More Technobabble From The People's Policy Project...
New York City and the Congestion Pricing Fiasco of Gov. Hochul.
Congestion Pricing is one of the many techniques that is designed to use Market Forces to reduce traffic with a pleasant byproduct of reduced carbon emissions. It sounds great at first with an increased price at the peak travel times for toll access to locations that are notoriously high traffic regions. The idea was developed by a Columbia Economics Professor William Vickery (Nobel Prize winner in 1996— who incidentally died 3 days after the announcement) around 1959. Vickery envisioned a future with transponders in each car for tracking purposes. Thus, Vickery essentially foresaw the EZ-Pass system four decades earlier. The only difference between the EZ-Pass system and the Vickery system is the idea of an increasing toll price during peek usage of the road ways. It’s just a more dynamic understanding of the allocation function of pricing based on demand. As the demand for space on the roadways increases the price also increases to match this demand.
The New York State model was a private-public partnership dream come true for TransCore, Inc. of Tennessee . And the People’s Policy Project is lamenting the demise of this project so much they wrote an article called “NY Governor Hochul’s Decision to Suspend Congestion Pricing is Absurd” by David Trimmer. I first read the article in Jacobin the same day I read the article by Shawn Fain and his fight for the 4 day work week. It took me a few moments to question the fact that this article which goes by the same name in Jacobin is in fact a reprint from the People’s Policy Project [3P] where it was published four days earlier. It would been nice for the Jacobin editors to have at least written this was first published on the 3P website on June 10th , 2024. I only discovered this fact when I wanted to see what other articles David Trimmer wrote for the 3P website. None of them very interesting if you ask me. But what I did find interesting were the groups he worked with namely PolicyEngine a think tank that supposedly does advanced analysis of policy proposal impacts. I say supposedly only due to the fact that everyone one of his links to the articles he colloborated with them was a dead end no matter the web browser I used[ Chrome, FireFox, Duck Duck Go, and Safari). Furthermore , the search function on the Policy Engine website for David Trimmer yielded no results. So I am not sure what to make of this little quandary other than this author of the 3P seems to have no presence on the PolicyEngine Website whatsoever. But yet ChatGPT actually is stated as an author on the PolicyEngine Website— here is an example article from ChatGPT as Co-Author: Automate policy analysis with PolicyEngine’s new ChatGPT integration. But, while this is all bizarre enough considering that PolicyEngine is a cross platform analysis tool heavily connected to AI—the question becomes who is really doing the analysis at all? Is it just a black-box type AI situation? How much of the Policy Engine formula is based on large language model analysis in the first place? And while of this gives me pause about the 3P and their love of technocratic solutions it certainly doesn’t put a nail in the coffin of this idea.
Essentially, the idea of congestion pricing isn’t all bad. However, the way in which NYC wanted to implement this plan certainly was. For example ride share and taxi cabs were going to get charged $2.50 and $1.50 respectively—while large trucks were getting $36.50 and passenger vehicles $15 according to the article in Timeout.Com. So, think about that pricing for example if your goal is to get vehicles off the road that aren’t populated with 2 or fewer people then shouldn’t ride share be taxed at the same rate as passenger cars and any cab with fewer than 3 people in it? Otherwise you’ve only shifted the preference from personal conveyance into the city to the faux-taxi services of Uber or Lyft. That to me won’t drive down the demand for single person conveyance from those with money. Driving in a Lyft or Uber would certainly still be cheaper than driving in your own vehicle with $15.00 charge on it and the cost of fuel and parking. You’re still doing better taking the car if you can afford to do so. And let’s face it we’re talking about Lower Manhattan the home of Wall St..
But, let’s look a little closer at the idea of the Trucks. Imagine you’re trucking company bring food delivers too all of the Boroughs in NYC— let’s say that 30% of your fleet of trucks will venture into Manhattan during the peak period let say that is 30 trucks a day. At $36.50 per truck that is $1,095.00 per day or $5,475.00 per week, $21,900.00 per 4 week month and finally $284,700 per year. That’s a pretty hefty bit of change to absorb both from the client and the consumer. And let’s face it that price increase is not going to be localized to just Manhattan. We will feel the ripple effect across the entire NYC Five Boroughs. The same bodega in Harlem will get a slight increase to pay for this new tax on goods just like the high end 3 star Michelin Restaurant in Manhattan will get. But that isn’t the entire problem.
