January 14, 2001

Let's charge drivers for rush hour road space

Posted in People ·
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I’m stuck in traffic. Sneaking along the Rock Road. I know I shouldn’t be here. There’s a bus lane to my left, the Dart a bit further over to my right, but like many of you, I jumped into the car this morning without thinking. It was freezing after all. At least us pampered coastal southsiders have the choice of a pretty decent public transport alternative. The rest of the country should be so lucky.

As I move from first to neutral and back to first again, I’m reading a gushing property supplement spread out over the wheel. As always, I’m intrigued by the “take five at around �350,000 ” nonsense in the “paper of record”. What’s better value: a three- bedroomed semi-d in Clontarf or a chateau in France? Spare me. Oh no, we’re slipping down that traffic ‘n’ houses, traffic ‘n’ houses, traffic ‘n’ houses road again.

These two chestnuts will again dominate the forthcoming election, whenever it’s called. This week, the major opposition parties cancelled all summer leave, so paranoid are they that Bertie will pull a fast one when the evenings get longer, so it could be closer than we think. (Even the Taoiseach’s own brother suggested the great one’s utterances on the certainty of a 2001 election should be taken with a pinch of salt. The brother went on to say that you could look Bertie in the eye and still not know what he was thinking.)

Irrespective of the election date, cars and houses will loom large on the hustings. It strikes me as odd that these two central lifestyle issues are treated so differently by our politicians. Being ideological about it, houses are treated with the free-market approach, while the traffic debate is still firmly rooted in the teaching of Marx and Engels.

If time is money, then congestion is very expensive. However, like so many important things in modern economics, the cost of congestion is almost impossible to measure. One thing is certain: my decision to drive into town alone in my car has a negative impact on the general level of traffic, possibly adding five extra seconds to everyone else’s journey. Collectively, selfish actions can amount to a huge cost in terms of time wasted. The cost to the economy must run into billions of pounds every month.

Contrast this with the economics of the housing market. If I want a house by the sea with a nice view I have to pay for it. The more people who want the house, the higher the price and the more credit extended to the asset, the higher the price still. The house is expensive because the resource we are paying for — in this case a plot of land with a view by the sea — is scarce. The issue is one of property rights which, in every capitalist society, are both valuable and sacrosanct.

Although it does not appear so at first blush, traffic congestion is also an issue of property rights. Between the hours of seven and ten in the morning and five and seven in the evening, road space in Ireland is a scarce resource. Use and abuse of the road network in rush hour imposes a huge cost on the economy but we do not put an individual price on it and a free-for-all ensues, leading to massive congestion.

No individual is charged for using the roads and so the collective cost is borne by all of us.

If the property market worked in such a way, there would be similar chaos. Imagine no property rights in the housing market. In fact, we don’t have to think that hard, we just have to hark back to the squatters of the 1970s and 1980s. Squatters gave the two fingers to property rights and for a brief time tenants’ rights superseded property rights — a free ride for the squatters and commercial anarchy for landlords.

A similar state of anarchy prevails on Irish roads today. We all squat on the roads in rush hour and the government’s response is to build more roads. In the housing market, this is like squatters taking over all the best property without paying any rent. In response, the government would, in this fantasy world, be obliged to build more council houses at a significant cost to the taxpayer.

Or, taking the roads comparison a bit further, politicians would be compelled to promise high-rises in the centre of town and in the more salubrious suburbs which would be given away on a first-come, first-served, no-cost basis.

In an effort to introduce the free market concept into the debate on traffic, we need to put an individual price on the collective property right that is the road network at peak hours. In Singapore, a toll is payable by those who use the roads. A strategic zapper logs a driver’s car every time he passes a certain point and he is billed every month accordingly. But this approach only goes half way. Why not go the whole hog and introduce a rush hour point system? Initially, these points would cost �1 each.

Every driver would be required to buy ten per month. Points could be traded, precisely like houses. At first, everyone would rush to buy 80 per month (40 return journeys Monday to Friday) but this would cause the price to skyrocket, as supply would be limited.

Drivers who absolutely insisted on driving would have to buy these points through a designated office such as the post office. Drivers who pooled their cars could sell their points, creating an efficient market. After a matter of weeks, prices would stabilise and a typical cost for using the roads at rush hour would be established.

However, the more cars sold, the higher this price would rise. Obviously, rush hour traffic would fall as only those who were prepared to pay for the pleasure would do so. The rest would seek to make other arrangements such as car pooling, the bus or the train. Over time, the market would become hyper-efficient and all commuters would be sensitive to even modest price changes. The initial cash raised could be used to upgrade the existing road networks.

This idea is hardly revolutionary. It is simply putting property rights into the traffic equation. It is not hard to see how we could reduce traffic congestion immeasurably without ever compelling anyone to do anything.

Politicians should be asked why we treat houses and traffic so differently? If we accept that the free market forces of supply and demand determine the exorbitant price of houses in this market, why not use the same tools to dictate the price of traffic?