The Massachusetts car economy is costing us $64 billion a year, and we barely notice it

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Same shit in most of the major cities. Time to get more workers telecommuting and offer incentives for employees to move closer and employers to move away from city hubs.

azdood85

For the Paywalled:

A new report from the Harvard Kennedy School reveals what car culture costs us all.

By Nestor Ramos Globe Columnist,Updated December 13, 2019, 6:00 a.m.

It’s Thursday morning, and millions of cars are parked in millions of driveways all over Massachusetts, gassed up and ready for their daily commutes. Car payments, insurance, E-ZPass and gas: These are the kinds of things most of us think about when we consider the cost of driving.

But the real price Massachusetts pays for its vehicle economy is much, much higher. Now, thanks to an ambitious research project by a team of graduate students at the Harvard Kennedy School, we have an idea of just how high: $64.1 billion a year.

That astronomical estimate includes all the things we don’t often think about when we get into our cars — costs that extend far beyond what we pay at the dealership or the pump. And the biggest slice of that giant pie gets paid for before anybody actually signs a lease or gets behind the wheel.

So many of the expenses associated with cars and roads are borne by the public that the average family in Massachusetts is on the hook for about $14,000 a year, whether they own a car or not, the study found. For those who do own vehicles, the average annual costs nearly double.

“We never talk about the costs of driving,” said Rep. Seth Moulton, who suggested the study to Linda Bilmes, the Kennedy School public policy professor who oversaw the work. “We always talk about subsidies that go to railway passengers, but never the subsidies that go to drivers. … We are subsidizing the least efficient way to get around.”

The costs we all bear include everything from the maintenance of road surfaces across Massachusetts ($1.4 billion) and the estimated annual value of the land we’ve paved for roads and parking ($8.7 billion) to the indirect but very real costs of productivity lost due to time sitting in traffic ($4.6 billion) and as a result of injuries and deaths on the road ($10.5 billion).

Once you know where to look, you see the cost of the motor vehicle economy everywhere,” said Stevie Olson, the lead author of the study and a graduate student studying public policy at the Kennedy School. “Often times we’re presented with the high costs for infrastructure for public transit but we never consider the true cost of operating the road infrastructure.”

Indeed, when we talk about the T and the sorry state of our public transit system, we often talk in dollars, whether that’s billions for a rail link between North and South Stations or a $50 million cash infusion in the wake of the latest safety report. At the highest levels of state government, we come back again and again to the levels at which taxpayers subsidize transit.

But when we talk about state highways and city streets, that calculus gets much more complicated, the various costs so entrenched and diffuse that they are practically invisible. Beyond the portion we pay for directly at the pump, the roads sometimes seem free.

But they aren’t free — far from it.

“You may not pay a tax that covers the pollution from your car, but people that are breathing that in and people that are getting asthma and other related afflictions end up at the doctor. Someone is paying for that,” Olson said. “If you take the T to Stop and Shop, you’re still having to pay for that business to upkeep its parking lot. Those costs are embedded in consumer products.”

When was the last time you considered how much extra your home cost because of the land value of the driveway? How about what could have been done with all the valuable land that has been given over to storing cars overnight?

“The amount of land committed to roads and parking is enormous, and it’s something that we take for granted. All that land could be something else,” Olson said.

Moulton has long advocated for high speed regional rail in Massachusetts, but the study does not compare cars to transit, or advocate for any particular way forward. Instead, it provides an important and often missing piece of the ongoing discussion about how Massachusetts can grapple with a transportation system in crisis.

It is too easy when we talk about expensive new transit projects to consider them in vacuum, as if the cost of doing nothing is, well, nothing. But the status quo isn’t free by a long shot — it’s costing us billions of dollars and hundreds of lives every year. When a report on the MBTA’s dubious approach to safety was unveiled this week, the public was understandably aghast to learn that, in the words of the report, “financial considerations take precedence over operational performance and safety.”

Clearly, the T must address the shortcomings detailed in the report. After all, imagine if someone was killed because the T wasn’t safe.

OK, now imagine if someone was killed every day.

But you don’t have to imagine: That’s what happens on our roads, where 360 traffic fatalities occurred in Massachusetts in 2018 according to the National Highway Traffic Safety Administration. The costs associated with all that death and destruction don’t usually show up on balance sheets, but we all pay them nonetheless. That’s just part of the price of the $64 billion status quo.

That’s the big blank space in our critical regional conversation about transportation that the study begins to fill in. Maybe even when all the real costs are considered, we’ll still think it’s worth it when we walk out to our cars. But at least we’ll be thinking about it honestly.

