[sustran] zegras-cox et.al.

Wendell Cox wcox at publicpurpose.com
Fri Aug 22 02:10:52 JST 1997


Re the John Whitelegg "Subsidy v investment" posting...
>
>A final point (and an obvious one I'm afraid) about subsidies.  Why do
>we use the word subsidy to describe the flow of cash into transit and
>use the word investment to describe the sdame flow into roads.  A new
>road in Manchster (the M66, Denton-Middleton), about 10 miles long has
>just been approved by the UK government at a cost of œ115 million
>(Pounds sterling).  That's a lot of subsidy for a lot of short journeys
>producing a lot of pollution.
>
1. First a point of clarification....

In reading your paragraph above I perceive that you were questioning why we
--- a rather broad classification of people --- "use the word subsidy." Your
point seems to have been narrowed considerably by Eric Bruun's most recent
posting... I suspect your original terminology is what you had in mind (the
Bruun interpretation would relegate a whole lot of people, transit agencies,
etc. to the "opponents" classification)

        "should capital investments, as Prof. Whitelegg points out, referred
to as
        subsidies by opponents, be provided as a grant by government, "

2. Let me  venture a response to your (John Whitelegg) point above.

>From the US perspective, highways spending itself may well not be considered
subsidy, if we define subsidy as money paid by non-users. However, capital
spending on either is investment (the quality of investment is obviously
variable).

The US highway funding system is user fee based. The user fees (largely
petrol taxes) collected in the US are more than the capital and operating
costs of all streets and roads, though some of the fees are used for other
purposes (especially transit), with the result that general fund taxes are
used to support the resulting deficit (which is largely for local roads, not
intercity highways). I would therefore argue that highway spending in the US
should not be considered subsidies --- since it is the users who pay (or at
least pay enough through their user fees to pay for it). Streets and
highways are generally not subsidized by non-users in the United States. 

Subsidy is an appropriate term for public spending (capital or operating) on
public transport, since grants are paid by the general taxpayers, not by the
users. Transit is subsidized by non-users. It would be different if transit
were supported by user fees on transit riders (obviously not an option).
However, I don't necessarily subscribe to the view that there is a
subsidy-investment conflict. Capital subsidies in transit are investments
just as much as user fee capital expenditures in highways are investments. 

The highway discussion above obviously leaves out issues like externalities
and their potential monetization (social costing). Obviously the majority of
transport professionals who find social costing a legitimate approach would
provide evidence of subsidies to highways. Those of us (a minority) who
recognize that there are externalities, but who find social costing to be an
inappropriate analytical and policy tool would be unconvinced. 

But I'm sure that none of us has the time for that lengthy discussion at
this point.

Best regards,
Wendell Cox
WENDELL COX CONSULTANCY
International Public Policy, Economics, Labour, Transport & Strategic Planning
The Public Purpose: Internet Public Policy Journal
http://www.publicpurpose.com
Voice +1 618 632 8507; Fax  +1 618 632 8538
P.O. Box 8083;. Belleville, Illinois 62222 USA



More information about the Sustran-discuss mailing list