There is a lot in the news and the motor is firing up again. This epistle is about the delays in airline traffic and I have a brief comment on the Texas Transportation Institute 2007 mobility report.
There has been much talk in transportation circles about the TTI report, and in the interest of brevity, I will not say much here. Tim Lomax and company do say that, yes, building more roads does help with traffic congestion and we need to keep at it. Tom Bazan has written recently that 150,000 more vehicles were registered in Harris County last year than in 2005, so it is no surprise that traffic congestion has gotten worse. This mirrors part of what my public comment was to the 2035 plan. Additionally, heavy congestion is a sign of economic and social vitality in an urban area, so congestion isn't always a bad thing.
So, are you one of those who says that building more roads only induces ever more demand by current road users? Then try reading this article by Robert Cervero. Finally, I will state that traffic congestion is still not nearly as bad in Houston as it is in transit heavy Europe. Commute times in Europe vary by country with a mean of 38+ minutes. Note that the article I cited was 4 years old.
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We've been bombarded recently by a spate of stories about how bad air traffic has become and what remedies are there for alleviating the problem. Gary Becker and Richard Posner write about their ideas here.
When I flew to China in 1991, air traffic congestion wasn't too bad. When I went on holiday in 2000, the situation was much worse. I flew into O'Hare and had to go into a holding pattern which nearly made me late for my flight to Tokyo, and flights to Tokyo don't happen every hour. I and another passenger were then spirited through Narita onto our connecting flight to Bangkok.
Casual or long time readers of my blog will probably know by now that any time The Wizard reads about matters like these, I find it always helps to view the matter through the lens of history. This morning I awoke to watch a program on the History Channel entitled Our Generation: Fly with Me.
The Fly with Me program was a great one to watch and here are some of my hand written notes I took while watching the program:
1) The first really large scale passenger aircraft was the DC-3. It was mentioned on the program that in 1955, a cross country flight from New York to Los Angeles taken on a DC-3 lasted all day and had to include three stops to refuel. The Wiki entry for the DC-3 confirms this, as it mentions that the range of the aircraft is 1,025 miles.
2) The cost in 1955 to fly across America on a DC-3 was $1,000. Translated into 2007 dollars, that same flight would cost $7,500. So not only was travel by air a bit slow by today's standards, it was also expensive. Now where has that matter been discussed before?
3) As it was, flying was something for the rich and was considered to be a romantic thing to do. Going to the airport and getting on a plane was a special occasion.
4) The subsequent roll out of the Boeing 707, the first aircraft of the jet age, changed everything. Not only could passengers get to their destinations in one third of the time, but jet aircraft introduced economies of scale in the number of passengers it carried. Whereas the DC-3 carried 21-32 passengers in a noisy propeller driven aircraft that could not fly above the weather, the 707 could (somewhat quietly) carry 110-200 passengers 35,000 feet up.
5) The 707 was not the end of reaping the economies of scale from jet aircraft. 15 years later, my favorite plane, the Boeing 747 took to the skies. The 747 can not only fly twice as far as the 707 could, it can also carry 2-4 times as many passengers.
6) In 1978, Congress passed the Airline Deregulation Act, causing further drops in the costs of flying. Meanwhile, the standard of living in America has (more or less) doubled since 1950, allowing for more money to be spent on transportation and travel.
So what has all this meant for flying? I have flown with United Airlines since I worked in China because they offered me membership in their frequent flier program when I went over there. Just for kicks, I punched in a round trip ticket itinerary from JFK airport to LAX (New York to Los Angeles) for a 5-6 hour non-stop flight leaving on November 15, 2007 and returning on November 30. The response I got was that I could get a round trip ticket in economy class for $328, $302 if I used a nearby airport like La Guardia. Even first class flights could be had for $1,308. I am sure that if one looked hard enough, one could find cheaper flights.
As it is, these figures mean that flying by jet aircraft has dropped the cost of flying by roughly 80-95 percent since the DC-3 ruled the skies. Needless to say, flying by jet aircraft has democratized flying, just as the improvement of roads (and later rail transport) in Europe democratized travel. The number of passengers traveling by air in America has grown by 300% in the past 30 years. 80% of Americans have now traveled by aircraft and 50% have flown in the past 12 months. Then there is the issue of airport security and what it means for passenger inconvenience and delays.
And what about the supply side of airports in the United States? Well, America has built one large new airport in the past 30+ years!
