February 14, 2007

Road pricing: the principle

Stumbling and Mumbling is asking why the 'right' is not in favour of road pricing, here are my reasons even though it will not effect me much personally since I have set up my life to minimize the amount I have to drive, and as a nasty righty I can of course just spread my leathery wings and fly should need arise.

Road pricing is just yet another tax it is not creating a market for road space. Markets react to fluctuations in supply and demand, but the price of the road charge will be fixed and centrally controlled. Should a period become less popular the price for using it will not go down until an equilibrium is reached spreading demand in the optimum way, it will just be another fixed cost forcing those for whom driving is already marginal, that is the poor, off the roads and possibly out of work, while not changing the demand distribution at all.

Saying that there is already a market for road space, just an informal one not based on money into Gordon Brown's pocket but on connivence and frustration. People will attempt to travel at the most convenient time for them, if this is the same as many other people all have to pay the price in frustrating queues. When the frustration of certain times outweighs the connivence of traveling at them people will change their travel plans to a more optimal time. So supply and demand will reach the optimum levels. Road pricing is not a pigrouvian tax as there is no externality, congestion is not something created by them that effects you. It is created by us equally and its effects borne by us equally.

Nor will this tax have a good effect on the market between transport systems. Road users already pay more through the various taxes than is spent on the roads while trains and buses already receive large subsidies. So by adding yet another burden to the roads it is further distorting the market in favour of the government sponsored market losers. Where the market undistorted it is a pretty safe bet that public transport would be even less used than it is now compared to private as public transport is overall simply less useful than private. As can be shown easily using Metcalfe's Law (in either of its forms), the number of nodes in the road network for private transport vastly outnumbering the number of nodes for any public transport system.

So road pricing is restricting for free markets and free movement. So even without mentioning the huge lost of privacy that will be incurred as it tracks every single journey on the road network, and the enormous cost that will be incurred when labour make a complete hash of setting it up, no wonder it has no support in the 'right'. Not that we would be very likely to support any new taxes on anything.


Post a Comment

<< Home