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October 31, 2007

Comments

Geoff103

No, Redwood is a realist and right. He knows, as does anyone with any experience of life, that any road-pricing scheme introduced by Labour will be IN ADDITION to the current costs that motorists pay - VED, Fuel Duty etc - and not a proper replacement mechanism.

What we certainly don't want or need is yet more of your fatuous 'redistribution to the poor' which amounts to nothing more than taking from the hard-working and enterprising and doling it to the idle and feckless.

David Duff

"Roads are a scarce resource, and prices are the best mechanism we've discovered for allocating scarce resources."

Yeeees, but not if the government owns the monopoly and sets the prices! Are you, perhaps, advocating the privatisation of the road network? And, apropos Geoff, up above, do you think it likely, this side of Elvis re-appearing, that HMG will give us back some of the money they already take from us on the pretence of improving the roads?

Justin

If these prices are regressive, the solution is more (and more efficient) redistribution to the poor...

That's a big 'if' though Chris, isn't it? I bet we see road pricing before we see its regressive nature addressed.

Geoff103

No, Redwood is a realist and right. He knows, as does anyone with any experience of life, that any road-pricing scheme introduced by Labour will be IN ADDITION to the current costs that motorists pay - VED, Fuel Duty etc - and not a proper replacement mechanism.

What we certainly don't want or need is yet more of your fatuous 'redistribution to the poor' which amounts to nothing more than taking from the hard-working and enterprising and doling it to the idle and feckless.

Geoff103

Ooops, didn't mean to post twice. Apologies.

ian

All of the above, but he's still a hypocrite...

Planeshift

So instead we get the status quo of of ever increasing traffic in town centers and ever increasing roads in the country to keep up with demand, with public transport offering no real alternative.

Isn't british politics great?

Matt Munro

Sureley the real scarce resource isn't the road, it's the oil, so if you want to discourage road use then the most efficient way to do it is increase petrol duty, but that upsets suburban middle england and we can't have that can we.

What will happen in reality is that the rich will pay and won't notice, the middle classes will charge it to expenses and and the poor will have to get mugged on public transport or pay what amounts to a tax on going to work.

john b

I use public transport every day; it's fast, generally reliable and I've never been mugged while using it (and yes, I live in the UK). Forcing as many people as possible to give up their cars and do the same would be an unequivocally good thing...

Geoff103

"Forcing as many people as possible to give up their cars and do the same would be an unequivocally good thing..."

Forcing?

Are you a Fascist or Communist? Doesn't really matter since when you talk of 'forcing' people to travel in a way you approve of, then you're obviously a totalitarian.

Bob B

S&M is surely correct about this.

The credit for much of the pioneering work on the economics underpinning road pricing goes to Sir Alan Walters, who went on to become Mrs Thatcher's personal economic adviser when she served as PM:
http://en.wikipedia.org/wiki/Alan_Walters

A select bibliography of papers and monographs by Alan Walters on road pricing: Track Costs and Motor Taxation, Journal of Industrial Economics (1954); The Theory and Measurement of Private and Social Cost of Highway Congestion, Econometrica (1961); and The Economics of Road User Charges (John Hopkins University Press, 1969) - see the citations in this NERA report on road pricing:
http://www.mondaq.com/article.asp?article_id=52552

Bus and train fares impact regressively on anyone with lower incomes but I've not seen reports of John Redwood arguing for free public transport at the point of use because of that.

John Redwood does have an excuse - he's a historian and no economist.

Btw Alan Walters comes from very humble origins in Leicester and obtained his bachelors degree, an external London University degree, on attending the local University College, Leicester.

dreamingspire

Free public transport sounds very attractive, but leads to abuse (e.g. children holding parties on the bus, as reported in London). Low fares balance that out. Charging me £2.10 to go 2 miles on the bus and nearly £4 for a day ticket in a relatively small urban area (as happens where I live) is utterly stupid, but make that 75p (currently in the much larger area of London it is 90p), or £1.50 for a day ticket, and the situation will be transformed.

Bob B

Two simple points for starters, Dreaming, which tend to get overlooked.

Free public transport at the point of delivery has to be paid for somehow and that means the tax burden has to increase overall or equivalent public spending has to be cut. Extra taxes create their own distortions and disincentives so we need to net those out of any prospective benefits as well as the costs of providing for "abuse" of a free service.

Secondly, something that John Redwood failed to take account of - which rather demonstrates his limited understanding of economics. If use of congested road space is freely available at the point of use while fares are payable for travelling on public transport then potential travellers are apt to substitute the "free" service for the service which will cost them, especially since journeys on public transport tend to be longer than roughly equivalent journeys using private transport. The outcome is that road congestion will increase because of the substitution effect.

Peter Risdon

Comments in your first post pointed out some issues with road pricing, including the distinction between pricing as a mechanism for rationing a resource, and a market. The former is not obviously the latter.

If a pricing scheme is not a market (because supply isn't interacting with demand), let alone a free market, then your criticism of Redwood doesn't hold, even if road pricing is something you advocate.

Chris Williams

Point of info - Walters went to university before the Robbins report, so what all that stuff about 'external degree of the University of London' means in practice is that he went to Leicester University before 195thing, when it was chartered. That, in itself, isn't evidence of rags to riches.

