3.1.19

A DEFENSE OF ROAD SOCIALISM?

Earlier this year, the editorial board at The Independent Review invited me to review Randal O'Toole's Romance of the Rails: Why the Passenger Trains We Love Are Not the Transportation We Need.  The full review will appear sometime this spring, and I'll likely be linking to it again, heck, maybe even letting my Economics colleagues know about it in case they get any brownie points for having emeritus faculty that are still active in some way.

The editors gave me permission to use excerpts from my review before it appears, with due credit.  In light of the attention Mr O'Toole's work is getting in the ferroequinologist community, here we go.

We'll start with a couple of reviews that haven't made it into cyber-space.  The Railway and Locomotive Historical Society, which have a serious book award (honoring longtime transportation scholar George Hilton) also on occasion issue a Broken Rail Award, issued “on occasions when a book is so outrageously inaccurate or poorly produced that it’s utterly without merit to the historian.”  That's excessively harsh.  The work is, as I shall argue, bad political economy, but it's bad in a way that will reward careful study.  A brief review in Passenger Train Journal also slags on the book, but any time a review mentions the Cato Institute and the Koch brothers as though that's a refutation, it's more along the lines of a virtue signal than a substantive contribution to discussion.

In Railway Age, D. P. Alan of the Lackawanna Coalition (and formerly a stringer for Destination: Freedom) has more than the 1500 words the Review allotted me, which gives him the opportunity to respond in detail to some of Mr O'Toole's more egregious claims.
His problem: subsidies for transit and Amtrak (Chapter 15). His solution: autonomous motor vehicles (at 323-25). He presents his auto-utopia as a sweeping generality, without considering the bumpy road on which it rides. When will such vehicles, like the one that killed a woman in Arizona earlier this year, be available to today’s non-motorists, as well as motorists? When motorists can have them, would they surrender control of their vehicles, which would negate one of the primary selling points of the auto industry? When today’s non-motorists eventually buy them, where could they be stored and used? Every vehicle takes up more room per person than a seat on a train or a streetcar. What would this scenario do to the urban environment and landscape? Would these additional vehicles exacerbate the effects of climate change?

He does not say. Instead, he repeatedly lambastes trains and transit as wasteful because they do not make a profit. That seems to be his only measure of success.