The chicken or the egg— in this case the Egg was coming first and with disastrous results. The egg being the tax without the necessary infrastructure to support the added estimated 153,500 people per day this plan would create soon for the MTA system. If you get my point what I’m getting at is that the MTA didn’t have the extra cars, the improved rail signaling system, or the increased infrastructure to handle people with mobility issues or other physical and mental challenges to effectively use the system. Something that Trimmer writes about as the following “These investments would improve service and extend more affordable transportation options to residents” .
Trimmer tries to point out that only “2 precent” [estimate by the MTA at no more than 3% actually] of the low-income necessary workers use private transportation and they can get a 50% discount— so that $15.00 is now $7.50. Gee thanks. But considering that people are barely scraping by an extra $1,950.00 the maximum amount it might be for a person to pay at $37.50 per week might cripple their budget. Further more Trimmer continues to claim that disabled persons will not be charged at all. If they drive their own vehicle. But, what about those in Ubers or regular taxis? Odds are they will still have to pay that extra $2.50 or $1.50 in the form increased prices.
And because of the increase in costs for the entire trucking industry which is the lifeblood of a city like NYC— even if your live and work in Brooklyn your still going to be paying more for anything delivered into the city as the trucking industry will logically distribute the increased costs across the entire region. Remember the finally consumer will feel these increases the most and that means the poor.
And then we return to my first point even if the low income and middle class ran to the MTA with zeal could the system handle the extra 153,300 persons in the system? The MTA has had a major staffing shorting for about 4 years now. So, I have serious questions how this project wasn’t going to affect the already overstretched and routinely hard pressed finances of the MTA when it comes hiring? But that’s the problem isn’t it with a major project like this one you have to have the infrastructure in place before you can really initiate it. Where are these extra passengers to go magically once you start to push the system?
What was required was the MTA to invest in the transit system first to upgrade the trains, increase the rolling stock, and improve the stations before the implementation of this program. That would mean taking on debt, finding federal money, and selling state Bonds to cover the MTA. Things that no one in Manhattan or Albany New York wanted to hear about. The current plan was more about selling technology to the state of New York and city of Manhattan than anything else.
And the worst part of the problem is that plan would only further alienate the MTA daily user from those who do not. After all Trimmer comments that “Given the “high cost” of purchasing and maintaining an automobile, especially in NYC, many low-income residents see the MTA as their best option, given the system’s immense size and small cost” in his 3P report (aka Jacobin Article). The unfortunate end effect is to further stigmatize the use of mass transit instead of promoting mass transit as both cost effective and environmentally friendly solutions to city living. Instead this policy would force the less affluent members of the community that commute into NYC daily to be shackled with the realization that they were now being forced into a world of mass transit. Which of course is antithetical to the American self-image of being independent and free to travel about once you’ve reached a certain level of affluence.
That was a major drawback. But, like it or not trucking companies were never going to quietly swallow the increase in costs for the transportation of goods this idea was creating. That extra cost was always going to be born by the entire population of NYC and probably distributed to near by locations in New Jersey and further up in New York State too. And that means a general raise in the cost of living for those New Yorkers that would have never used a car in downtown Manhattan itself as they would have felt an increase in the goods they purchase every day like Milk and Butter to use two favorites from any good Economics Text Book.
My next concern would be with the company Transcore and their tracking software and tolling policies. As we’ve seen in the past across the nation with E-ZPass the fact is that over billing is a rampant problem. Since 2022 the New York State’s thruway authority has been plagued with complaints about E-ZPass over charging customers and racking up fees. In Lackawanna the system overcharged 59,000 customers the state admitted. In New Jersey the system overcharged on average 4,000 people on the Garden State Parkway for a nine day period in September of 2022. Also in New Jersey and Pennsylvania the E-Zpass system charged some users of the Trenton-Morrisville Bridge up to $9.00 instead of the correct $1.25. These problems have been consistently found in these automated tolling systems including Maryland that did an audit in 2023 to find that 83,000 drivers were overcharged, fined, or penalized incorrectly in 2020 and 2021. E-Zpass declared that was an error rate of .0001 percent given the total number of transactions per year. Which sounds low until you realize that these complaints go back to 2012 with E-Z Pass and are not just confined to the last 2 years.
