Road Transport Markets

Before I begin let me just say that I like markets, I believe markets are generally speaking the best way of allocating resources. Furthermore there are few better ways to begin a day than reading Worstall’s latest fisking of Richard Murphy.

Having said that Richard Wellings, Director of IEA Transport has some, ahem interesting ideas on how we should arrange transport in the UK. Fundamentally his principles and mine on the subject are not that far apart, I think we both agree for example that pay at the point of use is a fair system*. However our ideas of what this means in practice rapidly diverge. One major issue I have with Richard’s thinking is that he has refused/never been able to quantify the externalities of road transport, yet in a paper he wrote for the IEA said “the Treasury has long enjoyed a huge surplus from motoring taxes that is redistributed to general spending”, how he can claim there is a surplus when he has never quantified the full costs remains a mystery.

In the same paper he said “Poorer motorists are hit particularly hard by fuel duty”, undoubtedly so. His assumption must be that a market based system would see costs for users fall, however, again that assumes the current costs of road transport are lower than the revenues gained and without a cash figure for those externalities, that assumption is hot air. Furthermore, if you want to help the poor it might be somewhat better to remove their reliance on an expensive mode of transport by providing them with the opportunity to use a safe cheaper mode.

Another doozy was a blog he wrote about increasing the speed limits for HGVs, on the one hand when talking about externalities of motoring and the effects on house prices we got

Urban air pollution and noise externalities are already to some extent ‘internalised’ by land markets, e.g. home buyers pay less if they buy properties close to a busy road

However on the issue of rights of way to provide access to pedestrians and cyclists we got

The obligation to keep public rights of way useable clearly constitutes a forcible taking from the property owner.

One ongoing cost to a property owner is internalised, the other is theft, can anyone square that circle for me?

Perhaps the biggest issue I have with Richard’s thinking is when it comes to how we get from the distorted market to a freer market. I’ve yet to see him make any suggestion about how to undistorted the market, he would just turn it over to the market as is. But how can this be fair? 60-80 years ago the government picked a winner, motorised road transport and it has been a state controlled monopoly ever since with billions spent on it each year, meanwhile walking and cycling have been marginalised. Driving is so entrenched due to this distortion that I fear a free market would not result in an efficient system any time soon.

The great road building of the ' 70s (total transport expenditure, includes rail)

The great road building of the ‘ 70s (total transport expenditure, includes rail)

Let me be clear about an efficient system, this would be a system where people have the opportunity, on a journey by journey basis, to choose which is the best mode of transport for the task, be it walking, cycling, driving, bus, taxi or train. Currently though, in no small part due to issues surrounding the subjective safety of walking and cycling, people feel they have little choice other than to drive, however it is evident from the Netherlands and Denmark that when given the opportunity to choose (because they have been provided with a safe and convenient network), walking and cycling become much more popular.

In essence what we have is a system where two twins were separated soon after birth, one of them was starved and downtrodden for 60 years, the other fed steak and steroids, now Richard Wellings wants to chuck them both in the ring for a fight to see who wins. I suggest that the market distortion will not be solved by letting them fight it out, rather that the allocation of spending needs to be adjusted for several years to fix the distortion before letting the market have its fun.

Ultimately the problem I have with some of Richard’s ideas is that they do not appear to be pro-market as much as they appear to be pro-motoring which is clearly not the same thing. If the market is a means of efficiently allocating resources then opportunity to choose must be available but due to the issue of subjective safety this cannot be the case. Instead what we have is two shops next door to each other one of which is guarded by a psychopath wielding a tyre iron preventing you from entering.

*in a proper market system that takes account of externalities cyclists would not need to pay at the point of use as cycling has been shown to have a net benefit to society, strictly speaking cyclists should be getting paid.


One thought on “Road Transport Markets

  1. Richard Wellings wouldn’t be the first neo-liberal to use his theory where it suits him and abandon it (without admitting so) where it doesn’t. Political extremist are much like religious extremists – they argue that they have god on their side, and that their cause is virtuous, but underneath, they have feet of clay.

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