Paying to drive in the “Big Apple”
One of the first things that students are taught in beginning economics
class is about scarcity. Scarcity is not about something being rare,
rather, scarcity is about there being less of something good that people
want.Â
New York City has long been noted for its traffic jams. There is
just not as much space on the streets as people would like to use,
causing the city’s well-known traffic gridlock. Space on the streets is
scarce.A good clue that something is scarce is that people are willing to pay
some price (but not necessarily any price) for it. Do you think that
New York City streets are scarce?
Mayor Bloomberg is proposing a hefty fee to use the streets in NYC, $8
per day for cars and $21 a day for trucks, during the city’s worse traffic
times,from 6 AM to 6 PM. While this is a heavy cost, is use of the streets
in New York City free now, without the fee?
Without fees, those who value the streets less may replace those who
value the streets by a lot. But the fee, no matter where it is set,
will split people into two groups, those who value the streets more than
the fee and those who value them less than the fees. Why do you think
that this is so?
Can you think of any other place where a price or a fee might be useful
to ration something scarce among different users that is not currently
being used? Can you think of some place where the price of some good
is too low, or in other words, does not do a very complete job of rationing
the good among the competing users? What is the evidence that the good
is scarce? Do you think that it is currently worthwhile to charge a price
for the good or service? In other words, will the collections from the price
outweigh the cost of collections and enforcement? Remember, to collect a fee
or price, something must be done to keep the non-payers from using the good.
-MC
June 12th, 2007 at 8:47 pm
I believe that charging a fee for driving in New York City is a good way to balance out societies wants to drive and needs to get to work on time, but cannot because of the gridlock of traffic they may be stuck in. These types of people would be willing to pay a fee to keep the gridlock to a minimum. The people that are unwilling to pay the fee will be overruled by the people who are willing. This occurs in economics all around the world because peoples’ wants overpower there needs. Which makes things scarce and not available to society.
June 13th, 2007 at 8:26 am
Because New York City streets are filled with traffic jams every day and the mayor is about to impose a fee on driving in the city, the streets must be scarce. Although drivers get where they need to go, they pay a price both literally and figuratively. Yes they may have to pay $8 a day, but they also pay in their time. Wasting hours on the street, just sitting and waiting is time that, to some, could be spent better. Granted they are on the way to work or home, but why not spend more time than money? If the roads mean enough to you, then go ahead and pay the $8. Soon enough, New Yorkers will begin to trade their keys for bus passes and taxi fares. Keeping traffic to a minimum as well as boosting the New York economy is a great idea. The only thing needed for this to be successful is an assumption of the city dwellers’ individual rationality. Some will value money more than travelling in a private vehicle, while others will value their privacy over the cash. Since the only price one pays to drive is the occassional toll, the $8 Big Apple Road fee should be an effective economic implementation.
June 13th, 2007 at 10:31 pm
Good job Michelle and Derrick.
-MC
June 16th, 2007 at 9:36 am
The government, as any other holder of scarce commodities, has long “sold” commodities at market prices – FCC sells bandwidth, the various DNR’s sell hunting/fishing rights, the National Parks sell park access (in various tiers nonetheless!), the state department will sell you the right to travel (Passport) and so on….
Congestion fees on public roads do have some problems – they are a conversion of freely on a first-come-first-serve-basis publicly funded resource into a fee-based-access sold commodity. Obviously the roads were funded with public moneys collected under the promise that the results of that “taking” of taxes and land would be available as a betterment to all as a public resource.
An additional problem is the idea of an additional “taking” from those captive within the “taken zone” – the peoples who’s visitors and goods will now have to carry the cost of a fee to access their physical location. The scale is smaller per levy, but it basically parallels the Mediaeval Robber Barons with their chains across rivers so they might extract a toll for passage.
There is also an issue of disparity. In most of these city access schemes residents are afforded either a discount or fee-free access, meaning the majority of traffic is at a lower tier and the occasional visitor is screwed over with a higher rate. Chicago has implemented this sort of two-tier fee structure with its iPass tollways – where non iPass traffic is charged double for the same service – a right fo passage. There are many who have problems with this sort of tiering of fees.
I am very puzzled how it would be imagined that levying a fee and increasing difficulties in access would boost NYC economy? This has been far from the case in the European Cities that have run with congestion fees for several years.
The promised traffic relief is phantom – and experience in other fee charging cities is that the only thing that changes is costs go up and you have bottlenecks at fee assessment points (and you get to be on Camera going in and out!).
Messing with fees is just political fast-talk for levying more taxes on doing business in NYC. But remember that is a city where taxi licenses are rationed to the point a taxi license is worth $450,000 each and free-market (rather than the socialist “rent controlled”) housing is kept in such short supply as to be similarly expensive.
The NYC model is to restrict access to the NYC markets in order to sustain high prices & margins.
Steve
June 22nd, 2007 at 4:49 am
New York City certainly will not be the first city to charge for congestion. A key question is whether these charges are a tax or not.
Diplomatic immunity also means no taxes. See the article here:
http://www.indianmuslims.info/news/2007/jun/21/us_embassy_owes_pnds_1_5_m_london_congestion_charges.html.
-MC
July 15th, 2007 at 3:28 pm
When I first heard about paying to drive in New York City I was really shocked at “what the world was coming to” so to speak. When you think about it nothing is free these days. But when I stopped to think about the good it would do I realized it would be for the best. Besides do we not pay a toll to get into New Orleans, Houston, etc. By charging people to drive you increase the amount of people using public transportation which is not only good for the enviornment but also good for the economy and you reduce the traffic jams.