McArdle’s objections to congestion pricing

By Felix Salmon
June 3, 2010
Megan McArdle for giving me something to push back against with respect to congestion pricing. Megan, like me, favors congestion pricing, but she does see some problems with it.

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Many thanks to Megan McArdle for giving me something to push back against with respect to congestion pricing. Megan, like me, favors congestion pricing, but she does see some problems with it.

The first, I think, is a bit of a straw man:

There’s a real tendency to tell drivers that congestion pricing is great for them: less traffic! I can kind of buy that argument, and then I notice something: almost no one making it commutes by car…

All the people commuting by car seem to think they will hate it. And that makes me think that they probably will.

Yes, this is absolutely true. Congestion pricing will hurt people who commute by car. That’s the whole point. If you currently commute by car, then you’ll either end up spending more money, or else you’ll use public transit. Neither is an obvious improvement. Some richer commuters will like their faster commute, but car commuters who aren’t wealthy will absolutely be the biggest losers here. We tax what we don’t want, and what we don’t want is car commuters. Most advocates of congestion pricing are pretty clear on that point.

That said, it’s worth pointing out a couple of mitigating factors here, beyond the simple idea that the cost of the toll might be balanced by the benefit of faster traffic. First, car commuters already pay for commuting into the central business district of New York, which has no on-street parking: they have to pay to park somewhere, and parking in the CBD is expensive. Megan talks about a car commuter paying $200 a month in congestion charging, and she’s right that that is “a lot of money for most people”. But on the other hand, we’re talking here about people who are already paying much more than that just for parking.

Secondly, where the congestion charge makes the biggest difference isn’t with commuters, so much as it is with through traffic and trucks. Insofar as commuters end up driving more quickly, it’s not mainly because there are fewer car commuters. Instead, it’s because truck traffic will end up moving from peak times to off-peak times, and because through traffic — cars which have no business in Manhattan but just drive through on the way somewhere else — will take alternate routes. Charging is pretty much the only way to make these things happen, and they’re clearly necessary.

And thirdly, car commuters are in the minority in every district in the New York metropolitan area: not just in the boroughs generally, but even in congressional districts in eastern Queens or in Westchester or even in New Jersey. Today, without congestion charging, the number of people who commute by car from any given area into New York’s CBD is smaller than the number of people who commute by public transit from the same area. It’s not like these people have no choice in their mode of transportation.

Megan continues:

I still think that congestion pricing is a good idea for a lot of reasons, but let’s not kid ourselves that it makes everyone better off. It makes affluent people who can afford taxis and congestion fees better off, and poorer folks who can commute by bicycle.

Well, under the Komanoff plan, there’s a hefty 33% taxi surcharge, so let’s not jump to conclusions about whether people taking taxis will be better off. And most of the bicycle commuters I know are actually pretty affluent — for starters, it’s generally much easier to commute by bike if you live in Manhattan than if you live in Queens or the Bronx. And living in Manhattan, for the most part, ain’t cheap.

Certainly every city with congestion pricing has used some of the freed-up road space for bicycles, and the rate of bike usage in New York is rising fast. The more bicyclists there are, the safer and more pleasant biking becomes, and the more everybody wins: as someone who commutes either by bike or by subway, depending on the weather, I can assure you that biking is much more pleasant. And London is just one of many examples of cities where a large number of people have switched from the subway to a bicycle, not because biking is cheaper, but just because it’s a much more efficient way of getting from A to B. In New York, a congestion charge would be extraordinarily helpful in terms of increasing the number of bicyclists.

Megan then says that reducing subway fares “is a terrible idea”, on the grounds that rush-hour subways are already at capacity. But again, if you look at London, subway ridership went down after the congestion charge was introduced, because it made buses so much more attractive. Subways are capacity-constrained, but buses really aren’t.

But more generally, New York’s subways are woefully underused. For a couple of hours a day they’re crammed to capacity, and for most of the rest of the days there’s huge amounts of space. If you reduced the fare at off-peak times, that would do wonders in terms of maximizing the utility provided by the subways — while at the same time reducing congestion on the streets above.

What’s more, rush-hour subway traffic is very price inelastic. The people who brave the subway at 8am are the people who have to brave the subway at 8am, and that’s true whether it costs $4 or $2 or $0. Reducing the fare at peak times might increase peak-time ridership a little, but it wouldn’t increase it a lot. And in fact, if it were done in conjunction with putting a lot of new free buses on the road, there’s a very good chance that, just as in London, subway ridership at peak times would actually fall.

Finally, Megan says that “if you want to reduce auto traffic, you need more capacity on the [transit] system–and you cannot build that capacity if the system has no reliable source of revenue other than the largesse of the city government.” Well, yes. That’s exactly why congestion-charging revenues should be earmarked for transit.

Of course there are some losers with congestion charging. But everywhere that it’s been implemented, it’s been a bit like the smoking ban: people hated it before it was enacted, and then actually kinda liked it afterwards. There’s no reason that the U.S. should be any different.

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