My liberal Seattle friends are complaining. It seems passing the RTA tax meant that poor people would end up paying even more in taxes. Who knew?
I knew. Let me spell it out: Every tax, no matter how small, hurts the poor more than the rich. See, the rich are rich and they can easily dodge any taxes that would harm them. The poor? Not so much. They’re stuck in a rut. They’re poor. They don’t have options!
Anyway, let me spell out what a sane transportation policy would be for the Seattle area.
First, sell all the roads, all of them. Allow people to own the roads and control who can use them, with the following criteria:
- No discrimination.
- No really, no discrimination.
The reason behind this is that people have a right to move about, and when it comes to roads, that means you can’t deny some people and not others simply because you prefer one or the other groups.
Now, I know what you are thinking: TOLLS!
Tolls are bad. They are hard to collect, but they are actually far better than the system we have now.
See, the system we have now works like this.
- The government collects tons and tons of money.
- They spend some of the money doing what they promised to do.
- They spend the rest on themselves.
- If there is a problem that people are willing to pay to fix, they fix that last because if they fixed it, people wouldn’t want to pay more money to fix it anymore.
It also inspires something called perverse incentives. Perverse incentives are when people are given a reason to make bad choices because the rules of the game twist the true costs of things.
For instance, a woman on welfare might think that her life would be better if she got pregnant and had a child our of wedlock because the government would pay her more money. Obviously, this kind of thing is good for no one, and yet, there is an incentive to do it.
Another example is the man on disability who can do some kinds of work but it wouldn’t pay nearly as much as what he earned before or the disability check he is making now. So he decides to do nothing because he gets more money for it.
How do you eliminate perverse incentives? The free market is the answer, especially price signalling. You eliminate all road and gas taxes, and you sell all the public roads to the highest bidder.
See, when someone owns a road, they will try to maximize the profit they get from that road. And the way you do that is you build a beautiful, clean, well-maintained road that people like to use, and you charge them as much money as you can but you also want to make sure as many people as possible use it. Just like any business, they have a motivation to provide the ideal customer experience because with the ideal customer experience you get the ideal profit because you can charge the ideal price and people will show up in ideal numbers.
The road owners will have an incentive not only to maintain their roads, but to charge the best toll, which will be the lowest toll that simultaneously provides for all the expenses of keeping up the road but also limits traffic to the maximum number of cars.
And that’s the key: People will limit traffic themselves by raising prices.
Which sounds bad. Now poor people can’t get to work because they can’t afford the tolls. But this is simply not what will happen. What will happen is some enterprising person will say, “You know what? I can stick a hundred poor people on a bus and then divide the toll among all the passengers.” Now the poor people are paying 1/100th of the toll.
So the second part is: Privatize the buses and trains. Let them sink or swim on their own.
Competition exists even with fixed things like roads. Let me describe some of the things that you’ll see.
First, monopolies can’t exist. For instance, let’s say there’s a road that serves only my house and my neighbor’s houses. You might think someone would try to buy the road and charge exorbitant fees because we really have no option, but we do. We can park outside of our neighborhood and walk the last few feet. In short, it will probably end up that we’d buy the road for ourselves and maintain it for ourselves in some kind of collective. This already happens, all the time, in communities. Homeowner’s associations may own the private roads that service the homes.
Second, suppose I-5 is crowded and so the owners of I-5 decide to raise tolls just enough that traffic begins to slow down slightly. Since they can make a little more money by letting in a few more cars, you can bet they will figure out a way to make traffic even better and increase capacity. In fact, they’re probably going to spend a great deal of money to do this. See, when you own a gold mine, you try to get as much gold out of it as possible.
Third, there are always alternatives, particularly in a developed area like Seattle. If I-5 is too expensive, you can take 99, or 509, or the side streets, or any number of options. You can bet that every road will be competing with each other.
Fourth, you will see rich people get behind transportation projects in a way you’ve never seen before. Imagine someone like Elon Musk who tried to economize lithium batteries for his electric vehicles, but with transportation. If people are spending billions to maintain and use roads, and there’s a better way to move people and things from point A to point B, count on a capitalist to find it and exploit it.
We have been so programmed to instinctively think that collective action means we need government to step in that we are blind to obvious solutions that lie right in front of us. There are great transportation options, wonderful things that can be done. We just need to unleash the human spirit through the free market to get it done, quickly, safely and efficiently.