Tuesday, July 08, 2008

The Political Economy of Public Transportation

"People respond to incentives not just in markets but in any setting they find themselves in. " -- Mike Munger
Russ Roberts and Mike Munger have a terrific podcast on the political economy of public transportation:
Michael Munger of Duke University talks with EconTalk host Russ Roberts about Munger's recent trip to Chile and the changes Chile has made to Santiago's bus system. What was once a private decentralized system with differing levels of quality and price has been transformed into a system of uniform quality designed from the top down.

How has the new system fared? Not particularly well according to Munger. Commuting times are up and the President of Chile has apologized to the Chilean people for the failures of the new system. Munger talks about why such changes take place and why they persist even when they seem inferior to the original system that was replaced.
Listen to this podcast and you'll get a good understanding of why I am extremely distrustful of most attempts by politicians to try to correct what they perceive to be "social ills" using government-based solutions. Their intentions may be well-placed, but the incentives created by their centralized plans are often disastrous and end-up being completely contrary to the objective they were trying to achieve.

No comments: