It’s Only a Positive Externality if the Government Does It


Jason Kuznicki

Jason Kuznicki is a research fellow at the Cato Institute and contributor of Cato Unbound. He's on twitter as JasonKuznicki. His interests include political theory and history.

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31 Responses

  1. Avatar ppnl says:

    It depends on how much of a problem curbside service is. If it is causing a traffic problem for example then it is reasonable to make them pay for it.

    Here bus services use the parking lot of a large business. They pay for that privilege.Report

  2. Avatar DensityDuck says:

    The issue is that people riding the bus aren’t riding Amtrak.

    And if there’s one thing this administration loves, it’s trains.Report

  3. Avatar tom van dyke says:

    Great post.

    Says Cleckley, “The days of people coming into the District and using curbside space for free are over. We just can’t do it.”

    “We?” one is tempted to ask.


  4. Avatar Mike Schilling says:

    Because, like every other locality, they’re starved for tax revenue? But, you know, instead of charging a fee for curb services, they could just close another firehouse.Report

    • Avatar DensityDuck says:

      “What’s this? You’re in our town, breathing our air? Where’s your air-tax receipt? Oh, you don’t have one? That’ll be five hundred dollars, please.”Report

      • Avatar Jesse Ewiak says:

        Now, I know you realize that’s insanely hyperbolic, but to be blunt, isn’t that what congestion pricing is? “Hey, you want to come in our city and pollute it? OK. Pay up then.” And I have zero issue with that.Report

        • Avatar Dan Miller says:

          I think you’re right, but Jason may have a point here as well. Namely, how do we know what an appropriate fee is?The answer clearly isn’t zero–buses take up space, emit fumes, and clog traffic. On the other hand, is the proposed fee really appropriate? I’m not sure, but we should probably find out before automatically deciding that the government is attacking private businesses for its own mendacious purposes, or that this fee is totally justifiable.Report

        • Avatar DensityDuck says:

          My point is that if the whole idea is “get mo’ money” then where do you stop?

          And why do these sorts of discussions always wind up as “raise taxes or BABIES WILL BURN TO DEATH!” I mean, there’s really no other thing that will save money?Report

  5. Avatar clawback says:

    So why is the District of Columbia imposing hefty new fees on the providers of intercity transit?

    To raise revenue. Not every tax is Pigouvian.

    Also, it’s not clear, at least from the links provided, that the new fees are “hefty.” All I see are “new regulations that allow it to charge … $80,000 a year or more” and that they “could range from $10,000 to $80,000 per year,” rather than any indication of what they actually will be.Report

  6. Avatar John H says:

    I’m not sure why so many people dislike? hate? trains. I live near Worcester, MA and I’m dating a guy in Manhattan. Have been for a year and a half. (Yes, I’m trying to find a job down there, but nothing yet). I hate driving. I really hate driving. I hate getting stuck in traffic, I hate crazy people on the road, I hate stopping for gas, I hate slow people in front of me and fast people behind me, I hate long lines in the left lane all trying to go around the one slow car in the right lane, I hate people getting antsy and trying to go around me on the right in such a set up, I hate not being able to do much besides listening to the radio, and etc, etc, etc. And I hate the price of parking in NYC.
    There is no good public options in Worcester, but there is down in CT. So I drive down to Old Saybrook, 1 1/2 hours or less, and park for free!! in Old Saybrook. I then hop on the Shoreline East train for $5.75 one way to New Haven, CT. In New Haven, I then hop across the platform and get on Metro North to Grand Central Station in Manhattan. From there I take the subway a few stops south to my destination. The fare is $14 one way.
    It is awesome. On the train I can relax, read, play games, or take a nap. No stress, no hassles, no lights to stop at, no traffic to get stuck in and no trying to find parking in the city. I love it. (Well, except for the one time a young woman puked all over the floor in the seats across from me, but that was once in the year and a half I’ve been doing this).

