Policy and Planning as Public Choice

Mass Transit in the United States

David Lewis, Fred Laurence Williams

• Publisher: Taylor & Francis
• Year: 2019
• eBook ISBN: 9780429817038
• Edition: 1
• Topic: Physical Sciences
• Subtopic: Economic Theory

First published in 1999, this book applies formal economic measures to the passenger and taxpayer benefits of public transit service in the United States under a public choice analytical framework. Approximately 400 local transit budgets have been renewed annually for more than 25 years. These budgets epitomize Braybrooke and Linblom's concept of 'disjointed incrementalism' and Buchanan's concept of 'Public Choice' since local legislators funded transit despite constant academic criticism of transit performance. On the other hand, Braybrooke and Lindblom and Buchanan show that local budgets capture benefits that traditional planning analysis does not grasp. This is borne out in analysis in the book. Indeed, far from draining society, transit returns five dollars in benefits for each one dollar of public subsidy. After explaining the analytical framework in Chapter 1, four chapters are devoted to measuring the value of transit benefits. The concluding chapter draws out the implications of this approach and of benefit measurement for policy and planning.

1 A Public Choice Analysis of Transit Budgets

Introduction

The professional literature on public transit policies in the United States is incomplete. To contend with chronic financial distress, the preponderance of policy analyses have focused on transportation system efficiency goals, but they have neglected transit’s public policy functions. The cost and effectiveness of transit services in reaching transportation objectives (e.g., patronage) imputed to transit systems are well documented. Little, however, has been reported on transit’s measurable benefits to passengers and to taxpayers. The ensuing misapprehension of transit’s value to households, cities, and the public interest has resulted in a vicious circle of perceived failure and financial neglect in the United States transit industry.¹

The evidence in this book suggests that the public realizes five dollars in cash savings for each tax dollar invested in transit services. These are the costs of owning, operating and accommodating automobiles that several million Americans avoid with the help of transit services.²

As real social processes in which tax revenues are exchanged for transit benefits to taxpayers, hundreds of local governmental budgets have shaped United States transit services since the 1970s. The distinct public policy functions that have emerged from these budgets are discussed throughout this study. How local budgets integrate the benefits of transit is discussed in this chapter. The more pressing question, addressed throughout this book, is how to measure transit’s benefits.

Transit budgets are not unusual. Organized vested interests such as construction companies, equipment manufacturers, land speculators, labor unions, and transit managers figure in any local transit policy process. Much about transit can be explained in terms of the pecuniary interests of these familiar groups whose benefits are tied to transit expenditures rather than services per se. To advance their interests over time, however, these interests contend with planners, financial specialists, economists, informed citizens, and other specialists who exert influence on behalf of rationality and efficiency. Professionals wield considerable influence on elected officials who are forced to weigh competing demands on the budget. In addition, public opinion and parochial interests that benefit from transit services indirectly play an important, if episodic, part. In this way, local transit budgets are typical of the budgets served up by polyarchies.³

What is a “Public Choice Budget Analysis?”

Decision makers in public service seek to serve the “public good”. But how are decisions that serve the public good actually identified and distinguished from publicly bad decisions? Traditional planning theories propose that good public decisions are “rational” in the sense that total benefits to society will exceed total societal costs. The idea is that collective choice can and should mirror “rationality” as it applies to individual choice-making behavior. Individuals do not freely make choices whose costs to them exceed the benefits they perceive to be forthcoming. By the same token, traditionalists argue that social groups in a democratic society should be presented with public choices whose collective benefits exceed the collective costs of achieving them.

In the same vein, traditional neo-classical economics teaches that good public choice requires decisions that yield “Pareto improvements” whereby change leaves some individuals better off without leaving others worse off. Cost-Benefit Analysis and related methods of “rational analysis” are the measurement tools that have been devised to help decision makers make good choices (Pareto improvements) and avoid bad ones.

There are theories of choice however that do not hold to the traditional model outlined above. James Buchanan, founder of the “public choice” school of economics, rejects the fundamental premise that “rational” decision making, as it applies to individuals, can logically and reasonably be transferred to a collection of individuals (namely, the public) as a basis for public decision making. Other non-traditionalists, such as political scientists David Braybrook and Charles Lindblom, hold to the same view. Buchanan puts it thus:

“Rationality or irrationality as an attribute of the social group implies the imputation to that group of an organic existence apart from that of its individual components. If the social group is so considered, questions may be raised relative to the wisdom or “unwisdom” of this organic being. But does not the very attempt to examine such rationality in terms of individual values introduce logical inconsistency at the outset? Can the rationality of the social organism be evaluated in accordance with any value ordering other than its own?”⁴

Buchanan and others of the public choice school argue that it is simply majority decision making in the context of democratic institutions that yields sound social choices. They view majority decision and coalition formation as the key mechanisms through which a social group makes “correct” choices among alternatives, not Cost-Benefit Analysis.

Over the last quarter century, many practitioners of Cost-Benefit Analysis have found little or no evidence that the benefits of transit outweigh the costs. On the other hand, democratic, majority-driven public budgets have supported the provision and growth of transit services in American cities for more than a quarter century. Whereas traditional and neo-classical decision theorists would view the contradiction as an example of bad (“irrational”) public decision making, the public choice theorist would assume that weaknesses in the Cost-Benefit Analysis are the cause. Buchanan himself reminds us that decisions reached through the approval of a majority has never been, and should never be, correctly interpreted as anything other than a provisional choice of the social group. As a tentative choice, the majority-determined policy is held to be preferred to inaction, but it is not to be considered irrevocable. In other words, if the result of a majority budget decision to finance transit is ultimately seen by a majority to yield net negative outcomes, the decision will ultimately be reversed. But, if transit budgets are consistently sustained through voter behavior, it is the Cost-Benefit Analysis that must be faulty, not the budget decisions themselves.

