Before providing a detailed response to Conrad deFiebre and Minnesota 2020’s critique of a column I wrote for the Pioneer Press differentiating the economic concept of “public good” versus “private benefit,” a general observation.

When you read Mr. deFiebre’s commentary, which I fisk below, notice the deep anti-intellectual tone of his argument. He laments my “philosophical fantasy,” sarcastically dismisses “Deep Thoughts” and derides “cogitation.” Doing so, deFiebre makes my point from the column. He isn’t saying I misinterpreted the difference between public good and private benefit – a centuries old economic concept familiar to anyone who’s ever taken freshman economics. No, without any economic justification, he’s dismissing the concept as non-existent or irrelevant and certainly not worthy of consideration by policymakers when spending billions of tax dollars.

Apparently, I am suffering from a delusion that “think tanks” like Minnesota 2020 and The Minnesota Free Market Institute are suppose to think, to apply accepted economic thought to current policy and provide insight in to how policymakers might approach issues. I erroneously assume that a think tank should think, not simply opine. Mr. deFiebre’s piece would open whole new vistas of discourse by freeing debate from the constraints reality.

Let the fisking begin.

Over at the Minnesota Free Market Institute, nee Fact Slayers League, they’ve finally come up with a semi-plausible defense of the $1.6 billion in property taxes Minnesotans shell out each year to build and maintain local roads and bridges.

If one is going to lead with an insult, one should at least try to do so with a little panache. As my hero Cyrano might say, “nee Fact Salyers Leagure? Is that all?” Had Mr. deFiebre but a little wit or letters he might have said, “Westover’s Buridan’s Ass argument starves between economic theory and partisan politics.” Instead he calls it “semi-plausible,” which like the phrase “somewhat unique” forgets that some English words represent binary concepts and cannot be modified. Better had he taken a cue from G.K. Chesterton when he described an inadequate argument by Oscar Wilde as “like the Venus deMilo; what there is of it is magnificent.”

Unfortunately, like economic theory, such literary flourish is hidden in books. It is difficult to absorb by Googling, especially when one lacks the understanding to select appropriate search terms. And in this piece Mr. deFiebre demonstrates the understanding, literary flourish and wit of one who might aspire to author verification codes for Internet comment submissions.

That not-inconsiderable sum is equal to all the state and federal road user fees we pay through gasoline and vehicle taxes. Property taxes, of course, are not based on the extent to which property owners use the roads. But Craig Westover of the MFMI assures us that this is one government subsidy that is all well and good.

A point of clarification, which Mr. deFiebre missed in my column – there is a distinction between taxes and the legitimate government functions they finance and the concept of “subsidy.” Taxes are legitimately levied to finance necessary roads and bridges. A “subsidy” occurs when taxes levied on all are used to build unnecessary infrastructure that benefits only a few. A road “subsidy” is the exception not the rule. An example of a road subsidy is any of myriad federally earmarked road projects in the Eighth District secured by Rep. Jim Oberstar that are not on the state priority list but require shifting funds to non-essential projects in order to capture the federal earmark.

Mr. deFiebre goes on to quote my argument that –

“roads provide benefit even to those who do not drive: Roads are the means by which emergency vehicles (police, fire and medical) get to any person’s home. Every item in any person’s home from material possessions to basic needs like food and clothing has at one time traveled some distance via a truck over a road. By contrast, light rail and bus service benefits only those who ride them. LRT and bus riders receive a private benefit from ridership; non-riders receive no benefits.”

I quote Mr. Westover at length so we can examine his argument in detail. Also, to document for posterity a rare right-wing acknowledgement that there really are public interests worthy of support with our taxes.

Another plea for precision – not public “interests” but public “goods.” There are lots of public interests, but not all of which require a government response. Government response is constitutionally limited; rule of law requires a consistency to government actions and interventions. Government intervention ought to be based on specific criteria, not simple an “interest” put forth by Mr. deFiebre as representing the public. But there I go again philosophizing, thinking and cogitating. I forgot for a moment that a debate with Mr. deFiebre is not constrained by reality. He goes on –

Let’s start with a look at the public-private dichotomy Westover posits — but which he also notes in a St. Paul Pioneer Press column is “admittedly not always a simple distinction.” He’s right that streets and roads provide a public benefit in access to emergency services and consumer goods. But the vast majority of driving - car trips to work or play or shopping that inflict most of the wear and tear on pavement and create the most congestion - is as strictly private as the way he characterizes transit rides.

