A Stitch in Haste

There’s nothing particularly noteworthy about the (freshman economics) notion that as fuel costs (or other costs, such as airport delays and security theater) rise, people will increasingly switch to substitute modes of transportation:

The high cost of fuel, along with traffic and airport congestion, is drawing travelers back to trains for commuting and for travel between cities as much as 500 miles apart.

Californians are considering selling billions of dollars worth of bonds to start on an 800-mile system of bullet trains that could travel at 200 miles per hour, linking San Francisco and San Diego and the cities in between. In the Midwest, transportation officials are pushing a plan to connect cities in nine states in a hub-and-spoke system centered in Chicago.

The public is way ahead of policymakers in recognizing trains as an attractive alternative to cars and planes, said Representative James L. Oberstar, a Minnesota Democrat who is chairman of the House Transportation and Infrastructure Committee. “I think we’re at a transformational point in intercity passenger rail service,” Mr. Oberstar said.

Representative Oberstar does a lot of thinking about transportation and infrastructure — and most of his thinking is wrong. But that’s a whole other blogpost.

The point here, while still in “freshman economics” mode, is to remember that fuel costs are irrelevant to the core question of whether passenger rail is a public good. It isn’t.

To be a public good (i.e., worthy of government provision and taxpayer funding), the good must be non-excludable. But of course passenger rail is excludable — you need a ticket. This is not a complicated concept.

At most, passenger rail approaches the status of “club good,” because service is, to some extent, non-rivalrous: my boarding a train does not prevent you from boarding it to (ignoring capacity constraints, of course).

Furthermore, since a passenger train only truly benefits those who actually use it, it is fiscally perverse to force taxpayers, most of whom will not use it, to pay for it.

The absurdity of taxpayer-subsidized non-public goods reaches its apex when the taxpayers not only “do not use” the non-public good, but actually “can not use” it:

Critics say it is unfair to require people in areas where there is no Amtrak service or infrequent service to subsidize the train travel of people in the few corridors where there is frequent, fast service. “I do not think you can justify many, perhaps most, of the routes Amtrak is running,” Senator Jeff Sessions, Republican of Alabama, said in a Senate debate last month.

Sessions’ lament is true enough, but it’s more of a sufficient condition for impropriety rather than a necessary condition. Someone who lives in, for example, New York City, with its Amtrak hub, but who still doesn’t use Amtrak, is as much a victim of the fiscal perversion of taxpayer subsidization as a taxpayer in the backwoods of Alabama where there is no Amtrak station anywhere in the vicinity. To tax anyone who does not use a non-public good to subsidize anyone who does use it is an illegitimate government action.

(Progressives, and perhaps even some classical liberals, might suggest that taxpayer subsidization of the poor who use a non-public good is appropriate as part of a general “social safety net” program. But the way to implement that kind of subsidization would be personal vouchers to lower-income riders, not broad subsidies to the entity itself. In the case of passenger rail, the more likely outcome of general subsidies if of course to redistribute income from lower-income taxpayers to higher-income taxpayers. After all, who is more likely to ride Amtrak or a commuter train — the lower-income taxpayer or the higher-income?)

The status of an enterprise as a public or non-public good is wholly independent of the market for substitutes, “general economic conditions,” or any other rationalization by Amtrak’s apologists to tax one (politically disfavored) constituency for the sake of another (politically favored) constituency. The fact that passenger rail is becoming more attractive in the wake rising fuel costs is, if anything, an argument for ending its subsidies.

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