|Taking a New Direction|
Londoners are wondering what's going to happen tomorrow morning when the
fees for driving into the center of London get set to five pounds ($AU14) per
car per day.
rednecks, libertarians and
merchant bankers alike may be about to join forces and take up arms against
such an blatant unreasonable excuse for the government to dip into
people's pockets, perhaps a little thought is appropriate.
Cities are generally
congested. The centers of cities are horribly congested. Usual government
mismanagement of the problem makes it worse in two ways - not only is there a
tragedy of the commons - it is a subsidized tragedy of the
The tragedy of the commons plays a big hand. The roads are a scarce
resource, which the government insist belong to 'everyone' - so everyone can
use them without consideration of the externalities of their actions - slowing
other traffic. Hence much of the surplus from road use is taken up with people
waiting in traffic jams - much like people lining up for hours to buy a loaf at
government fixed prices in communist Russia, where poverty belonged to everyone.
Making people pay for the use of the roads reduces the use of the roads - and
therefore reduces transport times for those who do choose to pay for their use.
Most governments not only fail to see this, but actually subsidize the
congestion - normally through subsidizing public transport. Taxpayers (most of whom don't even
go to the city centers) are forced to pay taxes to subsidize
dirty, overcrowded, dangerous trains, trams and buses so that people can all
commute to the oldest, most overcrowded, poorly planned and dirtiest part of
the city - the city center.
In the era of high-speed freeway systems and record motor vehicle ownership,
governments insist on subsidizing people to do business at one of the
few places where overcrowding makes these things unachievable.
So tomorrow morning Londoners, many of them not known for their enthusiasm
for free markets, are about to get a quick lesson in the power of the market
(or at least a government-simulated market). Doubtless it will be chaos in
the teething stage, but it will ultimately lead to better use of the resource.
And of course the best way to use this new revenue would be give it back to the
population in the form of tax-cuts, but no-one seriously expects this to happen.
It's hard to know what has inspired this flash of clarity in the UK Labour
Party. Perhaps it was the realization that they were already on the Laffer peak, and that
efficient taxes were needed to raise the funds for the coming war.
All over the world, better understanding of the free market is allowing governments to more
efficiently fleece their citizens of their hard-earned income.
On the other hand maybe Tony Blair thought that five pounds was enough to
deter fundamentalist religious
psychopaths from letting of bombs in central London.