On the other hand, is there really no public benefit from transit? If the movement of a frozen hamburger patty by over-the-road truck to the local McDonald’s constitutes a public good, why isn’t the bus commute of the worker who flips the patty the same thing? Does only inanimate merchandise being transported for someone’s private profit and someone else’s private enjoyment serve the public interest? And what about the light-rail ride to work of the 911 dispatcher who sends the cops, firefighters or paramedics to your house in an emergency?

Here Mr. deFiebre confuses the public good, the highway infrastructure, with the outcome of some specific economic activity. The public good is the road, not someone’s choice to transport a specific hamburger patty across it. That patty is a private benefit, which I pay for when I consume the hamburger. I pay all the costs of the private transportation of that hamburger, and I pay the salary of the worker who flips the burger, in the price of the burger. A person choosing not to eat a burger bears none of those private benefit costs. How the burger flipper chooses to get to work is his or her personal decision – a private benefit.

The same logic applies to the 911 dispatcher. I pay legitimate taxes to pay the dispatcher’s salary for which I receive a benefit; the dispatcher chooses the private benefits on which he or she spends money, including choice of transportation (as do hookers and bank robbers, which, if Mr. deFiebre were into thinking might raise interesting questions about a moral justification of either roads or rail). Mr. deFiebre goes on -

In reality, as opposed to Westover’s philosophical fantasy, transit provides these and many other public benefits, spurring sustainable compact land development and reducing arterial congestion (by 9 percent in the Twin Cities, according to the Texas Transportation Institute), tailpipe pollution and the need for land-gobbling parking. And it does it with less than one-fifth of the subsidy from non-direct users that Minnesota provides to motorways.

A point to note is the term “benefit” as Mr. deFiebre uses it. Public “benefit” can only be measured in terms of public “cost.” To put the issue in personal terms, there are certainly benefits to driving a Lexus I don’t enjoy driving my Chevy Cavalier; however in aggregate, whatever benefits I might derive by driving a Lexus are overshadowed by costs that would diminish greatly other parts of my life. The net “benefit” of my driving a Lexus is negative (unless of course someone else were paying for it).

Opining, Mr. deFiebre looks only at the seen benefits of LRT; critically thinking about LRT requires understanding the unseen ramifications and calculating the total costs to society of LRT. A net aggregate economic loss to society is not a benefit to society even when one segment of that society derives visible benefit at the unseen expense of others.

Also note that Mr. deFiebre cites as benefits outcomes that he regards as favorable, not necessarily those that people would freely choose if transportation policy were based not on social engineering but enhancing mobility – the ability of individuals to get from where they are to where they want to go, to do what they want to do, when they want to do it. Rather than deal with the questions of congestion relief (no, LRT doesn’t provide it) and environmental issues (no, LRT doesn’t reduce pollution, it actually increases it) I’ll link to a Policy Memo by MnFMI president David Strom on congestion and another by the Cato Institute’s Randal O’Toole on the impact of LRT of energy use and greenhouse gas emissions.

Mr. deFiebre then quotes a lengthy section of my column, which he might have summarized as “accepted public good theory.” I will so summarize and skip right to the last graph Mr. deFiebre quotes and then to his comments.

“The policy distinction boils down to this: If a taxi ride from point A to point B is a private benefit for which an individual pays a market fare, why is a bus or light-rail ride from point A to point B a ‘public good’ subsidized with tax dollars?”
There are a few problems with all this cogitation. For one thing, taxi fares are set by local governments, not pure market forces, and cabs wouldn’t get you very far, very comfortably without subsidized streets to drive on. And if motorways are a classic public benefit, why do they exclude people who lack the steep prices of buying, fueling, maintaining and insuring a car?

