Highways and Prosperity Revisited:
Victoria Transport Policy Institute Criticism Considered Invalid and Unfair


The VTPI paper was dated July 28, 1999 and The Public Purpose became aware of it on August 4, 1999. This response was posted on August 4, 1999 and an e-mail was sent to VTPI advising them of the posting. VTPI has since indicated that their paper is a draft and that a new version will be posted soon.

As a result, this response, too, is considered a draft.

The Victoria Transport Policy Institute(VTPI) has published a paper by Todd Littman, "Reply to Critics of Transportation Costing," which criticizes an op-ed piece by Wendell Cox and Jean Love that appeared in Governing magazine and the Washington Times in 1994. One of the most fundamental difficulties with the VTPI paper is that it applies a standard appropriate for an academic paper to a short (1,200 word) op-ed piece that was highly edited by the publisher for reader interest. A paper of many pages would have been required to deal with the issues in the depth that would be required for such analysis.

Each of the criticisms is considered to be either unreasonable for an op-ed piece or incorrect, as is indicated below.

1. VTPI:

Cox and Love state that "Through fuel taxes, licenses and fees, American highway users contribute more than enough revenue to support the street and highway system." As discussed above, this is untrue using conventional economic analysis. Only by incorrectly classifying general taxes as user charges are automobile revenues considered to pay all roadway costs.


We consider the VTPI criticism to be invalid.

Highway user fees, excluding general taxation, are generally more than the total construction and operation costs of streets and highways in the United States. As our article continued: "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." The latest data is indicated in this link.


They also state that "the purported external costs of the personal transportation system are largely paid by the driving public, who constitute virtually all of the taxpayers. After all, 90 percent of American households have at least one car." As discussed earlier, this confuses external costs and subsidies. It ignores the economic inefficiency of non-marginal pricing, and the inequities of external costs of driving imposed on members of other automobile owning households.


We consider the VTPI cricitism to be unreasonable

VTPI has inappropriately applied an academic standard to an op-ed article. The reviewed article was a 1,200 word magazine op-ed. Our point was not to posit a detailed economic analysis, but rather to indicate that, as a group, highway users and the public are virtually the same people. There is no doubt that some people benefit more in relation to their costs than others, and we are open to alternative highway financing programs that would redistribute costs and benefits more fairly, so long as they are revenue neutral.


They claim, "Nor are cars the polluters their critics contend. On a per-person basis, a single-occupant automobile emits less sulfur dioxide and nitrogen oxide than rail transit." They have chosen their pollutants selectively (they don't mention CO, VOC, particulates and CO 2 ) and ignore other environmental impacts, including noise, habitat loss and resource consumption, all of which incur higher much cost per passenger mile from automobiles compared with alternative modes.


We consider the VTPI cricitism to be unreasonable

Again, VTPI has applied an academic standard to an op-ed article. The statement in question was made in the context of "auto-bashing" statements that directly state or imply that the automobile is inferior to public transit from an environmental standpoint. Our point is that the facts are not quite that simple.


Cox and Love state that "reliance on the automobile and the highway system is at the heart of our unequaled affluence." This is incorrect. Most objective studies conclude that motor vehicle use provides few external marginal benefits to justify overall underpricing.


We consider the VTPI criticism to be invalid.

We strongly believe that the superior US access, the product of our automobile based transportation system, contributes to the fact that the US remains the most prosperous major nation. Only Luxembourg, a nation with the same number of people as Los Angeles suburb, Long Beach, has a higher gross domestic product per capita than the United States (purchasing power parity). We also believe that superior access and more market oriented labor laws contribute to the generally lower US unemployment rates. VTPI cites a US Office of Technology Assessment (OTA) report to refute this point, but that report simply indicates that "OTA is not aware of any evidence to support this." It is too bad they didn't look at income and unemployment. Comparative GDP-purchasing power parity data may be reach by this link.

"Underpricing" is considered in #5, below.

5. VTPI:

Cox and Love also argue that underpricing driving is necessary to give Americans more lifestyle choices.


We consider the VTPI criticism to be invalid.

We argued no such thing.

6. Comment on Externalities

Because much of VTPI's critism is based upon an assumption that negative externalities (external costs) should be quantified, the following comment is offered:

Neither external costs nor external benefits are subject to reliable and objective quantification by bureaucrats, government departments, economists, transport consultants or anyone else. One of the fundamental reasons that the Soviet Union failed as an economy (along with the resolve of Margaret Thatcher and Ronald Reagan) was that its bureaucrats could never get the prices right. We do not accept the proposition that bureaucratically (read "politically") determined external costs should be imposed, because they cannot be reliably determined. As Hayek indicated, "the market price cannot be known until there is competition."

If our position is inconsistent with what VTPI considers to be "conventional economic analysis," then so be it. We recall that Copernicus held views inconsistent with the establishment of the time, the church. The "high priests" who guard the conventional wisdom have been wrong before.

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