The Subsidized Road Problem

This post will be continually updated as I think about the subject and respond to your comments.

As I discussed in the introductory entry there haven't been dramatic, revolutionary changes in technology in at least fifty years. Why? You might be tempted to suggest that the technology just doesn't exist. There is a grain of truth to this, there aren't any complete systems radically better than anything we have now ready for prime time. However, many underlying technologies have improved dramatically in the same time period. In particular computing, communications, and material science have each leaped forward. Why hasn't anything radically new evolved on top of the amazing computing we now have available?

I think the answer lies in the economic incentives. Transportation is heavily subsidized: airports, air traffic control, train stations, train tracks, bus stations, marine ports, subways, buses, and roads receive direct subsidies from federal, state and local governments. In other words, your tax dollars pay for these things regardless of how much you use them. This is very problematic, because this means that any new technology has to compete against the entrenched status quo at a heavy discount. This makes it virtually impossible for something new to take hold.

I'm not against subsidies, they are an important government tool. The world is full of things that do more good than their market value suggests: schools, basic research, parks, etc. These things deserve subsidies, and I think some public transportation funding is well deserved. However, there are some things that do more harm than their price suggests and I think roads are an excellent example. In short, cars pollute, kill people, and waste their time. Congested roads are more dangerous, so each extra person that drives increases the risk of everyone else on the road. Each car contributes to the cancer rate and global warming. Finally, big city commuters know all too well that traffic adds huge time to their work day. By driving you impose a cost on all your fellow drivers, but you don't pay that cost. This is on top of the absurd direct subsidy, which gives you free roads! Before you argue that you pay for the roads in taxes, remember that everyone that walks to work pays the same taxes as 150 mile commuters. You do pay, but you don't necessarily pay your fair share and if you increased your use you wouldn't pay more. This leads to the unfortunate consequence, that the cost of roads does not affect your driving related decisions. All of this makes it very difficult to replace roads even though we can do better.

Those of you that know a little economics know that I'm alluding to externalities. It's a fascinating topic and pretty central to my political philosophy. Read up on them, you won't regret it.