The Transit Lobby and Fares

Randal O’Toole has a weird blog post about our construction costs report. I say weird, because it complains that we didn’t ask certain questions that we actually did, in the executive summary: “what kind of political and decision-making process allows for such expensive projects to be approved in the first place?” in his language. It also is under the impression that Sweden and Italy are authoritarian states. I bring this up because the post suggests two reasons: the transit lobby, and user fees. These are both wrong, and I’d like to cover why.

The user fee issue

O’Toole harps on user fees:

At heart, and I keep harping on this, the real problem is the disassociation of costs from user fees. If costs have to be paid for out of user fees, then expensive and obsolete technologies will automatically be rejected. But if there is no relationship between costs and real measurable benefits, then there is no need to control costs at all. Any agency leader who supports lower-cost solutions loses out because their agency’s budget will be smaller and any politician who tries to control costs loses out because they bring less money into the pockets of potential campaign contributors.

The reason we don’t talk about this in the report is that high-subsidy transit systems don’t generally cost more to build and operate than low-subsidy ones. The norms in Asia are that rapid transit service should be operationally profitable; Japan won’t even build subways unless they can show a 30-year payback period, i.e. 3.3% financial return on investment in an economy whose natural rate of interest is maybe 1.5%. The norms in Europe are that intercity rail should be profitable but anything else is a social service that should receive subsidies.

And as it happens, there’s no systemic cost difference between Europe and rich Asia. Construction costs span the entire non-US range in both places: South Korea has very low construction costs and so do Southern Europe, Turkey, and the Nordic countries; Singapore and Hong Kong compete for highest costs outside the United States and so does Britain. In Hong Kong, if anything, the MTR’s development profits have enabled it to waste more money on construction, since it still gets state money for construction on top of the development profits, which have no accountability.

Transit ideology and modal warfare

O’Toole and other Americans with similar pro-car, anti-rail views like Wendell Cox and Robert Poole has an obsession with counting some kind of subsidy metrics. He talks about the transit lobby, and he ends up misunderstanding how the politics of mass transit works elsewhere. But, in short, modal warfare is not usually about construction of subway lines, but about road diets and bike lanes.

For example, in Germany, Kai Wegner just did very well in the Berlin election on a platform of more parking spots and opposition to everything the Green Party does. CDU came first for the first time since 1999. But Wegner supports more U-Bahn construction and attacked the left-wing coalition for dithering on the subject. His transport ideology is not the same as that of American mode warriors; it’s cars-and-trains urbanism, with cars getting more attention than trains. Social democracy for that matter has the same ideology, but with a greater role for trains – and it’s this ideology that built around 100 km of majority-underground metro in Stockholm for $3.6 billion in 2022 dollars.

I bring up Germany because we’re seeing the linkage between fares and operations vanish in real time, due to fallout from the 9€ ticket from last summer; see coverage on this blog here and here. Before corona, public transport fares covered around half of operating costs Germany-wide (source, p. 36), and some of the big city rapid transit system broke even (at least the Berlin U-Bahn and I think also the Munich U-Bahn). The perceived success of the 9€ ticket is changing Germany’s transit advocacy ideology – but in the exact opposite direction from more construction, whatever the cost. No: the same advocates who center low fares oppose subway construction, viewing it as a sop to cars-and-trains urbanism and preferring surface light rail instead. The same is true in the United States: the sort of people who support free transit and sue agencies that raise fares usually also think rail investment is racist and money for transit should go to bus operations.

The transit lobby

As soon as it’s clear that there are different ideologies of mass transit, the question of the transit lobby gets murkier. O’Toole, rooted in modal warfare, says of construction costs “The real answer, I suspect, is that the transit lobby has persuaded the public that transit is all good and no bad. This in turn persuaded politicians that they can spend as much as they want on transit (unlike freeways) with no political backlash.” But there’s a strong lobby in support of urban rail construction everywhere, across the entire cost range, including in our low-cost examples.