Some of the supply has come online via private jets operating at smaller airports, especially for business executives or rich people who don't want the hassle of dealing with checking in at the big airports. The show mentioned that a typical private jet now runs some $40 million, but a company called Net Jets allows one to rent (or buy) into a private jet. Prices start at $412,000 and the program mentioned that a typical Gulf Jet ownership program will run you $2 million for 50 hours per year of flight time. Don't laugh. Net Jets operates 370,000 flights in 150 countries.
So what's the solution? Rail fans no doubt would dream of high speed train service, but realistically high speed rail can only compete with planes on a time basis over a distance of up to perhaps 600 miles once one considers the time differential of navigating the airports. Then there is the issue that capital costs of constructing high speed rail would probably average $30 million per mile and go up. Then, how do you navigate around in your destination city?
So should rail fans put their hopes in having the federal government fund a Los Angeles - San Francisco - Fresno high speed rail line, or perhaps one connecting Dallas - Fort Worth, Austin - San Antonio, and Houston? Well, let me put it to you this way: Each of those routes all connect destinations in only one state and if you are looking for the federal government to fund any big programs, you'd better make sure that the program in question benefits the entire country and not just one state! Get the message?
I had the opportunity, if I so desired, to take the Chunnel between London and Paris in January of this year. I opted for flying between Heathrow and Charles de Gaulle. When considering the time differential, it was only a one hour flight, but the train rides, navigating through customs, etc, made it a 4 hour trip. The chunnel trip would have probably come close in time terms, but the trip by air (and getting around in both cities) cost $90 less than by rail.
Any time I think of long distance travel by train, I think of Amtrak. One person I know who traveled by Amtrak wrote me a message a while back saying that Amtrak lost their luggage and did nothing to help them locate it!
My thought is that, considering the NIMBY'ism surrounding the building of new airports, we are going to have to continue with airport expansions for the near term future, along with better use of non - major airports. It's either that, or resort to using larger aircraft which can carry more passengers. Another idea might be implementing congestion pricing of flights at busy times at major airports. Bullying the airlines via legislation for their success in getting people to fly, but not increasing the supply of airport runways and terminals, is only going to drive up the price of flying because mandating the compensation of angry passengers who are forced to wait is going to force the airlines to raise their prices to come up with the money to do that.
Air travel will become more expensive in the future as petroleum prices rise, which may help alleviate the problem. It is difficult to fly aircraft using any other kind of fuel besides petroleum, although the Brazilians have made aircraft fly (albeit with major problems) with ethanol. However it remains to be seen whether or when alternatives to today's petroleum will become viable on an industrial scale. Some people are doing some really amazing and ambitious stuff finding a replacement for traditional petroleum as a liquid fuel.
I am going to stop now as this has been a long write. I may post more on this later.
Wizard.
And so the world watches on as the thugs who have ruled Myanmar Burma for the past 45 years do what they do best - put down an uppity populace.
You know what amazes me about all of this? When I worked in China in 1991 - 1992, Ne Win was still in charge behind the scenes, making sure his up and coming tyrant in training Saw Maung was keeping Burma safe for dictatorial rule under the dreadfully sounding SLORC. Ne Win is gone now, but Than Shwe has been busy making sure his family lives a splendid life while the people starve. Shwe is supposed to be the primary person who is holding back any progress towards opening up to the outside world or in making steps towards democracy or national reconciliation.
I am busy looking at my beaten copy of Freedom From Fear which I brought while I lived in China. The book's author, Aung San Suu Kyi was awarded the Nobel Peace Prize while I was over there. The book is one of the most inspiring books I've ever read and there was once upon a time when I was younger that I actually entertained grandiose ambitions that I would actually be like her and do something great in the world. Alas, it was not to be.
Gun control advocates take note: As inspiring as leaders like Ms. Suu Kyi (her husband died some years ago) are, as nice as it is to have cell phones and satellite images of oppression carried out by the Burmese generals, and as inspiring as it is to see monks out in rebellion against tyranny, I know deep down in my heart that the real problem is that - as I just heard on a CNN video - the people do not have weapons with which to defend themselves. One of the first orders of business that all the great dictatorial regimes of the 20th century took care of making sure that the populace was disarmed as fast as possible. Lenin and Stalin did this. So did the Nazis, as did the Chinese Communists, and so did Pol Pot. The Burmese generals were no slouches either at disarming their people as they would have been put back in the barracks decades ago if they hadn't done otherwise.
