vary between private good and club good, but it’s
never a public good.

The definition of a rival good has to do with the good being considered not how much of it there is. Then it depends on how you define the good, which I generally try do using the ways in which it is consumed. I eat a marshmallow and it then becomes unusable to anyone else. I drive along stretches of roadway at 3-4am and only cause imperceptible/infitesimal delays to my very few fellow travelers. People don’t care about being in the exact spot I am in, but in their travel speeds along the stretch of roadway.

I tried to find a definition of good that would help resolve this distinction, but it’s too vague a term. Your distinction did help me realize that the marshmallow analogy could be improved upon. I should have used something that cannot not easily be apportioned, like roadways. Maybe this is a better analogy, but probably not perfect: a really, really big lollypop. I think I’ll go back and edit the post to improve the analogy. Let me know if you can think of a better analogy.
Thanks for the opportunity to improve my communication.

Your distinction between club goods and public goods, depends on whether it is exludable or not, and so by saying that, you seem to agree that it is possible for roadways to be non-rival.

You lost me there. I think I made it clear that roads are excludable. Let me know what I’m missing.

actually he uses the example of tolled congested freeways (private good), tolled uncongested freeways (natural monopoly), untolled congested freeways (common resource), untolled uncongested freeway (public good). At this point in time he is not making an argument about the best way to provide freeways but just that under different conditions a freeway (as built) could fall under each of the four different types of goods.

Maybe you are referring to a different book by Mankiw where he contradicts himself, but page 234 of “Principles of Economics” says, “Roads can be either public goods or common resources.” Please send a link to where he makes this claim to which you are refering. Then tell me where he discusses the excludability of roads or explain how roads are not excludable.

I am open to the notion that over-supplied roads could be considered “club goods”

I also came from an engineering background, so I too tend to be keenly aware of the imprecision of economic terms…

Mankiw fifth edition,
figure 1 page 226, and in the section you mention he does mention the possibility of tolls making them excludable, although he discusses this in the context of a pigovian tax and not excludability. On the Instructor’s powerpoint slides they make a bigger deal about the ability of freeways to satisfy the criteria of all four different types of goods. I never realized that he didn’t discuss all four categories as fully in the actual text of the book, and seems to contradict the claim that they could be all four types of goods.

Thanks for pointing that out. I stand corrected that Mankiw actually mentions excludability in roads. I guess I gave him too much credit, because, unfortunately, he is just plain wrong.

He lists toll roads as excludable, but non-toll roads as non-excludable. But just because a road is not tolled, doesn’t mean it couldn’t be tolled or access prevented.

It’s very sloppy reasoning on Mankiw’s part: to conflate “not excluded” with “not excludable” is to conflate “is” with “could be”.

So by categorizing roads as potentially club goods you cede the fact that they can be nonrival.

I’m inclined to say yes. Particularly local streets could be club goods. But, highways are typically over-supplied private goods.

That is
Technically EVERYTHING is excludable.

Here is a quotation from Cowen and Tabarrok’s new principles text (same Cowen as above, who I consider to be a good economist, because he talks about *cost*):

“When a person cannot be CHEAPLY prevented from using a good, economists say the good is nonexcludable.” (CAPS added by me)

Of course, “how cheap is cheap?” you may ask. Well this is just a principles textbook, to introduce students to the concept. More advanced (good) texts will delve into those details. I’m not sure if Mankiw brings the notion of cost into his public goods discussion (don’t have it in front of me), but my guess is he probably does. And if not he is being sloppy and therefore just an “okay” economist in my book, not a “good” one.

Plus, governments typically already attempt to exclude people/cars from the
roads who are not licensed.

Is mobility the good provided by a road? It is if you think of the users as the people who move around on it. But if you think of the users as landowners nearby, then the good provided by the road is property value (in the form of access to markets, access to customers, etc.) If you assume that people are able to park and walk to anywhere that is near the road, then the land value boost is neither excludable nor rivalrous. (If you assume that the only way for people to get from the road to a piece of land is to use a driveway, then it is definitely excludable – Chuck Marohn is always telling us about those costs involved in allowing an extra driveway on a “stroad”.)