The US doesn’t really have a stronger transit lobby than Sweden or Italy or Turkey (or Germany or France or Japan, etc.), unless one defines “transit lobby” as “builds unusually expensive transportation infrastructure.” The typical federal funding formula in the United States is 80% cars, 20% transit; in Germany it was around 55% cars, 42% rail, 3% canals in the Grand Coalition. In Sweden, cities have transitioned to tolerating more disruption for drivers and less for pedestrians on the feminist grounds that drivers are disproportionately men. The ability of transit riders to both get a larger share of the funding and make the cities more walkable and bikable at the expense of the convenience of car drivers is unusually weak in the United States by developed-world standards.

In some cases, it goes the other way: a weak transit lobby leads to higher costs, due to political impositions. In Tampa, an attempt by the transit agency to increase bus frequency somewhat and provide bus shelter had to be pitched as BRT, and then the DOT extracted surplus and demanded that the agency get federal BRT funding for repaving all lanes used by the buses with concrete – lanes that were to be shared with cars and trucks, rather than dedicated to bus service. This has led some advocates to propose that a stronger transit lobby is what’s needed to improve transit efficiency… except that New York is the worst.

There are real political reasons for why the US has such high infrastructure construction costs; this is not just transit – road tunnels cost a lot more per km in Boston and Seattle than in Berlin and Stockholm and Paris and Madrid. We go over them in the report. I urge people to go read it and focus on issues of politicization, bad-and-worsening procurement norms, lack of interest in interagency coordination, and the subordination of expert civil servants to incurious political appointees. The modal warfare that O’Toole engages in is pretty irrelevant in either direction; in countries with functional infrastructure construction programs, people who are that political never have any input other than a very broad yes-or-no decision over megaprojects, and not even that level of input over smaller projects (Nordic decisionmaking about road construction is notably depoliticized).


  1. Thomas

    It’s hard to read anything Otoole writes with any kind of seriousness. His arguments can be picked apart with a toothpick, and don’t have much to stand on.

  2. Astro

    What does O’Toole believe funds the Interstate highway system? The tooth fairy and a sprinkling of gas tax? These analyses and commentaries he provides are obtuse, to say the least.

    If the goal is to get people where they’re going, and all the options are ‘unprofitable,’ one still should pursue the option that costs society the least (however you should choose to slice that analysis).

    • Alon Levy

      Yeah, he thinks it’s the gas tax, because of the upward churn in which all US driving pays fuel taxes but only federal and state highways get gas tax money. But more fundamentally, there’s this specifically American belief that fuel taxes are user fees (and not, say, equivalent to cigarette taxes).

      • SP

        Most (all?) States will contribute a portion of state-collected gas tax to local agencies to maintain their road networks. Federal gas tax can also go to locals through the LPA process, although it flows through the States.

        Minor nit – there are very few Federal highways. Interstates and US highways with a few trivial exceptions are State owned. Even on Interstates, routine maintenance is State-funded, since Federal-aid funds can’t be used for maintenance or routine operations.

      • Tunnelvision

        I see that all the time in CT. CT is one of the few states in the North East that has no Tolled highways and anyone introducing the idea of tolls gets shouted down mostly because “we pay all this fuel tax and our roads are still crap”, and tolls are seen as simply another way to tax the motorist with no demonstrable outcome.

        Mind you drivers in the UK who insist they still pay “Road Tax” and that other users who don’t pay Road Tax (cyclists) should not be accommodated on roads are almost as ill informed as the Road Tax they rave on about was abolished in the 1930’s and its a Vehicle Emissions Tax…….and Highway funding comes out of general taxation pot……

        One issue that has always intrigued me is why transit is supposed to show a profit or at least you hear that argument frequently from some quarters, whereas the same argument is rarely heard for new highway infrastructure. The argument there is that well if we speed up the motorist its less wasted time, but as experience shows traffic expands to fill the road space available and in reality how many highway schemes entirely funded through taxation, have actually improved traffic flow, and how do you measure the ROI for a highway?

        • Astro

          All that road tax would go to great roads, if the roads were easier to maintain. The elephant in the room every time someone keeps complaining about how the gas tax doesn’t go far enough, is that the tax is insufficient from the jump. Especially in areas of low density, there is just not the local tax base, local fuel usage, what have you, to support the massive quantity of road required to fuel an autocentric metropolis.

          Now if only there were some alternative means to get around which would cause less road wear, require less infrastructure expansion, and preserve the fatigue life of the infrastructure we do have… Whatever could that be?

