Thursday, May 25, 2006

Land use regs, TX vs. CA immigration, congestion reduction, and a compelling philosophy of toll roads

It's time again to clear out the small stuff stack with a miscellaneous set of items for your weekend perusal. If you only read one, make it the last one.
  • Reason's blog on how smart growth laws backfired in Maryland and actually promoted sprawl.
  • More Reason on the growing acceptance of High-Occupancy Toll (HOT) lanes.
  • A very short post by Virginia Postrel on why immigrants are better for Texas than California (which is probably why we seem to be more comfortable with immigration here than in Cali).
  • Bob Poole at Reason on the new transportation mindset that gets beyond the "congestion paradigm" that "we can't build our way out." He talks about Georgia, Washington, and, of course, Texas:
"I'm pleased to say, however, that this Congestion Paradigm is beginning to crack. The revolution began in Texas soon after the turn of the century, when Dell Computer announced that it would no longer expand its operations in Austin (its headquarters) because traffic congestion there had become intolerable. This proved to be a wake-up call, leading the Governor's Business Council to research the issue and draft the Texas Metropolitan Mobility Plan. This revolutionary document declared that MPO plans should set aggressive targets for reducing congestion well below today's levels. And they should develop realistic estimates of what it would cost to accomplish that, as a guide to finding the resources to do the job (which is what led to the current preference for tolling in Texas). Projects would be selected by crunching the numbers to determine which ones delivered the greatest reduction in congestion per dollar spent. Thus, there was no bias against transit projects, if they could deliver cost-effective congestion reduction. But most of the evidence suggested that what was needed was large-scale additions of highway capacity."
  • A San Francisco Chronicle op-ed on the high price of land-use planning out there.
"These restrictions included urban-growth boundaries, purchases of regional parks and open spaces and various limits on building permits. These regulations created artificial land shortages that drove housing prices to extreme levels. Today, residents of Houston, Texas, can buy a brand-new four-bedroom, two-and-one-half bath home on a quarter-acre lot for less than $160,000. That same house would cost you more than five times as much in Marin or Contra Costa counties, seven times as much in Alameda County, and eight to nine times as much in Santa Clara, San Mateo, or San Francisco counties."
  • Finally, with my apologies to Erik: an excellent speech by Mike Krusee, chairman of the Texas state house transportation committee, laying out the logical philosophy for toll roads over the gas tax. It'll make you proud to be a Texan. It's concise too, so no excerpts here - please consider reading the whole thing.
Hope you enjoy your Memorial Day weekend, and don't forget to take a short moment to remember the spirit of the holiday. See you next week.


At 3:26 AM, May 26, 2006, Anonymous Anonymous said...

A quick comment about your comment on Virginia Postrel's short blog. The numbers don't really flesh out your notion that Texas is more "comfortable" than California re: immigrants. Naturalization numbers -- California is at 145K, Texas is at 35K for 2004 ( Of course, if we're talking about illegals, the numbers are all over the place. INS claims CA is at 2.2 mil vs. TX at 1 mil. ( Either way, your quip is inaccurate in numbers.

Anecdotally, from personal experience (my parents are immigrants from East Asia), "native" residents of Texas and California seem to be very comfortable with immigrants and immigration. Where does your impression of Californians come from?

Also, you'd probably be better off saying up-front that the SF Chronicle op-ed is from Randall O'Toole. I was a bit confused why the pro-regulation editorial board of the Chronicle wrote an op-ed on why urban limit lines are bad. Also, he does the apples to oranges thing again -- development in the Bay Area is much different than in Houston, for a number of non-human reasons.

By the way, it's 68 degrees without a cloud in the sky here in the Bay Area. How go the T-storms and the humidity? (I laugh now, but I'm coming back in a week.)

At 7:05 AM, May 26, 2006, Blogger Tory Gattis said...

The "comfortable" comment is not based on the numbers, but stories about how CA has taken a more hostile attitude towards immigrants - passing laws to deny them state services, for instance - than Texas, which even allows illegals to attend state colleges at in-state tuition. I can't remember where, but I once read an in-depth article comparing CA vs. TX attitudes towards immigrants, with CA being more fearful and TX being more accepting.

No fog today, huh? We're warming up here - but the T-storms have been minimal this spring, and we just came off one of the best winters and springs in my memory. Amazing weather. We're not CA, but I'll take the 1/5-price homes, low cost of living, and no income tax tradeoffs vs. a few extra warm months. It frees up a lot of discretionary income for great dining out and some fun travel.

