Wednesday, October 31, 2012

Good and bad local news

Revealing bits of good and bad local news from the Chicago Tribune: Food trucks and congestion pricing.

Our city council is (finally) allowing Chicagoans to have food trucks. Sort of. They're restricted to special food truck areas, and have to follow a host of regulations, including gps trackers to make sure they don't spend more than two hours in one place.
One of the rejected locations is on Broadway south of Wellington Avenue. The East Lakeview Chamber of Commerce opposed it, saying the location would allow food truck vendors with lower overhead costs to unfairly compete with 20 restaurants that each spend at least $150,000 a year to maintain their storefronts. As a result, that location was removed, said Ald. Tom Tunney, 44th. 

.... "The businesses just don't feel that this is the right thing to do for them when they are trying to make a dime," Maureen Martino, executive director of the East Lakeview Chamber, told members of the License and Consumer Protection Committee..... she added. "And there is really not a need for more food."
Ah yes, as we all know, the purpose of regulation is to stifle competition, to keep prices up so that existing businesses can "make a dime." And I'm delighted that the Chamber can instruct the city council on the "need" for food.

In the good news category, Chicago may finally get congestion pricing on our freeways. This is, of course, an insanely good idea, that has only been sitting in introductory economics textbooks for 30 years or so.
The idea is being floated by the Chicago Metropolitan Agency for Planning as a way to pay for, and make the best use of, new lanes on six major Chicago-area roadways. These lanes would be "congestion-priced" in such a way as to assure that traffic would always flow at the posted speed limit of 55 mph.
Wait, you're kidding. We're not going to reserve them for carpools or electric cars like California does? Where is this sudden bout of sanity coming from?
Skeptics will see this as an excuse to gouge motorists who are already saddled with high gasoline prices, heavy fuel taxes and toll charges. Actually, one attraction of the idea is that if you would rather save the money, you'd have as many lanes available as you do now. Only the people who put a higher priority on their time would have to pay.
As nice a description of "Pareto Improvement" as I have seen in a newspaper. Yes, you and I might say "let's congestion-charge the whole thing, and tomorrow." But perhaps bundling it with new lanes and marketing it this way will get past the usual objections by people like, say, the City council (see above) and chamber of commerce. The cost is, of course, many more years of delay until the new lanes get built.
If you're worried about being gouged, it's reassuring to hear that the extra cost of a faster journey would not be prohibitive – $2.76 per trip on the Stevenson and $3.41 on the Eisenhower. Studies of congestion-priced lanes in other cities indicate that even low-income drivers find them worth the cost when time is short.

It's lovely to see a newspaper use the sensible words "priority on their time" rather than the senseless "can afford it" and an attack on "special lanes for the 1%, " and even document that view as in the last sentence.

I wish they had pointed out that the major substitution is simply time: To save money you simply schedule your trip off rush hour.

A minor complaint. We all know enough about economic modeling that $2.76 per trip is an impossibly precise estimate. I can't imagine that traffic engineers know elasticities with two orders of magnitude more precision than economists to.

The bright side, and my only original two cents in this post: The uncertainty is win-win.  One of two things will happen with congestion pricing. People might be willing to pay astounding amounts of money to get to O'hare at 9 am Monday morning, so the costs skyrocket to $10 or $20. Great.   Our city, state, and federal governments are broke. Congestion taxes are as non-distorting as they get. Or, people turn out not to be willing to pay much, and voluntarily reschedule or reroute to stay off busy roads. Great, we voluntarily eliminate congestion. We can't lose.