        • Tony

          The ROI is the number of big box stores, office parks, and fast food restaurants you can squeeze in a mile radius from a highway exit, while the negatives of car centric development are summarily dismissed.

      • Michael Schaeffer

        I genuinely think Randal O’Toole is a hack being paid to spout his views.

    • Mark N.

      Yeah, he brings that especially obtuse comparison between the freeway and the rail line in Phoenix that “cost” the same but differ greatly in numbers transported, leaving out that “little” detail that roadways only get people somewhere when those very same people first shell out lots of money for the cars to drive on them. He fails to see — or simply ignores — the tremendous benefits, in financial terms as well as in multiple others, from well-funded and organized public transit, an explicit goal of which is not only to transport people effectively and efficiently, but to also greatly reduce the dependency upon automobile ownership (and its many associated costs).

      • Henry Miller

        You vastly underrate just how expensive great transit is. For poor people who live in a city a car probably is cheaper (poor meaning they have to buy 10 year old cars and do all the maintenance themselves thus paying only for parts not labor. Poor also means they are illegally driving without insurance), though for everyone a step above that great transit is cheaper. There is a step below that where you use the cheap transit despite how bad it is because you cannot afford a car.

        Of course odds are you are a step above that level. If you can afford a car that isn’t worn out – including maintenance why would you put up with the service levels most people get on transit. Your car is there and ready to go when you want to go. If it is not a great system it only costs you more many as the car is so much better for getting around.

        Now if we change that to a great system you can save a bit of money, but you will still have to come up with several hundred dollars per months ( either in fares or other taxes) to pay for it. That is a lot of money. Worse a lot of it needs to be spent up front building infrastructure and until the last part is done you get zero use from transit.

        • Mark N.

          LOL. Actually, what tends to be vastly underrated — by you obviously as well — is how expensive automobile ownership truly is. A recent study in Germany calculated that even the ownership of a subcompact Opel Corsa over a 50-year period results in a cost of $689,000. If you’re thinking, “Oh, that’s just Germany,” well just consider for a moment the socialized costs to create the vast plains of land in the US lost to its endless parking lots, or the percentage expense that just goes to the common two or three-car garage as part of the total price of a typical American home.

          Even in a comparatively expensive European city like Munich, a monthly transit pass that covers the entire city costs only €63.20. I seriously doubt the portion of a typical Munich resident’s taxes which goes toward the public transportation system would bump that figure up into the “several hundred dollars.”

          • Henry Miller

            The thing is we already have great car infrastructure. As such money spent on a car actually gets you places. For most people the transit they have access to is not a reasonable alternative to the car. Sure it would be cheaper, but when you can drive in 15 minutes and transit takes over an hour (once you get on, waiting wastes more time), then it is well worth the money for a car in time savings.

            I realize that many of the readers here live in one of the few exceptions where transit is reasonable. However the rule for most people is transit isn’t a reasonable option.

          • Henry Miller

            I just dug into that study a little: it is not useful for this discussion. A poor person will have costs a lot less than that. I just re-did the math, and the total cost for a poor person is more like $250k for a compact car (todays dollars). That is buying a 10 year old car, keeping it for 5 years, paying $1000/year in maintenance, another $1000 in taxes and registration, and $3/gallon for fuel. Now I have no idea how you calculate other subsidies which that study does claim exist (that study is also German while I used US numbers, which will be different).

            Great transit service would cost about the same assuming everyone in the city was paying the same for it (that is you force people who drive to pay for a transit trip fare anyway). Sure the bad transit poor people put up with is cheaper (depending on where you live 1/4 to 1/2 the price), but the service is such that they dream of the day they can afford a car. Even places with what we consider great transit have large areas they serve but only with infrequent transit.

            If you want to talk about costs you have to compare costs for people who care about costs, excluding costs from people who don’t. People who drive new cars are not concerned about costs and will not respond to arguments about how expensive a car is. People who care about costs buy used cars and keep them longer which means the costs they care about (their personal out of pocket) is much below average.

          • Mark N.