At 8:53 PM, May 26, 2006, Blogger Max Concrete said...

Regarding Krusee's speech, it is of course serving his interest but it drastically increases the "transaction costs" of using highways. Most of society is moving toward more efficient ways of getting things done, often eliminating the middlemen. Here is why privatized toll roads are so inefficient
1. The cost of capital for private firms is higher than for government, maybe as much as 2 to 3 percent on the annual interest rate.
2. Private firms need to make a profit, which is an additional substantial cost for drivers.
3. The cost of building a toll road is substantially higher than a free road, something like 20%.
4. The costs of collection is another transaction cost with the middlemen (including credit card companies) peeling off a few percent of revenue.
5. The cost of enforcement can be substantial, requiring a small police force, law firms, courts, etc.
6. Toll collection technology has a much shorter life than the toll road itself, necessitating more ongoing costs.
7. There is a lot of corruption involved in the process as documented by
8. Most states are avoiding privatized toll roads entirely (CA, FL) and other states are doing it on a very limited basis, typically one-of deals like Chicago or Indiana.
9. We will end up with expensive roads that are generally underutilized.

Congestion pricing is also doomed to fail because the price increases needed to actually thin out rush-hour traffic are very large (think 3x or 4x existing rates) and are not politically feasible. For example, London's tax is 8 pounds (about $13). It worked, but can you see rush hour toll rates being increased by that much?

Unfortunately, the Republicans in change couldn't care less how inefficient something is, as long as it is not a tax.

As for making tolls a financial asset for government, then they should also start making money on police protection, education, and everything else government does.

Oh, and did I mention that Mike Krusee is an IDIOT!

At 1:16 PM, May 27, 2006, Blogger Tory Gattis said...

While I support toll roads, I strongly prefer public ones over private ones - for the risks you mention plus the monopoly clauses that generally prevent competitive capacity nearby.

I find it very hard to believe toll roads are 20% more expensive than normal freeways - esp. all EZ-tag ones like Westpark. The equipment can't cost all that much, and the billing/payment system is a sunk cost already in place.

> 9. We will end up with expensive roads that are generally underutilized.

Obviously, there is a strong incentive for this *not* to happen, because either the private or public entity will lose money. I think this a bigger risk with free highways, where the "loss" of underutilization is hidden, like the 59 Eastex.

I think congestion pricing will be politically acceptable as long as the free lanes are also available and people have a choice. On roads like Beltway 8, they would be wise to congestion price only the left lane or two with frequent EZ-tag readers, rather than the whole thing.

> As for making tolls a financial asset for government, then they should also start making money on police protection, education, and everything else government does.

We all agree everyone needs and has a right to police protection and basic education - therefore broad-based taxes make sense. Everyone does not have a right to free 70mph routes wherever they want to go. The absurd extension/equivalent would be nationalize the airline industry, charge a broad-based tax, and let everyone fly for free wherever they wanted. In some ways, it would be more "efficient" in the same ways you describe, but that efficiency is more than wiped out by the free rider overconsumption problem. As a general rule, it's better to have users pay full-price for what they consume.

While there are additional costs for toll roads, I think they're balanced out by fairness, the benefits of congestion pricing, and the need for people to explicitly understand and pay the real cost of living farther out vs. in-town.

At 8:11 PM, May 27, 2006, Anonymous Anonymous said...

As the most truly liberal individual on this blog, I will have to defend my dear capitalism.

1. Cost of capital for government is lower because they have the power to take money by force to prevent bankruptcy. Include IRS expenses in this calculation.

2. Profit gives the proper incentives to cut costs and maximize revenue.

3. 20% higher? Please link to evidence. Sitting in traffic isn't a cost? Pollution, gas, time? These costs are gargantuan relative to the cost of a toll booth. Without toll booths you have to collect taxes, this costs money.

4, 5 & 6. Without collection you get overuse and massive congestion. Collection promotes carpooling and bus usage. This saves society money. Without toll booths you have to collect taxes, this costs money. Collecting and enforcing at the toll booth instead through the IRS and state comptrollers office doesn't make it any cheaper.

7. Public endeavours are corruption free? Come now.

8. New ideas are often avoided without merit because of fear of change.

9. Underutilised? Please provide evidence. Isn't the point of new roads to reduce traffic congestion?

"Oh, and did I mention that Mike Krusee is an IDIOT!" - zing


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