January 02, 2007

Road Pricing

Tim Worstall seems to agreed with Labour's plan to introduce road pricing. I don't, Mr Worstall wants to use the pricing change people's behavour so as to reduce the amount of congestion. Personally in traffic planning, as with everything else, I think that is the people involved that are in the best position to decide when they want to travel. If there where some externality that needed to be internalised then there would be a case for road pricing to do this, as they would not have all the information to make that choice until it was. But there isn't, to show that this is the case first a selection of definitions of externality.
A cost or a benefit arising from an economic activity that affects people other than those who decide the scale of the activity.
Any benefit or cost imposed by an individual, household or firm on another individual, household or firm for which no compensation is paid or received.
A cost or benefit not accounted for in the price of goods or services. Often "externality" refers to the cost of pollution and other environmental impacts.

So an externality is something where other people pay the cost for your actions not you. The cost of congestion is being delayed, and everybody contributing to congestion is delayed. Everybody pays the price for their actions.

To contribute to traffic congestion, delaying everybody, means that you have to pay the price for it by being delayed your self. Congestion is not something caused by other people that only affects you, it is caused by and affects everybody on the roads. It is not an externality, it affects the people that cause it as much as everybody else. So there is no need for an extra cost to internalise it.

People simply find certain times of the day they need to drive, that driving is by far the most useful mode of transport, and outside of London often driving is the only mode of transport available. Because of these facts the need to drive is fairly static, as can be seen by how traffic level have been still increasing even with the ever increasing fuel prices. This is going to be yet another of Labour's indirect taxes, and one with some horrific civil liberties repercussions.


Blogger Bag said...

Hasn't he moved to Portugal or something. That makes things easier.

When I move to somewhere else they can introduce road charging, ID cards and totally screw the NHS.

Note to Tony. I said when.

8:08 pm  
Blogger Tim Worstall said...

I've been in the big P for the past 5 years so all my commentary suffers from that particular problem.

As to the costs of congestion: Your being there has imposed costs upon all of the others. That they are also imposing costs upon you does not mean that your actions are not imposing costs upon those others.
Your argument would mean that if we were all pouring sewage into the river it wouldn't matter: we're all both imposing and suffering the same costs.

8:33 am  
Blogger chris said...

So long as everybody understands the true costs, and in the case of congestion they do, then the only people in a position to weigh them against the benefits are the people involved. This might lead to outcomes that outsiders might not understand but that does not mean these where the wrong outcomes as the people outside that situation are not in the position of having access to all the data that went into the decision.

2:56 pm  
Anonymous Anonymous said...

The main problem I have with road pricing is that the system that is proposed will be effectively impossible to impose, yet we will waste a truly stupendous amount of money demonstrating this fact.

The technical hurdles to be overcome are these: Build a black box which is resistant to tampering, withstands poor car electrics, always works and which reliably reports its vehicle's travels to a central location.

Next, build a way to receive these transmissions which is robust enough to withstand huge peaks in demand, and which fails very infrequently.

Finally, work out how to cope with appeals against the road charging system.

As a further point, work out how to withstand the bad publicity generated when a newspaper publishes a photo of a completely empty motorway which is charged at the "Extremely congested" rate.

So, these are some of the main challenges.

Let's see how likely these are to me solved. First, let's start with the technical bit: how good is the government at running innovative technical projects, based on past performance?

Millennium Dome, anyone?

NHS IT Project, then?

PFI Projects?

I'm afraid it looks rather as if they simply throw money at large companies and hope for the best. This government is extremely poor at running any large project, and extremely poor at anything involving computers (which virtually no politician, especially not Tony Blair, understands at all).

So, the technical side'll be a wash-out.

What about the legal side? What happens when someone tries to charge you for something you haven't done? Easy: you refuse to pay, cite the Bill of Rights and take the case to the European Courts.

Once a case is in the European Courts, every similar case gets adjourned to await the outcome. With a malfunctioning system, that'll be an awful lot of cases.

And finally, making boxes tamper-proof, what's the record like for that?

Again, not good. About the only systems truly tamper-proof are open source encryption systems; closed-source systems like Windows get broken into routinely by Chinese software pirates. Given that our Government seem to be firmly in bed with Microsoft, it is a safe bet that the black box system will run a Windows CE variant.

Pretty much broken before it starts, then, isn't it?

3:38 pm  
Blogger chris said...

Dr Dan H I agree that the system is technically unfeasible. It will be hacked, and I expect that within weeks of the first of these black boxes being released it will be perfectly possible to go into a back street garage to get it 'fixed' if you are willing to pay the correct price.

In my opinion this is a good thing. The idea of this system up and running correctly (even if I thought it necessary which I don't) has such dire privacy implications that it hardly bears thinking about.

9:22 pm  

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