The fact is that automated systems like this that are supposedly fail proof are much better at concealing errors because they push people to auto-repay and obscure their errors with statements that are either paperless or difficult to access by design. And even after the problems are discussed and found many State Legislatures like NY have only in 2024 after going completely cashless now have instituted modest protections to the road users without the E-Zpass transponders. Still no comprehensive legislation exists in NYS to protect drivers from the E-Zpass errors exists at this point. This is just nonsense if you ask me.
And you cannot tell me that this system of congestion pricing in NYC wouldn’t also have numerous issues with cost overruns in the system including repairs, updates, and oops we overcharged lawsuits and refunds. So we know the $507 million dollar contract award to Transcore would have been just one of many usually including continued maintenance of the system and regular upgrades. And then of course there is the question of who actually owns the Code that drives the system. If Transcore sells them a proprietary code then well— Transcore owns that lock, stock, and barrel. What do you do then if 5 or 10 years you don’t like the Transcore bid but they are the only ones who own the code? You have to build in a little future business security—it might not be all of the code that is proprietary just some small crucial piece of the system. My point is that businesses like this have ways of locking you into their systems for decades to milk the Government of Money.
Some of you might be saying well—damn this is pessimistic even for you. And that is true to a point. But, remember these corporations are designed to generate profits and once they get into a government agency they do everything they can to increase the difficulty factor of competitors to take their place. And this was a project that was going to make billions of dollars for Transcore in the long run. So, I would expect them to build in a rather hefty bulwark of job security features int to the software that would make transitioning from Transcore to some other company rather difficult.
But, pessimism besides the point would the system even work as intended? In London they started this policy in 2003 and studies show it has worked up to a point. But one of the more important factors is that London’s buses increased earlier on by 300. Now, in 2024 they cannot operate the complete fleet due to increased traffic and a reduction of traffic lanes. In a June 2024 , CBS interview a professor of Urban Policy by the name of Tony Travers is quoted as saying the following “"It has had other consequences, some of which people would think were good, but it has not had the lasting effect on increasing traffic speeds and improving the predictability of journeys." Congestion in cities can only be managed by reducing the number of cars, trucks, and buses completely. Once people accept the higher cost operating a vehicle in the core of the city is now X+y instead of just X it can be ignored by those with the economic ability to do so. Yet, I have a solution!
Here is a solution: remove private cars , ride services, and private company taxis completely from the Manhattan. Why you ask? The problem with these schemes is that it often get side tracked with extra lanes for buses, bicycles, and wider sidewalks for pedestrians. Meaning that even though fewer cars are on the road the limited roadway space is absorbed by these additional people using them. So, the clear answer is to ban private automobiles and taxis. That’s where this type of solution wants to go in the first place, but is just frankly too scared to actually say the facts—cars, light trucks, SUV’s etc are the problem. After car manufacturers have been pushing the car into cities since the dawn of the automobile and city planners have been trying to adapt streets to them nearly as long we end up these half solutions. The answer is to remove cars from the streets and replace downtown Manhattan’s crowded streets with trolley cars and bicycles while leaving enough room for material goods to reach Manhattan via trucks and emergency vehicles.
The problems this solves are the following: finite space constraints of roads and the stigma of public Transportation. Firstly, let’s face facts in America especially the car is sign of wealth and freedom. That means public transportation for the most part is a sign of either a lacking the wealth to own such a vehicle. This then implies that as poor people lack freedom. In our culture either one of these facts has become tantamount to tyranny. The fact is that my radical everyone goes public option puts everyone on an equal footing in lower Manhattan. Secondly, it solves the problem that will occur when adding bicycle lanes to the road since without private cars the only vehicles operating would be delivery trucks, emergency vehicles, buses and a few taxis operated by the MTA. Further more you could eventually eliminate the buses by installing street-cars like one in the image above. This would further reduce traffic and increase the convenience of the streets by increasing the number of passengers per vehicle by using multiple cars per street-car. It’s pretty radical what I’m suggesting but the facts are that most other projects in this vein are just window dressing.
Now let’s talk about how we pay for it?
