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November 08, 2005

Cars for the Poor: Strange Bedfellows

UPDATE: I apparently got much of this post wrong.  See this followup post for more details.

This article from the libertarian-leaning Northwest Meridian applauds the Brookings Institution's Margy Waller -- who advocates for big-government programs to subsidize car ownership for people at or near the poverty line.

Strange bedfellows indeed.  The small-government Meridian presumably likes the idea because they feel that transit is expensive, big-government meddling.  Waller welcomes support from all corners, since as she says in this Washington Monthly article:

"[P]oor central-city residents find themselves living further and further away from economic opportunities. Evelyn Blumenberg, a professor of urban planning at UCLA, found that car-driving residents of the Watts section of Los Angeles have access to an astounding 59 times as many jobs as their neighbors dependent on public transit. Even more isolated are the car-less low-income families that now live in the suburbs—nearly half of all metropolitan poor."

Now, somewhat to my surprise, I find Waller's argument on this point fairly convincing:  the fact that many poor folks don't have car really does seem to make it hard for them to find a job.  So, despite my general belief that automobiles are already too heavily subsidized, extending car ownership to the poor and near-poor seems like it could have some substantial benefits in raising their economic prospects.

But my support for Waller's ideas only goes so far.  In fact, I think some are downright nutty.

Waller's biggest-ticket proposal -- which she discusses at length in the Washington Monthly article -- is for the federal government to subsidize commuting to work, through a system of tax credits that would cost a whopping $100 billion each year.  If I read her correctly, the value of the subsidy would be tied to the cost of commutes; that is, longer commutes would come with larger subsidies.

Obviously, Waller is well-intentioned here; she wants to help people cope with a major, and rapidly growing, daily expense.  Recognizing her good intentions, however, isn't the same thing as endorsing her ideas: to me, this is simply one of the most counter-productive, bass-ackwards transportation proposals I've seen for a while.

First, there's this:  why commutes?  Yes, commuting can be expensive, and that can make it more difficult for people to get jobs, and to hang onto them once they have them.  But low income folks face lots of equally necessary expenses -- medical care, child care, and so on -- that can be a barrier to employment.  With so many different and competing needs out there, shouldn't low- and middle-income folks themselves be able to decide for themselves what they'd like to do with a tax credit?  Waller's exclusive focus on the costs of commuting seems strange, and unresponsive to the reality that the cost of transportation isn't the only barrier to landing and keeping a good job.

And then, there's this:  if you pay people to do something, generally speaking they'll do more of it. So if you subsidize commutes -- giving people who commute longer distances a bigger subsidy -- people will inevitably wind up commute longer distances.  They'll choose jobs that are farther away from their homes than they otherwise would; and they'll choose homes that are farther away from job centers.  The result:  more miles driven, at the most congested times of day.  And that means more pressure for new roads; more CO2 emissions and air pollution; more petroleum imports; and perhaps most ominously, more sprawl, which will lock metro-area residents into the same kinds of development patterns that have served the poor so badly in the first place. 

In fact, much of the $100 billion annual commuting subsidy would simply be capitalized into land values, particularly of the most sprawling neighborhoods.  Housing that's inexpensive because it's relatively inaccessible to jobs would gain in value, as the expected value of the commuting subsidy gets incorporated into the purchase price of each house.  I haven't done any serious analysis of this. But my experience with farm subsidy programs tells me that the end result of this sort of subsidy will likely be an aggregate increase in housing prices of somewhere on the order of a trillion or so dollars.  (That's right, Waller's proposing a trillion dollar subsidy for sprawl!)  Much of the gain will be concentrated in the most sprawling housing units with the highest commuting costs.

And then, there's this:  adjusting the subsidy to the cost of the commute means that many folks will opt for a more expensive commute.  So even if you *could* walk or bike to work, the promise of a larger tax bonus might entice you change your commuting habits, or even your job.  Which would mean that, at an aggregate level, commuting to work would probably become more expensive than it is right now -- an economic distortion that would make our already-inefficient transportation system just that much more wasteful.

To me the whole idea of subsidized commutes seems poorly thought through -- and fails to recognize that even well-intentioned ideas can have all sorts of unintended, and unwanted, consequences.

Posted by ClarkWD | Permalink

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Comments

Your Margy Waller linky has this site URL leading, Clark.

Posted by: Dan Staley | Nov 8, 2005 5:18:41 PM

Thanks for the catch, Dan.

Posted by: Clark Williams-Derry | Nov 9, 2005 9:25:48 AM