The Yale Free Press

“Americans just like their cars.” This is all that most television news analysts are left with after trying and failing to explain why demand for roads, cars, and gasoline continues to increase in spite of everhigher prices at the pump. It is not the only place we find this catch-all phrase. Why does demand for roads seem to be increasing while market demand for transit systems appears to be non-existent without significant social engineering? Americans prefer to drive. Why have the past 60 years of growth in this country been characterized primarily by auto-dependent, sprawling suburbs? Again, that potent love-affair with the road.

Set against this chorus plays another set of beliefs and opinions championed by a coalition of architects, urban planners, sociology professors, and other generally progressive folk. The gasguzzling automobile, we are told, is a symbol of what is wrong with America. Post WWII suburbs, characterized by a strict separation of housing, shopping, offices, and civic space accessible only by the car are inefficient and environmentally damaging social wastelands. Worst of all, critics claim that this kind of development perpetuates racial segregation, class stratification, and a host of other evils. If only Americans would embrace smaller hybrid cars, more transit, and denser development, we could all live together in peace and harmony.

There may be some truth in these opinions, but since conventional wisdom says that the root cause of automobile dependence is a disposition or preference, progressives risk sounding like arrogant social engineers. This is not an inevitable tension, however, because what both views lack is clear economic theory. The question of why the demand for automobiles and roads (as well as for transit) acts the way it does should be subjected to a similar kind of analysis that we would expect for any other economic good.

Private automobiles and public transit are two different “goods” that try to meet the same need: the desire of people to get from one place to another. It is similar to, for example, the market for house cladding, which, for simplicity’s sake, we’ll say consists of bricks and wood siding. Both brick and wooden boards serve the same purpose—protecting people from the elements. However, brickmaking and logging are distinct processes, and determining the appropriate material for a given house depends on many factors such as price, climate, and maintenance. The same reasoning applies to cars and transit. There are many trips for which a car makes sense. If, for example, I am going on a major shopping trip, it might be more convenient to load my groceries into my trunk than lug them on the subway. Other trips might be easier by transit. If I am commuting by myself over a heavily traveled route into a dense urban area, it might save time and to take commuter rail.

In such systems, pricing is the way in which information is communicated between the supplier and consumer so that everyone can make the best decision. If, for example there is a clay shortage, brick prices will rise, and more people will choose wood. Likewise, if gas prices rise, demand for transit will go up. Or at least it is supposed to.

A smart reader may have noticed by now, though, that there are some serious differences between the siding and transportation markets. For one, the government currently controls the supply of both roads and transit, while bricks and lumber are generally created by private enterprises. A far more important difference is in the pricing structure. In the cladding market, there is a strong relationship between supply, demand and price. While that relationship exists in the market for gas and automobiles, it is almost completely non-existent when it comes to the supply of roads.

The fact that government has historically been involved in the creation of transportation infrastructure reflects the fact that the creation of road or rail networks is almost insurmountably difficult without the use of the government’s power of eminent domain. That meant that government and communities had to either directly build and operate the network (as in the case of roads) or do so indirectly through franchises (in the case of rails). This is not the most important difference, however, because even when the supplier of a good is one entity, information can still be communicated through prices to consumers. For example, even if the government was the sole supplier of bricks, it could still respond to a shortage of clay by raising prices, thus regulating demand and avoiding massive shortages.

This, however, is not how the market works when it comes to the supply of roads. With the exception of a few tolls on limited access highways, the government supplies roads over most routes using taxes levied on all citizens or drivers regardless of how much they use a particular route. If, for example, I have a choice between driving my car along a heavily congested freeway or taking a train that runs along the same route, I will probably choose to take my car (for its privacy and added convenience) if both trips cost the same to me. When thousands of other commuters make the same decision, the result is gridlock. If the same situation (massive demand and limited supply of a “superior” good) occurred with bricks, the price of bricks would go up so that enough people would choose wood instead and there would be no shortage. In the lack of any market pricing structure, gridlock takes the place of high prices and the result is a long commute for the drivers and an anorexic transit system for the riders due to less demand.

It is this market structure, not some uniquely American infatuation with cars, which explains why most growth in this country has been completely dependent on the automobile. If the government supplied bricks free-of-charge to consumers using general tax revenue, it would be no mystery why every new community looked like colonial Virginia.

What can we do about this problem? Thanks to recent advances in toll collection technology, it is now possible to inject free market ideas to an extent that would have been unimaginable only a generation ago. An ideal solution would involve automatic toll collection on every state owned road. Toll prices would set by a politically independent agency that applied a predictable formula to keep all roads running at capacity, using money produced by high demand roads to fund a combination of transit and road improvements.

London recently implemented a “Congestion Charging Zone” in a heavily used section of the city. This scheme, in which cars must pay to travel in the affected area, has proven so effective at reducing traffic and providing money for road improvements that the city recently decided to expand the program’s area. EZPass and SmartTag, two automatic toll technologies already in operation along the east coast demonstrate how far the collection tools have developed. With technology rapidly advancing, and cities like London proving the effectiveness of these basic economic concepts, it looks like there may finally be a chance to exorcise the demons of automobile dependence in America.

is a sophomore in Calhoun College and Webmaster of The Yale Free Press.