Finance: Well the first major hurdle is financing the project and at the state level that will require two things bonds and higher levels of employment. Now, you’re complaining that bonds will increase the debt of the State. And that is true— but who is holding that debt mostly? Citizens of the US and many of whom are within the borders of the US. Many of whom will be hedge funds and households— why because the bond market is a great way to create stability in one’s portfolio as they are stable and low risk. That is critical to any long term strategy of the market. In 2023 especially Hedge funds were jumping on Treasury bonds especially Federal ones—where many funds where operating at a 60/40 split— 40% of their Portfolio being some type of bond. My point here is that Bonds even state bonds offer a great way to secure low-risk investments to many investors.
Full-Employment: This is the sponge if you will that will mop up and return debt based financing to the state and local coffers in the form of increased income tax , sales tax, and even property taxes potentially. A very critical feature of this part of the project is that the employees should be people living and working in NYC for the most part. That is to say we should increasing the size of the MTA to include the very people who will build and maintain newly expanded rail system. The key is to increase employment in the region that is going to operate this resource daily i.e. NYC and the Mid-Hudson Region. So that is where you want the majority of the employment to occur in this process. That is the epicenter of this investment. In the economy of NYS.
The Fear of Inflation: The Polish economist Michal Kalecki made a very important point in his essay on “Money and Wages (part I: The Theory)” that essentially the space for investing in an capitalist society is “financed by itself” meaning that the movement of money from one Capitalist Institution in this case the MTA to that of others i.e. employees, local subcontractors, and so on will equal out the deposits of the banking system and thus only creates a slight rise in demand for what we call the M1 supply or to specifically cash. This is the great inflation fear— but we also must remember that tax revenue will increase too with increased employment. So proportionately the most important part of this equation is balancing taxation in the system. Thereby limiting the effects of this problem. As Kalecki also pointed out in his essay “Business Upswing Mechanism” the key to paying off this deficit in the budget is by creating an increase in “purchasing power”, in this case an increase in employment in the region to full levels and general rise in salaries. This is will as I’ve already stated increase the tax base both from income tax and sales tax while driving enough revenue to pay off these bonds.
Shift In Demand: The final part of this equation is a dramatic shift in the demand of the demand of the consumers in the region. Once, the MTA has upgraded its facilities, rolling stock, and reduced delays the fact that people are being forced to us Public Transportation via a policy of totally reducing traffic in Lower Manhattan would reverberate through the system all the way up the MTA a lines from Manhattan to Port Jervis near the PA Border of NY and Suffern near the NJ Border to New Haven Conn. The demand for these already high use elements in the system would skyrocket with a total prohibition of passenger cars in lower Manhattan. The shift in demand would be towards long term employment of the MTA and increase in services and best of all a decrease in demand for cars and passenger vehicles in the region.
In final summation we find that my more radical solution doesn’t require any complex proprietary software systems that usually fail miserably in the long run. Because we start the process by first building the most critical parts of the physical infrastructure the system won’t collapse due to an increase in demand and lack of personnel and infrastructure to support it. This policy also as I’ve stated before removes the stigma of poverty from the public transportation system. It is no longer the last resort of the wealthy but the new status quo. Instead it is only form of transport in the city. It will help to promote a more walkable city in the long run. And finally it doesn’t impose any extra fees on those least able to pay them by increasing the general cost of the goods with no general increase in the purchasing power of the people. Like the MTA’s plan would have done with their $36 dollar per day toll for trucks on top of all the other tolls in the cities for crossing bridges and using tunnels.
The city is better off in the long run because not only is congestion solved , but it is also a long term employment system as well through continual upgrades, maintenance, and development. All of which should be done by personnel of the MTA. That is the critical feature this is not a big public/private project in my vision but essential a very large Public Project with minimal use of subcontractors and outside material use. This is a regional economic development project that places the emphasis on highly skilled people in a broad spectrum of trades and engineering disciplines across an entire region. This is in contrast to the often popular solutions of high cost and often temperamental high tech solutions. We should make the system just technologically advanced as it needs to be without being seduced by the allure of profitability through automation. The MTA’s shareholders are the state and the people and the necessary return should a high level of service and great careers from the conductors to the marketing department.
This is a really good article Connor!
Capitalism works Fu%& ya