Even the populace having some guns might not be enough. Churchill once said that uprisings have a habit of coming out of nowhere and this one did just that. This one, much like the Chinese uprisings of 1989, was at least partly economic in nature. Part of the Chinese complaint in 1989 was over a wave of inflation which had hit the economy. This one was lit by increasing fuel prices.
However, my reading of history is that successful rebellions against tyranny usually have to involve at least a good sized minority of the population in order to have a chance of being successful. The American Revolution pitted a deeply divided colonial population where some were loyalists, others sat on the fence, while others fought for American independence. The breakdown of the Soviet bloc involved a failure of will, a kind of crisis of confidence amongst the Soviet leadership which eventually led to Moscow relaxing its grip over its Eastern bloc satellite countries. As 1989 rolled on, hundreds of thousands of people in all of the Soviet bloc countries eventually rebelled. However, the 1989 Chinese Spring uprisings largely were confined to students, factory workers, and intellectuals. The army was divided, but the hundreds of millions of Chinese farmers and peasants did not get very involved.
Ms. Suu Kyi wrote in Freedom From Fear that dictatorships rarely last more than 2-3 generations as the original rebels who seize power die off and the next 1 or 2 generations are seen as not having any legitimacy. In theory this is probably true, but one scary way around this dilemma is for leaders in dictatorships to set up orderly transitions of handing over power. If they can do this, then the new regime can perpetuate itself. This is what Deng Xiaoping did when he was paramount leader in China.
Ne Win seized power in 1962, so Burma has been in the grip of military rule for 45 years now. I am thinking that Burma will have to wait until the 74 year old Shwe passes on before the country can really start over again. Ms. Suu Kyi herself has now been under house arrest for nearly 20 years now and is now 62 years old. It is quite conceivable that Ms. Suu Kyi will not live to claim her right to rule which was taken from her when the military junta nullified the elections of 1990. Even then, it is going to take a change of heart amongst today's younger army leaders, together with the passing of Shwe, before progress can go forward.
Meanwhile, quite a large expatriate population of Burmese live in Thailand. My car mechanic and his wife are Thai and I have met both of their families while in Thailand in 2004. His oldest brother runs a shrimp boat and a food processing business in Surat Thani. His brother's family employs a family of five Burmese nationals as servants and they shut up about it because the legality of such people being in the country is - ahem - questionable. Quite a few Burmese find employment in Thailand this way. Some Burmese in Thailand are of the Karen ethnic group who, as rebels against the junta, have been driven out of the country. What will be their fate?
Sigh... What a sad thing to happen to a potentially great country with such a wonderful people. Maybe the neo-conservative armchair generals like Charles Krauthammer, William Kristol, Richard Perle, and their ilk who have been promoting the exporting of democracy abroad should fess up to their ideals and tell the American public that America should go in and restore democracy to Burma via an American military invasion. Just a thought.
On second thought, some other nation states might not like that too much.
Wizard
On Friday, September 21, 2007, the Houston Property Rights Association welcomed Houston trial attorney David Mestemaker, who is representing Houston area mobile food vendors in a federal lawsuit challenging new state laws which have enabled the City of Houston and Harris County to pass new stringent regulations surrounding the operations of taquerias.
Mestemaker, a personable fellow perhaps in his 50's, opened his talk by saying he first came to Houston in 1980 from Michigan. He got a job in the oil business, working for Tenneco. The company sent him to law school, but the company was sold just as he was completing his school work. Mestemaker mentioned that he has been practicing law for 18-19 years, but that the taco truck lawsuit is the first time he has had an opportunity to claim a United States Constitutional claim. Mestemaker mentioned that he would only have about 1 hour to speak to the group, as he had his (very noble) weekly appointment to read to the blind. He said to the group that when he first received the call that he was dreading the idea of speaking to such a group, thinking that he would be speaking to a bunch of landlords who would be telling him that their clients needed to get their trucks off of their property. He said not to get upset if anyone was offended. We at HPRA instead gave him our usual cold water welcome we give to our guest speakers and I informed him we were equal opportunity offenders, ergo he later on admitted that he had a great time speaking to us.
Mestemaker said that the taco & mobile food truck Constitutional claim was based on the 14th Amendment, specifically its due process and equal protection clauses. Mestemaker said that Constitutional claims are often very complex, but broadly the issue is whether a statute or ordinance is, either on its face or in its application, biased towards certain groups? If so, then such laws are violative of the 14th Amendment.
