Human Transit: should transit agencies “retrench” to become “profitable”?

I seemed to have a stirred a hornet’s net recently.

Jarrett Walker responds to (and deconstructs) my post at Human Transit Should transit agencies “retrench” to become “profitable”?:

I agree with almost all that Jarrett said. In short, we cannot be afraid of accounting.
I didn’t think equity, welfare and redistribution were derisive terms, though I am sure there are more politically correct terms of art to talk about these things to avoid bruising egos (The term “coverage routes” which Jarrett prefers is just trying to ensure spatial equity, redistributing funds from areas where transit is profitable to those where it is not, a form of financial aid from the government, or “welfare payment” we might say.) Many coverage routes are just “suburban welfare”. Admittedly the term welfare has become politicized in the US (“welfare queens”, “corporate welfare”), but providing for the general welfare is a primary function of the US government and is in the Constitution. Welfare economics is a major branch of that field.
The point is not that transit should be profitable (though that would be nice), but that if it is useful, it should break-even (i.e. be financially sustainable without depending on others). If people are not willing to pay for the service, it is insufficiently useful. I think the public utility model is valid (and historically how transit had been organized in the first place).
Overall, I am neither of the anti-transit right nor the anti-transit left nor the pro-transit right nor the pro-transit left, not anti-road right nor anti-road left nor the pro-road right nor the pro-road left. I don’t subscribe to modal warfare. I walk to work, live in a 5 person household with one car, two strollers, a trike, and a scooter, (and which would have a bicycle were it not stolen), have a GoTo Card in my wallet and use transit when necessary.
To this extent I am Hayekian (and small “l” libertarian), I cannot know what you want better than you can, there is an inherent data problem (Hayek’s Fatal Conceit). Maybe you want transit, but maybe you would rather have the cash I am spending to provide you subsidized transit service so you can do something else with it. The only way to know what the best allocation of resources is, is to charge for things what they cost (at least to the extent we can figure it out, and the collection costs of charging are not too great – which are not trivial problems).
Cars need not fail for transit to succeed. Each mode has its use, the problem comes in deploying it where it doesn’t fit (e.g. urban freeways, cars on campus, low volume fixed route transit). If we don’t acknowledge the misfit, we will waste scarce resources (time and money) that could be better spent elsewhere. And let’s not kid ourselves, these resources are scarce. If we don’t acknowledge the subsidies and the cross-subsidies in the system, people will continue to behave inefficiently. The argument that because there are subsidies in other modes, we should have subsidies in our mode is wrong. Two wrongs don’t make a right. A bad subsidy does not justify more of the same, it justifies removal.