The evils of externalized costs and what it means for transportation in Massachusetts

Okay, this isn't WalkBoston specific but it is related to transportation in general, and I keep ranting the ears off anyone who will listen to me and I woke up in the middle of the night last night to fret about this, so I'm just going to get it off my chest.

This spring, Governor Patrick proposed a significant transportation reform for the Commonwealth of Massachusetts, which involved a lot of absolutely essential elements like road and bridge repair. Like much of the rest of the country, Massachusetts' transportation infrastructure is aging and ailing, and we need to take care of it. This, of course, costs money, which no one has these days.

So, Governor Patrick proposed that we pay for these improvements by raising the gas tax 19 cents a gallon. This would have been the first gas tax increase in Massachusetts since 1991. Why a gas tax to pay for transportation improvements, though? No one wants to pay more for gas, after all!

I talk about this in terms of internalized and externalized costs. Internalized costs are costs that are reflected in the price we pay for things. So, for example, if we know that one out of every 200 oil tankers is likely to leak and cause environmental damage, and some smart economists figure out that $0.01/gallon would fully fund a program to clean up that damage, and we therefore tax gas at that rate, then the price of gas "internalizes" that environmental cost of gas. If, on the other hand, we decide that we're not going to clean up those spills, or we're going to let an environmental nonprofit do that, then we're "externalizing" that cost, either to the future or to the nonprofit and its donors.

When we drive, we cause wear and tear on roads. We create a need for traffic enforcement by state and local agencies. Our use of roads and other transportation infrastructure creates the need to spend money. Streets and roads are not free, even though they look free because so few of them are toll roads. The more we drive, the more wear and tear we create, and a gas tax is a fair way to figure someone's contribution to this. If I don't want to spend more money on gas, I can get smarter about how much I drive -- as many people have done in the last year when gas prices skyrocketed to more than $4/gallon. Because a gas tax internalizes the cost of roads, drivers can make smarter choices about how much it's worth to them to drive somewhere.

It additionally makes sense to use this money for things like public transit, because public transit is less costly per user in the long run, and a full bus is much less damaging on the infrastructure per capita than each person or family in their own car.

BUT. Public transit isn't popular, and paying for things we use isn't popular, so the citizens of Massachusetts made a big stink, and therefore the legislature dug in their heels, and someone came up with the brilliant idea of making these costs invisible again: sales tax. Now, there's no incentive for people to be calculated about their impact on the built environment, because we all pay sales tax (although it can be easy to dodge that through things like internet shopping) on things unrelated to transportation. Way to go, guys.

Now, of course, we'll raise less money for necessary improvements, it'll be more variable, and people will have no incentive to understand that their choices have consequences. If there's one great evil in our current system, it's externalized costs that create falsely deflated prices for goods and services with high costs. I'd hoped Governor Patrick could lead Massachusetts out of that system for transportation spending, but, instead, we're all going to pay higher taxes on cheap plastic trinkets while people who ride the T have to pay up to 25% more because some short-sighted jerk wants his roads to look like they're free.