*(Edit: Thank you for the gold!)*

gioraffe32

Lots of facts and details are missing in this article. The benefits aren’t enumerated or quantified. Also assumptions are made but not stated. A couple examples:

**”We are subsidizing the least efficient way to get around.”**

It depends what you mean by “efficient.” If you mean dollars per pound of human moved, vehicles are probably least efficient. But if you mean use of a specific human’s time to get where they are going, cars are extremely efficient. I can get from home to work in about 15 minutes at the exact specific time I need to, even if that varies. On public transport, busses, trains, or a bike, the use of my time (a valuable resource) would be much more, hence much less efficient.

**”The costs we all bear include everything from…the estimated annual value of the land we’ve paved for roads and parking ($8.7 billion) to the indirect but very real costs of productivity lost due to time sitting in traffic ($4.6 billion) and as a result of injuries and deaths on the road ($10.5 billion). “**

If we were to revert the land for roads to some other use, how would police, ambulance, and fire get to emergencies? What would the cost be in terms of property damage and human life then? And how would busses and/or trains run if none of those corridors where roads are were open for transport?

And, again, they talk about time lost due to sitting in traffic. But how much time is *saved* due to not waiting for a bus or train, or having to wait at work or home until the next bus is scheduled to arrive. How much time is saved by going directly to my destination rather than on some other long route with dozens of stops on the way?

And how many deaths and injuries are prevented or mitigated because we have roads? Again, I’m thinking of police, fire, and ambulance?

**TO BE CLEAR:** I am not anti-public transport. And I think this is a valuable study. But it needs to be put in the proper context. The value of *having* vehicular transport needs to be measured with the same rigor; then we can compare honestly.

UserNameNotOnList

There should be tax incentives for commuters who live close to their jobs. The areas around my work are so expensive but if I had an incentive to move closer I might try to make it work. These incentives might come with some negative consequences though like skyrocketing real estate prices around big job nodes like cities but at least there will be less traffic.

speedwaystout

Ok, but it’s also the truck economy, which is what brings the rest of the economy to people.

FireWireBestWire

Want to compare percentage ownership of total wealth, assets, liabbilities, and other categories across different generations, education levels, races, household wealth, and household income? Well, the Fed has a fun tool for that.

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Ran across this site the other day and find it really fascinating to utilize. The site provides some interesting, easily accessible statistics. Use the ‘Wealth Component’ and ‘Distribution’ drop-downs to change what is being compared.

evilcounsel

Wow.. wealth share of those under 40 from ~13% to 6.6%.

Azel0us

Great tool. This is the links the belong on this sub. Look at the wealth distribution by education level. College degree has gone from 50% to almost 75% since the mid 90s. Got to go play some more with this. Thanks for the link.

JimC29

I think it would be interesting to weight the generation/age groups by headcount. I don’t see how comparing, for example, 19 years of boomers vs 15 years of Xers is useful.

Cool tool nonetheless.

lerkmore

When I look at levels rather than percentages, is that adjusted for inflation or not? It’s not obvious on mobile.

EDIT: Adjusted for inflation or not, it looks like literally everyone is significantly better off than they were 30 years ago. All races, education levels, and income brackets. Nice.

OneShotHelpful

2019: The year the Federal Reserve admitted it was wrong

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More like the fed acted appropriately but economic conditions worsened due to trade policy, causing them to reverse course.

protostones

The post election recession is gonna be CRAAAAAZY

likechoklit4choklit

the Phillips curve was disproven this year… we really don’t know what we don’t know

I’m glad that Powell has admitted as much

saffir

I actually can’t wait for Donald to get re-elected again. I want to see how he bullshits and blames the worse recession since 1929 on Obummer.

IceShaver

Abolish the Fed

getsadzeg

Gen X has never recovered from the 2008 recession

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Some of us never got our footing after the fake recovery of the housing fraud era

SlipSlamMammaJamma

Anecdotes don’t prove anything. This article is based on the experience of a single person.

This is very weak content for a sub called /r/economics. You can’t make bold, broad statements such as “an entire generation never recovered from 2008” based on a single anecdote. The claim might be true, but this article proves nothing.

Does the fact Mark Zuckerberg is a billionaire prove that all millennials are super rich? Of course not. The same is true for whatever this Vox journalist is going through.

CowboyJimador

i was like “uh thats not true” then I realized it was Vox…

randomstupidnanasnme

I am doing alright. I am living.

devildunkard

I was fine and I am still fine but I can’t still can’t sell my condo for what I bought it, close though. So I guess I count.

imk

Pound surges and UK stocks hit record high after Boris Johnson wins Tory landslide. FTSE 250 jumps to all-time high on hopes that Brexit uncertainty will come to an end

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I guess we know which way the money voted in yesterday’s election.

kylco

Brexit is not anywhere close to an end, though.

