It looks like another legislative session and another missed opportunity to deal with transportation problems in the state, especially around Seattle. Both political parties seem to ignore some of the fundamental economics at play. If you own a business and have seen a steady increase in customers until your factory no longer has capacity to build enough products, you have two choices. First, you can build another factory. Second, you can invest in efficiencies to improve the output of the current factory. Building a new factory comes with a substantial increase in capital costs and ongoing costs. Improving existing capacity also comes with a cost, but usually a fraction of the cost of building a new factory. Businesses usually jump to the second option and try to improve efficiency, before deciding to build a new factory. Why would our state government not take the same approach, instead of immediately jumping to the most expensive option?

The economics of roads are like the economics of factories. We have seen a steady increase in the use of roads to where our current roads cannot meet demand, the result being traffic gridlock. We have two choices. First, build new roads (or widen existing roads). Second, improve the efficiency of our existing roads through a better mass transit system (buses). It should be noted that light rail is the worst of both worlds due to the high construction cost and lower ridership. Buses move far more people in the same space as a few cars, and have the same flexibility of the current road system. A good bus system is the equivalent of an improvement in efficiency in a factory. Either option is going to cost money. New riders will not pay for the entire cost of an improved bus system, but then again neither will drivers pay for a new road. Just like the factory example above, we have a choice of building new roads at a few billion dollars per project, or we can spend a few hundred million dollars improving the bus system, and not build as many new roads. The cost of building new roads is now astronomical and cannot be done within current state economics, which is why each legislative session we come out with no real answers.

Many will claim that we are not willing to subsidize bus transportation, yet the fundamental question is whether we would rather spend $5 billion a year of our taxes on new roads, or $700 million a year of our taxes on a better bus system that improves convenience and reduces the number of cars on the road. If the bus systems were structured such that 10-20% of commuters could realistically use the bus, then that would free up that much space on our existing roads. Either way, the taxpayers will be on the hook for the bill, but it would be better to be on the hook for a few hundred million than a few billion. Bus ridership is based on availability and convenience, neither of which we have obtained to high enough levels that buses are a viable transportation alternative. I have heard many say that buses are not viable until gas is over $4.00 a gallon, but it is not that simple. Bus ridership is based on convenience, the more convenient the more likely someone is willing to ride even with cheaper gas prices. With our current inconvenient bus system, then even at $4.00 a gallon for gas it is unlikely to make a dent in bus ridership. There is no doubt that there is tremendous pressure on our state government to focus on road construction, versus cheaper alternatives, but economics will ultimately prevail.

Coming soon… A Tale of Two Cities