Parking Shortages Still Bad for Business

One thing you can normally count rightwingers to be correct about is the subject of price controls. Price controls seem appealing — everyone likes stuff, but nobody likes spending money, so price controls offer the promise of getting stuff for less money. It’s all good! Except it’s not good at all because price controls actually just lead to shortages. The market works, conservatives are awesome, you can look it all up. Unless the subject turns to parking. In that case, the DC GOP is responding to a parking meter price hike by whining that “the new rates will hurt businesses that depend on customers who drive to their stores.”

In fact, there are two ways meter pricing could, in theory, hurt businesses. On the one hand, meters might be so expensive that there are just tons and tons of vacant parking spaces haunting downtown. In this case, the high price of parking is keeping customers away from stores and the meter rates are two high. On the other hand, meters might be so cheap that convenient street parking is rarely available and drivers leave their cars parked for long stretches of time. In this case, the low price of parking is creating parking shortages and low turnover, keeping customers away from stores. One can’t deduce the answer to this question a priori, but it’s abundantly obvious if you walk (or drive!) around DC that downtown parking is too scarce not too abundant. That means the current price is too low.

On the one hand, this issue isn’t the most dramatic thing in the world. But on the other hand when you consider what a large proportion of economic activity still takes place in big city downtowns and how reliant this country is on automobile transportation it becomes clear that the systematic underpricing of parking in built-up areas is in fact a major source of economic inefficiency. Making it all the more maddening, local governments are leaving funds on the table. Normally when you think of revenue sources you’re dealing with a trade-off between useful expenditures and harmful taxes. But when it comes to parking, correct pricing results in both more efficiency and more revenue that can be spent on useful city services — that would be very good for businesses (and everyone else).