The Central Planning Of Lifestyles: Automobility And The Illusion Of Full Cost Pricing

The Central Planning Of Lifestyles: Automobility And The Illusion Of Full Cost Pricing

July 01, 1997

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Over the past several years, the push to limit Americans’ use of their automobiles has gained a great deal of momentum. Advocacy groups and government agencies have produced studies claiming Americans “overuse” their automobiles, relative to some “socially efficient” level of driving. Thus, if government could force people into new lifestyles with new working and living arrangements, we would all be better off.

The package of policies proposed includes higher gasoline and vehicle taxes, high-density land-use regulations, new road use charges, eliminating the tax-deductibility of employer-provided parking, and forcing owners of shopping malls to charge for parking. All this is meant to increase the cost of driving to Americans by $300 billion annually. In true Orwellian fashion, it is argued that these proposals would enhance overall “economic efficiency” and increase economic growth.

The alleged overuse of automobiles is paternalistically referred to as “hypermobility.” Like the hyperactive child, Americans are simply too mobile for their own good, and the prescribed remedies are the public policy equivalent of Ritalin. The purpose of the proposed makeover is to get us out of our evil cars and into kinder buses and subways and onto gentler bicycles and sidewalks.

The economic theory behind these conclusions, the “theory of market failure,” calls for so-called “full-cost pricing” of automobiles. It is impossible to implement in the real world. Application of the theory is easily manipulated to promote ulterior motives that have little to do with advancing the economic well-being of society and much to do with remaking society to the liking of one or another environmental advocacy group.

In fact, the economic theory of market failure has no relevance to analyzing problems allegedly associated with driving. The roads are government-owned monopolies, financed by taxation. Driving takes place in a non-market, i.e., socialized, setting. It is therefore difficult to see how a theory of market failure would apply. Indeed, a theory of socialist or government failure would be more appropriate.

The real problem lies in the fact that truly free markets are prohibited. Any real social cost problems associated with the use of automobiles would be best handled through the privatization of roads. With modern technology that allows for low-cost monitoring of road usage and individualized pricing, this is a feasible proposition that is already being implemented in some states. It would ultimately allow for a resolution of pollution problems based on common law principles of justice, where the victims of harmful effects are compensated.

The idea that the government or some environmental advocacy group can determine the full-cost price of driving is not credible. If the vast amount of information for this exercise were possible to obtain, then a price system based on voluntary exchange of goods and services would be unnecessary. All decisions about the efficient allocation of resources could be made by central planners.

In fact, the actual motives of those expressing concern for full-cost pricing, economic efficiency, and making the polluter “pay” (though not for real damages, and not to those who have been damaged) are probably something other than those stated. Clearly, economics and practical experience tell us privatized markets are economically more efficient than government managed markets. Yet the prospect of privatization is not discussed in these studies. It might be that privatization of roads is not politically feasible. On the other hand, how politically feasible is a plan that would raise the price of gasoline to over three dollars a gallon and forcibly relocate people from their country homes to densely populated urban centers?

In spite of the fact that there is a stated concern for making the polluter pay, anti-car advocates make no mention of compensation for the victims of pollution. It is assumed that all payments meant to capture the ephemeral “social costs” of driving, in the form of higher taxes and congestion prices will go to the government. Once again, reforms that move toward the privatization of roads would make it easier for the victims of pollution, not the government, to collect for actual damages.

As Loren Lomasky demonstrates in Autonomy and Automobility, cars are a fundamentally liberating technology. Proposals to limit Americans’ use of cars would be no less fundamentally shackling. It is ironic that, for all their concern with social cost, these proposals fail to even consider the social costs associated with the loss of liberty that they would entail.