Monday, November 9, 2009

You Can't Spell Subsidy Without B-U-S

By Josh Stephens

It's funny to consider the circumstances under which Americans are willing to accept government subsidy or programming. Education: good. Agriculture: Good. Fire and safety: sure. Health care: no comment. As for transportation, we seem to be OK with ambulances, whether they're transporting us to publically supported hospitals or not. But mass transit to someplace else -- be it work, recreation, or your Botox appointment -- is another, more complicated matter.

Public transportation seems like a business because the fare structure is so familiar. Paying for a bus ride feels no different than paying for a movie ticket, so it's natural to think that the marginal cost to the consumer covers the marginal cost to the provider and away we go. Except that hidden from every fare is the 50-70 percent of operating costs that are covered by the public. Since we don't get a receipt saying "70 of your ride has been brought to you by the taxpayers of your city and state," it's even easy to imagine that the people who use public transportation can, and do, just pay for it themselves.

These assumptions complement the fallacy that riders are the only beneficiaries of the system. But as we have seen during this recession, public transportation's benefits are more than vast enough to justify public intervention. Buses and trains rescue people who can no longer afford to drive, and they enable urban economies to function by matching employees with employers -- which is the whole (economic) purpose of cities. This is why a certain radical fringe contends that the benefits to free transit -- that is, transit with a 100 percent subsidy (a la schools) -- would pay for itself many times over.

That might sound a little nuts, except that it's hard to define a substantive difference between the argument in favor of fare-free transit and that in favor of toll-free roads. It's tempting to imagine that, through the magic of elasticity, if you divide the quantity demanded by a price of zero you get infinite demand and therefore an infinite reduction in traffic. The math doesn't work out quite like that, but without the burden of pulling out a wallet, a great many discretionary riders would have a few bucks left over for food and rent.

Which brings us to the recession: All the great ideas in the world matter little if transit agencies have no money to spend and more riders than they know what to do with, which is exactly the state of affairs today, as the nation's transit agencies face a collective deficit well into the billions. My article approached these deficits from a distant, abstract perspective, as if to assure everyone that, indeed, misery loves company. But let's not forget that the real misery is that which afflicts the riders, forced to abandon jobs, remain housebound, or suffer interminable waits while the bus plies its route.

Many agencies don't quite know what they're going to do to close their budget gaps, save raising fares and eliminating service. No matter what, one encouraging outgrowth of this crisis -- from a reporter's standpoint -- is the outpouring of candor from these agencies. While government bureaucracies are notorious for obfuscation and euphemism, my reporting uncovered very little sugar-coating, as if the global crisis has finally allowed public officials to let down their guard.

Their collective message is clear: Transit agencies are asking for patience, understanding, and even a little sympathy. Whether or not we're willing to give them any more of our money is, however, another matter.

Josh Stephens’ article, “Mass Transit’s Reversal of Fortune,” appeared in the fall 2009 issue. He is a freelance writer based in Los Angeles.

Technologies Must Connect Quickly With Public to Thrive

By Karl Vilacoba

Connected vehicle technologies have the potential to transform the driving experience in the century ahead. They may also have the potential to fizzle out before they really get started.

Inventions like these live or die by the enthusiasm of their earliest adopters. Their success depends on the quick spread of related technologies, and promoting early buy-in is tough work. Think of the first radio stations, broadcasting across miles of landscapes to populations that didn’t own radios. Likewise, a connected car can’t “talk” to a mute car. Generating an initial flow of information – enough to hook the first wave of users and influence them to spread the word to friends and family – will be crucial.

This is a dilemma explored in a 2008 study by the Center for Automotive Research (CAR), which looked at some of the upsides, costs and obstacles to building a connected auto fleet and road system in the U.S. The report compared the situation to the advent of cell phones a decade ago, but noted an important difference – cell phones could at least call hard lines. Without other cars or infrastructure to interact with, connected vehicle technologies are useless.

Sources I spoke to for my article, “Car-Respondence,” stressed the importance of retrofitting older cars, at least to a point that they can transmit a basic level of information. Again, that will be difficult – people won’t shell out money for the equipment unless they’re convinced it’s worth it.

Perhaps the best way to accomplish a mass retrofit is to package the technology with gadgets that do other things – as a bonus feature of a satellite radio or an app in a BlackBerry, for instance. Once people get the taste for it, and the quantity of information transmitted begins to make a difference, they’ll be more likely to buy cars outfitted with the most cutting-edge capabilities of the day.

Some predict connectivity and hybridization/electrification are the two most profound changes the auto industry will see in the years ahead. This could be a big opportunity for Detroit -- oft-criticized as lagging a step behind the world’s automakers -- to take the lead and get back its Motor City mojo.