Mestemaker said that the new state statutes enabling local ordinances to be passed were originally authored in March 2007 by Duane Bohac and Kevin Bailey. As one can see by reading the legislation, the statues apply only to counties with a population of 2.8 million or greater - i.e. Harris County. Mestemaker said that representatives received substantial campaign contributions from the Houston area restaurants and associations. However a quick lookup on the Internet revealed that, though yes Duane Bohac received at least $3,800 worth of such monies, that was less than 2 percent of the $222,000 he raised during the period leading up to the 2007 State legislative session. So take that as you will. Kevin Bailey received a lot more money from labor unions and both Bohac and Bailey received more contributions from home builders than from food vendors.
All the same, the issue is still before us. Mestemaker said that the ordinances state that the mobile food trucks have to have written permission to be on a piece of land or property, that there needs to be a toilet within 500 feet of the business, and that they need to be inspected everyday.
A short time ago, a hearing was held in the court of U.S. District Judge Nancy Atlas. Justice Atlas asked the Harris County representative what they intended to do to enforce the new rules. Mestemaker told HPRA that the Harris County attorney said something to the effect that "this is an unfunded mandate and if they (the State of Texas) will not send us any money to enforce it, then we won't do a damned thing about the matter." Ms. Atlas then asked the City of Houston attorney what it intended to do and the CoH attorney said several things:
1) The CoH will empower the Houston Police Department to inspect and ticket taquerias - something Counsellor Mestemaker wondered whether the rank and file of HPD would really care to be doing when real criminals are roaming the cityscape.
2) The City intends to enforce the rule that a bathroom must be within 500 feet of the taqueria.
3) The building owner who has the bathroom where the taco truck is parked must have a signed notarized statement authorizing anyone can use that bathroom. More on this particular rule in a moment.
4) The mobile taco truck must be inspected everyday.
5) If the truck owner intends to be on a piece of property for 90 minutes, then the owner must have written permission to be on the owner's property. More on this later.
The City lawyer was asked by an AG lawyer in one hearing what would happen if violations would occur? The City attorney said that
1) A fine would be imposed.
2) Their medallion (which acts as a permit) would get yanked.
3) A felony charge would be slapped on owners and operators.
4) Then finally the City would shutdown a truck which continued to violate ordinances.
In Mestemaker's words, the City's attitude was one of "it's just a minor thing", no big deal. There may be a different point of view from the point of the truck operator or owner.
Mestemaker said that there were an estimated 17,000 restaurants in Harris County and only 43 full time food inspectors. In comparison, there are an estimated 1,500 taco trucks or trailers operating in Harris County, ergo that makes the taco trucks about 9 percent of all the food establishments in the Houston area. About 500 of these are licensed and are operating in the City. More are unlicensed, while others are admittedly downright illegal. Meanwhile, there are a total of 15 commissaries in Harris County which the taquerias get their food and utensils from, as well as functioning as places where trucks can get cleaned. 14 of these are in the City, while only 1 is in the County. Also, only one of these commissaries is open 24 hours per day.
As things stand today, the taco trucks are supposed to be inspected once per year, if an inspector shows up (and that can happen at any time), or if there is a report that they are in violation of an ordinance. These requirements are not too terribly far different from those facing fixed location restaurants, but one big difference between taco trucks and fixed location restaurants - and this gets back to items #3 and #5 above - is that the bathroom on the premises of fixed location restaurants must be in compliance with the Americans with Disabilities Act. In other words, the ADA compliant bathroom must be accessible to those with handicaps.
Some HPRA members at this point brought up ideas. One member asked what was the difference between a Taco Bell with a drive through window doing after hours business, but whose restaurant was closed? Not much it seems. This is an issue because many of the taquerias in fact do walk up trade and have no place to sit down. Ergo, there would be no need for customer toilets.
Mestemaker went on to say that prior to the new ordinances, the requirements for the trucks were that they needed to have a wastewater tank which had a capacity of at least 33 gallons. This is because such trucks do not have a grease trap, something that normal restaurants are required to have. These tanks could be serviced at a commissary or via vacuum truck whose purpose is to clean clogged grease traps at fixed location restaurants and to clean tanks for mobile trucks.
