I think the point is that additional capacity will never solve congestion problems in the long term in an economically vibrant city.
Ok. Then ask yourself why this is the case
only with highways and not for any other good or service in our vast economy.
For example, you will never hear telecommunications company executives saying something to the effect of: " Even though our networks are maxed out at certain hours of the day, we are not going to add any additional capacity because all that will happen is people will use it and we will once again be maxed out." You will never hear an American Airlines executive say something to the effect of: "While it is true that we have a lot of frustrated customers who are unable to book flights on our most successful route due to them consistently being sold out, we will not be adding any additional fights to that route because they, too, will eventually sell out and we will be right back where we started."
Such an approach is quite obviously absurd. So how is it that the exact same approach comes across as reasonable to people such as yourself and many others when it is applied to our highways? What is the difference between highways becoming maxed out and telephone and airline networks becoming maxed out?
The difference is pretty obvious: unlike the vast majority of goods and services in our economy, highways are provided by the government - and, as such, they are largely isolated from the forces of supply and demand which prevent similar situations from happening in other areas of the economy.
From an economic perspective, highway congestion is nothing more than just a specific type of shortage - a shortage of available empty spaces on a road. In a free market shortages occasionally occur - but it is always in response to sudden, unanticipated developments such as unanticipated demand or, more commonly, catastrophic events in the supply chain such as crop failures or industrial accidents that force things such as refineries and factories to go out of service. But as long as the free market is allowed to operate, the shortages are always temporary - and the mechanism which ensures this is
market prices. Market prices work to eliminate and prevent shortages by rising to a level that simultaneously reduces demand while providing strong incentives for people to resolve the supply problem.
This, of course, is nothing more than Economics 101. Unfortunately, a great many people, including a significant number of politicians, have never bothered to grasp it and often embrace policies that totally ignore it - and when they do, the result is shortages.
For example, the supply of fresh peaches in the Metroplex is quite plentiful at this time of the year - a couple of weeks ago I purchased some really tasty peaches at Fiesta for 49 cents a pound. In January, however, that supply is quite low because they are out of season in North America and must be imported at great expense from South America. Yet, if you have a strong craving for peaches in January, you are probably not going to have a difficult time finding them in local grocery stores though you will probably have to pay close to $4 per pound for them. It is that $4 price that makes it possible for you to enjoy peaches whenever you like by strongly encouraging the vast majority of shoppers in January to instead eat more seasonally plentiful fruits such as apples, citrus and bananas. Imagine if a bunch of Leftist politicians decided to embrace the situation and "do something" about it. They would decry how "unfair" it is that produce companies are "taking advantage" of the fact that peaches are in short supply in January and accuse grocery stores of "price gouging." They would get all worked up about how "unfair" it is that only the affluent can afford to eat as many peaches in January as they do in July while those on the tightest food budgets must give them up altogether. If they got their way, such politicians would impose some sort of price control that would forbid people to sell peaches at a higher price in January than they sell them for in July. If that happened, assuming that anyone even bothered to import peaches under such conditions, you would have almost no luck at finding them on store shelves because, as soon as they were placed out, shoppers would gobble them up as though it were July. As utterly absurd as such a policy would be, that is
exactly what some people call for anytime there is a spike in the price of gasoline - and the one time that it was tried in this country was in the 1970s and the result was gas lines. People also call for the same thing in places where rental costs start to go up - and to the degree rent controls have been imposed, the immediate result was a severe housing shortage.
Now, applying such principles to highways - well, here, we are at situation that is even
worse than the imposition of price controls because there currently is absolutely
NO pricing pressure whatsoever on most highways to enable the forces of supply and demand to operate in order to prevent congestion. Basically, anyone who has an automobile can secure a spot on the highway during peak travel times on a first come-first served basis at no additional cost than at low traffic hours.
Now it is true that, on Metroplex highways, the person who enters the highway during rush hour is going to pay a higher "price" in terms of the time it takes to get to his destination - which, at this point, does create certain supply/demand pressures to encourage people to move closer to work, work off-peak shifts, etc. But notice that this sort of "price" and the resulting incentives to change behavior come into place only
after the capacity of the freeway has been maxed out. The current system has absolutely
zero supply demand incentives which would work to prevent the freeway from becoming maxed out in the first place. And
THAT is precisely what brings about the situation you describe of additional capacity being constantly added and subsequently maxed out.
The problem with the sort of "solutions" the authors of the book you mention seem to favor is that they regard a perpetual state of highway congestion to be the inevitable norm and, to them, the fundamental issue boils down to simply how to deal with it. I disagree.
