Policy

David Levinson

The Process of the Transportation Experience

TransportationExperience

Policy Making

Planning

Deployment

GeographicEconomic

Socialand

PoliticalEnvironments

Experiential Policy Model

TransportationExperience

Principles andAttitudes

Layered Policies

Action andReaction

GeographicEconomic

Socialand

PoliticalEnvironments

Nature ofTransportation

Systems and Modes

Conventional Policy Model

There areprinciples thathave evolved

from social andeconomicthought

Subjected to thecalculi of politicaldecision making

Filtered throughobjectives

These interact toyield a set of

potential policies

There areproblems

and/or issuesbearing on

transportation

Governmentpolicies result

Action andreaction

Differences in the Model

• What is exogenous, what is endogenous.

• Experiential model says attitudes formed as part of the system, and reshaped as system changes. Fewer outside experiences - transportation permeates society anyway, so is there an outside?

• Experiential model deals with embedded policies.

Mother Logic

• Railroads provide the mother logic to the study of transportation.

• Canals and turnpikes (and tramways) provide the grandmother logic, which railroads adopted and innovated.

• Highway, water and air transportation eventually develop new logics.

Demand for Policy

• The market for policy work has been growing.

• Transactions (transportation and communication) are a growing share of the economy, while production (manufacturing, resource extraction and agriculture) and declining.

Approaches to policy

• Expert – Interventionist – The Rational Planning School (Apply

Social Science/Economics Knowledge. Fix Problems)

• Benign Neglect – Incrementalist, – First Do No Harm.

What to do with a dysfunction?

• Create policy to fix (regulation) - the problem is the failure of the market or existing system.

• Remove policy to fix (deregulation) - the problem is the intervention in the market or system.

Rationales for Regulation

• Fairness• Competition• Progress• Stability• Off-System

Fairness• Service is not available everywhere. Early on in the

development of a system, intervention is needed to ensure that service is everywhere available. Later on, reductions in service may require intervention. []

• Those served are not treated in the same way. Intervention is required in the name of equity. []

• Government should do something so that transportation providers are treated fairly. In particular, not all providers make adequate profits. Also, providers may be at the mercy of large service purchasers []

• There is the more global question of how transportation (or location) rents ought to be shared between service providers and service users. Governments should be referees. []

Competition• Dysfunctional component organization and resulting

embedded policies are market failures needing repair. Only governments can make the deep system interventions required. []

• Monopoly transportation providers abuse their economic power. Intervention is needed to control abuses. []

• Intervention will improve the optimal use of resources. The systems are unable to implement marginal costs prices because marginal costs are less than average costs. Marginal cost pricing is socially desirable and ought to be implemented. To achieve this goal, social decisions have to be made about the additional resources required to cover system costs, i.e., funds over and above those obtained by charging marginal cost prices. []

Progress

• Infant industries need assistance. A variation on this is the notion that social overhead capital requires up-front investment. []

• Processes of innovation and technology development are not working in viable ways; government should do something []

• Government should do something about decreasing (or diminishing improvements in) off-system and on-system productivity.

• Technology change may beg new arrangements that only governments can implement. []

Stability

• Government control of between- or among-system competition is necessary in order to achieve some desired result. Desired results are in the minds of beholders, and they range all over the map. []

• A related matter is the notion that stability is a good thing, and that governments ought to provide for it. Transportation development (or deterioration) may upset an existing equilibrium. []

• When a social contract begins to fail, government must step in to glue it together. []

Off-System

• The health and safety of the public and/or labor requires intervention. []

• Transportation service may be needed to achieve some off system goal. Government may be called on to assist in providing the service. []

• The effective workings of governments, national economic systems, or defense systems require government intervention. []

Free Riders and Principal/Agent

Free riders • Rational people like to

free ride. (Something for Nothing)

• Rational people like to prevent other people from free riding at their expense.

• Free rides permeate transportation problems.

Principal/Agent Problems

• Firms, Governments are not entities, people are, people have motives not identical with the institutions they serve.

• Tragedy of the commons < _____ >

Iron triangles (and aluminum rectangles)

• Iron triangle of regulated, regulators, and legislators.

• Has been breaking down as outside groups (consumer groups, rate payers, environmentalists, etc.) have tried to crack the triangle and succeeded.

• Also breaks down as deregulation makes many issues moot.

Regulatory Capture

• Regulators get captured by the regulated

• Why? Incentives …• A few are regulated, have a very large

incentive to try to influence system. Many benefit from the regulation, but each has a very small incentive to influence system. When was the last time you turned out for a Public Utilities Commission meeting?

Interaction of The Transportation Experience

and Policy-Making

TransportationExperience

Policy Making

Geographic,EconomicSocialAndPoliticalEnvironments

Correspondence Problems:On or Off Diagonal

Loci of Issues

National Regional Local

National

Loci of Authority

Regional

Local

Jules Dupuit

• The ultimate aim of a means of communication must be to reduce not the costs of transport, but the costs of production

• Transportation is a derived demand

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Example: Effects of Deregulation

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25

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1978 1980 1982 1984 1986 1988 1990 1992 1994 1996

Year

Cents per Passenger Mile

($1994)

Small Airports

Medium Airports

Large Airports

Comparison of Modes

0.00

50.00

100.00

150.00

200.00

250.00

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

Fare ($1996)

Air carrier, domestic, scheduled service Class I bus, intercity

Transit, all modes (unlinked) Commuter rail

Intercity/Amtrak

Physical Analogies

• Kubernetes Steering (gives us government and cybernetics - the science of control).

• Newtonian universe (nudge the wheel to the left or right)

• Extrapolation• MISLEADING

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System Dynamics

• We must think about system dynamics, but in a complex way. Small changes (a new idea, a new combination, a new building block) can be the “straw that breaks the camel’s back” and open up a new way of thinking.

• We don’t simply need to do old things better, though that is important. We can also do new things.

• A new mode or technology that reshapes the world. Just because many systems are at maturity, doesn’t mean new systems are being birthed.

Planning

David Levinson

Policy vs. Planning

• Policies - rules for behaving (Process)

• Plans - schematics of the final outcome (Product)

Land Use vs. Transportation Planning

• Transportation planning - from the engineering office (CE5212 is still in the CE department)

• Land use planning - from the urban designers and architects (Most US city planning programs still in Architecture Depts.), later captured by Policy Analysis (as at U of Minnesota.

The Cause of the Divide

• Engineers like rational analysis• City planning does not lend it self

to rationalism?• Others?

The Consequences of The Divide

• Land use and transportation planning have been divorced

• Transportation engineers think they are responding to land use changes

• Land use planners think transportation drives land use changes

• They are both right.• The system is out of whack

The Need for System Planning

• Covers BOTH Hard and Soft• Hard: Facility• Soft: Management Financing and

Control

Questions? Comments?

• Next Time : Case Study #1, writeup due Wed.

• Abstracts Due. Wed

Share of National Income By Sector

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

Share

Manufacturing Natural Resources

Transportation Trade

Services Government

Other Communications

Electric, gas, and sanitary services