More support for Infrastructure Bank

From Brad DeLong: The Economist on Infrastructure BankMore stimulus: Buffers for the flighty

More stimulus: Buffers for the flighty: ON BALANCE, I agree with the “it’s insane” analysis offered by Matthew Yglesias of America’s refusal to borrow money at historically cheap rates and spend it on infrastructure and other job-generating activities that will need to be undertaken eventually anyway…. [T]echnological change and globalisation have absolutely nothing to do with high unemployment in the construction sector. The people who build things in America will always be Americans, and there haven’t been any revolutions in construction technology between 2007 and 2011…. The reason the construction sector is sitting on the couch playing with the Wii instead of out fixing America is that America isn’t spending the money to do the fixing. America has a $2 trillion backlog of infrastructure maintenance, according to the Urban Land Institute. With the government able to borrow money at ridiculously low 10-year rates, it seems pretty convincing that we should be borrowing that money and spending it now, both to improve that infrastructure and to get the economy going. (Insert sub-argument: yes, but infrastructure programmes take a long time to get underway. Response: did you or didn’t you say this was structural unemployment that will take many years to resolve?)…

Again, only an economist (or The Economist) would think house construction and road construction are near substitutes, and the skills are easily transferred, but the general point remains, we should have an infrastructure bank to fund things that have benefits in excess of costs and can pay back the loans. See Fix It First, Expand It Second, Reward It Third: A New Strategy for America’s Highways

Chinese mass transit: On the right track | The Economist

The Economist on private Value Capture funding subway construction in Shenzhen China: Chinese mass transit: On the right track

The builder is MTR Corporation of Hong Kong, the part-privatised company that runs the territory’s remarkably efficient and clean metro system (pictured). That MTR also owns a huge property portfolio is almost certainly a core issue in its involvement with Shenzhen.
Back in 2004, as part of a strategic effort to expand beyond Hong Kong, MTR commissioned a report from a local university on transit systems in many of the world’s largest cities, which observed that “railway investment is not financial viable on its own.” Not long after MTR’s founding in 1975, the parsimonious colonial administration which then ran the territory came to a similar conclusion, and decided to finance the construction of a subway system through simultaneous grants of adjacent property. It was, in essence, a trade of movement below for land above, a model that has been used successfully in Japan and, a century ago, in America as well.
The results have not been entirely successful. Some of the MTR projects reflect the worst of bleak government architecture but over time its portfolio has become a bit smarter; and these property holdings, along with the lease of advertising space, now account for more than 60% of MTR’s revenues and presumably all of its very healthy profits, as well as providing the financial strength to support its spotless metro service.

Value Capture needs to be used more in the US.

Dr. Doofenshmirtz, Toll Entrepreneur

Dr. Heinz Doofenshmirtz, toll entrepreneur
Dr. Heinz Doofenshmirtz, toll entrepreneur

Dr. Heinz Doofenshmirtz is the antagonist of Perry the Platypus in Phineas and Ferb. He runs Doofenshmirtz Evil Incorporated, a company dedicated to destruction (with little profit on the side). At least two episodes of this series deal with toll roads:
According to the Wikia: In Toy to the World: “Not far from the toy factory, Perry arrives at Doofenshmirtz’s location where a large amount of bricks are being loaded into truck. Perry gets caught in a brick trap and Doofenshmirtz approaches, explaining that he plans on constructing a great wall around the Tri-State Area. The only way people would be able to get in and out is through his toll booth.”

In this case Doofenshmirtz is being “evil”, following the “enclosure” movement of earlier times (see also The Transportation Experience), but in this, enclosing an entire metro area for the purposes of raising toll revenue (profits). No new value is being created, in fact value is being destroyed as wealth is transferred and an otherwise useless wall is constructed to ensure excludability. (Unless there was a congestion problem, and Doofenshmirtz uses time of day pricing to manage demand, I just suspect this is unlikely).

In Candace Loses Her Head ” he’s going to use his Drill-inator to tunnel to China, then charge tolls.”

In this case, he is adding value to the world (from a transportation perspective), and needs the revenue to pay back the Research and Development costs of the Drillinator, leave aside the operating and construction costs. This seems not terribly evil, but perhaps unsound.

Doofenshmirtz: Ah, Perry the Platypus! Your timing is impeccable. And by impeccable I mean: COMPLETELY PECCABLE! [Laughs] Your just in time to witness my latest scheme. Behold, my Drill-Inator! I will bore a tunnel to China, build a toll highway, and make millions!

Unfortunately …

Doofenshmirtz: The molted lava of the earth’s core completely slipped my mind.

(Which reminds me of Transatlantic Tunnel)

Think Big: Transportation overhaul would save money, create jobs, cut pollution, burn less oil

Daily Kos on transportation: Think Big: Transportation overhaul would save money, create jobs, cut pollution, burn less oil. In case it wasn’t clear, this is basically a liberal agenda on transportation.
I really don’t understand why these are all federal government responsibilities. It seems that if local governments don’t do what one party or the other likes, then they try to change federal policy (only one thing to change instead of 50). No one is really interested in doing things at the appropriate level of government. Frankly, as important as parking policy (No. 11) might be for cities, the federal government should not be involved one way or another (this includes taxes, which I recognize exist, but the main issue is how cities want to function, if they think asphalt is an amenity, more power to them [they are wrong, but that is a mistake local governments should have the power to make]).
Other things might be good ideas (rail electrification No. 8) but are private not public responsibilities (given the passenger share of rail transportation is to a first order approximation, outside the northeast, zero).
At least the infrastructure bank (No. 7) requires repaying the loans (a seemingly obvious idea, yet not standard in the many infrastructure bank proposals).