Mestemaker went on to describe the demographics of who actually operates these mobile food trucks. A small number are operated by blacks, who mostly offer barbeque type fare on their menus. Some are operated by Asians who offer Chinese food, but about 85 percent of the trucks are operated by Hispanics. Mestemaker said that in January 2006, two elected officials, CM Toni Lawrence and Duane Bohac, made statements to the effect that, "these taquerias are springinig up like daisies and are making us look like a third world country." So, yes there is a contention that there is a racial motivation behind the enactment of these ordinances.
As noted above, Mestemaker said the County passed an ordinance saying a bathroom had to be within 300 feet of the taqueria, while the City requirement was that a bathroom had to be within 500 feet. The trucks can no longer be cleaned by a vacuum truck, but now has to go to a commissary for cleaning. As noted above, there are 1,500 trucks and only 15 commissaries. During ealier court hearings, Mestemaker asked a City witness on the witness stand how long an inspection takes and the reply was an inspection takes 20-45 minutes per vehicle, so you do the math. Imagine a commissary is open 16 hours per day. Can all 1,500 trucks get inspected in an average day? That aside, my notes say that the commissaries pay for the inspections, which I would imagine would imply that the truck owners themselves would ultimately bear the cost for these inspections as I would think that the commissaries would pass on the cost of the inspections onto the truck operators (I did not get this part of the story clearly). That leaves these truck owners having to drive for perhaps 30 minutes to the nearest commissary, then wait in line for their daily inspection, then pass the daily inspection before they can go home for the day.
One HPRA member asked whether these rules are in effect for trucks operating in San Antonio, Richmond, Victoria, or other urban areas in the state? The answer of course is no (from reading the statute), which begs the question of why are these rules in effect for trucks operating only in Harris County and Houston? Are the trucks in Houston any dirtier than those operating elsewhere, or is the incidence of sickness resulting from patronizing these places any worse than in other areas in Texas?
CM Toni Lawrence said to Counsellor Mestemaker that City ordinances have been on the books since 1999 regarding inspections. Mestemaker told the audience that the ordinances that have been on the books have to do with the operating of wastewater tanks, not the requirement of everyday inspections. Mestemaker went on to ask why is the solution of wastewater tanks still not viable and why can't they still ply their business? Mestemaker asked City Council whether there had been any reports of sickness from patronizing the taco trucks in the past 5 years. The answer was no.
Mestemaker told the audience that most property owners have a kind of symbiotic relationship with the taco trailers (not necessarily trucks). Many collect rent from trailer owners and sell gasoline to them. They are happy that they are there, but they are not happy with the new requirement that the mobile food units need written permission from them to operate because of the fact that the ADA approved bathroom requirements are stiffer for a restaurant than for, say, a gas station. Mestemaker did say that some of these facilities are of a semi-permanent nature, complete with water meters and have leases with the property owners.
When Mestemaker was approached by the taqueria owners about taking on the case, he told them that they could not afford him, but he has been proven wrong. These people have come on strong because they know their livelyhoods are at stake. Mestemaker said that there are an average of 3 employees per truck, which means that 4,500 people's jobs are at stake here. Many of these trucks are operated (but not necessarily owned) by single mothers and most of these trucks are not making a great deal of profit from what they do. These trucks do not carry a great deal of food because they regularly replace their food stores from their commissary visits. The freshness of their food stores and the fact that they do not store their food supplies for long helps to account for the fact that patrons almost never get sick from eating the food on offer.
Mestemaker said he has few problems with the requirement that taquerias have written permission from property owners to be on their land. However he did bring up the scenario of whether a new construction site which has the lunch truck roll up would be able to satisfy such a requirement? Also, some of these trucks operate on parcels of land which have not had paid any taxes for many years and, if one were to look at the HCAD website, there may be doubt as to who may be the title holder or owner of the property in question. In other words, the land is probably vacant. How would one secure permission to operate on such premises? One HPRA member then asked, almost in outrage, why should this be a City requirement? If he owned a piece of property, then if he didn't want them there, then he (as the property owner) would evict them. No government intervention would be necessary.
One HPRA member who happens to be a practicing attorney asked about the 14th Amendment claims surrounding this case. Mestemaker said that the precedent was founded in 1886 when the City of San Francisco passed an ordinance prohibiting the operation of laundries in wooden buildings. They had to be operating in brick and mortar ones. Ergo, it was alleged that the ordinance violated the 14th Amendment in its application by denying a same playing field. The United States Supreme Court ruled that if the effect of a law denies equal footing, then its gone. Mestemaker says that these ordinances and statutes, in their application, chill the ability to do commerce and force taqueria owners to spend several hours per day - every day - of their time in complying with them. Furthermore, neither the City nor the County specifically asked for empowerment from the State to enact them.
