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Graham Neary is a financial commentator who has been a fund manager and analyst in the London financial markets.
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The transport minister, Eamon Ryan who is also leader of the Green Party, it has been announced will set up an inter-departmental group to make sure the transport sector meets its emissions reduction targets.
Related to this, The National Transport Authority has published what’s called modelling on transport climate targets, which basically means having an educated guess about the effect of various possible policy choices. This basically means they have a go at understanding what would happen if they increased bus fares, kept them the same, or reduced them, and then the same for a variety of combinations of other policy levers that the government could pull, or push, or not change at all.
This is a fairly normal process that the civil service and other government bodies uses to present the government with policy options, and be able to give an educated guess of what the effect of those policies might be.
These scenarios necessarily include a pretty wide range of options. One of the scenarios imagined a €10 daily charge for driving in cities, and significant increases in parking charges.
To be clear, this is not government policy. This is not even proposed government policy, this is just one of several scenarios that the NTA offers an opinion on, as to what the likely outcome would be, if it were to be adopted as government policy. It would go alongside sharply reducing public transport fares, and would obviously be targeted at creating a modal shift in transport from private cars to public transport.
The purpose of the NTA study is to assess what level of impact it would have, how big the modal shift would be.
That didn’t stop an avalanche of criticism on social media, and other media, to the effect that Eamon Ryan was … well, everything from Stalin to Pol Pot to … who knows what. Eamon Ryan, I think we might guess, might be sympathetic to effecting that sort of modal shift, but the fact that these weren’t his policies, they weren’t even his proposals, that hardly mattered to the outraged right-wing motorist mob.
There wasn’t much said in all that that was rational, so I’m don’t think there’s really much point in trying to engage in a debate with blind outrage, but I still think that there is something here that is interesting.
The theoretical justification for free markets is that resources are allocated more efficiently when people have to pay for the stuff that they want. The free market opposition to socialism is that the government is often not very good at producing stuff, but even if they were, the model of taking payment through taxes and distributing stuff, whatever stuff, free at the point of use, the objection is that people then use that stuff wastefully.
If you waste bread, you get punished by having to pay for more bread. On the other hand, if there was an annual bread tax, like the TV licence, and then you could take as much bread as you wanted, you would not be motivated to only take what you need. The wasteful would be subsidised by the prudent, and the prudent would likely get fed up of that and not bother to be so prudent.
This argument clearly doesn’t work for some goods and services. An obvious example is healthcare. People can’t be sparing in their use of healthcare, because when you need it, you need it. And you might know that you need it, but you likely don’t know what you need. You rely on the doctor to tell you what you need. This also true for education, and other markets where there is a very long lag between the consumer decision and the outcome, or where the consumer can’t possibly have the knowledge to make the decision about what is best for them.
But that said, for a great many things, the consumer, the citizen, is perfectly well able to decide what they want, and decide if the cost is worth it to them. You don’t have to know how a mobile phone works to know that it works, and you don’t need to know much more than that your friend’s bill is much lower than yours for the same usage, to know that you should probably switch provider.
And this marketplace, as I said, disciplines the consumers too. Most goods and services are not in infinite supply, but there is enough to go around, and the fact that you have to pay for it means that you don’t generally waste, so there is no real shortage; and if there is, prices go up, and you only use what you really need.
That’s free markets 101. And, if you were looking at the reactions to the NTA’s scenario of congestion charging and increased parking costs, you would see there was no shortage of rhetoric that basically said Eamon Ryan who, again, didn’t write this, was a communist, and that this was an infringement of the rights of these, evidently conservative-identifying commentators.
The problem is that when it comes to cars, what we have now is communism. Apart from a tiny number of tolled roads, in Ireland, the cost of building and repairing roads is foisted on the whole of society. Whether you use your car all day long, drive at the times of highest demand and congestion, or use it hardly at all, you have to pay the same.
We do have a motor tax in Ireland, but it doesn’t remotely approach covering the cost that the state pays for building, repairing, and policing the roads, let alone the other societal costs like pollution, injuries from collisions, and the loss of amenity that huge volumes of traffic on our streets causes, so even if you don’t own a car, a big chunk of your taxes goes to subsidising the people who do.
The same goes for on-street parking that is either free or charged at a rate that is less than it costs to provide. The people who use it are basically getting a subsidy from the rest of society.
A €10 congestion tax would do a few things. First of all, it would deter the traffic of people didn’t really need to drive into the city, but did it anyway. That would mean that the people who did pay their €10 would have less traffic clogging the streets, and a better driving experience in return for their fee.
We would all get less pollution. This is a classic example of unpriced resources being wasted if they are given free, and used efficiently if the consumer has to pay the economic cost of their consumption choices.
What is really astonishing here, is how quickly the self-identified fiscal conservatives turn into hard-line Bolsheviks, determined to abolish the market economy and have the shortages distributed evenly among the masses, once it’s one of their freebies that are threatened.
People who are absolutely sure of the supremacy of the market, when it comes to one of the scarcest and most in-demand resources in society – road space – all of a sudden, think that a simple market mechanism, you pay for what you use, is a totalitarian infringement of their rights.
People who rage against anyone else in society getting a handout, whether it’s a council house or lone parent allowance, and aren’t shy to say that anyone who gets them are little short of parasites, they all of a sudden become collectivist Trotskyites who want the cost of their transport needs and wants to be met by society as a whole.
Funny that.
