What’s Wrong with “Congestion Pricing”? It’s Not Just the Creation of “Lexus Lanes”

By Robert E. Prasch

The past six months have seen an uptick in the number of “news” articles detailing the workings of what economists call “congestion pricing.” For those unfamiliar with the idea, these are schemes wherein people can elect to pay a premium to access a “fast lane” so as to avoid congestion in some public place, or for some public service, at times of peak demand. In keeping with the doxa of our times, the idea is that the creation of a market, where previously one did not exist, is ipso facto a “win” for all parties.

So, for example, thanks to a program being aggressively promoted by the Obama Administration, drivers in Miami can pay a higher toll during rush hour in exchange for driving on a dedicated, traffic-free lane of I-95. Similarly, airline travelers awaiting Transportation Security Administration (TSA) screening may (it is not guaranteed) be granted the privilege of using a dedicated and relatively uncongested “express lane” in exchange for paying a fee and submitting to more extensive advance screening, including the provision of fingerprints for a permanent file.

Economists, technocrats, and the Obama Administration are ecstatic about such ideas, and have granted them the District’s most coveted moniker, “progressive.” Why? Because, they insist, by “putting a price” on congestion, markets “efficiently allocate” the privilege of using a roadway — or accessing a service in the case of TSA – during periods of peek demand. By “choosing” to pay the higher toll, a subset of all “consumers,” presumably those who place the highest value on their time, can bypass a known inconvenience. Others are either incentivized or “nudged” (a favorite term of behavioral economists and neoliberals everywhere), by the observed differential in price to avoid payment by rearranging their travel plans.

By contrast, this line of thinking maintains, those “consumers” unwilling to either pay the additional price or change their traveling times have, in the course of making their decisions, “revealed” that they have not in fact been overly inconvenienced by congestion. Of course, they might grumble anyway, but economists and technocrats feel confident in rebuffing them by appealing to what is called “the theorem of revealed preference.” And what is revealed, exactly? It is that the inconvenience borne, in dollar terms, “must have been” less than the differential in the tolls assigned to “express” and “congested” lanes. Of course, as is de rigueur for all discussions by mainstream economists, distributional issues and/or the flexibility of the work-hours assigned to an increasingly overworked and underpaid labor force are given lip-service at most, and often substantially less than that.

What Is the Impetus for Congestion Pricing?

The TSA and the U. S. Transportation Department (DoT), each of which is actively promoting congestion pricing through publicity and/or subsidies (and are undoubtedly behind the current run of strikingly uncritical stories on the subject), assure us that the promised “convenience” is only one of the several benefits to be garnered from their “progressive” policies. For example, the DoT claims that congestion pricing on freeways has contributed to a modest reduction of greenhouse gases by inducing at least some drivers to make decisions that will reduce their individual contribution to overall congestion.

Government officials and politicians have other reasons for favoring congestion pricing, but have found it politic to leave them unmentioned. But, there can be no doubt that they are influential, if not conclusive. Consider that congestion pricing offers a myriad of opportunities to greatly enhance domestic surveillance – always a fan favorite with the Obama Administration. Charges levied for driving into crowded downtowns or using dedicated freeway lanes are usually logged by the remote observation of a pass stuck onto one’s vehicle. That this information concerning the whereabouts of your vehicle will be gathered, stored, cataloged, and analyzed goes without saying. Similarly, airline travellers participating in TSA’s program “volunteer” a variety of private information, including fingerprints, in advance. This latter program has the added benefit of inducing the citizen/consumer to participate actively in the government’s surveillance program. Doing so undoubtedly, if only subconsciously, conditions citizens to be more accepting of enhanced government scrutiny of their every move – clearly a disposition strongly favored by Congress, the NSA, and the White House.

Another rarely discussed aspect of congestion pricing has not, I would conjecture, escaped the attention of Wall Street or its many Congressional allies. The revenues from congestion tolls can be tracked, modeled, predicted, securitized, and sold. With state and local governments chronically pressed for cash as a consequence of our nation’s inane commitment to austerity, these revenue streams are likely to be packaged and sold off sooner rather than later. Moreover, as the Chicago parking meter scam illustrates so well, there is every reason to believe that these securities will be sold for substantially less than what they are worth.