Mestemaker has talked to many people about the matter, including fixed location restaurant owners. The general consensus about the matter amongst the public seems to be that if people aren't getting sick or if these mobile food trucks are not dumping wastewater down sanitary drains, then leave them alone. The other matter at stake is Premises Liability Law. Mestemaker said that if you are a property owner, but that something happens on your property without your permission, then you are not liable.
One HPRA member said that the politicians in question are really trying to follow the wishes of their voting constituents. In other words, there are plans being made for areas where the taquerias are numerous and that the populace in those areas do not want them operating there. What are the politicians in question supposed to do? Another HPRA member though said that this sounds like one of those matters where we just have to do something about those people.
Finally, there is a hearing on the suit on October 24. December 1 is when the ordinance is supposed to become enforceable. Mestemaker wrapped up his story by telling of something that happened at the end of one hearing. The Houston Chronicle reporter asked if if he knew whether Homeland Security was here? Mestemaker said no, was he on the watch list and would he not be able to fly anymore? This was because some 60 truck operators showed up for the hearing. They were, in Mestemaker's words, the nicest and most well behaved people in the court room, but our government pulled out the stops and rang the fire alarms in reaction.
I will say here that more than 20 years ago I worked for a Domino's franchisee for 2+ years. The company operated (and still operates) an area wide commissary off of 610 North Loop where dough, meat, card board delivery boxes and vegetables are all distributed by truck for standardization purposes. If you every happen to see an 18 wheeler with the Domino's logo on it, then that truck is on a run from the commissary delivering food orders to company stores . Each of our stores were inspected maybe 2-3 times the entire time I worked for him. I had to attend a City mandated restaurant sanitation course.
Having stated all of this, I will say that the entire idea that these trucks must get inspected every single day is absolutely preposterous on its face. Instead of the public paying for the burden of having government employees going out to perform what are perhaps annual inspections of restaurants, we will have effectively turned the tables by having the taqueria truck owners and operators bear the burden of having to report for a daily inspection. This is a classic example of using governmental regulatory powers to shut out your competition, using the usual rationale that we need to protect the public. One might want to read these threads from Blog Houston. One HPRA member suggested that Mestemaker talk to the Institute for Justice which works on economic freedom type cases.
I will wind up this rather lengthy epistle by saying that this case has drawn considerable attention throughout the country. Mestemaker has given interviews in Spanish. KPRC, the Chronicle, and the New York Times have all done stories on the issue. Mestemaker told HPRA that he has not had more fun as an attorney than he has had in his entire career, on the account that he genuinely believes that he is right and that he has gotten himself involved in a rather weighty issue here.
So stay tuned!
Wizard.
A voice in the wind told me about this.
The accompanying Ride of the Valkyries background music is a priceless touch to what is otherwise a sad and pathetic video.
Wizard.
PS: Light rail is the most dangerous form of surface transportation on a per passenger mile basis.
I promised in my previous post that I would continue to write about transportation history, but I surfing the Internet led me to some stories about the London Tube system I could not pass up writing about. Having spent 9 weeks in London earlier this year, I have been following the London transit workers strike and public private partnership (PPP) meltdown of Metronet quite closely. As such, I found some very good stories and sites surrounding the London tube system:
1) This is a tremendous write up by City Journal on the meltdown on the Metronet PPP. This article should be required reading for anyone interested in transportation issues, especially here in Houston since Metro is entering a PPP type agreement with WGI.
2) This is a fairly new blogging website which is pro-rail transit, but they have some excellent links to stories about the Tube. They link to the City Journal story above. There is also this link which leads to #3.
3) This guy says the London Tube system has eaten up 12 billion pounds of subsidies ($24 billion) in the past five years. There are now over 1,400 managerial personnel on the payroll who make more than 50,000 pounds ($100,000) per year. Staff costs have gone up 52% in the past four years.
4) This is a story that appeared in this week's Economist.