Ofbearsandmen

I want to understand how is it that the markets are happy about this, when the part that won is the one who is pushing for a hard Brexit.

drokert

Seems like the doom and gloom from this wasnt quite as bad as predicted. I think this exit will be painful in the medium term as it has been (just look T the pound) but longer term may be better as the EU struggles with negative rates and persistently stubborn low growth

sportsarefun918

oh hello chaos!

AIArtisan

WTO Authorizes China to Hit US With $3.6 Billion in Sanctions

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Looks like the WTO is pissed that the US took action without asking the WTO for permission. Not that our action was wrong – because it wasn’t, but that we bypassed the WTO in doing so.

deck_hand

Cool, they can take it out of the Trillions they owe us for IP theft and market manipulation.

RichterNYR35

Wait, so China did the dumping and we get hit with sanctions? Am I reading that right?

TheContrarian2

Article is from November, FYI.

TheElusiveGnome

The China issue is one of the things I think Donald Trump is solving quite well to some extent. I’ve also been shocked that there have been no China tariff questions in the Democratic debates, even if that is quite an important subject. I wonder if the new US president will be willing to revert the tariffs imposed by the Trump administration.

Kozinho03

A $280 college textbook busts budgets, but Harvard Economics author Gregory Mankiw defends royalties

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Colleges/professors should drop it until the price comes down. It’s a good book, but not $280 good.

If not, this is the limit where I propose piracy as a solution. Download the pdf from libgen or some torrent.

LtCmdrData

Shoutout to my grad school professors who advised us when we could opt to buy the older edition textbook to save money.

softbackgroundmusic

Why is “Harvard Economist” an argument?

MysteriousTravel6

If an author of a textbook is worried about making enough money on something that is required for each semester by thousands of students every year, there’s a deeper problem that exists with the author.

DeanCorso11

For the entry for “rent-seekers,” is it just a picture of Mankiw’s own face?

sleepeejack

Chinese city turns into ghost town after Samsung shifts operation to India, Vietnam

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Most manufacturing is headed to India. Even Chinese companies are buying factories in India.

mashterful

Vietnam produces a lot of raw material commodities that China needs for its production of electronics. This is likely a lateral capital shift to reduced supply chain costs. They already had high demand for Vietnamese commodities.

SimonPgore

At least India is less likely to sneak in their own govt spyware or hardware backdoors. Vietnam might but not as prolific as China.

azdood85

…can we loot it?

Just change their business model. Real life fallout RPG

memecaptial

“Livemint”

A very reputable source.

Furthermore, the source that Livemint basically copies word for word never even once says “City turns into ghost town”. It says the factory town is losing population after the biggest employer, 80% of employment in the “city”, shut down its factory.

The factory only employed 3,000 people, so how on earth is that a city? If 3,000 is 80% of employment as SCMP states, then the “city” is only 5,000 people tops with kids included.

FarrisAT

Senator Elizabeth Warren’s Wealth Tax: Projected Budgetary and Economic Effects — Penn Wharton Budget Model

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I deeply deeply question this study’s assumptions about avoidance. They took a simple average of several estimates of the wealth tax experiences in Sweden, Spain and a few other countries. Notable about all of these wealth taxes were that they were very small and very ‘leaky’ in that the wealth they taxed was very narrow (Switzerland is a great example – they *barely* have a wealth tax bc its so leaky, but people love to hold it up as an example).

Furthermore, they appear to gloss over a lot of the ‘structuring’ aspects (eg, private companies are frequently fully/partially exempted from wealth taxes. Well guess what – you see a lot of public companies go private post wealth taxes. Is this classified as avoidance?)

This biggest point here – and I have written about this before – is that none of the economies that have had wealth taxes have as deeply developed finance markets as the US (and yes, that includes Switzerland). Several weeks back, a few collegues and I were drinking and talking about how we would structure away 100% of Jeff Bezos AMZN holdings while still maintaining his 20% operating control. Its complicated, but it would take a group of lawyers/srtuc fin guys a few days to figure it out.