Rather than denigrate cogitation, Mr. deFiebre out to spend a little time engaging in it. I promise; he won’t go blind by such self-abuse. Mr. deFiebre is so accustomed to the policies of the People’s Republic of Minneapolis that he doesn’t realize there is no a priori reason (nor legitimate authority) for government to regulate taxi fees. In Denver, host city to the Democratic National Convention, taxi fees are set by individual companies and delegates could grab a cab for as low as a $1.80 entry fee and $1.80 a mile compared to a government regulated $2.50 entry fee in Minneapolis and $2.50 a mile fare, according to the Hill. On top of that, the Minneapolis City Council proposed a $1 surcharge during the GOP convention (price gouging?).

The benefit of roads (again Mr. deFiebre confuses public “benefit” with the economic concept “public good”) doesn’t exclude people simply because they cannot afford cars. They still benefit from access to emergency service. They still benefit from delivery of products. They can access the roads through ride-sharing, taxis (when absolutely necessary), bikes and even bus service, which requires roads to operate. Important to note is that when they need it, people can use the road system to get from where they are to where they want to go, to do what they want to do when they want to do it.

Flipping the question, if LRT is a public good, why does it exclude the weekend warrior who wants to pick up a sheet of 4 x 8 plywood at Menards and the single mom who in the morning has to get one kid to daycare, one kid to elementary school and get to work when none of those locations lie along a light rail line? Neither the homeowner trying to save big money nor the single mom can do what he or she needs to do when it needs to done.

If the transportation policy objective is providing mobility to low-income people, there are better ways to achieve that than a public subsidy for suburban workers to get downtown and Viking and Twins fans to get to the Metrodome. Again, it’s beyond the scope of this response, but even a welfare program like transportation vouchers for low-income families, which would let them decide what methods of transportation best met their needs, would be more cost-effective than spending billions to build a rail-based mass transportation system that will forever run at an operating deficit.

Here’s the real story: Virtually all modes of transportation, from the Erie Canal to transcontinental railroads to streets and highways to air travel to modern transit, have been heavily subsidized by government, for the eminently valid reason that they promote economic prosperity.
One exception to this rule was the original urban rail transit, streetcar and interurban lines operated as regulated private enterprises for profit. Not only did they receive no subsidies, they often subsidized street paving, either directly or by being forced to dig up and reset rails at their own expense as part of city paving projects. Finally, these free-market stalwarts were driven out of business by competition from private cars on government-subsidized streets and highways.

Again, Mr. deFiebre is very sloppy in confusing legitimate tax expenditures on infrastructure with subsidies for private benefit. The simple fact is, current LRT policy not only pays for building the systems (which Mr. deFiebre would equate to a “subsidy” roads), but current LRT policy also subsidizes operational costs for the private benefit of a ride. That is the equivalent of the state paying the operational costs of your car every time you enjoyed the private benefit of driving it.

Mr. deFiebre seems astonished that a “right-winger” could acknowledge a legitimate need for taxes; I am positively astonished that Mr. deFiebre would admiringly refer to Carl Pohlad as a “free-market stalwart” or admit (however erroneous his example) that government drives private business out of existence. He concludes -

Public largesse to the private car won’t be reversed anytime soon, and I’m not advocating that it should be. But let’s not let auto-centric blinders and silly philosophical arguments delegitimize government’s important duty to offer basic mobility to everyone at an affordable price.

Couple of closing points: First, government cannot offer anything to anyone until it takes wealth from someone else. That action involves trade-offs. Wealth expended on LRT is wealth that the individual who created it can’t allocate elsewhere in the economy; taxes collected and spent on LRT is money the state and cities cannot spend providing other services. The question is – are the trade-offs caused by LRT worth it?

Second, economic realities are not “silly philosophical arguments.” Argument by intimidation is not argument at all, and Mr. deFiebre’s piece is not intended to further discussion but to end it. His position is that only a silly person would question light rail, and to question light rail is to be against the poor.

In fact, to question the obvious economics of perpetually building and operating mass transit at a loss is the only rationale thing to do. That kind of drain on the economy can only hurt those that Mr. deFiebre says he wants to help. There are much better ways to increase mobility for well-to-do and low-income alike than the thoughtless policies advocated by Mr. deFiebre.