            @Henry Miller
            Given that the primary target riders of public transportation shouldn’t just be the poor, but as wide and economically diverse group as possible — and certainly middle class — I don’t really understand your focus on the lower classes. But even assuming your calculations are roughly correct, if my calculations are right, that $250K over 50 years comes out to about $417 per month. Quite a sum for just owning what’s sure to be a very wasteful, pretty unreliable means to get around!

            Of course, the “average” middle-class family will typically buy (or lease) mostly new (or nearly new) cars, and so their true costs would be accordingly much higher — multiplied by the number of cars they with great certainty simultaneously own (in the absence of alternatives). The goal of public transportation then should be to provide that alternative so a typical family (and not just a poor one) should be able to comfortably and reliably get around with one or two fewer cars than they previously needed — and at less cost. And this is precisely how it works in numerous cities around the world with well-planned, successful transportation systems.

          • Henry Miller

            I agree that the target of public transportation shouldn’t be the poor. Or really the cheap – there are a lot of upper middle class wealthy people who drive very old cars because they got wealthy by not spending money. If you want to talk to the poor and cheap, then money is important, and $417/month is their language, and good transit can save them a lot of money. However you cannot use the $1148/month numbers the study comes up with to talk to them as now you are using numbers that are wrong for their situation and they will ignore the rest of your message as one that comes from someone already out of touch with their reality. Note, make sure you double check those numbers, not all studies are honest)

            If you want to talk to the “paycheck to paycheck” middle class people who are spending $1148/month on a car, money talk won’t reach them. They consider that money well spent for the ability to get around. Many of them know they can ride transit instead. However transit (pick the ones that apply, odds are most do!): doesn’t run on weekends/late night; they risk missing the infrequent bus; has routes that mean their trip time is unreasonably long. So long as any of the above applies money on a car is well spent for the ability to get around. Even the poor/cheap often consider the money spent on a car better spent than dealing with the above list.

            Note that my list didn’t include anything about race. While racist people do exist, I excluded that because it diverts attention from real problems. So long as it isn’t reasonable to ride transit you cannot call it racism for someone to not ride.

            I also excluded assault/harassment from the list. This is unfair, there are real problems here that transit needs to solve (Japan has a real problem with girls getting molested in the train – I don’t know how common it is, but it is a problem), but there is also unreasonable fear of it that goes with racism above.

          • Sassy

            On the topic of sexual harassment, it seems like it is a problem pretty much worldwide, and not particularly bad in Japan, despite the reputation, according to this Swedish study

            It’s a problem that is given significantly more respect in Japan, despite the problem not being particularly bad in Japan, possibly because it’s widely accepted that not using transit is not an option. It’s pretty common for transit advocates in the west to be very dismissive wrt sexual harassment concerns, ranging from “why don’t you be evil and drive” to “it’s not a problem stop fear mongering” but that’s an easier position to take when your daughter already drives for reasons unrelated to sexual harassment.

            Western feminism is also more revolutionary/antagonistic, which leads to opposition to easy workarounds like women only cars in trains or better policing, as a meaningful workaround can take momentum away from the “teach men to X instead of teaching women to Y” fight.

  3. Frederick

    The US probably has a larger “lizardmen lobby” than a “transit lobby”. Who is this O’Toole crackpot?

    Meanwhile, it’s always good to discuss about how to increase political activity about transit. In the case of USA, let’s not have a goal as lofty as establishing a “lobby” in Washington DC. Let’s talk about something smaller, at the public discourse level, at the “twitter” and “reddit” level: how to educate the average American about transit?

    Compared to every other developed country (even UK), the US doesn’t even have a transit fandom large enough to serve as some sort of “cadre” to preserve the knowledge about transit and to spread the good news about transit. That’s why people keep circulating the same old crap about transit when people bring up this topic.

    • Luke

      Kind of a chicken-or-egg problem. Americans don’t understand transit because no one uses it; even a large percentage of the people responsible for designing transit systems don’t use it (I’d be really, really curious to see actual numbers regarding that, but anecdotally, and assuming rough correspondence with the general rate of public transit use, it seems it must be the case). No one uses it because America is too sprawling and the people who’d advocate for it are either weirdos curious about transit and making cities work better (like us), and too politically disempowered to have an impact on decisions, or don’t understand the positive impact transit can have on quality-of-life and therefore don’t pay attention to it.