We can likewise expect that the guarantees granted to the hedge funds purchasing these securities will “lock in” cities and towns in ways that will impede sensible decision-making for years to come. For example, one can imagine that adding light rail or a road to ease traffic flow on a congested highway would be likely induce a lawsuit claiming that such improvements are detrimental to the value of a security built out of anticipated congestion tolls, and for that reason effectively constitutes either a breach of contract or a “taking” under law. I would give greater than even odds that, over the medium to long run, congestion pricing will substantially increase the costs of travel.

What, Seriously, is the Cause of this Congestion?

Neglected or elided in economic analyses promoting congestion pricing is any coherent discussion of the underlying causes of congestion. It is no secret that our political classes, backed by substantial donor monies, and the “scholarship” commissioned of hireling economists at corporate funded “think tanks,” have claimed repeatedly that budget exigencies do not allow for expanded or improved infrastructure. Their claim rings somewhat hollow, of course, when we see just how quickly these same guardians of fiscal orthodoxy suspend the imperative to make “hard choices” when Wall Street wants a massive bailout (to the tune of loans and guarantees amounting to $29 trillion from the Fed), or Washington whimsically decides to send other peoples’ children off to fight a war against one or more Middle East nations effectively selected at random ($3 trillion and counting in Iraq).

The point, well known to one and all, is that the United States has long neglected its transportation infrastructure. This has manifested itself in poor maintenance, periodically collapsing bridges and, most visibly, “congestion.” Given the slack in the American economy going back decades, our neglected infrastructure cannot be attributed to a lack of resources. Moreover, the nation’s infrastructure did not come to be inadequate or poorly maintained as a consequence of some unexpected or untoward event. That the problem did not “sneak up on us” should be evident from the fact that the issue was central to Senator Gary Hart’s 1984 campaign for president. Finally, the poor state of our infrastructure cannot be ascribed to population growth, as overall US GDP has expanded more rapidly than the underlying numbers of American residents (the distribution of that GDP is, of course, another matter altogether). Once we dispose of the vacuous narratives expounded by economists and technocrats employed by the DoT, TSA, or Ivy League schools of government, it becomes evident that our infrastructure problems are an artifact of decades of political dysfunction in which both political parties have prioritized the whims and greed of the wealthiest amongst us, while forcing the rest of us accept higher prices – in cash and patience — to use what were formally publically-provided goods and services.

The sad fact is that for some thirty-plus years, the priorities of our nation’s political leadership, and the priorities of those who pay for the politicians’ campaigns and provide cushy post-political sinecures for them, have not included the nation’s infrastructure. Now that the consequences of this neglect are evident to one and all, our political classes urgently feel the need for a gimmick. Congestion pricing is that gimmick. But it is more than merely a gimmick – congestion pricing also has an important political function.

Congestion Pricing as a Method for Dissipating Political “Voice”, Thereby Shoring Up the Status Quo

From a plutocratic perspective, congestion pricing is important to the extent that it dissipates resistance to the status quo. How does it do that? Well, those persons who are able and willing to pay to be released from the inconvenience of congestion are, as proponents argue, likely to be the same people who feel most inconvenienced. However, and this is important, had these same inconvenienced persons been unable to avail themselves of the “escape hatch” constituted by congestion pricing, their individual and collective frustration might well have induced them to organize around a collective solution to a collective problem – solutions might include more and more capable staff for TSA, or light rail along some of the nation’s busier commuter corridors. Such a political expression would, of course, challenge the long-standing efforts of neoliberal ideologues to de-legitimate the public sector and defund government operations.

