Amtrak Subsidy

I’d like to talk about an issue that has been below the surface of the news but reflects a constant disagreement in our politics. Economic conservatives would displace almost everything in favor of the marketplace. But when you decide what to pay for, what are you including or excluding from the transaction?

Perhaps you’ve been following the arguments about subsidizing Amtrak, for example.[1] The details are more complex but I want to set out the basic issue. Passenger trains and commuter rails and busses tend to be subsidized by government. If they depended on the marketplace alone, they would fail. When any of us decide whether to take Amtrak or a city bus, or the subway in New York City or Washington, we are thinking of the personal costs and benefits. I’ve calculated, for example, that when I go to New York City, unless my wife is going down with me, it is cheaper to take Amtrak than to travel alone by car.

But if Amtrak failed, the trip to New York City would impose much greater burdens on me than just the cost. Given that this corridor is one of the busiest passenger rail corridors in the country, that would put a lot of people on the highway. It could make the trip slower, the likelihood of accidents on a more crowded highway greater, and, of course, unlike an Amtrak trip, I couldn’t read or work on the road.

Notice, though, that those burdens of extra traffic on the highway don’t just affect me. They affect everyone on the road. And my Amtrak bill does not reflect those benefits of mass transit. There isn’t any calculation on any bill that identifies the costs to me and to all of us if Amtrak were allowed to fail.

And of course I haven’t listed all the costs. The pollution costs of taking the car are much more than the pollution attributed to train travel. Highways take a great deal of land that we could have enjoyed for other purposes – their land use is much less efficient. They are expensive to police, expensive to clear for winter travel, and expensive because of the damage from salt splashed on the underbodies of our cars and washed into our rivers and streams.

Nor do those calculations take into account the impact on global warming. It isn’t possible to be precise about the cost for global warming. But it will be large and should be accounted for. Many things can’t be put into numbers. What’s love or freedom or life itself worth in dollars? As a common ad says, “priceless.”

So to see if subsidizing Amtrak is justified, we have to add all those shared benefits to ourselves and each other that can’t be part of the ticket price. Social benefits have to be paid for by the whole society. None of us alone can buy the benefits of less climate change or less congested highways.

So yes, I believe in subsidizing mass transit and helping it grow. I think it is valuable for those who don’t take it too. More generally, the marketplace doesn’t handle every problem well.

— This commentary was broadcast on WAMC Northeast Report, July 25, 2015.

[1] See http://www.cbo.gov/budget-options/2013/44782 for the Congressional Budget Office discussion. Individual routes raise additional considerations but even those decisions impact the entire system.

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