      About the only thing I see changing this situation is the housing crisis. Fundamentally, you can’t have an optimally-efficient economy where the price of participation is at least several thousand dollars a year on transportation, and all the costs–private and public–associated with SFH ownership. This seems to be bearing itself out most substantially in the metrics of the housing crisis (low rates of construction, high congestion costs, high rates of urban air pollution, etc., etc.)

      Then again, the “ownership society” is so strongly predicated on the most-empowered social class growing its wealth from the high housing values that the scarcity of housing caused by suburban sprawl generates. Ergo, the people who are most strongly disadvantaged by the current situation–viz a vis housing and transportation–are almost tautologically marginalized from the potential process of changing it. I don’t know how we fix the whole thing without Americans realizing what an outlier our urbanization is relative to global norms…and as crucially, that the extent to which we deviate from those global norms is bad.

      • wiesmann

        I think the problem is not so much that the US is an outlier, than it is “advanced” in a bad direction. US Sprawl with all its social segregation and its pseudo military cars is what many European sprawls wants to become when they grow up. The difference between a leader and an outlier is just a change of perspective…

        • Luke

          Sure, but materially speaking, European/East Asian urban advancement is both more universalizable because it it consumes fewer resources per person, and not fundamentally disruptive and ultimately self-destructive of the positives of urbanization in the way that American urbanization is.

          As Alon has said on this blog before, to have everyone in NYC do the more typically-American thing and drive to work, you’d have to level Manhattan. It’s also pretty clear that even if every car was electric and autonomous, the level of resource consumption to give every person equal to a car is pretty actively destroying the biosphere. The only way to solve those problems are to A.) not give everyone equal access to a car, or B.) have there be fewer people; both of these should be pretty objectionable solutions to what is ultimately a non-problem. Just don’t make everyone have a car. Just as with public support of congestion pricing, public support for transit and urbanism come with doing them well.

          A matter of perspective, yes, but some perspectives are just objectively wrong. Because no one’s perspective can be privileged above anyone else’s, they must be considered on their own merits. This means that as many people must be allowed to voice their perspectives as possible, which means as much must be done as possible to allow more, rather than fewer, people to exist and be constructively involved in society. Any perspective that fails this test is essentially self-refuting.

          • adirondacker12800

            The back of the envelope estimate was that you’d have to level wide swaths of Queens, the Bronx and New Jersey to the parking, north of 60th Street. You would then need some sort of high capacity people mover system, a horizontal elevator sort of thing. Instead or being cable driven it could be on wheels and have some arrangement for electricity to be supplied to it so it could be self propelled… The cars could be attached to each other…

          • wiesmann

            I’m not disagreeing, mostly pointing out that I think the US has foremost a perception problem, i.e. there is the US way that is right, and the others which are communist. Even if every other developed nation does has a better system with better outcomes, like with public health.

            I recently had to explain to some American Colleagues that no, you don’t need a DUNS number to open a company bank account in Europe. Always this idea that a) the state cannot provide some service which needs to be handled by a private entity b) clearly the rest of world must work the same.

  4. Astro

    A follow-on inquiry as I read more about O’Toole:

    For people like this, whose ideas have so little logical and mathematical consistency that they could not carry water in the middle of the Pacific Ocean, how do we keep people from citing him as a legitimate source? I guess it once-again becomes an exercise in having the right resources to spread the information about just how thoroughly dis-proven his views are.

    Which, with the scale of backing the Cato Institute has (even though he was fired), I’m not quite sure what level of effort it would take to drown them out.

    • Alon Levy

      I don’t think people cite him as much anymore? He (and Cox and Poole) come off to me as fighting the 1990s-2000s mode wars, not the 2010s-20s ones about Uber-but-for-X and the Boring Company and what have you.

    • Tiercelet

      > how do we keep people from citing him as a legitimate source?

      Make his arguments no longer useful for their ideological or material interests.

      That’s all. People who cite him don’t need him to be right, they just need him to sound authoritative and support their positions. The correctness of his views is irrelevant to their discursive utility.

  5. Erik

    He reminds me of Mike Sparks incompetent hubus in the same regard as most mega nimbys.

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