Housing, Transportation, and the Politics of Path Dependency

Tyler Cowen says he doesn't take the Metro, even though his home and office are near stations, because there are Metro-inconvenient places in between that he likes to go. Matt Yglesias rightly wonders why libertarians don't complain more about the zoning requirements of suburbs like Tyler's Fairfax. This is an excellent question. I've been long puzzled by the widespread libertarian preference for state-subsidized roads plus building regulations oriented around cars over state-subsidized trains and buses and building regulations oriented around them. Matt writes:

I don’t really understand why it is that this kind of thing doesn’t seem to bother libertarians very much. Bryan Caplan specifically cites America’s large houses and ample parking spaces as the benefits of our free market approach when they are, in fact, the product of systematic regulatory mandates. I think this illustrates the basic tribalism of a lot of our politics. If Fairfax County were considering some kind of hippie-inspired stringent rent control law, we’d be hearing no end of it from blogging George Mason University professors. But given a set of extremely severe land use regulations that happen to antagonize environmentalist and left-wing Europhilic bicycle commuters, suddenly mandatory minimum parking requirements become the essence of capitalism.

What makes this issue so tricky for me is that the status quo pattern of settlement and transportation certainly does reflect systematic regulatory mandates, but it's not clear how worthwhile it is to try to back out of this pattern once it has been established — even if those mandates were stupid. The way we live is indeed very much a function of choices made by government some time ago and reinforced by its ongoing decisions to maintain the established system. I think the case for the proposition that many of these choices were big mistakes — that we'd have an overall better pattern of settlement and transportation had government made different choices — is pretty compelling. Yet it remains that whole cities have formed around the suboptimal status quo system and many tens of millions of people have invested in goods like houses and cars taking for granted the structure of the status quo system.
I suspect defenders of greater density and more public transport overstrain themselves trying to make the implausible case that a transition to their favored alternative would cost most everyone less than maintenance of the status quo, despite the fact that almost everyone has already arranged their lives around the current system. I don't think this kind of path-dependency/status-quo bias/lock-in effect would be insuperable if government would simply stop actively subsidizing people to arrange their lives around the status quo system. It could make people pay directly for using roads; price for congestion; shift incidence of taxes from labor income to carbon use, etc.
But this is hard to do in a democracy, since people tend to want what they've got and feel entitled to the subsidies that support the status quo. If people live the way they do because they're being actively subsidized to live that way, and the government takes the subsidy away, people will feel punished. This sort of thing is why democratic politics (ironically) tends to involve frequent attempts by ideologues to jam policies people don't want down their throats so that they get something new (like it or not!) and eventually come to want it, since people tend to want what they've got. This is what I expect many of the dubious cost-benefit analyses of new train lines, etc. really come to. Pretexts for implementing unpopular and short-run inefficient policies in the hope of reshaping the choices, habits, and preferences of a public unfortunately satisfied with their current crappy mode of living.

Author: Will Wilkinson

Vice President for Research at the Niskanen Center