In short, one cannot accuse Mr. deFiebre of “slaying the truth”; for Mr. deFiebre the truth is an irrelevant concept.

A visitor to a Minnesota farm noticed a hog limping around on a makeshift leg fashioned from a broken broomstick. When he asked the farmer about it, the farmer replied:

‘Let me tell you about that hog.

“I was out plowing the field one day when the tractor tipped over and pinned me under the wheel. Well, when I didn’t show up for feeding time, that hog searched me out and brought help. But that’s not all. One day, my little son Sven fell in the well. That hog pushed the bucket into the well with his snout, grabbed the rope in his teeth and pulled Sven to safety. But that’s not all. One night, my whole family was sound asleep when the house caught fire. That hog rushed into the burning house, woke up my wife and me and helped us carry the kids outside.”

“That’s amazing,” said the visitor. “But why does the hog have a broomstick for a leg?”

“Why,” said the farmer, “when you have a hog that has done so much for you, you don’t want to eat him all at once.”

So it is with Minnesota tax policy: When legislators have productive Minnesotans creating wealth and willing to work for a better Minnesota, it’s not smart to gobble them up all at once to pay for a better Minnesota.

Having taken a nibble out of taxpayers with a 2-cent-a-gallon gas tax increase in April, the state took another bite Tuesday when five of the seven metro-area counties — Anoka, Washington, Ramsey, Dakota, and Hennepin — imposed an additional one-quarter of 1 percent sales tax to pay for transit improvements. Come October, the state digests another 3 1/2-cent gas tax increase while sampling wheelage taxes and increased vehicle license fees a la taxpayer. For dessert, there’s an additional 3 cents in gas tax increases on the table, all part of the $6.6 billion transportation tax increase passed over Gov. Tim Pawlenty’s veto.

Let’s not forget that the Legislature got a taste of taxpayer during the 2007 session when it allowed Hennepin County to skip a public referendum and impose an appetizing 0.15 percent sales tax for the Twins stadium. And this fall, taxpayers could be looking at an additional 3/8ths of 1 percent sales tax increase to support outdoor recreation and the arts.

If you’re keeping score, that’s a total gas tax increase of 8 1/2 cents a gallon, and, if voters approve the outdoors and arts sales tax, five metro counties will each have sales taxes greater than 7 percent. All that stands between St. Paul and Minneapolis and an 8 percent sales tax is some wild hair like a Vikings stadium tax, the Legislature returning for the one-quarter-cent of proposed transit tax that got compromised away or some suddenly “necessary” mitigation on the increasingly controversial route of the Central Corridor through downtown St. Paul.

And let’s remember that in the just-completed legislative session, the proposal was floated to expand the sales tax to clothing and selected services. While that proposal included reducing the sales tax percentage, it also significantly increased the number of items taxed. The impact would be that in the future, small tax increases, like one-quarter of 1 percent, would amount to significantly more out-of-pocket expense over which we would have less control if the state were taxing necessities.

No wonder our family budgets are a little limp.

For a state with an awful lot of people advocating for a more progressive tax structure, that’s an awful lot of regressive taxation to put on the tax menu. Of course, there is a solution to that problem — raise income taxes so the evil wealthy are paying their “fair share.” Raising taxes on the wealthy provides more state revenue, but it doesn’t alleviate the tax burden on the rest of us. We’ll still be paying the regressive 8 1/2-cent gas tax increase and sales taxes over 7 percent, in some cases close to 8 percent, but “fair share” makes a good sound bite and is in keeping with a progressive nibble, nibble, nibble approach to tax policy.

As an aside, gas and sales taxes are paid with after-income tax dollars; to pay an 8 1/2-cent gas tax (after you make over $31,860), you must earn over 9 cents in real income.

I finally understand what is meant by a “progressive” tax policy — you just keep progressively paying a greater share of your income for a progressively lower standard of living. As valuable as we taxpayers are, progressive-minded legislators don’t want to eat us all at once.

Craig Westover is a contributing columnist to the Pioneer Press Opinion page and a senior policy fellow at the Minnesota Free Market Institute (mnfmi.org). His e-mail address is [email protected] This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

This commentary orgininally appeared in the St. Paul Pioneer Press Wednesday July 2, 2008.