    Buses are not as good as trains. While you don’t have to drive yourself, the bus still gets stuck in traffic and is more likely to crash than a train. Also, the train is fast. It stops at the station for about 2 minutes, so most of the time you are actually moving.

    Most places don’t have a great commuter rail like NY. If I want to go any farther than New Haven I have to take Amtrak. For some reason, Amtrak is way more expensive than a commuter rail, even for the same route. I wish the commuter rail went to Worcester so I didn’t have to drive to Old Saybrook.

    For some reason, it seems Republicans hate public transit. The governor of NJ turned down a ton of cash to create more routes into NY, meaning more people will have to drive. The Florida governor also turned down transit money. Now I hear the Shoreline East in CT may end weekend service, so there goes my trip to NY. I can’t drive to New Haven because that station has a huge cost for parking. I’ll have to drive to NY State and take the train from Brewster, but that means another hour in the car instead of relaxing on the train.

    I’m trying to eventually live in NY, and get rid of my car. Then use public transit most of the time, and join Zip Car for those rare times I will need to drive out the the country or something. But of course, the prices for housing are so high in NY, unless I can find a super good job it’s not feasible. My partners house in the city is way too small for me to move into, so I have to get my own place. At least until the day he can sell it and we can finally buy a place together. My point, though, is I am trying to do what I can to get out of my car, while it seems most people in the country including most politicians, want to make it harder for people to do that. Hence this major new cost for bus travel. Make it too expensive to take the bus, so you have to drive. Ugh…..Report

  7. Avatar Michael Drew says:

    I don’t really understand what issue being discussed here is exactly, and I’m not sure I care much. I’m mostly just curious where the referenced claim that positive externalities never emerge from private institutions or their actions was made. I don’t see one cited.Report

    • Avatar Will Truman says:

      I think it’s implicit in the notion that we should subsidize government-run transportation entities while taxing private transportation entities that are both doing the same. If the positive externalities of the former warrants subsidy, what about the positive externalities of the other? Do they not exist? Jason can correct me if I’m wrong, but I think that’s what he’s getting at.Report

      • Avatar Jason Kuznicki says:

        That’s exactly right.

        To add a bit, I’m not calling for subsidies for this or any other business. Dan Miller’s comment above is what I’d like to see developed further. I have a lot of questions and skepticism, but few answers.Report

      • Avatar Michael Drew says:

        I guess I don’t see where imposing a fee for the use of a scarce public resource on a private firm that uses it to realize private profits amounts to a denial that their business realizes positive externalities, even if the justification for subsidies for certain public utilities may rest in part on an argument about their positive externalities. As Jason says, that argument “helps” make the case; it doesn’t constitute the only question on which those decisions should rest (even by Jason’s own reckoning of how public subsidies should be managed, as far as I can see here).

        It seems to me, then, that, first, it’s not clear that we’ve shown that the public/private distinction itself couldn’t contributes in a concrete and reasonable, rather than arbitrary, way to the public consideration of how to treat various actions that have positive externalities by various entities. (I’m not making the case that it absolutely does in this case, just that a non-arbitrary argument as to why it might could well exist. The public could prefer subsidizing public utilities to private ones for defensible ones; we haven’t exhausted all the potential reasons why that might not always be an arbitrary, indefensible preference for the public to have. In fact, I don’t think we’ve even considered any.) But moreover, it seems to me that in any case, even if a pure distinction on the basis of public-versus-private were found to be arbitrary in a given case (such as perhaps this one), any number of other matters of context might play into considerations that would distinguish between differing public treatment (i.e. subsidies versus fees or taxes) among various examples of actions with positive externalities, whether public or private.