Strikes are what you get when you have an urban area which decides to base its transportation strategy using a large public transportation component. The reason for this was made crystal clear when I was an undergraduate Economics student. For years I swallowed various sociological / social structure or political power type arguments about the role of labor unions in a society. My beliefs were all blown away with a single line which I read in my first year textbook. The author mentioned that the power which a labor union has is tied to the elasticity of demand for the labor that the labor union provides. The more inelastic the demand curve for the labor union's labor, the more power a labor union has for extracting economic rents for its members. That is why you see labor unions oppose the movement of money and capital for plants, free trade agreements and competition from non-unionized labor.
As for unions in transportation, all I can say is to repeat what the Economist says. A large component of the demand for travel in any urban area is inelastic, especially taking trips back and forth from home to work. Moreover, in cities like New York and London where a substantial percentage of the population take the subways to work and might be having a hard time affording a car due to housing costs or parking hassles, then you end up with a large segment of the population who are effectively held hostage to the whims of unionized transit workers and those transit workers know that. The union claims that they are merely worried about losing pensions and jobs, but as a practical matter they will get everything that they want because they are in a very strong position to make such demands precisely because the social decision has been made to rely on transit as a means of getting around. Those union workers have the power to make their problems a public problem and I am confident that those pensions will ultimately get backed up by the British taxpayer.
Social losses result from lost economic activity and from having a large workforce of transit workers who are commanding rents that result from wages which are above their levels of productivity. The $4.8 billion per year subsidy that the Tube is receiving works out to about $700 per person per year or $2,800 for a family of four. Throw in the fact that even a zone 1 and zone 2 Oyster Card monthly pass is 90 pounds and you have a real cost of about $2,800 per year for using a transit system which can only get you to a neighborhood in London that is within a 4-5 mile radius of the Strand. Tack on another $1,500 plus per year if you want to use the the Tube in its entirety. At costs like that, you are getting to the point where you might as well start thinking of buying a car, especially if you have a family.
A big question for many who live in London is what are the substitutes? As the Economist article mentioned, many stayed at home. A few were fortunate to be able to walk or bike their way around and they were fortunate this is still late summer. However such issues really beg one to ask whether British taxpayers are getting their monies worth when the people who are the recipients of their largesse won't even do their jobs without demanding even more tribute - and yes, tribute is the correct word to use here. Then there's the issue that this same union is - surprise - desperate to get the back the work that Metronet quit doing. So far TFL is the only bidder, which should not shock anyone and will end up giving the transportation union exactly what it wants. Several months ago, a portion of an old tunnel collapsed and as the City Journal article mentions, it would take an awful lot of guts for a private sector actor to take on the maintenance and upgrade of a 100 year old subway system with huge unknown defects and liabilities.
Sigh... I'm glad this is not my problem - yet.
Wizard
In continuing with my previous post on Tim Blanning's account of the Europe of 300 years ago, I present two follow ups on what happened in Europe (and indeed the early American Republic) in transportation. The first involves looking at the rest of the lessons from improved road building and my next blog entry will look at Blanning's writings on the use of waterways in Europe.
As was intimated in the previous post, Blanning writes that it was the British and the French who worked hardest at improving road building. However, pouring large amounts of money into road building did not in of itself translate into a leap towards modernity, indeed the results between what happened in France and what happened in Britain could scarcely be different. Though the French monarchs of the Ancien Regime poured growing resources into road building in the 18th century, where those resources went was a bit uneven as were the results. The highways and arterial roads were greatly improved and this indeed sped up travel in France considerably. However lateral roads linking up provincial towns were still in dire condition, something that was noticed by none other than Adam Smith:
In France, however, the great post-roads, the roads which make the communication between the principal towns of the kingdom, are in general kept in good order, and in some provinces are even a good deal superior to the greater part of the turnpike roads of England. But what we call the cross-roads, that is, the far greater part of the roads in the country, are entirely neglected, and are in many places absolutely impassable for any heavy carriage. In some places it is even dangerous to travel on horseback, and mules are the only conveyances which can safely be trusted.
Adam Smith then went on to add something else that was a big problem in France with regards to road building:
The proud minister of an ostentatious court may frequently take pleasure in executing a work of splendour and magnificence, such as a great highway, which is frequently seen by the principal nobility, whose applauses not only flatter his vanity, but even contribute to support his interest at court. But to execute a great number of little works, in which nothing that can be done can make any great appearance, or excite the smallest degree of admiration in any traveller, and which, in short, have nothing to recommend them but their extreme utility, is a business which appears in every respect too mean and paltry to merit the attention of so great a magistrate. Under such an administration, therefore, such works are almost always entirely neglected.
As the French say, plus ca change, plus c'est la meme.
