Houston and the Free Market

Tory Gattis had a great post on Monday in which he reviewed some news from late ’08. Two major highlights:

1. A comprehensive study by the Brookings Institution found that congestion pricing of freeways “would reduce housing costs and sprawl. It eliminates the subsidy for living farther out, which drives up demand and density in the core.”

No kidding! I’ve long been an advocate of this because of my experience living in Italy. In Italy the equivalent to the Interstate Highway System, called the Autostrada,  is a privately operated freeway network, the largest portion of which is operated by Autostrade S.p.A., which basically translates to Freeways Incorporated. (BTW, I think since I lived there they’ve rebranded as Atlantia, but I’m not sure)

So, when you’re driving around Italy there’s essentially an EZ Tag scanner at every on-ramp and off-ramp, you get on and drive, and when you get off they bill you based on the type of car you have (weight) and the mileage driven. It’s all electronic, and keeps all toll-both related slowdown off the mainlanes.

Combine that with a congestion-pricing model (ie it’s more expensive to drive at rush hour) and you’ve got a free-flowing highway system 24-7 with no need for federal fuel taxes.

What do you do with that? You split the difference, let the state gas tax be set to the level TxDOT determines would adequately maintain the existing highway (not freeway) network, plus a small margin for new roads…  Since a lot of freeways would be off their books they shouldn’t need much or any increase, but if they do let’s cap it at 9 cents (half of the eliminated federal gas tax) for good measure. End users should still see a good drop in prices at the pump.

After that, there’s two obvious policies to consider: index the tax to inflation, or index it to the TxDOT budget. Indexing to inflation is pretty non-controversial, and would keep things about how they are. Indexing it to TxDOT’s budget is probably more controversial, and would certainly be politically charged… but it could be a good way to get attention to the workings of TxDOT. Nothing like a little attention from the public to keep spending in check. These are public funds, after all.

Either way, you’ve separated the biggest cost out of TxDOT’s purview, allowing them to focus on the rural roads, and on regional connectivity and access. They’d be busy creating a larger number of routes… just what the Dr. ordered.

What’s best about this system? It charges the heaviest users for the service they use the most, ie commercial truckers and long-distance commuters. People out in the rural middle of nowhere who won’t ever get a freeway SHOULDN’T be paying for one!

And, as the study predicts, many people would change their lifestyle habits (ie live closer to where they work, or find an alternate route) to avoid the fees. People would have a choice, do I want to pay what it really costs to drive on the freeway at rush hour, or not? For those who decide it’s worth it, cheers to them! They’ll now have a free-flow commute. For those who decide it’s not, they should have more money in their pockets at the end of the day.

It’s a free-market solution, and I like it.

2. Tory responded to some illustrations of where Houston’s Planning Department does singificantly interfere in the marketplace: residential density, parking requirements, setbacks, and deed restrictions.

I don’t need to add much here, Tory said it well.

I only had one thought experiment to add to the idea about parking:

Parking standards are a fixture of city ordinances everywhere, yet there’s tremendous debate about how much parking is ‘not enough,’ or ‘too much’ or ‘just right,’ and nobody seems to have a good answer.

If parking was only ever determined by property owners, the various branches of the real estate industry would have studied parking into oblivion and would have turned parking lot sizing, design, and sharing arrangements into a brilliantly exact science.

Why would they have done this? Because it would be in their best interest! Every inch of parking that sits vacant is wasted money, every minute that the parking space is not in use is capital they have spent that is not returning anything to them. Likewise, every customer who encounters a full parking lot and moves on is potentially lost business!

Look at retail floor layouts. Where you put shoes and t-shirts in a clothing store seems unimportant, but if you talk to a retailer they can tell you study result after study result after study result that helps them determine exactly what arrangement to place their products in order to be easily browsed by customers and to result in the highest number of sales.

If only private-sector enthusiasm were applied to everything government tries to do! It could be, if we gave more of the things government struggles with back to the people.

Why not start with parking requirements?