The
only places where you will find other areas of an economy in a similar state of having to deal with chronic shortages and where politicians constantly scramble to "fix" the consequences while ignoring the causes are in socialist countries. Unfortunately, planning for our highway system in this country is largely done on the Soviet model - not unlike how that country "planned" for the construction of new housing units. In the USSR, the number of new housing units to be built was determined by central planning "experts" who decided exactly how many hideously ugly and drab giant boxes crammed with tiny apartments would be built and where. And, because Marxist dogma asserts that people are "entitled" to be provided with housing, only nominal, token rents were charged for such apartments. As a result, they were filled up before they were even built by people who had been on years-long waiting lists. And unlike a home builder such as Don Horton who regards a huge demand for housing as a good thing and a great opportunity, Soviet officials considered it to be a constant burden and a drain on their budgets which could have been otherwise spent on occupying Eastern Europe or propping up some other area of their perpetually distressed economy.
In terms of quality, our government does a far better job at building highways than the Soviets did building apartments - but that is only because we have a highly prosperous semi-free economy capable of generating large amounts of tax revenue and because much of the actual construction work is contracted out to private firms. But in terms of how highways are planned and operated, there is very little difference between the Soviet model and the way we have been doing things - so it is not surprising that we end up with identical results: chronic shortages.
The only way to reduce road congestion in the long term is to reduce the number of trips taken per mile of road.
Exactly! That's why the solution rests with toll roads. Tolls introduce the element of pricing into the equation and, if they are set at the proper level, they will act to encourage people to engage in behaviors which will reduce the number of trips per mile of road long
before the highway's capacity becomes maxed out.
The problem is that our system of toll roads - especially here in Texas - has been far from perfect. Unless changes have been made that I am not aware of, in Texas, tolls can only be collected as a way of recovering the costs of building the road. That's why I-30 between Dallas and Fort Worth stopped being a toll road during the late 1970s when it was finally paid for. That is also why the Dallas North Tollway is having to constantly expand northward in order to continue to collect tolls. The problem with this is the fact that the solution to highway congestion is not just merely introducing prices, but rather
market prices.
A private company does not merely seek to simply recover the cost of its capital investments and operating expenses - it seeks to obtain as large a
profit as possible by charging what the market will bear.
That is how market prices are achieved and what must happen if toll roads are to be of help in reducing congestion.
Whoever will be responsible for operating the toll roads will need to set the rate at such a point where it will generate the most revenue without causing the system to be maxed out. Set the rate too low and the road will become maxed out. Setting it too high will discourage people from using it and adversely impact revenue. Somewhere between the two extremes is a happy medium where there is a threshold of how high you can set the price before hurting revenue through a loss of volume - and
that is where the price needs to be set. As demand for the road eventaully grows, the additional drivers will end up bidding that price to a higher level - and
that is how market pricing will prevent highway congestion.
The big question is this: is the government itself capable of setting such market prices? Is it ethical for a governmental agency to generate a profit? Will government officials be able to resist complaints and political pressure from the general public that the market prices it sets are "too high" causing them to lower them or subsidize them for certain people thus defeating their purpose in the first place? I have my doubts that it can - which is why I think the government should lease such roads out to private operators with the condition that they not allow the roads to be operated beyond a certain capacity.
One way to do this is through walkable mixed-use developement. You rarely hear any one complaning about there being too many pedestrians.
That is one way of doing it. So are things such as rail lines, busses and such. But observe that such things are usually discussed only
after the roads have already become maxed out and most of their advocates usually suggest
imposing them on people through legislation. What needs to happen is people need to embrace such things
before the roads become maxed out - not because they have to but because they
want to. That is what market prices can do.
The principle is really simple: I like peaches much more than I do apples. But in January, I eat apples and not peaches because I can get apples 6 for $1 while peaches can be nearly $4 per pound. But at least I have the ability and freedom to purchase peaches if I really wanted to and was willing to pay the necessary price. I have a
choice. I wouldn't have such a choice if the government imposed price controls and made peaches impossible to obtain. I would
have to eat apples. Likewise, if supply and demand bid up the price of my daily commute to $5 each way, I would have to make a similar choice. I could continue to drive and pay $200 per month in tolls. Or I could take some form of mass transit (which, under such circumstances, would become a profitable enterprise) or I could move closer to work.
I would be the one who gets to choose based on what is more important to me - saving money or continuing to live and work where I do. But, under our present system, if congestion continues to increase and extra capacity is not added, I will not even have such a choice due to the length of the commute time.
Like I said, if you really are interested you should check out that book. They make a good case.
I don't know anything about this particular book - but most I have heard of along those lines approach the matter from a collectivist standpoint and blame all problems on the free market. (There are also some books that are written by environmental extremists who are hostile to economic progress
as such and regard the mere
existence of human beings, let alone their well being and prosperity, to be a problem.) If that is the case with this book - well, I suspect that it would probably end up being a waste of time because all they will be doing is attempting to "fix" consequences by using more of the same poison (i.e. too much socialism and the absence of free market forces) that made the patient sick in the first place. I think the solution that I briefly described here is much more in line with the facts of reality and, if implemented, will actually work - and it will work without a bunch of authoritarians telling us how we may and may not go about living our lives.
