Public Transit Projects Are the Perfect Recipe for Financial Disaster
The largest urban mass-transit systems across the US are entering an all too familiar point in their long history: another looming financial disaster caused by financial mismanagement and the consequences of covid. No urban transit system exemplifies this problem more than the Metropolitan Transportation Authority (MTA) in New York.
Ridership in New York has not rebounded to precovid levels, and the MTA is projected to have a funding gap of $1.6 billion in 2026 despite proposing a 5.5 percent increase in fares and tolls. At the same time, New York governor Kathy Hochul and MTA announced in January 2022 the second phase of the Second Avenue subway. The extension of the subway line in New York by 1.6 miles will cost an estimated $6.3 billion ($3.9 billion per mile), the highest cost of any subway extension project in the history of the world. Including financing, the total bill cost is $6.9 billion.
With almost prophetic knowledge reminiscent of communist propaganda on the upcoming utopian society, secretary of transportation Pete Buttigieg, the governor, senators, and representatives praised the project for its “sheer grandeur.” The fact remains that with each grandiose announcement of the upcoming utopian green mass-transit society, the reality of mismanagement ultimately will set in.
In his book Bureaucracy, Ludwig von Mises anticipates the potential problems of public enterprises in the market economy. He writes, “A socialist central board of production management will be helpless in the face of the problems to be solved. It will never know whether the projects considered are advantageous or whether their performance would not bring about a waste.”
He continues later:
The authorities are inclined to deviate from the profit system. . . . They consider the accomplishment of other tasks important. They are ready to renounce profit or at least a part of profit or even to take a loss for the achievement of other ends. . . . the result of such a policy always amounts to subsidizing some people to the burden of others.
Urban planners, politicians, and passenger advocates believe that the current sy
Article from Mises Wire