Friday Q & A: Marc Scribner of the Competitive Enterprise Institute

Part 1, Part 2

Analyst Marc Scribner at the Competitive Enterprise Institute examines transportation policy from a staunchly pro-market standpoint.

Here are excerpts from our conversation. (Note: We did the interview on Election Day, before we knew Republicans would gain control of the Senate.)

You’re skeptical about a lot of what federal regulators do. But what are your other guiding principles when you look at a particular transportation proposal?

We are skeptical of the government getting involved in all sorts of areas.

With aviation, we have an airline deregulation act for a reason, and that was to allow the market to regulate itself.

When you get into certain areas like roads, it gets more difficult because you’re not necessarily talking about regulation so much; you’re talking about the fact that the government has a monopoly on the provision of these services.

When it comes to roads, we’re looking at how we can harness markets and get them involved in the provision of road transportation.

For instance, we’re strong supporters of P3s [public-private partnerships], if done properly. We’re strong supporters of looking at contracting for public transit.

But when you’re starting from a monopoly, you often have to do things like start pricing, which we don’t do now. When you’re relying on tax revenues, for the provision of this infrastructure, your starting point is a lot further behind than freight rail which is wholly private.

“What can the market do?” is the first question we ask. And, “what is government doing right now”? And then we try to align our pro-market principles in order to advance more private-sector provision [of services] in these areas.

There was a deregulatory era in the Carter administration with Alfred Kahn and deregulation of the airlines.

At a Senate Commerce Committee hearing [on Sept. 10] on the problems with railroad congestion, [chairman] Jay Rockefeller pointed in the direction of more regulation and what the government could do to force railroads to serve their customers better.

Could we go back to re-regulation?

I hope not. And Jay Rockefeller, I can’t say I’ll miss him as Commerce chairman. He’s been an enemy of partial railroad deregulation, what resulted from the Staggers Act of 1980, really since it was enacted.

He’s been going to bat for shippers, and he has come up with a variety of excuses, that captive shippers are a major problem, when they’re not. There may be some problems there, but they’re very limited….

A lack of capacity, sure, it is at least a short-run problem. If you had asked the railroads ten years ago, none of them would have predicted the rise of shale oil that were now seeing….

If you talk to investors, they say, “If we start seeing more regulation, essentially price controls, we’re going to demand greater dividends.” Railroads are putting $20 billion or $25 billion of their own money into their networks every year.

If you start seeing Wall Street demanding more back, demanding more security, you’re not going to see the investment that we need to build out these networks.

So, moving in a re-regulatory direction I think would be disastrous.

Let me ask about the National Highway Traffic Safety Administration’s move to mandate vehicle-to-vehicle (V2V) communications capability for cars for collision avoidance.

Won’t V2V or vehicle-to-infrastructure technology make cars more expensive?

Yes, although maybe a couple hundred dollars in additional cost. So when we’re looking at a $30,000 new vehicle sticker price, it’s not all that significant.

It’s going to be people who buy new cars who would in theory receive this benefit early on: getting advance collision warnings or if there is a car broken down in a lane ahead of you, you get an alert.

The value of that is sort of murky, because you need to have a significant degree of fleet penetration before you even start seeing that.

There’d still be people driving their 1996 Honda Civic, because it’s reliable and cheap. And they can’t afford to buy a new car.

So you’d have a mixed fleet, some people avoiding collisions, other people not. Seems like an awfully big investment to say, “We’re going to have vehicle-to-vehicle (V2V) communications” and yet there’s a chance you collide with someone whose car doesn’t have V2V.

So where’s the benefit?

I’ve asked people, can anyone name a networked technology where there are essentially zero benefits for the first purchasers. I couldn’t think of any…. And that is the case for V2V, at least as it’s envisioned by NHTSA right now.

That’s a big challenge. The [car and light truck] fleet turnover is slowing down. In a weaker economy, people are holding on to their cars for longer. We don’t know when we’re going to start seeing people purchasing cars as rapidly as they have in the past.

But maybe this is where we start utilizing existing LTE cellular networks or something like that where you get some of these [advance collision warning] benefits out of your Smart phone.