You Can't Get There From Here: Government Failure in U.S. Transportation

Abstract

Consumers, firms, and government spend $1.3 trillion on transportation, which accounts for roughly 17 percent of U.S. GDP. Transportation also absorbs about$1.2 trillion in travelers' and shippers' time--a valuable commodity excluded from GDP. Ttransportation policy is an important means for government to exert its influence on the economy. From regulating international air fares to providng bus service to owning and operating the roads, the government's presence in the U.S. transportation sector is pervasive. This paper argues, however, that the government's extensive involvement in transportation is undesirable and that it should greatly reduce its role in all aspects of transportation. By repeatedly failing to enact efficient policies to allocate transportation resources and by rigidly pursuing policies that have undermined the efficiency of every transportation mode and the welfare of most users--especially those with the lowest incomes---policymakers have assured that government failures are compromising the performance of the U.S. transportation sector far more than market failures. By ridding the transportaton sector of most observable government failures and by allowing innovation and state-of-the-art technology to flourish free of government interference, the private sector can vastly improve transportation and thereby advance our standard of living. The only real uncertainty is how long policymakers will resist change.