Private Mass Transit In a Congestion-Priced Future

I’m not nearly the private mass transit booster that Stephen Smith is, but his discussion of the possibility brings to my mind the fact that this is part of what’s missing from a lot of congestion-pricing conversations. I often hear it said that to make congestion pricing work, you’d need to pair it with massive new investment in mass transit. And I don’t think that’s right at all.

If you take a snapshot of gridlock in any American city, part of what’s striking about it is that the vast majority of vehicles on the road are going to be operating at well below their capacity. Mostly you’re looking at individuals driving alone in cars that could comfortably seat two or four people. And many of the vehicles on the road can comfortably carry many more people than that. So if you look at Atlanta or Phoenix, it’s not like the existing capital stock of vehicles is inadequate to the task of carrying everyone to work in a more efficient manner. What’s lacking, instead, is the incentive. If you carpool, you cause yourself some delay and inconvenience and only save a little money on gas. With a good congestion pricing plan, suddenly everyone faces less delay and less inconvenience, but now carpooling entails substantial savings.

But — and here’s my real point — the basic economic logic of congestion pricing would make private bus service much more viable. Right now, buses usually only work with hefty public subsidies. That’s because every person who rides the bus to work is, in effect, doing a favor to everyone who drives by freeing up space on the road. But the actual allocation of the subsidy is highly politicized and only loosely related to actual demand. In a world where you have to pay for the space you take up on the road, but also pay lower taxes, then it’s much easier to imagine private bus service taking off. That, in turn, would mean a much more rational pattern of bus-related investment. Meanwhile, funds that are currently expended on generalized bus subsidies could instead be used to specifically enhance poor people’s disposable income.

And, yes, I’m well-aware that none of this is going to happen any time soon. But I think people are oftentimes insufficiently utopian in their thinking about public policy. Think about how different policy was in 1960 compared to today.