July 07, 2004

Cars for the Poor

The free market argument for why passenger rail shouldn't get government subsidies is that if the service were valued enough by riders they would pay enough in fares to cover the costs. This is very simplistic and doesn't add externalities into the calculation of social cost (if even such a beast actually exists). One arguement of proponents of passenger rail is the poor need means to get to jobs. In a thought experiment, the Heartland Institute's Wendell Cox concludes that giving the poor automobiles would be less costly than subsidizing transit.

[This is analgous to the thought that handing out cash payments (or a negative income tax) to the poor would be cheaper than funding bureaucratic welfare programs.]

"Why Not Just Buy Them Cars?"