        One clear such matter of context would seem to me to be need. If a given utility is known to be valued by the community, and it is further understood that it would not exist without public subsidy, then it seems like a likely case for subsidy. On the other hand, if another utility is also known to be valued, but it a also also is known to be an independently profitable entity that will continue to exist without subsidy, or even under the burden of taxation or fees, it seems like an unlikely candidate to be an attractive recipient of public funds. Am I missing a killer argument that these are not entirely understandable considerations for a community to take into account when considering where to apply public funds? If D.C.’s application of a curb standing fee endangers a valued utility to the point of possibly ending it, then it seems likely that the fee will be reconsidered. On the other hand, if the bus companies can afford to maintain essentially the same operations and are able to simply absorb the cost of the fees out of profit (not saying that is the case), then this seems like a rational fee for the community to impose by way of recouping profits gained by what has come to be seen as excessive use of (again) a scarce public resource (curb space) by a private actor, resulting in enhanced private profit (and not expansion of service valued equally or greater by the community than the restoration of the public purse in the given amount).

        A further dimension to consider here before concluding that this jurisdiction considers only government utilities to be ones with positive externalities worth subsidizing with public funds is the possibility that, irrespective of this behavior-targeted particular fee, in the broader context the municipality in fact does subsidize these particular private providers of valued services that result in positive externalities beyond the specific utility of those on each end of the transportation transaction. Not to make any claims that I can’t presently, and have no intention of putting in any effort to, document, but I’d be willing to lay down even odds that, looking at D.C. transportation policy in its entirety, such subsidies are more likely than not quite possible to suss out analytically. Perhaps not, but I think one would have to acknowledge the possibility.Report

  8. Avatar Dan Miller says:

    I went and looked up parking rates. There’s monthly garage parking available in the neighborhood in the range of $200-300. That’s for a car, not for a bus, so you’re going to need at least 3 of those in a row, probably 4. Moreover, the bus parking won’t work in a garage–it needs to be street parking, which is probably more expensive since it’s more convenient. So let’s go at the higher end of that range. 4 x 300=1200/month, or $14,400 per year. So the low end of these proposed fees actually seems pretty reasonable. Jason–thoughts? What’s a better way to come up with an appropriate charge for using public parking in this special case?Report

    • Avatar Jason Kuznicki says:

      Perhaps the low end is reasonable then, yes.

      Until recently, some of the buses had an arrangement — it must have been at least somewhat formalized — to use the city’s own property, at the parking lot on the site of the former convention center. They’d pull up to a curb on the inside of the block where parking wasn’t allowed, and patrons could form a line right next to them with plenty of space and zero obstruction to businesses, cars, pedestrians, or anything else.

      That’s all over now, because the convention-center-turned-parking-lot is now a giant hole in the ground as a new development project goes in. Nice timing, to say the least.

      In any case, I’d like to know what their deal was, just to have another data point if I were to carry this further.Report

  9. Avatar Anderson says:

    Judging by the rest of the report (“Pantuso says many of the bigger bus companies like Bolt, Megabus, D.C. to N.Y., voluntarily agreed to move to Union Station, which means they won’t get hit with the city’s new curb fee. But he says some of the smaller Asian-owned companies like Eastern and Fung Wah are still working off of the sidewalk. So they might have to raise prices.”), it seems that the city’s main goal was to move the buses out of places where they caused increased congestion, not to raise revenue. If the primary focus was to raise revenue, why did they waive the fees for the buses that moved away from curb sides to the safer and easier-to-manage Union Station? It just seems like a “nudge” (as Cass Sunstein would say) that is wholly within grounds for a local government. Maybe I’m not looking at this correctly, but I don’t really sense any malice toward the private sector or the positive externalities they provide on D.C.’s part. At least not on this issue.Report

    • Avatar DensityDuck says:

      Union Station. Where the Amtrak station is. Oh, snap.Report

      • Avatar Jesse Ewiak says:

        Yes, transportation hubs are a normal practice. But yup, it’s all a conspiracy to help out Amtrak.Report

        • Avatar DensityDuck says:

          Wouldn’t it be better to give transportation companies a positive reason to go to Union Station? Maybe if it were better to have the buses go to Union Station instead of the National Mall, the bus companies would already do that on their own.Report

  10. Avatar db says:

    Fortunately for DC, if this does turn out to be a truly terrible idea the bus companies can move their pickup/drop-off stops to Rosslyn or Maryland.Report

  11. Avatar BSK says:

    I think a lot of issues are at play here:

    1.) With increasing competition among these bus services, you risk “turf wars” breaking out over preferred curb space. I used to ride these buses fairly often between NYC and Maryland/DC. I believe that Maryland must have charged some sort of fee because one bus had to move its drop-off/pick-up point because of an issue with another company and a lawsuit that was filed. I don’t know the details, but it seems like if there is no regulation or monitoring of the situation, things can get hairy fast.