Here’s a semi-example that people might understand – and understand this is ***HUGELY*** ELI5. I have a $100M building outright that I rent to tenants (say an office building) – its illiquid with a thin market and I can’t just move a building. Let’s say I do this: I enter into a terminally settled, non-transferable, future-callable, sale-leaseback with a partial-repo feature, with an overseas bank. The mechanics are this: I ‘sell’ the building to, say, Nomura in Japan. This is the ‘sale’, but I don’t take the cash. Instead, Nomura agrees to a 99-year lease where I can operate the and the rent payments are settled via the sale proceeds I never received – this is the terminally settled part. I rent to tenants and keep the net operating profit. Now depending on the corporate profit rate versus the income tax rate, I’m going to either 1) pay myself a ‘salary’ that zeros the corporate profit or 2) dividend myself, which ever is cheaper. ‘Future-callable’ means I can undo this in the future; ‘repoed’ means that if I need some of the money that Nomura is holding from the proceeds, I can get it back in part.

You say, “but the operating lease has value!” – does it? Its non-transferable, so it has no market value, and I can zero the economics of it so it has no model value; you can’t value that using any generally accepted measure. There are some detailed complicating factors in this example, but they can be sorted out; importantly, transactions like this are fairly common for (completely legal) reasons. The main thing I have done is taken the building out of my calculation of ‘wealth’ – I would have owed 6% times $100M, but now I don’t ‘have’ a $100M building to tax – Nomura has the building. I will owe either income tax or corp tax, but I would have owed that anyway. Wealth tax zeroed.

You might say “well just make X illegal!” – fine. But tax cases like that can take 10-20 years to sort out, and the goal here is to $0 the taxes long enough that you get the wealth tax repealed. It will get repealed, not because of “evil republicans”, but because it causes ***MASSIVE*** wealth distortions that you will pay for. In the extreme it will cause capital flight that will be similar to the stagflation in the 1970s. This was the exact reason that France and Sweden repealed their wealth taxes. it wasn’t because *rich people* left the countries (although some did) – it was because rich people sent their *capital* overseas, which seriously jacked up interest rates and capital formation.

edit – typos

Laminar_flo

> Penn Wharton Budget Model (PWBM) projects that Senator Warren’s proposed wealth tax, if implemented in 2021, would raise between $2.3 trillion (including macroeconomic effects) and $2.7 trillion (not including macroeconomic effects) in additional revenue in the 10-year window 2021 – 2030 while reducing GDP in 2050 by about 1 to 2 percent, depending on how the money is spent.

For reference, Warren’s campaign estimated $3.75 trillion in revenue, more than $1 trillion more than these model estimates.

aw3524

My favorite portion of her plan is that it will direct revenue of “billionaire tax” to social programs in one hand and has a goal of getting rid of billionaires in another hand…

So… what happens where there are no more billionaires to tax and programs are already in place?

moshennik

Can’t wait to see the mass Exodus of the rich and their money and along with that, jobs and business

Lindys1

Would someone ELI5 me the way “capital flight” would be effective in avoiding a wealth tax when the person doesn’t leave the country? I understand if someone physically leaves the country and takes their wealth with them. But what about those that stay in the country and move the wealth overseas? If I “move” 10 million dollars into a foreign bank or into foreign investments why would this still not be taxed? The only way around this would be to “hide” it in like a Swiss bank account or something of that nature which would technically be illegal, no? Would people that do this just count on the government not auditing them?

This is of course excluding hypothetical vehicles like the poster mentioned.

Cipius

Nobel laureate Robert Shiller argues that gossip, half-baked philosophy, and fake news drive economics — not only numbers. His peers aren’t exactly thrilled.

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Honestly thought this was common knowledge. There have been countless people arrested for swaying markets (pump and dump) using blogs and spam emails…

n3v3rgonnagiveyouup

“animal spirits”

scottfc

He is right, all these things influence our ‘animal instincts’ or in layman’s term our intuition/feeling/instincts. Numbers are a language like English, chinese, Russian, you name it but our understanding of that language is very poor compared to languages we use near every minute of our lives. Average people don’t use feelings but their animal instincts who are much more influenced by linguistics (rumours, mainstream media pundits pushing for certain laws, stocks etc and so on). This is why I believe delving more into behavioural economics is the next step in this epistemic community/field, there are so many unknowns and it’s our job in the future to find new ways to quantify it. Just think about all the possible applications and angles this could add to more established theories alone.

beastfromtheeast21

Is this our weekly thread which tries to pretend behavioral economics is new and subversive rather than from the 1970’s and relatively well integrated with the mainstream?

Mexatt

I’ve always thought that fear can really hold back the economy. I sell landscaping stone in Wisconsin, when Scott Walker went after teachers, I noticed an immediate drop in sales that year. I was selling to fewer teachers, they were all scared for their paychecks.

ksiyoto