Bailout

Why oppose the congestion charge?

By Felix Salmon

I’m having quite a lot of difficulty coming up with someone to take the anti-congestion-pricing stance in the debate that I’m taping at Reuters in Times Square tomorrow. Policy wonks from left to right seem to like the idea with remarkable unanimity, at least in theory if not in the exact form that any given proposal might take. Libertarians, for example, quite like the idea of pricing externalities to avoid the tragedy of the commons — they tend to the econogeeky that way.

For me, the strongest argument against a congestion charge is that there’s a decent chance that it will be a very expensive way of achieving not very much. After all, there are lots of urban planning ideas which work in theory but not in practice. Mark Ambinder has a good interview with Joe Flood, who wrote a whole book about how a bunch of geeks from the RAND Corporation managed to persuade New York authorities in the 1970s that shutting down fire stations wouldn’t result in more fires. They were disastrously wrong.

More recently, notes Flood, the Bloomberg administration ran all manner of studies designed to demonstrate that the Atlantic Yards project in Brooklyn would create jobs and tax revenue, rather than lose money for the city.

If I have any skepticism about the wonders of congestion pricing, it’s in the gap between theory and reality: to talk to someone like Charles Komanoff, it’s easy to come away believing that just about everybody will win. Drivers will get faster commutes, bus riders won’t pay fares and will travel faster, subway riders will save money — what’s not to like?

But as my previous article for Wired showed, there’s always model risk, and it’s impossible to price. Empirical evidence from London is mixed: the quantity of traffic is down, and revenues are up, but the speed of traffic doesn’t seem to have increased very much, and the initial gains seem to be eroding over time. Even Komanoff expects something similar to happen in New York: in order to keep congestion constant, the congestion charge is going to have to rise at a pretty substantial rate, pretty much in perpetuity. No matter where it starts, be it $8 or $16 or something else, it’s certain to get higher pretty quickly.

What’s more, there’s no doubt that a congestion charge is politically unpopular, especially in the outer boroughs: people see only what they would pay, and not what they would save — especially when, as with the Bloomberg plan, there’s no decrease in transit fares.

But if someone has stronger arguments against the congestion charge, let me know — especially if you’re free at noon on Wednesday.

Full post as published by Macroprudential on June 01, 2010 (boomark / email).