    2.) Whether money goes there or not, I could imagine residents and vendors being upset with buses dropping off and picking up passengers at their door steps. Some businesses, like a convenient store, might benefit from passengers looking for a bite or a drink upon getting off. Fancy restaurants or apartment buildings might be very upset. Perhaps they have no real grounds to, but they would, and I could see the government giving in to these groups.

    3.) Recently a bus tipped over, I believe down in Virginia. Investigators found that the bus should not have been on the road for safety concerns. I believe it was run by one of the less legitimate companies. This may be a roundabout way of attempting to skim off the buses that are truly dangerous and likely can’t afford such fees.

    I don’t know if any of these issues make the fees any more legitimate, but they do seem something worth considering.

    Jason, I’d recommend looking into what other states do. As I mentioned, I believe that MD had some sort of system. And I’m pretty sure NYC does; many of the major buses (Bolt, for instance) actually have signage alongside that for the MTA. Can’t imagine they’d have that up there without a deal with the city in place.Report

  12. Avatar Loviatar says:

    As a former New Yorker and current New Jerseyan who makes frequent trips to and through Chinatown I say this post is bullshit. Its just another crappy Libertarian post on how the free market can do no wrong. Well I’m here to tell you I would love for NYC to institute a similar tax.

    Has any of you free marketers tried to get through Chinatown when those buses are on and off loading passengers, I’m not even talking about driving, I’m just talking about trying to walk past their loading areas. They’ve pushed pedestrians into the streets, snarled traffic and disrupted other business by using a public way-fare as their private loading area. After their departure the sidewalks are filthy with ticket stubs, snacks fed to their passengers, cigarette butts and anything else you can imagine a group of people waiting in an area for thirty pus minutes would discard.

    Police have been called for disturbances among the passengers and bus companies, the sanitation department has to make extra runs, there have been accidents caused by the congestion. So saying all that a simple question, since Jason thinks the tax is an inordinate burden on a sanctified private industry, if not said private industry then who should pay for all the inconveniences and additional costs I’ve listed above?Report

    • Avatar Jason Kuznicki says:

      I work near Chinatown. I used to walk by the stops every day. I didn’t see any disturbances at all. No litter, no crowds, no trouble even with parking, because as I said they were using an area of city property not usually open to parking anyway.

      Now, things might be different in New York of course, but what I’d really like is for someone at least to make the case that a problem existed for which this was the appropriate solution, both in general approach and in price point, given conditions in the DC market.

      We’ve been discussing that up and down the thread, and you’re free to join us if you would like.Report

      • Avatar BSK says:


        I’ve seen the Chinatown stops in both cities and they are VERY different. Loviatar’s description of the stops is accurate, though I don’t agree with his argument. In general, the stops in DC are better managed. As you noted, many DC stops used to be in that spot by the convention center which is apparently something else now. Megabus uses a parking lot along North Capitol. Vamoose uses a side street in Bethesda and has another stop in VA I’ve never used.

        In all honesty, if either city needed a measure like this, it would be New York. Very different traffic patterns (both car and pedestrian). As I noted above, it’s possible that New York does have a system in place, at least for some buses, as indicated by the signage.Report

      • Avatar Loviatar says:

        so again, since the question wasn’t answered.

        Who should pay for a private enterprise using public facilities that causes above average congestion, crime, litter and traffic?

        Should the overall public or the private enterprise gaining an unpaid for benefit?Report