As for roads, the key issue is externalities. Right now in the UK it's almost always cheaper (though sometimes less convenient) to travel by car, precisely because the planet-frying effects of CO2 emission are not being charged to anyone. Other externalities - notably obesity and psychological effects - also fall on the population as a whole rather than the car-driving parts of it.

Bob B

It happens that Alan Walters came from a notably poor part of west Leicester which, in turn, perhaps explains why he attended the local university college, taking an external London degree, rather than going away to university.

Of course, road pricing is about "externalities" generated by use of motor vehicles on congested roads which haven't been internalised in the marginal costs paid for by motorists. That is the very rationale for introducing road pricing on vehicles using roads when the roads are congested.

Matt Munro

Forcing as many people as possible to give up their cars and do the same would be an unequivocally good thing...

Posted by: john b | October 31, 2007 at 05:52 PM

If you can explain to me how I can get one child to a chilminders, one to school and myself to work, all within the space of an hour, on public transport, I'd like to hear it.

reason

Peter Risdon,
(unlike most of the rest) has a good point to make. Road pricing should be a market in order to maximise its efficiency. We should auction to right to price a given road to the highest bidder. It does create information problems for potential users however. Any suggestions?

Katherine

John Redwood, and most of the commenters here, seem to assume that "poor people" own cars in the first place, in order for them to be priced off the road. Care to examine that assumption?

Bob B

All that it is necessary to assume is that the response of motorists in private cars and CVs to changes in the price for road use is greater than zero, which is hardly an extreme assumption.

It otherwise matters not whether the drivers of vehicles are poor or not. The issue about congestion prices impacting regressively on those with lower incomes is a gigantic red herring. The prices of food and clothes impact regressively but as far as is known John Redwood is not now proposing that food and clothing should be freely available this side of a Marxist state of Communism where each person performs according to his/her ability and each takes according to need. Evidently, Alan Walters had optimistically assumed we were going to remain a market orientated economy.

Btw the ONS on the relationship between car ownership and income:

"Car ownership is closely related to income, as well as to sex, age, stage of lifecycle and location. In 2002, 59 per cent of households in the lowest income quintile did not have access to a car. This was around seven times the proportion in the top quintile group (8 per cent). High proportions of households without access to a car were found among single pensioners (69 per cent), student households (44 per cent) and lone parents (43 per cent)."
www.statistics.gov.uk/cci/nugget.asp?id=1006

Matt Munro

"The issue about congestion prices impacting regressively on those with lower incomes is a gigantic red herring. The prices of food and clothes impact regressively but as far as is known John Redwood is not now proposing that food and clothing should be freely available this side of a Marxist state of Communism where each person performs according to his/her ability and each takes according to need."

Yes but.....The poor already pay to use the roads through something called the road fund license, and I somehow doubt that will be abolished. No one gets to use the roads "for free" now.

Bob B

"The poor already pay to use the roads through something called the road fund license"

But the road fund license fee (VED) doesn't connect with whether the roads are rural or in urban centres nor whether the roads are congested or not. The VED is payable whatever the circumstances of road use so, once paid, the incentive for vehicle owners is to get in the car and drive on the roads regardless.

The obvious truth of the matter is that something has to be done to restrain road use at peak times in urban areas or the system will resolve the problem all by itself by gumming up.

john b

"If you can explain to me how I can get one child to a chilminders, one to school and myself to work, all within the space of an hour, on public transport, I'd like to hear it."

Enrol your older child in a school near your house, and enrol your younger child with a childminder near your house. Having spent about 20 minutes walking the kids to the school and the childminder respectively, you then have another 40 to train/bus/cycle it into work.

Blissex

«Btw the ONS on the relationship between car ownership and income:
"Car ownership is closely related to income, as well as to sex, age, stage of lifecycle and location.»

Most importantly, car ownership, like house and share ownership, correlates very strongly with right-wing politics, to the point that it can be regarded as causation. No surprise about Redwood's position.

A conservative think thank discovered this over twenty years ago, and as a result the Thatcher government determinedly put as much public housing and share property in the hands of the public for nearly nothing, and adopted a policy of discouraging public transport and encouraging car transport (to the point that Mrs. Thatcher was reported to have said that a man that cannot afford a car by 26 is a failure).

The result has been wildly successful, ensuring several decades of unbroken conservative (no matter what the ostensible denomination) government, where the car, share, house owning majority of "f&ck you, I am fully vested" yeomen vote their wallets election after election.

Thus the end of politics :-).

Bob B

Developing the underpinning economics for road pricing evidently didn't preclude Alan Walters from becoming Mrs Thatcher's chief economic adviser, when she was prime minister:
http://en.wikipedia.org/wiki/Alan_Walters

He is also notable for having advised against Britain joining the European exchange rate mechanism (ERM) but was (unfortunately) ignored and John Major, as Chancellor of the Exchequer, signed us up in October 1990 to the general approval of both front benches in Parliament at the time.

Kevin Carson

David Duff,

How about "privatizing" highways by treating all highways in a given jurisdiction as the property of an independent corporation to be cooperatively owned by the users, and entirely financed by their user-fees? Absolutely no outside revenues of any kind. And NO use of eminent domain.

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