By giving the most aggrieved an option to exit from the consequences of congestion, a potential coalition in favor of greater public investment can be forestalled, even as the (false) belief that the solution to all public problems is private initiative acting through markets is affirmed. Hence, diverting those who are most likely to act from perceiving a shared political grievance with the entirety of their fellow citizens who are also poorly served by the erosion of the nation’s infrastructure has useful political consequences – if your goal is to do nothing about the underlying problem.

Finally, what is to be the fate of those who – for whatever reason – do not participate in these proliferating programs? Every adult not blinded by a college course in mainstream microeconomics or neoliberal misinformation knows the answer. The spaces and services that the broader public depends upon will inevitably come to be even more underfunded and understaffed. This will occur because (1) these services will be disproportionately serving non-elites, and because (2) political elites will be emboldened by the enabling myth that non-participants have “selected” the poor quality “option” (hey, they could have paid for a faster lane or line, right?).

The Future of Congestion Pricing

Is congestion pricing the way of the future? Wall Street, the business press, wealthier taxpayers, mainstream economists, and the Obama Administration all fervently hope so. However, the smarter among them realize, if only vaguely, that an important obstacle remains. What is this remaining obstacle? It is the flickering residue of the once-robust republican ideal that, as citizens, we should all share in the governance and fortunes of the nation, including its rights and duties, and the several benefits and costs accruing to citizenship. This – now somewhat quaint — idea must be eroded even further if congestion pricing is to achieve its potential.

The success of congestion pricing, and the neoliberal agenda more broadly, are predicated upon American citizens embracing the idea that access to rights, government services, and the protections owed citizens, should be granted in proportion to each individual’s ability and willingness -to -pay. This, I suggest, is the underlying message of the numerous articles that are now appearing on congestion pricing. So, for example, National Public Radio’s “Marketplace” aired a soothing report assuring us that congestion pricing on Miami freeways was not simply a government program designed to create “Lexus lanes” for the wealthy, but a practical, easy to achieve, solution to traffic congestion. Likewise, Reuters ran an article that can only be described as an embarrassingly transparent advertisement promoting TSA’s congestion pricing program. There was no mention that the “TSA-Pre” program could be rather sensitive politically because, beyond a demonstrated willingness-to-pay, it accepts or denies citizen access to security express lanes on the basis of some unknown and unknowable criteria set by the authorities. Just don’t call it “profiling”, OK?

Despite these obstacles, DoT, TSA, and the Obama Administration are confident that Americans can be induced or cajoled into viewing themselves as consumers rather than citizens of a free republic. Sadly, there is a good chance that they are correct.

7 Responses to What’s Wrong with “Congestion Pricing”? It’s Not Just the Creation of “Lexus Lanes”

  1. Unfortunately, congestion pricing reduces total roadway throughput by increasing congestion. Traffic analysis is a whole field of study. At any given speed, there is a maximum throughput of cars per lane of traffic. If you increase the density, the cars must slow down, to allow a reduced headspace between cars. Congestion pricing or HOV lanes, increases the auto density of non-HOV lanes, resulting in lower total throughput due to congestion. This link discusses the problem, with real data.
    http://paleale.eecs.berkeley.edu/~varaiya/papers_ps.dir/accessF05v2.pdf

  2. Thank you for this article.

    What a coincidence this is coming about just when the Koch brothers have created yet another monstrosity of an outfit, their ACCE, or American City County Exchange, to do what ALEC does, but at the city and county levels?

  3. Great article. I guess the best we could hope for is that this congestion pricing makes the 99% even more aware of the extreme wealth inequality that is the hallmark of neoliberal economics policies — and more ready to do something about it. I know– Don’t hold my breath waiting for that to happen.
    One way that crony capitalist welfare queens get to use and abuse the rest of us is because they remain hidden. E.g. most Americans don’t know who the Koch brothers are, despite the fact that they are paying to immerse us all in neoliberal propaganda through “think” tanks and through the purchase of university business departments.
    Brooklyn College Defends Academic Freedom By Saying No To Koch Millions For Its Business School
    A libertarian professor cries foul, as if the Kochs are apolitical.
    http://www.alternet.org/education/brooklyn-college-defends-academic-freedom-saying-no-koch-millions-its-business-school
    “an estimated 150 colleges and universities … have taken $56 million from the billionaire, libertarian, industrialist Koch brothers since the 1980s (and then integrated their extreme right-wing agenda into business classes while censoring other views)”

