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This is part of a multi-part reflection I've been doing following the death of my friend, Mark Baumer . There's nothing graphic i...

Elastic with the Facts

Rubber bands--also called "elastics" in New England.
Elasticity is an important concept in economics, and one that is often ignored in political conversations. It's not ignored by one side or the other. Both liberal and conservative thinkers can overlook elasticity, when it's in their interests to do so.

Elasticity means that the price of something--expressed through supply, demand, or both--is not static. If you think about it, this follows common sense, and also can be shown empirically in a lot of instances in our lives.

The reason elasticity is central is that it helps us to make sense of how costs are passed through a chain of economic actors. To not have elasticity would make both liberals and conservatives equally wrong, because one person's tax-and-spend would be another person's Reaganomics. Anything could be excused in economics, because the basic truth that spending somewhere doesn't go away would cover all bases. To put it another way, if there was no elasticity, why fight for lower taxes for the rich? Why fight for better public services for the poor? All spending would just go around and around. 

Economics is a flat circle, man. It doesn't matter if you're a Republican or a Democrat, man. (Or not. . .)

In actual practice, spending does go around and around, but depending upon who has more bargaining power, the effect of any given policy may be better for one actor than another. This isn't a liberal point, or a conservative point, as I said. It's just a reality. Sometimes this reality might actually undermine something I like. Sometimes not.

Why is it false--liar, liar, pants on fire false--to say that tolls on trucks will ultimately be passed onto consumers?

1. The anti-toll forces are ignoring a counterfactual. The money expected to be used from general funds to fix bridges and roads is still money that you, the taxpayer, pay. It's "existing money". But the argument being made by the GOP is that the programs being cut are wasteful. As a taxpayer, do you wish for waste to go into another hole, and pay for another thing? Or do you want a tax cut? I'd choose the latter.

2. Getting back to elasticity: the way that people use a resources changes based on its price. Let me give you three examples: 

a. I give you all the ham-and-cheese sandwiches you ever wanted. Unlimited.
b. I give you $500 a month, and you may buy whatever food you wish.
c. I give you $500 a month, and you may buy anything you wish--anything, not just food.
d. I give you nothing. Use your own damn money and buy things.

Do you think your spending habits would vary across this spectrum? They would, of course. In the first case, you'd find a great desire for ham and cheese. In the second, you might vary your food choices, but still buy the maximum food that $500 would allow. In the third, you'd buy food, but maybe other goods, or maybe even save your money. In the fourth, you might not buy anything, or you might work really hard to get your own money.

Trucking is subsidized heavily. I don't say this because truckers are bad. I don't say this because trucking should disappear. Trucking is a useful industry. But because we underprice the damage that trucks do to roads, we make trucking more competitive than other freight services. We also make it so that other road users pay in their stead (that is, the price of the road damage doesn't just go away--you pay it instead of a trucker paying it). Furthermore, truck or car, users of roads only pay about 50% of end costs for infrastructure. That's not fancy liberal math. I'm not including asthma, or climate change, or habitats for city pigeons. I'm counting asphalt, concrete, engineering. You the driver do not pay the full cost of driving.

Now, we get into the heat of things. There's two separate claims made about tolls:

1. Ew. You're trying to attack driving. First trucks, then cars. Ew. Ew. EW! War on cars, war on cars! 

Well, no. Driving is fine. But did you ever stop and think that maybe being caught in traffic, or having your job move farther and farther away from your house, might have something to do with the large scale subsidy to driving? And, on top of that, let's agree: drivers and truckers alike may feel strapped, but that's in large part because we put more money to road expansion than road maintenance. We also put a lot of money into things like the 6/10 Connector, that cost a lot but give us little utility. So all of the above may be true: drivers may have a reason to be frustrated, government may be too large, and driving may be subsidized.

2. The price of my consumer goods are going to go up.

Let's examine this. Yes, when you tax a particular item (and a toll is a type of tax, though it's a tax on use of a commodity, which anyone ought to agree is fair) it's possible for the taxed party to pass that cost. If I am a trucker, and the market allows me, I am going to pass costs to customers. If the market allows me. Truckers have to compete with other truckers, and also with boat freight and rail freight. Did you know that a single track of rail can carry a hundred times as much capacity as a single lane of highway, but only costs a bit more than the lane of highway? Did you know that containerization has made boat shipments much more cost-effective on the labor side, and that boats are some of the most fuel efficient ways of getting things to market? Did you know that Providence is very rail connected and has a huge port? If I were a truck driver, I would want to consider these.

And again, the counterfactual. If your general taxes are paying for roads, where do you suppose that money comes from? The tax fairy? You paid that money. So you may be much more aware of the taxation that happens to you when you pass through a toll gantry, but the taxation is already occurring.

Don't be fooled by an industry group. They want to teat of government to keep flowing. They want you to pay. They're full of shit. Call your representative and state senator and tell them so.


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