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Friday, June 23, 2017

Public Policy always implies subsidy--either to someone, or to their competitors.

Reading Peter Gordon's blog always reminds me that all public policies imply subsidies--either to someone, or to someone's competitors.

When they began, our health and safety regulations are a 'subsidy' for companies already engaging in them. The Dodd-Frank Act on banking is often decried as a subsidy for big banks, because the cost per customer of compliance is lower than for smaller banks.

My friend Rob refers to me as a 'Parking Republican' as I have zero issue with pricing either parking or roads. And why not? It's fiscally sound and economically efficient. Von Thunen pointed out that there is always direct trade-off between rents (real estate) and transportation costs, and the whole field of urban economics is based on it. As a nation, we invested piles of money in lowering transportation costs (adding roads). This massively lower the cost of transportation, which then massively lowered the cost of urban land. (Hence turning central cities into slums for a fifty years).

Free roads and free parking subsidize the automobile. Why not transit?