Travel Made Humans

Robin Hanson on how long distance travel was critical in human evolution … Travel Made Humans. Well worth reading. Transportation is the mother of us all.

Targeting toll lanes to catch cheats

Strib discusses Targeting toll lanes to catch cheats: ”

Targeting toll lanes to catch cheats

As many as nine of 100 cars using dedicated toll and carpool lanes are violating the rules, risking fines of more than $100, according to highway surveillance by the Minnesota Department of Transportation (MnDOT). In just four weeks this spring, 664 drivers were pulled over on suspicion of illegal driving in the restricted lanes on 35W and Interstate 394.  

Despite the violations, MnDOT officials say the toll lanes are working as hoped: reducing congestion and smoothing out rush-hour flows.  
MnPASS doesn’t come close to paying for itself because building the dedicated lanes and installing equipment to track vehicles cost tens of millions of dollars. In 2010, revenues from tolls and leases of the electronic gear brought in slightly more than the nearly $2 million cost of operating MnPASS.  
But MnDOT says the pay lanes were never intended to make a profit — only manage traffic more efficiently so the state could reduce the need to spend even more money building highways.  

By that criteria, we need evidence that the HOT lanes have a higher vehicle throughput than general purpose lanes. I doubt this is the case (person throughput, sure with Buses; economic efficiency, sure its uses have a higher value of time; but not traffic). Whether any of that justifies the high capital costs is unclear. My colleague Jason Cao and others have done some estimates (see the powerpoint) which seems to show safety benefits (though this looks a really weak set of evidence since it does not account for secular trends in improving safety, has a very small sample of fatal crashes (which is good in that few people died, but bad for drawing conclusions) and is barely significant at the 10% confidence level).
In their analysis, excluding safety benefits, Benefits are less than Costs. The problem here is the use of the same value of time for MnPass and non-MnPass users. This is how agencies do Benefit Cost analyses, otherwise they would invest more to serve people with a high value of time (which is what a business would do), but since aside from MnPass High VoT people don’t pay more, this is inequitable. Clearly MnPass users have a higher value of time, otherwise they would not pay. That same VoT assumption makes no sense in this case.

The agency says Minnesota will have only a fraction of the perhaps $40 billion needed for Twin Cities road projects over the next 20 years.  
“It’s not a strategy for making revenues, it’s a strategy for adjusting tolls to maintain performance,” said Nick Thompson, director of policy and strategic initiatives at MnDOT.  
The state expects to add two miles of toll lanes next year to 35W in Burnsville and plans more MnPASS lanes on Interstate 35E and elsewhere in the Twin Cities. Drivers who want to travel in the restricted lanes without carpooling install electronic gear on their windshields to track tolls. Electronic highway signs post higher or lower tolls to discourage or encourage use of the restricted lanes depending on traffic flow.  
Tolls typically range from $1 to $4 during rush hours but can climb as high as $8, prompting some drivers to try to beat the system.  

But when electronic tolls arrived in 2005 on Interstate 394, it introduced a trickier dimension for law enforcement. MnDOT pays the State Patrol $450,000 a year to use high-tech sleuthing to detect possible violators. Their equipment detects whether a car in a lane has a toll transponder, and whether the account holder has paid recently. As many as 9 percent of drivers are violating the rules on 35W, and as many as 5 percent are violating on 394, MnDOT says.  
Troopers cited 223 motorists for driving without the MnPASS account needed for those who aren’t carpooling, and gave warnings to 49.  
And 21 drivers who held MnPASS accounts were cited for misusing them to avoid paying tolls.  

So if I do my math correctly, the $450,000/(223+49+21)cost per citation is $1535? That seems really high, and not cost effective. Maybe there is some missing information here.

Seeing Red: Why L.A. Needs to Keep its Traffic Light Cameras

Eric Morris has a nice post on the Freakonomics blog: Seeing Red: Why L.A. Needs to Keep its Traffic Light Cameras

Policemen on the street, on the other hand, are vastly more invasive and potentially unjust because they are surveiling you when you are not breaking the law, have the ability to bust you on more severe charges emanating from a traffic stop (e.g. if you have drugs in the car), have fallible judgment about whether you were in the intersection, and have the ability to enforce the law selectively (e.g. racial profiling). If privacy is your concern it would actually be far better to have RLCs, but ban police from the streets. If you concede that it is kosher to have policemen on patrol I see little basis for arguing against RLCs, which are actually considerably more benign.
A major problem for RLCs is common to many public policies: those who are punished know who they are, but the beneficiaries do not. Also, it is hard to point to the benefits of something not happening. People who get tickets from RLCs are often bitter, and can turn into vocal enemies of the program. However, there are hundreds of people walking around today whose lives were saved by an RLC but will never know that they cheated death thanks to a camera. Consider that you might be one of them. Or if you really do hate RLCs, I’d suggest you fight back and teach those money-grubbing bureaucrats a lesson… by stopping at each and every red light.

Alas they are unconstitutional in Minnesota.