Arnold Kling  

Congestion Tax Works

Risk Spreads Widen... Consumption Taxation...

The first day of London's "congestion tax" began well, according to this report.

There were complaints and small demonstrations around London, but traffic was lighter than normal and did not appear to back up around the edges of the restricted zone, as expected by opponents of Mayor Ken Livingstone's charging plan.

Video cameras enforce the tax. This seems like an expensive approach. My guess is that as radio transmitters become cheaper, we will see many more toll roads in the U.S. using "easy pass" type systems. People will be amazed at how effective they are at reducing traffic jams. But chaos theory suggests that you only need to deter a few cars from using the roads in order to greatly reduce the chances of a traffic jam developing.

For Discussion. Why do economists like tolls so much?

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CATEGORIES: Microeconomics

COMMENTS (6 to date)
Patrick R. Sullivan writes:

Surplus and shortage. Resolved by price movements. Not Rocket Science.

Sean Hackbarth writes:

Tolls put prices on behavior. That makes it easier for economists to analyze the behavior with their models and number crunching.

Keith writes:

It seems a little early to proclaim success after only one day. Where is all the traffic going? Now, money-hungry politicians, like those in New York City, want to emulate London's "successful" tax increase, er, congestion pricing.

Damien Smith writes:

Keith, there's a John Seabrook New Yorker article that discusses the very idea of charging in NYC:

It would be relatively easy for Manhattan, apparently, with the existing toll bridges and tunnels, plus EZ-Pass. The political trouble starts with the fact that they are divided between two states as well as two authorities (the Port Authority and the MTA), only one of which is currently profitable.

Mark Bahner writes:

" those in New York City, want to emulate London's "successful" tax increase, er, congestion pricing."

If there *is* a tax increase involved, at least it's a very visible tax increase. Compare that to income taxes, deducted from every paycheck.

Kosta Demos writes:

Mr. Hackbarth is on the right track. Economists are (hopefully) trained to identify the "best deals" for collective expenditure.

For almost a century, western governments (especially that of the U.S.) have subsidized the automobile and fossil fuel industries at a level far beyond that afforded any other industrial sector. The resulting expenses occasioned by crises in public health and environmental disruption have gutted public treasuries that might have been better devoted to education and cultural programs, shelter, agriculture and, yes, far more cost effective energy and transportation infrastructure.

Why Keith considers the responsible politicians who want to encourage folks to abandon unnecessary automobile use to be "money hungry" is beyond me. News flash - there is such a thing as the public good! I just hope his folks taught him how to ride a bike.

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