Here’s another fine mess light rail has gotten us into, Ole. While amusing in a slapstick sort of way, the tussle over the train running through the University of Minnesota campus down Washington Avenue or looping north of the U campus through Dinkytown, seriously, ought put to rest the flummery that the Central Corridor project is about transportation and the mobility of the community. Not and never was. It’s about political clout.

A page-one Pioneer Press news story by Dave Orrick last week offered the keen observation that the route rhubarb is really a clash of cultures – academia vs. politics.

Where Ole and Lena taxpayer (who are footing the bill for the Washington Avenue route while picking up the tab for the U’s lobbying against the Washington Avenue route) fit into that culture clash is pretty clear. We don’t. Never have. Public input on the Central Corridor has always been of the “What kind of cheese do you want on your hamburger?” variety: A lot of meetings about the best way to implement light rail, but the tax-paying public never had a viable voice in the yea or nay decision.

So, forgive me if I find it amusing when (also at taxpayer expense) University General Counsel Mark Rotenberg pens a 23-page legal memo to federal officials claiming that the U is being railroaded. Ya think, Mark? How do you think we taxpayers feel about the Central Corridor.

First, we’re told to get on board because light rail will relieve traffic congestion. Then we hear Hennepin County Commission Peter McLaughlin, chair of the new board that will spend the transit sales tax monies, say congestion relief is only a “secondary objective.” The primary purpose of light rail transit is “guiding development.” Then he says, as we critics have been saying all along, the Central Corridor will actually increase congestion along the route. Not to worry, however, a legislative session-ending deal found 8 million tax dollars to help camouflage that problem.

The Met Council reads Rotenberg’s memo as a challenge to its competence. It should be used to criticism. A condition of the $6.6 billion transportation tax increase was creating an additional layer of governance charged with spending the quarter-cent metro-area sales tax for transit. Still, the kids couldn’t play nice. The ink on the tax increase was still wet when the headline read, “”Fight erupts over new sales taxes for transit: At issue whether money should be used to bail out Met Council.” The Met Council continues to run the railroad.

Local officials were critical of Rotenberg’s memo for more than just its content, however. They said the memo was naïve because it invited scrutiny from federal bureaucrats. Now I’ll be at the tail-end of the line when it comes to recommending federal scrutiny of anything, but when “we don’t want the feds looking too closely at what we’re doing” is a Central Corridor strategic concern, that ought to ring a few bells with someone about project viability, shouldn’t it?

It doesn’t with state Rep. Alice Hausman, who chaired the capital-projects committee, however. Her response was accusing the University of “arrogance.”

“The U is simply accustomed to getting their own way,” she said.

Gotta ask, Rep. Hausman, where you were on the U’s arrogance issue when Gov. Tim Pawlenty offered his initial bonding recommendations?

Pawlenty included a rather paltry $225 million in bonding for local roads and bridges. Roads and bridges were a legislative “priority,” as I recall. But U President Robert Bruininks opined in the Star Tribune that roads and bridges shouldn’t be paid for at the expense of higher education. He complained that Pawlenty’s proposal didn’t give the U its traditional 35 percent of the bonding recommendation – only 23 percent.

And Hausman and the Legislature listened. They passed $6.6 billion in tax increases on Minnesotans for the statewide transportation “priority” and then borrowed another $800 million on the taxpayers’ credit card for local hockey arenas, bike trails and giving the U just about everything it asked for and, oh yes, $70 million for the Central Corridor. Arrogant, perhaps?

Whichever side prevails in this tussle of titans, of this be certain: The academics and the politicians will ultimately come together and have a great makeup Kumbaya, and the Central Corridor project will be built regardless of the cost to taxpayers. On both sides there is simply too much arrogance and too much political prestige on the line to hope for any other outcome. And that’s not really all that funny, is it?

Craig Westover is a contributing columnist to the Pioneer Press Opinion page and a senior policy fellow at the Minnesota Free Market Institute (www.mnfmi.org). His e-mail address is [email protected] This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

This commentary originally appeared in the St. Paul Pioneer Press on Wednesday June 2.