Cheaper to buy everyone cars than Build Light Rail ?

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Why not buy a bunch of cars

August 26, 2004

A new report from the Federal Reserve Bank of St. Louis confirms what many light-rail skeptics have been saying for some time: It would be less costly to buy new cars for transit riders than build and subsidize new rail systems.

The Fed report says it would be considerably cheaper to give a new Toyota Prius to each low-income rider of the St. Louis light-rail line, and replace it with a new Prius every five years, than it is to operate that rail line.

One of the principal justifications for public aid to transit is to provide mobility to low-income people who cannot afford cars. Federal data indicate approximately 70 percent of transit riders do not have access to a car for their trips.

But transit clearly is incapable of providing much mobility for the poor. For decades, virtually all new urban-area jobs (in the United States and throughout much of Europe and Canada) have been established in places that have little or no transit service. For example, a Federal Transit Administration report found there were virtually no jobs in the growing suburban Boston employment areas that could be reached conveniently by transit from low-income central city districts.

Research out of the University of California-Berkeley indicates nearly one-half of the unemployment rate gap between African-Americans and non-Hispanic whites would be eliminated if virtually all African-American workers had cars.

In the United States, it would cost less than $10 billion to provide cars for all the transit riders who don't have access to them, compared with annual spending of about $25 billion on transit subsidies. Surprisingly, a commercial model for such a program already exists. Around the world, anti-automobile activists have established "car-share" networks that allow people to have access to cars without having to own them. For example, "Flex-Car" in Portland, Ore., provides cars for less than $0.30 per vehicle mile - a rate that includes the car, insurance, service and fuel.

Today, car-sharing is seen as a substitute for car ownership. But its larger market may be to replace public transit systems. Flex-Car's Web site offers packages that allow up to 3,000 miles per month for $700. Transit riders generally don't travel nearly that much. But if transit riders were allowed the freedom of a car, they would travel farther. If transit riders were to double their travel, the cost under Flex-Car's volume discount pricing system would be less than $15 billion, still $10 billion less than the transit subsidies.

A "cars for the poor" program is a thought experiment, not an actual proposal for converting transit subsidy programs into automobile options for low-income transit riders. But it demonstrates the high cost, limited success, and unfair distribution of benefits of the current transit subsidy scheme.

It is time to start considering alternatives that would provide greater value for taxpayers and more choices for transit riders.

Cox is a senior fellow at The Heartland Institute.