The Public Purpose
August 1999 . Number 30
Highways and Prosperity

A derivative of the following article was published in Governing Magazine and the Washington Times in 1994. The authors were Wendell Cox and Jean Love.

America's reliance on the automobile and the highway system are at the very heart of our unequalled affluence. The highway system, which carries an overwhelming portion of trips, provides unparalleled personal access to employment, education, recreation, cultural, and shopping opportunities for both rich and poor. America's vibrant trucking industry ensures the competitiveness of the freight transportation industry, which contributes in no small measure to affordable consumer prices.

America is not alone in its reliance on driving and the highway system. Europeans depend upon their automobiles almost as much as Americans there is less than a 10 percent difference in the percentage of trips taken by car. This is despite higher car prices, gasoline prices three to five times that of the US, cities that cover one-half to one-fifth the area of US cities, shorter trip lengths, and lower disposable incomes.

The reliance of Europe on its highway system is illustrated by the European Union's plan to spend nearly $100 billion building 9,000 miles of new expressways in the next eight years. In America, new expressway construction is at a virtual halt.

Like Americans, Europeans (and citizens of other first world nations) are moving to the suburbs to seek a better lifestyle. The automobile makes the fulfillment of this dream possible.

Through fuel taxes, licenses, and fees, American highway users contribute more than enough revenue to support the highway system. But, nearly 20 percent of highway user revenues are used for non-highway purposes. This leaves a funding gap, which is made up by other public revenues.

Critics, however, claim America's highway system does not pay its own way. They contend that highway users do not pay the full social costs costs imposed by users by non-users of highway- generated air pollution and traffic congestion. To account for the social costs and to reduce driving, some analysts urge an increase in gas taxes to two to three times the present level, additional funding for mass transit, and restrictions on auto use.

According to highway opponents, gasoline taxes should be raised to cover the social costs of highway use and to reduce driving. But, America's experience demonstrates that higher gas prices have little impact on driving. Fuel prices are just one component of the cost of driving. As gas prices increase, people have tended to spend less on new cars, used cars, and auto related products they make only small reductions in their driving.

Increasing the price of most products reduces their consumption. But some goods and services are more important than others. In response to a price rise in milk, most parents do not reduce milk purchases for their children. They reduce consumption of less important products, while continuing to purchase the same amount of milk for their children. Just as parents value milk for their children, most people value driving.

While higher gas prices do little to discourage driving, they do destroy jobs and increase the costs of virtually all goods and services. Higher gasoline prices exact a high cost on all sectors of the economy including those who do not drive.

Critics claim that highway congestion results in lost productivity. But, congestion is not a social cost. Obviously, only those that rely upon highways users or other beneficiaries are impacted by congestion. And any meaningful assessment of productivity requires a comparison with the alternatives. If the alternatives are more expensive or more time consuming, they are less productive and offer no real advantage.

Travel by transit is more time-consuming than travel by car for most trips in most areas. The waiting time, the time to walk or drive to a transit stop or station, the frequent stops and starts, and the need to transfer all add to transit travel time. Door-to-door, the most efficient mode of transportation is the automobile in most areas of the country. Except for the most congested areas, greater use of mass transit would result in far greater loses in productivity.

Highway critics contend that if we diverted more public funds especially gasoline tax revenues to transit, we would have more transit service and a greater diversion of trips from automobiles. Yet, America has invested more than $100 billion on transit in the last 20 years, and the percentage of trips taken on transit continues to decline. During the 1980s, transit's share of work trips increased in only two of the nation's 39 metropolitan areas with more than one million people. The loss was even greater in smaller cities.

Transit is beset by political problems that result in dysfunctional resource allocation. Transit labor is shackled by unfunded federal mandates which have driven labor rates to more than double the rate paid to comparable unionized workers in the private sector. Transit service levels today are only half what they would be if transit unit costs had risen at market rates over the last two decades. Americans paid for twice the level of transit service, but we didn't get it. Moreover, transit is preoccupied with building shiny new rail systems, consuming money that could be used to make more effective but less politically attractive transit improvements.

Highway transportation, like all human activities, imposes social costs and benefits. It is disingenuous to consider the costs without considering the benefits. Every American benefits from the highway system. Products move from producers to consumers upon the highway system. Even the person who walks to the grocery store to buy milk relies on the highway system to deliver the product to the store. And the year-round availability of fresh fruits and vegetables delivered by an efficient highway system has resulted in healthier, longer lives for most Americans.

Highways move the mail and provide access for fire and police vehicles. And countless lives have been saved, because the highway system helps to speed medical attention to virtually everyone.

The highway system not only enlarges the available pool of labor for employers, it enlarges the choices of jobs for workers. And the highway system has permitted Americans to live the low- density lifestyles they prefer.

How much are these benefits worth? Analysts are quick to point out the costs but slow to account for the personal and social benefits of the highway system.

There are highway-related problems that can and should be addressed. But the future of America's highway system, personal mobility, and prosperity, need not be limited.

Automobile pollution technology has substantially reduced overall air pollution levels even as the number of miles driven increases. And rapid growth in telecommuting and Intelligent Vehicle Highway systems (IVHS) that provide drivers with on-board information about route alternatives will further reduce pollution and congestion.

The new toll roads that are under development in US cities will provide more rapid travel options to many drivers without reducing the mobility of people who choose not to use them.

Transit, too, could be more effective than it is but it must be re-invented. The services of cost- effective private companies must be incorporated into the current system, and low cost rapid transit options must be adopted. And reserved lanes on freeways and streets for car pools, van pools, and buses will provide people with quicker trips. The best carpool lanes in the nation carry more people than any rail line outside New York City.

America's highway system is not perfect. But punitive strategies that erode our affluence or diminish our quality of life are not reasonable solutions. America's prosperity is directly related to high personal mobility and a competitive freight transportation system, which rely on the highway system. The task of public policy is to preserve and extend the net social benefits of the highway system by relying on strategies that are rooted in reality. (Wendell Cox is principal of Wendell Cox Consultancy and Director of State Legislation and Policy for the American Legislative Exchange Council. Jean Love is an independent consultant in public policy and transportation. Both have worked on projects in North America, Europe, Africa and Australasia.)

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