Responding to Incentives

We should assume that consumers act rationally given the incentives that they face. Repealing the policies that have shaped current behavior such as undervalued public parking, density restrictions, and tax breaks for homeowners will result in people moving closer to their work places and driving less.

Emily Washington at Market Urbanism has a great piece on the long commutes that so many people choose.

I agree with her assumption mentioned above… that is that consumers act rationally based on the incentives in place.

I chose to buy a house and move out amidst the sprawl when I lived in Indianapolis. After getting married and in preparation for having children we bought a house in the suburbs. Government policy favors this decision. Property taxes were lower. Purchasing the house gave us a smaller payment than rent in the city.

After living there for a few years gas prices started rising. My wife drove a Honda Civic, but I drove a 4×4 Toyota truck. I finally broke down and bought another Honda Civic for my commute.

Why? Why didn’t I move closer to my office? Why didn’t I move closer to one of the bus routes? Because the government subsidizes the road infrastructure. Zoning laws promote low-density sprawling suburban developments. Tax law gives an advantage to those who take out a mortgage to buy a home.

I think governmental incentives, and all their unintended consequences, are responsible for the so-called “irrational” decisions made by people when it comes to residences and commutes. Am I silly for thinking that, if governmental incentives are removed, people will naturally move into more dense housing areas that reduce their commute and travel times.

Intermodal Growth

Eastern U.S. railroads CSX Transportation and Norfolk Southern Railway each planned to hold groundbreaking ceremonies Monday on separate intermodal hub construction projects.

Progress in removing trucks from the highways and moving freight more efficiently.

Photo – Fishing Dhow

Fishing Dhow

Old school maritime transportation, an Arabian fishing dhow, seen here traveling amongst the fjords of the Musandam Peninsula, Oman. I snagged this shot while taking a tour cruise through the fjords this past weekend.

Increase in Parked Railcars

The latest figures leave 18.4 percent of the North American railcar fleet stored instead of in active freight service, up from 18.2 percent on May 1. Although that is far below the 31.9 percent stored fleet when at the depth of the recession in June and July 2009, the AAR says when the industry is healthiest only 2-3 percent of available railcars would be idle.

Hopefully this isn’t the start of a trend.

A380’s and Trans-Atlantic Capacity

A total of 408 daily flights are scheduled between the U.S. and Europe this summer, said Craig Jenks, president of Airline/Aircraft Projects. After years of declining as airlines switched to smaller planes, the average number of seats on those flights will rise to 255.8 seats per departure this summer compared to 252.4 last summer.

The super-jumbo Airbus A380, now flown by both Air France and Lufthansa to the U.S., accounts for most of the per-departure seat increase.

(Via The Middle Seat Terminal.)

USPS: A Failed Transportation System

A very thorough article in Businessweek on the imminent collapse of the United States Postal Service.

“The postal service is already carrying more junk than first class,” says postal consultant Campbell. “Pretty soon it’s going to be a government-run advertising mail delivery service. Does that make any sense? It doesn’t make any sense.”

“Civilians call it junk mail,” Rice says, joking. “We don’t like that term. We call it job security.”

This just doesn’t seem even remotely tenable.

Every day (except Sunday) the USPS has 10’s of thousands of automobiles driving the same routes regardless of mail volume.

Every day (except Sunday) the USPS delivers reams of paper, in the form of junk mail, that people don’t even want.

This is not sustainable. It’s wasteful from both a economic and an environmental standpoint. This is a classic example of the government’s inability to repair itself, and for that matter it’s inability to diagnose itself.

Railroad Fuel Efficiency

From an article on Seeking Alpha I found this particular bit of information remarkable:

According to the Association of American Railroads, U.S. freight railroads averaged 484 ton-miles per gallon in 2010, a 106% improvement over the industry average of 235 ton-miles per gallon in 1980.

106% more efficient in 30 years. That’s outstanding! If only we could capture that kind of development in automobiles.