26 February 2006

The costs of subsidised parking

In the US city governments … require developers to provide extensive off-street parking. … The required parking lot at a restaurant usually occupies at least three times as much land as the restaurant itself. Daniel Klein reviewing The High Cost of Free Parking by Donald Shoup.
As Klein says, the extent of free parking is so enormous and so normal that people just think it nature’s endowment, like air. Everyone feels entitled to free air and free parking. Hence, Shoup points out ‘most people do not see it as being any subsidy at all …Because parking costs so much and motorists pay so little for it, the hidden subsidy is truly gigantic.’ Shoup estimates the value of this subsidy to parking in the US at between $127 billion and $374 billion a year.

If we also count the subsidy for free and underpriced curb parking, the total subsidy for parking would be far higher. . . Do we really want to spend as much to subsidize parking as we spend for Medicare or national defense?

The answer seems to be yes, just as we apparently decide to subsidise other aspects of car use, other forms of transportation and other environmentally destructive activities, including: oil-intensive agriculture, energy production (mainly in the developed countries) and consumption (developing countries), and over-use of water.

Actually, it's probably not as bad as that: these subsidy decisions are made without reference to ordinary human beings. They don't reflect our wishes; rather they result from a corporatist agenda, where the corporatists are government agencies just as much as big business. It's only because policy goals are expressed in terms of spending decisions, activities, institutional structures and priorities, and Mickey Mouse micro-targets, that the corporatists can get away with it. If they were to come clean and admit that one of their targeted policy outcomes was to subsidise the destruction of our planet, then it's unlikely, I think, their policies would be adopted so enthusiastically.

In an increasingly complex and interlinked world, I believe it's essential that government re-orientate its policies so that they reflect the wishes of real people. This means determining what broad social and environmental outcomes we wish to pursue and rewarding the achievement of those outcomes. Under a Social Policy Bond regime, the market would ensure that this achievement would be carried out with maximum efficiency.


David Jeffery said...

Like the blog. 'Free parking' is one of those seemingly very innocuous but actually pretty damaging subsidies. I read a study recently which suggested that the number of employees using public transit or carpooling was more than a third lower at companies that provided free parking for their workers. Surely there's cheaper, better and more responsible perks you can provide your employees than that.

Ronnie Horesh said...

Thanks David. I agree.