Economic principles

Proclamations by the highway lobby that everyone benefits by a general subsidy of roads is not supported by facts. They completely ignore fundamental economics, regardless of whether they subscribe to socialistic or to free market principles. They ignore the fact that a road may simply be uneconomical. No economic analysis is done, whether by an Environmental Impact Statement, by Caltrans (see quote), or by an independent research group. The decision regarding which roads to build is usually based on political strength, rather than economics.

However, there is already a mechanism in place for determining whether a new road or road widening is economical, without adding to bureaucracy. This method is the free market. It separates politics from economics. The free market would determine if it is truly economical to build or widen roads, but the free market can only work if there is a high correlation between payer and beneficiary. In a free market, price regulates demand of any product or service.

In a free market, the consumer's dollar constitutes his vote --a vote with more clout than the ballot box. Hence, bringing roads into the framework of American fiscal principles gives the transport consumer new strength and new decision making power which he thus far has lacked.

Providing a "free" service will increase the demand for that service until saturation (i.e., congestion, waiting) is reached. This principle applies to use of a sales tax to build or widen freeways. Because there is no correlation between use and perceivable cost, traffic congestion will inevitably return and air pollution will increase.

Who benefits from road construction?

There are two distinct situations for constructing or widening roads:

Case 1) Increasing the capacity of existing roads by building parallel roads or increasing the number of lanes.

If it weren't for rush hour traffic, there rarely would be construction to increase capacity. Adding capacity only benefits car commuters, and usually only in the peak direction. For example, Rt. 237 in Santa Clara County had 1/6 the vehicle-per-hour flow in the reverse commute direction than in the peak direction. The peak direction was, and still is, bumper-to-bumper (at capacity), despite adding lanes. This means the traffic in the non-peak direction was 1/6 of the capacity of the road, and the off-peak traffic flow is even less. Clearly, only peak-direction car commuters benefited from adding the lanes.

Case 2) Building a road into a newly-developed area.

Only direct users of roads to a development (the beneficiaries) should pay for them and for road widenings elsewhere that are due to the development.

Developer fees for road financing are actually counter-productive. They encourage greater car usage to the development instead of encouraging people to take alternatives to driving. This also increases traffic congestion and air pollution for the region. In contrast, by using Modern Fare Collection (page 7), price becomes the natural disincentive to usage.

How to calculate the subsidy by a sales tax for freeways

While the subsidy to transit is often quoted as so much per passenger-trip, the subsidy for cars has been routinely ignored by sales tax backers. Yet, it is easy to calculate how much an average car trip would be subsidized by sales taxes because case 1 (above) is applicable.

For Santa Clara County, the direct subsidy paid by the sales tax is $5 per car-trip. If the users actually had to pay the $10 per day round-trip fee, so many people would have chosen alternatives to solo-driving that the freeway widenings would not have been needed. Therefore, these freeway constructions were economic boondoggles. (The gas tax paid by these commuters is insignificant, averaging less than twenty cents per day).


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