On weekends we like to dig into the archives. This post was first published in April 2009.
Now if I’m being honest here, I will admit that public transport advocates do get hammered a bit on the whole “economics of transport” debate. The roads lobby constantly states how through petrol taxes trucks and cars pay their way, yet at the same time rail and buses simply can’t fund themselves and require massive subsidies. Now I’ve always thought this strange – that something which just seems so much more efficient (putting a whole lot of people inside a metal box and moving them) could actually be not as economically justifiable as something which just was so obviously less efficient (putting one person in a metal box and then shifting heaps of those metal boxes).
Thanks to a most excellent book that I own, called “Asphalt Nation: how the automobile took over America and how we can take it back“, by Jane Holtz Kay, we can see the argument for cars over public transport start to unravel. Not only in terms of the environmental and social impact of cars – but in their economic inefficiency, striking at the very heart of those who promote roads-centric policies. It’s a book that Steven Joyce, Minister of Transport, should definitely read. It is written from an American perspective, but pretty much everything can be applied to New Zealand as we’re definitely one of the most auto-oriented countries in the world, particularly in the case of Auckland. An interesting quote on page 128 looks at the overall cost to individuals of transportation:
While the Japanese walk, bike and pay three times our gas tax, we pull mere pennies from our pockets at the pump and then subsidise the car. The Japanese pay 9 percent of their gross national product for transport; the United States pays 15 to 19 percent. Europe does better too. By paying a truthful $5 a gallon, plus three to five times what the United States pays in visible car-based fees, the Japanese and Europeans have an awareness of costs. The consciousness makes them decrease their driving and curbs cars in cities. It encourages a more compact land use policy and hence promotes four to eight times as much public transport. The reserve obviously holds: Americans pay less for gas and little for tolls and user fees – and this freewheeling policy encourages them to use almost five times as much gas per capita as residents of European cities and ten times as much as those in typical Asian ones; to drive infinitely more, undercut mass transit, build more roads, buy more costly cars, pay more in personal and social fees, and spend more for maintenance.
Substitute America for Auckland and just about the exact same thing could be said. It is true that we pay higher petrol taxes in New Zealand than Americans do, so our cars do pay their own way much more. However, it’s still fascinating to see that Americans spend twice as much of their GDP on transport as Europeans and Asians. Not particularly efficient if you ask me.
David Aschauer, an economist from Bates College, has some interesting facts when one looks as the economic productivity of public transport versus roads building. This is particularly significant at the moment, where investment in transport (read: roads) is being highlighted by the government as one of the ways in which they hope to minimise the recession through economic stimulus.
Spending on public transportation has twice the capacity to improve productivity as does highway spending. A nickel spent on mass transit carries at least twice the impact of a nickel spent on roads. A billion dollars invested in mass transit produces seven thousand more US jobs than does the same amount spent on road construction. A ten years $100 billion increase in such transit investment would enhance worker output five times as much as if made in roads.
Aschauer concludes that “public transportation spending carries more potential to stimulate long-run economic growth than does highway spending.” The reasons for this are obvious, that public transport creates many long-term jobs for bus and train drivers, for those maintaining stations and so forth. Roads construction is very capital intensive, but not actually that labour intensive, so therefore not a particularly efficient way to provide jobs and real economic stimulus.
If one looks at the economic costs of private transportation at a more personal level, its inefficiency becomes even more super obvious. Page 130 of “Asphalt Nation” looks into that further:
In terms of personal use, as well as GDP, the American family spends around 20 percent of its annual income on transportation, plus hidden costs. The Japanese spend only 9 percent, despite having more expensive cars, while Europeans spend a scant 7 percent. While Americans take only 5 percent of their trips on foot, Europeans and Japanese take 20 to 50 percent of their trips on foot and garage their pricey cars. In land costs our highways often steal almost half the space in our cities, Japanese roads one-quarter. In the fifteen most congested US cities alone, our car-bound transportation system adds about $7.6 billion to the price of goods.
I think the main point to take here is that the true costs of an auto-dependent society remain somewhat hidden, or are accepted because we all pay for them individually (rather than paying taxes to subsidise public transport). Contrary to what Libertarians would love you to believe, just because something it paid for through taxation rather than user-pays does not make it more efficient or cheaper. Ironically, if you look at all the hidden subisides the car receives, it actually appears as though auto-dependent societies pay more individually for transport and also pay more through their taxes for transport, when compared with countries that have a more balanced transport infrastructure like Japan.
The provision of parking in a particularly interesting one, especially if we look at who really pays for “free” parking. I will devote a whole post in the future to parking, but Asphalt Nation has some interesting stats which are worth mentioning.
Parking, 95 percent seemingly free to the driver, is, in fact, a drain, adding more than $600 to a home and $1200 to an apartment. For the 85 million employees given apparently free parking spaces, worth $1000 apiece, it amounts to an $85 billion lure.
This is the kind of stuff the roads lobby just doesn’t tell you.