Blanning goes on to write that the problem in France was that only a small proportion of the population could travel up and down the royal routes. Blanning writes that according to Pierre Goubert most of the population of France still lived in the conditions mentioned in my previous post - i.e. they were still living out their lives within a 5-10 mile radius of their places of birth, ergo their lives were still limited to that of the family, neighbors, the notary, the weekly farmers market and the seigneurial court. This meant that France continued to be fragmented in character, inhibiting the initial formation of an 18th century French national economy along with its vast advantages to entrepreneurs and businessmen of being able to reap economies of scale and scope through greatly expanded markets. That would not be accomplished until much later. In other words, the royal roads of the French Monarchy were not reaching the peasantry of France and they were the majority of the nation's people!
To be fair to the French, they were not the only ones which fell to the siren song of building roads mostly to please the courts of nobility, rather than to tie together cities and lesser towns. Blanning writes that the Spanish elites were also guilty of committing this sin, as were the Italians. And to reiterate, pursing this policy of road building for royal privilege rather than to integrate the nation resulted in fragmentation. According to John Lynch:
As natural produce, raw materials and manufactures could usually be transported only on the backs of mules and donkeys, the radius of any local economy was correspondingly short. For example, the price of wheat in Almeria was twice of what it was at Guadix, just 50 miles (80 kilometers) away. So the population followed the examples of the other coastal towns and imported grain from France, Italy or even Africa.
These issues (including the substantial price differentials in goods resulting from fragmented economies) were sidestepped in the United Kingdom. Of course helped immensely that the UK is a correspondingly small island, ergo the distances were not as great which was a big advantage in a world where travel was slow. It also helped that solutions from the national center were not trusted in Britain, ergo the solution of using turnpikes which were self funding. Moreover, they were also extended to towns and villages in the periphery, a fact that led to better and busier roads outside the main highways and arterials, which was noticed by contemporaries of the day.
It also helped businessmen, entrepreneurs, and travelers that the United Kingdom had a unified system of tariff structures, outside of those levied by the operators of turnpikes. When most people in the modern day world think of trade issues, they probably think of the some alleged exploitation of workers in the developing world, or of some disease or defects of products shipped in from other countries. It seems people seldom remember from history that the single biggest inhibition to trade were the seemingly endless number of levies which were slapped on travelers and merchants by an ongoing parade of officials - royal, provincial, and municipal, not to mention those laid by estates and monasteries! The Holy Roman Empire was particularly riddled with this problem, as was the Habsburg Monarchy. However France and Spain also suffered badly, even though they were nation states on paper. In fact both countries were a motley accumulation of territories which were acquired over hundreds of years. There was little movement for political reform on tariffs since so many were profiting from the system that was in place - and yes, much of that profiting was personal and was not going into public coffers. Stopping to pay the endless line of tariffs not only made trade and travel much more expensive, it also slowed trade and travel down. America's Founders noticed this and stipulated in the United States Constitution that the power to set tariffs was to be denied to the States without Congressional authority.
And last but not least, the improvement of European roads also helped alleviate to some degree one of the greatest horrors our ancestors faced - that of hunger and famine. Blanning writes that there is good evidence that Europe went through a cooling period that was particularly pronounced in the latter half of the 17th century. Mean temperatures were 0.9 - 1.5 Celsius cooler than they were from the 1920's - 1960's and that this cooling had a negative impact on agricultural production. Of course, agriculture was much different 300 years ago. Machinery did not exist. Cereals were a big part of the European diet and varieties were often not adapted to take maximum advantage of the soils.
For our ancestors, it wasn't a question of whether a crop failure and a year (or more) of dearth would come. It was a matter of when and it wasn't unusual for mortality rates to reach 20 percent when crop failures did strike. In two of his most unforgettable pages, Blanning describes in a hair raising narrative what would happen in a year where a crop failure struck. Still, the situation did start to improve during the 18th century and into the 19th. Some of the improvement came from improved governmental action made possible by the improved road and distribution system, while better farming and agricultural methods, not to mentioned improved weather all helped to cut down the length and severity of food shortages, though Europeans continued to be plagued by subsistence outbreaks. Widespread shortages occurred in France in 1741, the 1770's and most notably in 1788-1789 (which many believe was one of the factors which helped trigger the French Revolution), but it should be noted that many acute food shortages were local in scope!
Enough for now. Part three comes next week.
Wizard