Policy changes that should happen but probably won’t

Here are some local policy changes that I think could make a substantial impact on quality of life:

User fees for roads, prices set to vary by level of congestion

User fees for roads / congestion pricing. The present system of collective financing (subsidies) of public roads is badly mistaken in my view, both from a perspective of fairness and functionality. Currently, people who drive more are subsidized by people who drive less. To be sure, taxes on gasoline are a kind of user fee, but they don’t cover the costs of the roads. In addition, gas taxes don’t differentiate between travel in congested areas with travel in uncongested areas. Choosing to drive on a busy road imposes higher costs on others than choosing to drive on a less busy road. Thus, usage fees for busy roads (or at times of day when roads are busier) should be higher than user fees for roads with comparatively little traffic. As the economists would say, such fees internalize the externalities.

Usage fees make the costs of roads transparent to users of those roads. We now have the technology to track usage of roads very closely. Fees for roads should be instituted in many high traffic locations, if not everywhere, and should fluctuate with the amount of other traffic on the road. Such fees would keep traffic flowing freely, and encourage people to drive less, walk more, live closer to work, and take more economical means of transit like buses.

User fees need not be tax increases, as these taxes be offset by reductions in other taxes that currently fund transit maintenance.

Revision / relaxation of regulations on the density of housing

The cost of housing has risen dramatically in many highly productive parts of the country, especially in many places along the East and West Coast. Increased demand to live in these places has outpaced supply, in part due to increasing restrictions on density instituted by local governments since the 1970s. Economist Edward Glaeser has documented how much more difficult it is to build high in NYC today than fifty years ago. Ryan Avent wrote a book arguing that restrictions on housing supply in coastal cities has reduced productivity by making it difficult for more people to move to the most productive places in the country. Avent’s research is based on the finding that productivity tends to be higher in higher density places.

Regulations on housing density are partly driven in part by (1) the self-interest of existing property owners naturally wishing to restrict competition from new housing; (2) negative externalities generated by new development such as more traffic, blocked views, etc., and (3) simple fear of change. Only concern #2 can play a valid role in public policy. And agreements can be reached between developers and existing property owners in order to mitigate the negative externalities and allow denser buildings to get built. The alternative is that desirable places to live will become prohibitively expensive for most people as population grows.

There’s no reason why large parts of Queens, Brooklyn, or Northern New Jersey should remain at lower densities given the demand for living in these areas. Preservation of character is nice, but it unfairly benefits existing property owners at the expense of first time home buyers.

Increasing density often overburdens transportation infrastructure, but this need not be the case.  (See policy change #1.)

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