  4. Tadit Anderson

    I don’t understand why the principle of the commons is not applied, since congestion pricing is a particular strategy used by profiteering within Gresham’s dynamic. It was also a piece of the manipulation used by the Enron “pranksters.” Conceding the principle of the commons by accepting the framing of “congestion pricing,” seems kindred to pre-Minsky acceptance of the macroeconomic model without the inclusion of the “financial sector.”

  5. The Toll Booth Economy. by MICHAEL HUDSON.
    http://www.counterpunch.org/2009/05/20/the-toll-booth-economy/

    “Instead of providing basic infrastructure services at cost or subsidized rates to lower the national cost structure and thus make it more affordable – and internationally competitive – the economy is being turned into a collection of tollbooths”

    ___________________________________________________________
    Modern Monetary Theory in Canada
    http://mmtincanada.jimdo.com/

  6. Wade Riddick

    It’s the rise of the middleman economy – and it’s been happening for a long time. Drugs aren’t provided to pharmacies through Pharmacy Benefit Managers based on how cost-effective they are for the patient; instead, it’s based on how expensive they are. Kickbacks are allowed. This means cheaper drugs have less of a profit-margin from which to supply a bribe to the guy stocking the shelves. The result has been a murderous epidemic of drug shortages – particularly in crucial, if cheap and generic, cancer medications. Which not-surprisingly has gone uncovered in the press since it would make their true customers – Big Pharma – look bad. (You’ll notice the recent “reforms” to compounding pharmacies have very little to do with quality control in the manufacturing process and everything to do with price-fixing and rigging market share. Also notice how Obamacare leaves the process of device and drug kickbacks to doctors perfectly legal despite them long being illegal in Medicare.)

    The cable/telecom industry plans to do something similar by returning to the discredited old model of sender-pays instead of customer-pays. Companies will literally have a financial incentive to hold down bandwidth supply to drive up prices.

    In oil, gas, copper, aluminum and other commodities, banks have been hoarding supply to drive up prices since the ’90s through the derivatives markets.

    These aren’t just accidental conflicts of interest. This is essential rent-seeking behavior. A private concern hijacks a public good or utility – it’s nice if the service is degraded first so this takeover can be introduced as a “reform” (Klein’s “Shock Doctrine”) – then they charge several times more for access to a worse service than the one you were getting.

    This is what’s happening with charter schools, private military contractors and private prisons. The essential driver of all this is political campaigns. Thanks to progressive era reforms, civil service workers like public school principles can’t give campaign contributions to politicians and launder taxpayer funds through a subcontract to their cousin’s shell company. A charter school can. Ditto for private military contractors and private prisons – except they also have a profit motive to start wars and jail innocent people for crimes just to keep beds warm.

  7. In response to the above – would private prison directors really be able to override judicial process, issue warrants and bribe a jury in order to ‘jail innocent people’? What motive would they have, given that many prisons already suffer from overcrowding (generalisation I know).
    The security profiling described for the Transportation Security Administration (TSA) profiling – is this over and above what is required as standard, or is it simply that such details are requested in advance? I agree that ‘streaming’ commuters into the haves and have-nots is just one example of the stratification of society, and it is wrong that this should apply to public services. I think you might be a little paranoid in asserting the information used to track usage of this service will form part of a wider NSA effort at monitoring commuters’ behaviour (though undoubtedly it will join the information pool at their disposal and be called upon if sufficient justification exists to examine an individuals’ private data).
    And yes, the records of those who can afford to use faster lanes might feasibly be of some use to marketers who want to identify high net-worth individuals to target, but there are lots of other ways of doing this: credit-check companies, mortgage registers etc. All it really says is that they set a premium on their time.