I wonder how much mileage (so to speak) we’d get out of compelling car owners to pay the actual cost of their driving into a crowded city. The actual cost includes

  1. The cost of parking, which is to say the value of the next-best use of that extremely scarce land. As I recall, Shoup considers only the cost of constructing a parking space within a surface lot or in a structure, and explicitly ignores the value of the land. But imagine what we could do with that land: if the parking weren’t there, we could, among other things, extend housing. The average parking space looks to be around 180 square feet. In Boston, it’s not at all uncommon for an apartment to be valued at $750 per square foot. Imagine putting four stories of housing on top of that 180-square-foot unit; the value of the foregone housing is $540,000 (180*$750*4). If you secured a 30-year mortgage on that $540,000, it would cost you $3.58 per hour; the price of parking ought to be at least that much. Then add in the cost of constructing the parking space in the first place, the cost of its maintenance (occasionally re-paving it, etc.), the cost of enforcing parking tickets on it, etc., and it adds up.

    The point of the numerical exercise is simply that the cost of a thing should equal the cost of what you’re giving up to get it. Since we treat parking as free, and we treat it as a god-given part of the landscape, it’s hard for us to remember that there are other, possibly better, uses for that land.

  2. The collective loss of time caused by our individual decisions to enter an already-gridlocked city. One fellow has estimated that every additional car entering Manhattan during the weekday costs $160 in lost time. (Obviously the amount decreases at night and on weekends.) This is not hard to believe: one additional car adds a few seconds to everyone else’s commute. This is not to say, unless I misunderstand, that the marginal driver should pony up $160 for the privilege of driving into Manhattan; it’s easy to imagine that a fee of $10 or $20 would discourage enough drivers from entering the city that the congestion problem would resolve itself. But regardless, it should be obvious that my decision to drive has effects on people other than myself, and that I’m not required to pay for those effects. The economists call this a “negative externality” — a term for which we need a more scolding replacement. A “negative externality” is “your not cleaning up your own messes” or “a tax you impose on the community.” [1]

    The positive externality corresponding to this, on the flip side, is what subway riders give to the community every time they get on the train. If, in lieu of riding the train, you would have taken a car into work, then your decision to take the train saves the rest of us time, and you ought to be rewarded for that. (I don’t own a car; in lieu of taking the train, I’d walk or take the bus, so I sadly shouldn’t be the beneficiary of this reward.) You could be rewarded, for instance, by cheaper subway fare. A fee levied on automobile drivers that goes directly to subway riders would make the point particularly clearly.

  3. Environmental costs. When befouled air causes children to develop asthma, I don’t pay for that. When leaded gasoline leads to increased levels of crime and stunted mental development, neither I nor the petroleum companies paid for that. When your backfiring engine rouses me out of a sound sleep and destroys my productivity the next day at work, you don’t pay for that.

Add up all these costs, and many others I’ve not articulated (e.g., how much of our military budget would disappear if cheap gasoline weren’t considered a birthright?), and I wonder what the actual social cost of driving a car is.

[1] — I’ve wondered for a while whether economists feel morally complete once all negative externalities have been paid off. Suppose I dump radioactive waste in a lake, then pay to relocate everyone around the lake to a nicer, less-befouled area. By hypothesis, that waste now hurts no one, and all present harms have been compensated. Does the economist smile and consider the work done, or does he feel a morally repugnant residuum? After all, I dumped radioactive waste in a lake. Simply paying off the negative externalities shouldn’t balance the moral scales. Yet so long as the townspeople and I signed a contract freely and fairly, I get the sense that economists sleep soundly.

Naturally there’s a question of those who weren’t around when the bargain was struck. My children now can’t enjoy that lake. A few generations hence, someone might drink irradiated water and die a horrible death; that person didn’t get to choose whether to sign the contract. So within the notion of a “compensated externality” there lurks, not far below the surface, the idea that I hold this world in trust for those who follow. If I’m going to sign a contract on their behalf, I’m also assumed to be a fair judge — in fact, the only permissible judge — of their will. After all, if I’m not in some sense their representative, then what right do I have to sign a contract on their behalf?

I’m sure someone has written about the moral assumptions underlying negative externalities. I’d love to read it. As is so often the case, what sounds like a neutral technical dispute — how much to pay for the messes I create — is soon found to be a moral problem rather than a narrow economic one.