In fact, “pure” public choice theorists reject the idea that any form of Cost-Benefit Analysis can reasonably inform public decision makers. They take the libertarian position that elected bodies should make decisions and voters judge the consequences of such decisions in the form of subsequent election outcomes. We do not share the view that Cost-Benefit Analysis has no role to play in the budget and decision making process. But we do believe that the long history of democratically determined growth in transit budgets against a trend of Cost-Benefit Analysis results that sought to guide decision makers in the opposite direction indicates that something is wrong with the Cost-Benefit technology, not the public’s ability to make choices in its own interest.

Thus the purpose of a “public choice budget analysis” is to look to the history of democratically determined budget decisions themselves for evidence of what’s missing in the conventional framework for measuring the benefits of transit. Having thus identified the missing elements in conventional Cost-Benefit Analysis, improved measurement modalities can be developed and inculcated into the Cost-Benefit framework. The aim is to sharpen the tools of rational analysis, enabling them to guide decision makers effectively in future. This Chapter provides the public choice budget analysis. Subsequent chapters address the measurement issues.

Transit Services in the Transportation System

Most policy analyes of transit services have abstracted the “transportation system” components of transit services from the public policy functions of transit.⁵ Policy analyses have been sharply critical of the transit policy process itself. According to most, transit’s “system” role has been worsened by well-meaning, but ill-conceived, public expenditure. The political process is said to interfere with the efficient allocation of transit services. To expand transit’s political base, it is said, transit boards have increased peak period commuter services to the suburbs, worsening the inefficiencies of transit’s “peaking problem”. To appeal to taxpayers, one hears, services are deployed in low-density neighborhoods with hardly any patronage. New systems have been built, it is said, to transform an area of potential high density into a “world class city”, an appeal to the public’s vanity rather than the facts.

Moreover, analysts of transit expenditures have had only slight success in measuring the benefits of transit services.⁶ Like other citizens, analysts naturally search for results in the “sales” or use of the service. Under a planning “postulate” that transportation benefits are to be found “on the network”,⁷ transit policy analysts looking for “proof in the pudding”— patronage—have found transit policy decisions devoid of rationality.

We believe that the transportation systems framework is, by itself, ill suited to the understanding and evaluation of ongoing public services like transit. Like nearly all public sector activities, transit programs must compromise ostensible “system” goals in serving many masters. In polyarchies, that is, public policies seldom match any particular point of view, not even that of their proponents. Like most urban public policy choices, transit budgets are the offspring of multifaceted urban contention. Like the final score in a sporting event, the outcome of polyarchical decision making exists at a remove from the capabilities of any player or any team of players. Indeed, it is the hallmark of democracy that a typical policy outcome is not a sum of opinions, but a score that settles a contest.

The design and alignment of the Eisenhower interstate highway system in urban areas exemplifies polyarchy outcomes. Originally conceived as a national, limited access high speed road network to link cities together, the interstate highway system was seen by local interests as a way to substitute for locally financed bypass roads. So, instead of staying clear of the inevitable traffic congestion in big cities, the interstate highways were realigned to cut right through the major cities. Highway bills were also “jobs” bills, which encouraged “oversubscription” to the network. Interstate links became “slum clearance” projects and spurred suburban development. In the end, intercity linkage proved to be primus inter pares among contending goals.

Stated policy goals such as “national defense highways” are not cynically conceived to “package” nefarious aims. Often the stated goal is the essence of the legislation. But stated policy goals necessarily gloss over the mix of contending goals that are imbedded in most major legislation.

The stated goals of Federal transit programs, the subject of this book, are to improve urban transportation planning and salvage struggling transit service providers in order to preserve cities, combat traffic congestion, and provide low cost mobility to disadvantaged people.⁸ While conflicting somewhat, these goals appear compatible.

In the body of transit legislation, however, Congress advanced other goals. The Federal Transit Act of 1964 (as amended in the years since) protects the collective bargaining rights of transit employees, walls off the charter and school bus business, insists on the purchase of United States made transportation equipment, defends the rights of minorities in service and employment, and enforces the financial integrity of Federal grants. These ancillary provisions obviously shore up the coalition of interests that support transit legislation. Clean air legislation adds other transit goals, as does legislation for the rights of people with disabilities, energy conservation and welfare reform.

The commonplace of political compromise should not be mistaken for frivolity. Analysts may object to “ancillary” goals that compromise the legislation’s stated goals,⁹ but it is important to understand that without the “ancillary” goals from other quarters, transit programs themselves would compromise yet other important public goals. Instead, it is most useful to view Federal transit legislation as a road map of political history, representing the very hard work of navigating public transit goals through a thicket of related legitimate goals, some friendly, some antagonistic.¹⁰ Once subdued legislatively, the public policy goals that may appear to encumber transit programs become a constellation of program support. Thus does transit become a public policy institution that endures.

Looking back at the remarkable stability of local and State transit funding since the 1970s, particularly as the Federal government gradually retreated from operating sub...

Table of contents

• Cover
• Half Title
• Dedication
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• List of Tables
• Preface
• Acknowledgements
• 1 A Public Choice Analysis of Transit Budgets
• 2 The Public Policy Functions of Transit Services in the United States
• 3 Public Transit for Congestion Management
• 4 The Low Cost Mobility Benefits of Transit
• 5 Transit Value to Neighborhoods
• 6 Public Choice Analysis for Transit Policy and Planning
• Bibliography
• Index