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Interessanter Artikel (engl.), evtl. passend zur Diskussion der letzten Tage

verfasst von JÃœKÃœ, 18.04.2002, 22:16

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http://www.mises.org/fullstory.asp?control=936
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Who Cooked the Jam?
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by Gene Callahan

[Posted April 18, 2002]

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Recent swings in the oil price remind us how market prices
respond to changes in supply. Traders are constantly speculating how this or
that political event, whether in Venezuela or the Middle East, will affect
resource availability. The social function of such price swings is to eliminate
shortages and surpluses. As Martha Stewart would say,"It's a good thing."

But this system of market pricing isn?t permitted to work
across the entire transportation sector. Consider traffic jams. They indicate a
mismatch between supply and demand. But that is not the conclusion drawn by
economist Paul Krugman, who observes traffic jams to conclude:"you don't
have to be an elitist to think that the nation has been making some bad choices
about energy use, and about lifestyles more generally. Why? Because the choices
we make don't reflect the true costs of our actions" ("Nation in a Jam,"
The New York Times, May 13, 2001).

We'll let his contention that"the nation" makes
choices slide. Krugman contends that"the nation" does too much
driving, since each additional driver produces negative
consequences--externalities--for other drivers. Let's set aside the question of
how Krugman can tell what the cost of those externalities is, apart from market
prices. We'll grant him his estimate that the cost of traffic congestion in
Atlanta was $2.6 billion in 1999. Each additional person's decision to drive
cost other people $14 in lost time.

Krugman fails to ask why those costs are not borne by
the drivers in question. We don't go to the opera expecting to find several
other people vying for our seat. We never encounter two-hour delays in the
checkout line at the supermarket. Those resources are privately owned, and, in
the interest of making a profit, the owners have a strong incentive to ensure
that their customers have a pleasant experience. While it is true that private
businesses usually desire more customers and sometimes fail to plan adequate
capacity for those who show up, such situations are most often corrected quickly.
No one wants to own the business that's"so crowded no one goes there
anymore." If a private road owner found that his road was overcrowded, he
would simply raise the price of using the road.

Recall the last time you met unexpected highway construction
on the way to work. In my area, encountering such a project can easily add an
hour to one's commute. Multiply that hour by the number of people stuck in the
jam, and you can see that a whole heap of costs have been imposed on drivers by
the road operator: the government.

Why is the government free to impose those costs? Both because
we pay for government roads whether or not we use them and because the
government has made it very difficult for private companies to build roads, the
government has a near monopoly on routes for car travel. With the market process
for evaluating the relative importance of roads, travel speeds, established
property uses, pollution, and so on severely crippled, the government cannot
rationally allocate scarce means among desired ends. Political pressure comes to
dominate the allocation of resources.

For example, John Rowland, the governor of my state as I write
this, commented on Connecticut's branch rail lines in 1997:"Given the
ridership on these lines, it is by no means outrageous to say it would be
cheaper for the state to purchase cars each year for most of the riders."
On some lines, each passenger was being subsidized more than $18 per trip. But
when Rowland's plan to eliminate those lines was faced with strong opposition,
mostly from wealthy individuals who relied on the lines for access to New York
City, the plan was dropped. We are entitled to wonder if the campaign
contributions of the individuals in question didn't play a role in calculating
the"cost" of closing those lines.

As Sanford Ikeda points out, such interventions also have the
effect of making political action increasingly attractive, when compared to
voluntary exchange. The more my economic well-being is determined by the
political process, the more likely it is that I'll increase profits by lobbying
than that I'll increase profits by producing. Further, the more my neighbors are
using political pressure, the less resistant I will be to the idea of doing so.
If no one else is using politics to achieve his personal ends, then I may be
very reluctant to become the first to do so. But if many other people are
pursuing that avenue, my resistance to joining them is likely to decline
dramatically--after all, I can tell myself, I'm only trying to"even the
score."

The state has repeatedly intervened in the transportation
market. Roads are often provided at no extra cost to the users. The property on
which the roads were built was often seized by eminent domain, so that the
supposed construction cost did not reflect the true cost of acquiring the needed
land. The supply of taxis and jitneys, which can to some extent substitute for
having one's own car, has been artificially limited. Of course, other modes of
transportation have had their own history of interventions. We have no idea of
what a transportation market that had developed unhampered for the last several
centuries would look like.

But it might strike us as odd that the very process that
created the externalities in the first place--interventionism--is usually what
is offered as the solution to them. Instead of seeking ways to allow the market
in transportation to do its job, most recommendations call for further
interventions intended to clean up the unwanted effects of past interventions.

For instance, Thomas Sowell, in his book Basic
Economics, suggests that a law requiring mud flaps on cars is justified
because:"Even if everyone agrees that the benefits of mud flaps greatly
exceed their costs, there is no feasible way of buying those benefits in a free
market, since you receive no benefits from the mud flaps you buy... but only
from mud flaps that other people buy?" But Sowell's problem arises only
because roads are publicly owned. The owner of a private road could internalize
the benefit by requiring mud flaps and advertising the fact. Those who prefer to
pay for mud flaps, as long as everyone else does as well, can make use of roads
requiring them.

Krugman does not explicitly call for a particular policy in
his column. But when he says that the government should place a high priority on
"getting those incentives right," we are to understand that he means
imposing new taxes on fossil fuels, on car ownership, and other interventions
into the transportation market.

But there is no way for the government to"get incentives
right" without market prices, the very thing eliminated by intervention. It
is simply not possible for the government to guess the prices that might have
arisen on an unhampered market. Each subsequent intervention intended to fix an
earlier one will add new distortions and generate new unintended consequences.

Regulations that require a certain average miles-per-gallon
figure for a manufacturer's sold cars led directly to the explosion of SUV sales.
Since SUVs are considered to be trucks, not cars, they are held to
less-stringent fuel efficiency standards. Government efforts to increase overall
gas mileage steered consumers into buying less-efficient trucks, instead of
station wagons, which were subject to the regulations. The general response has
been, predictably, a call for new regulations on SUVs. Ford, for one, has tried
to head off new legislation by increasing the fuel efficiency of its SUV fleet.

Often, some proponent of new regulation will contend that
following the regulation will actually increase profits, and that it is the
right thing to do for purely business reasons. For example, Steve Gregerson of
the Automotive Consulting Group said of Ford's decision:"It's a smart
business decision. They're creating a vehicle that is going to be accepted in
the marketplace and has better fuel economy but offers some of the utilitarian
functions of the SUVs" (Houston Chronicle, July 16, 2001).

But if it really is a smart business decision--and perhaps it
is!--then surely some entrepreneur will do it without legislative pressure. Only
if one believes that our best entrepreneurs just happen to be legislators does
the argument make sense.

The free market is not a panacea. It does not eliminate old
age, and it won't guarantee you a date for Saturday night. Private enterprise is
fully capable of awful screw-ups. But both theory and practice indicate that its
screw-ups are less pervasive and more easily corrected than those of government
enterprises, including regulatory ones.


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Gene Callahan, who writes frequently for Mises.org, is author of Economics
for Real People, forthcoming from the Mises Institute. See
his Mises.org Articles
Archive and send him MAIL.



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Interessanter Artikel (engl.), evtl. passend zur Diskussion der letzten Tage - JÃœKÃœ, 18.04.2002, 22:16