Mr. O’Toole does not claim to possess a degree in economics or business, so his opinions on the subject must be considered those of a lay person, no matter how many quotes he uses to support his assertions. Not every work that looks like scholarship is truly scholarship. Mr. O’Toole did not publish his opinions in a peer-reviewed journal or with a well-known publisher. The Cato Institute publishes his opinions because they agree with each other.
These days, a publication in a peer-reviewed journal isn't necessarily valid, and we refer to The New York Review of Each Other's Books for a reason. But Mr Alan is on point about the false promise of autonomous cars.  From my review:
Perhaps Mr. O' Toole could contemplate inefficiencies in current transportation funding methods more effectively than by perpetuating the criticism of publicly funded of rail projects that compares, e.g., the full cost of Nashville's commuter rail service (chapter 15) with buying each potential rider a Prius. That criticism pretends that additional automobiles can be added to the road network without any increases in lanes or parking lots, something that is almost certainly not true. Nor are ridesharing services and autonomous cars-for-hire (when those become feasible) likely to be more effective than trains in taming congestion. Like the jitneur of a century ago, the operator of a ridesharing car rationally treats insurance and maintenance as irrelevant at the margin. Surge pricing simply sweetens the payoff during rush hours. On the other hand, the operator of a successful for-hire car service will have to consider the full costs of maintaining a fleet of cars (taxis without drivers) and surge prices at peak times might be sufficiently high that commuters view their trains as bargains.
Mr Alan also takes issue with Mr O'Toole's understanding of urban structure.
Mr. O’Toole criticizes the “urbanist” view that cities are “monocentric” or “polycentric” as a remnant of the long-distant past (at 320-21). Yet, it was rail transit that moved people into and out of the central cores of our cities efficiently, and it is doing so again. He abhors “smart-growth corridors” and champions the “nanocentric city” (Id.); a concept that sounds much like suburban sprawl. Los Angeles took a major step toward his concept of “nanocentrism” in 1940, when it decentralized city functions; a move that began to disrupt the “smart-growth corridors” (the term did not exist then, but it describes the areas) along the Pacific Electric rail transit lines. It only took about 20 more years to kill the rail system entirely, and Los Angeles sank into a deep decline. When this writer first visited there in 1979, the buses were slow and unappealing, and downtown was deserted. Today, rail transit is back, and so are the people. The city had previously developed according to Mr. O’Toole’s vision, but abandoned it recently for something more successful.
That development of Los Angeles didn't happen organically, it was shaped by such things as zoning codes and property taxes to build roads. Mr Alan seems to suggest that some taxing and spending, for instance to provide fire and police protection, makes sense, but he doesn't follow up on that point. Back to my review.
Might freeing taxpayers from the responsibility of subsidizing the residents of places with higher transportation costs in fact lead to more trains? That's speculation on my part, and yet: the presence of steep rent gradients in communities with substantial agglomeration economies and high value-added activities in part reflects high transportation costs. Lower transportation costs produce shallower rent gradients, ceteris paribus. Under the current political institutions, much money for fixing crumbling roads and bridges or providing train service goes from localities to the federal government, there to be allocated according to the politics of the moment, and subject to national standards. Perhaps a devolution of transportation funding to the states and municipalities might allow local improvements.
Here it might have been better for Railway Age to give Mr Alan a word limit, as his closing argument is ad hominem.
Mr. O’Toole lives in Camp Sherman, a town of 233 (2010 census) in Jefferson County, Ore. Madras, the county seat, has some demand-response transportation from Cascades East Transit on weekdays. Camp Sherman has none. Mr. O’Toole can deride transit all he wishes; he does not need it, or even have it. He can use his automobile to go everywhere, including to the airport. Yet, he never complains about the enormous federal and state subsidies to automobile transportation since 1919. He only vilifies the much-smaller subsides per passenger-mile that go to public transportation, which he chooses to avoid and disparage.
Easier to throw up the virtue signal than to, oh, briefly document the way in which the "enormous federal and state subsidies" plus zoning codes and the Planning Conceit have midwived both sprawl and steep bid-rent gradients?

In Classic Trains, former Passenger Train Journal editor Kevin P. Keefe is more sympathetic, but, ultimately, not persuaded.
I’m not a transportation economist, so I’m not qualified to go hammer and tongs after O’Toole’s numbers, but they are terribly one sided. In keeping with the Cato philosophy, he’s good at showing how much money the taxpayer “loses” every time an Amtrak passenger or an NJ Transit commuter boards a train.

Meanwhile, O’Toole has comparatively little to say about the real costs of the highway system, which he sees as the natural alternative to rail, or the extent to which local governments pay for airports. His ad hominem attacks on the New Urbanism movement and its role in the resurgent “monocentric city,” as he calls it, shows that he needs to get out more from his home in Camp Sherman, Ore., population 233.

By the end of the book, O’Toole is so swept up in his screed that he ends up making the stunning suggestion that perhaps only New York City really needs rail transit. Philadelphia? Boston? Chicago? They probably could all switch to buses and more cars and still be the better for it.

I have a suggestion for O’Toole: walk in the Adams Street entrance of Chicago Union Station at 4 p.m. on a weekday, stand at the bottom of the escalator (better brace yourself!), and try to hold on as a river of humanity washes over you for the better part of two hours, all heading for Metra trains to the suburbs.

Then, when you’re finished, go back outside, hop in your car, and try to get somewhere on the Eisenhower Expressway a few blocks away. Better allow for plenty of time, no matter where you’re going. Later, calculate the cost of forcing all those Metra riders to join you on the expressway.
Irony alert: a sentence that alleges an ad hominem argument while making a different ad hominem argument is perhaps the best case for an elementary logic module in a writing course somewhere.

Scout's honor:  I wrote the review, which includes a reference to what regular readers know as Naperville Zephyrs before Mr Keefe posted his review.

