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Government-Subsidized Transportation: More Demand, Reduced Supply

Written by Gary North on March 11, 2013

In 2012, there were 1.5% more rides on government-subsidized transportation. In response, 80% of all public transportation programs were reduced.

This is how government operates at the local level.

This information comes from a recent report from the American Public Transport Association.

The head of the APTA blames volatile gasoline prices.

A 2012 report by the National Conference of State Legislatures said that “affordability likely plays a role” in the growth of transit, noting “estimates are that an individual can save more than $10,000 a year by riding public transit instead of driving.”

Really? People can save $10,000 a year? I wonder how they figured this out. I also wonder how the masses are so ill-informed that they are driving away from $10,000 a year? Could it be that the report is wrong? Or could it be that the convenience of car travel is worth something greater than zero to most people?

“We expect we’re going to continue to have good ridership,” Melaniphy says. “More than 80% of transit systems have cut services, raised fares or considered it. Think about what ridership numbers would look like if they didn’t have to cut back.”

I see. Rising demand leads to reduced supply. This is the state in action.

How about this? The governments will sell their buses to private firms, which will then operate them on a profit-seeking basis. Then we will see how many people prefer to ride buses.

These governments will also remove all restrictions on operating cabs. Anyone can drive someone else wherever the person wants, at a price agreed to by drivers and riders.

Will demand rise? Or will it fall? Let the free market sort it out.

I am sure of this: if demand rises, supply will not decline.

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