THE SUNK COST FALLACY?

Milwaukee's downtown circulator streetcar, which was eleven years in the planning, has been a free ride for passengers, thanks at first to the Potawatomi Casino and Hotel.  But the City of Milwaukee have learned, the hard way, that levying new taxes doesn't bring in more revenue, and they're on the hook for operating the Hop.  Radio talker Dan O'Donnell makes political hay from those expenses.  "The City of Milwaukee is hemorrhaging millions of dollars per year in what may be the biggest left-wing boondoggle in its history."  According to Mr O'Donnell, the way out of the financial hole is ... more taxes.  "This is costing taxpayers $5.5 million per year in operational expenses, which Milwaukee is attempting to pay for by radically increasing parking tickets and parking meter fees. In other words, people who don’t use the streetcar are paying for it!"  Yes, parking spaces are productive assets and ought be priced accordingly, and yet, offsetting road subsidies with countervailing subsidies to a trolley doesn't make much sense.  Particularly if those people feeding the meter are driving downtown because ... the Hop doesn't serve residential areas apart from the Fashionable East Side, and only the inner parts of that.  Mr O'Donnell proposes turning the juice off.  "It is well past time to keep wasting money on Mayor Barrett’s Trolley Folly and put The Hop out of its misery."

Alas, Twitchy contributor "Ranty Amy" Curtis, a Wisconsin resident, notes that the Hop lives at the expense of everyone else.  "The city would be on the hook for tens of millions in Obama-era grants given for the building of The Hop."

It's policy follies like that which give rise to the Pig Book and the Department of Government Efficiency.  The inefficiencies add up.  In the early days of the so-called Great Society, an agency called the Urban Mass Transportation Administration thought that spiffing up the city bus fleet would get some drivers out of their cars.  (Didn't work, tolls and parking charges do that.)  That grant program still exists, under the Federal Transit Administration (a preservation railway can probably restore a basket case streetcar to service faster than the application gets funded) and for all I know the perverse incentives it creates also persist.

In Milwaukee, it was the prospect of Federal money that got the Hop built, and it was touch and go finding a corporate sponsor to pay for the rides.  Yes, it is convenient, easy ride from the railway station to the Grohmann Museum or close to the Summerfest grounds and because it's a free ride, a tired traveller might walk back from Walkers Point, grab refreshments in the Third Ward, and then take a short hop back to the railway station.

But was it good value for money?  And those more mundane capital grants?  Years ago, there was research in the transportation journals about how those led to uneconomically early scrappings of still-serviceable busses.

Do you wonder, dear reader, why I so often suggest the best thing for government to do is to go away?