As far as the transportation economics: there are opportunities for further research.  With the new semester upon us, and dissertation prospectuses coming due, herewith:
Sixty years ago, John R. Meyer et. al.,The Economics of Competition in the Transportation Industries (Cambridge: Harvard University Press, 1959) established the stylized facts of freight railroads having a competitive advantage on line-hauls of four hundred miles or more, and passenger trains capable of competing in corridors of two to four hundred miles. The transportation sector has numerous irreversibilities and nonconvexities, and generations of theoretical econometricians have identified all the ills that empirical investigation is subject to: and yet, with governments appropriating money to separate freight trains from passenger in Chicago, strengthen the Interstate Highways for longer and heavier tandem and triple rigs, and configuring urban streets to accommodate 53 foot trailers, there is likely to be value in new research into traffic allocation forty years after deregulation.
That research might provide an understanding of where the hidden subsidies to the polycentric (or sprawled) pattern of land use lie.

The most interesting development in the ferroequinologist press is the interview Trains columnist Fred W. Frailey conducted with Randal O' Toole.  The interview also appears in the February 2019 print edition of Trains.
I enjoyed it, even when it made me uncomfortable and though I didn’t always agree with what I read. And I said to myself, I’d like to meet someone who can make this many people so upset. You see, O’Toole is a contrarian—a libertarian, sort of—and also clearly a railfan. The thesis of his book is contained in these 15 words: “I still love passenger trains, but I don’t think other people should subsidize my hobby.” It so happened that O’Toole had ventured from his home in Camp Sherman, Ore., for a book tour. So we spoke by phone as he prepared to drive through Northern California.
The Frailey and Keefe articles are blog posts maintained respectively by Trains and Classic Trains, and those generally don't go behind the paywall.  A few of the interchanges merit further mention.
I see your economic message, but do you understand that streets in Chicago, and the expressways, are jam-packed? If you ran hundreds more buses into the Loop, there would be gridlock. That's true. You’ve got New York with two million jobs downtown, Chicago with half a million, Washington, D.C., 400,000. The question is, where is the dividing point between where buses can handle it all, and where we need to start having trains? Maybe we shouldn't have that kind of job density anywhere. It causes all sorts of problems, including office costs.
Perhaps with improved information technologies, the clustering of legal, financial, and marketing services in cities (Dennis Carlton of the University of Chicago used to make a quip about in the absence of transaction costs, the Loop would be a ghost town) will deglomerate, but the evolution of a city from a fortification supported by taxes to provide military protection and moral leadership for the peasantry to a network of activities probably reflects agglomeration economies.  Furthermore, one way to reduce the pressure on office costs might be to reduce or remove parking requirements.  I'll have more to say about that in a few days.

I'm way beyond 1500 words now, but let's tackle one more exchange.
It seems a lot easier to subsidize commuter trains than to level downtown Chicago. Okay, but look at the history of our cities. In 1950, most cities had jobs concentrated downtown. There’s been this huge diaspora of jobs leaving downtown as people moved to the suburbs. Because of its subway system, New York never got that job diaspora. If the subway and commuter rails were well-funded, and operating well, it wouldn't be a problem, but New York has a $60 billion maintenance backlog and Chicago admits to $16 billion. So we cannot seem to pay for the rail systems we have.
That "diaspora of jobs" didn't happen by magic. Road socialism had something to do with it.  Or, as I put it in the review,
Mr. O'Toole's work continues the curious libertarian attitude toward public spending on transportation, which the late Paul Weyrich characterized as “road socialism,” although it might be more charitably understood as a less unfavorable stance toward public money for internal improvements where exclusion is costly, as may be true of roads, waterways, and airways. Railroads, which can more easily exclude unauthorized use, are less worthy of public money. Because the use of roads, waterways, and airways is rivalrous, at the margin the provision of rail service to reduce congestion on the other modes might reduce the subsidies to places with higher transportation costs, or hold the highway system in trust for future users.
In some ways, the Independent Review got a recapitulation of points I've been making for years. Let me finish with yet another point from years ago. "Cold Spring Shops, however, welcomes conversation about transportation policy on the merits of the modes, rather than on the ideology of the advocates."

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