Monday, September 12, 2011

How Government Policy Has Shaped American Love of Cars and Suburbs

This recent piece by James D. Schwartz got me thinking about two bits of conventional wisdom: Americans love their cars, and they prefer the suburbs to central cities. That so many Americans do live in the suburbs and commute by car is taken as proof. While it is true that Americans are making the rational economic decision given their available choices, the available choices do not reflect an unfettered market. Too few people realize how much government policy has shaped a supposed cultural preference.

Schwartz calls the government subsidization of driving socialism. That’s a pretty overused term these days, and I’m not interested in igniting political flame wars. But think about this: we used to consider ourselves pretty superior to the Soviet Union when we saw them lining up for some good, made artificially cheap by the government. We told ourselves that such a thing would never happen here, because the free market would not allow it to happen. But when cars line up for hours in bumper-to-bumper traffic on our roads, that is exactly what is happening: people are lining up for a good made artificially cheap by government subsidy. Whether you choose to label it socialism or not, the fact is that if individuals are not paying the full price for their goods, then the free market is not working. Schwartz lays out the ways that motorists benefit from government subsidy:

From subsidies given to oil companies to produce cheap oil, to government bailouts/ownership of auto manufacturers, to road construction and maintenance on streets that cost nothing to use, to highly subsidized parking spaces, to government health care costs associated with pollution from automobiles, to the detrimental health that results from sedentary lifestyle that cars promote, to the vast government policing forces required to enforce our streets: it is undeniable that driving places enormous costs on our society, and this cost is highly subsidized by our government.

The gas tax is an effort to make motorists bear some of the negative externalities created by driving; however, the fact that this money goes into funding more roads simply rewards the very behavior it is meant to limit. Furthermore, Americans pay some of the lowest gas taxes in the developed world; for one estimate of the full cost of a gallon of gas, see this video. The suggestion of raising the gas tax is a political non-starter. A higher gas tax is unpopular across a broad swath of the political spectrum, including among those who decry the socialism of public transit subsidies.

The other piece of received wisdom above - the American cultural preference for suburbs - is another choice made in a government-manipulated market. Federal policy skews demand through the mortgage interest tax deduction, subsidizing buying rather than renting. Municipalities skew supply through zoning codes: Edward Glaeser and Ryan Avent both write about the difficulty of building in places like New York and San Francisco, because of restrictions demanded by residents who don’t want any change. The restrictions limit supply in the urban core, making it more expensive. This in turn drives people to the periphery in search of affordable housing.

I certainly don’t deny the need for any government subsidy - I’m not sure there exists a public transportation network in the world that would be completely viable without some government subsidy (please enlighten me if one does exist). Nor do I deny that there exists - among some of the population - a strong preference for the suburbs. I do think it is wrong to use Americans’ preference for cars and suburbs to justify the continuation of policies that favor those things. It’s circular logic. The truth is that we really do not have the data to justify the conventional wisdom. In fact, recent data is showing a growing preference for walkable neighborhoods.

What I advocate is allowing for real choice - and asking people to pay more of the true cost of their choices. With less subsidization for an auto-dependent lifestyle, it would no longer be as cheap relative to living in the urban core. Only at that point can we start to make sweeping generalizations about Americans’ cultural preferences.

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