Let’s say we have a public benefit, service, facility or square footage of space that theoretically belongs equally to everyone, cannot be increased at a reasonable cost, and for which the demand far exceeds the supply. How do you decide who gets it? Do you have everyone grab what they can as fast as they can, hoarding and wasting, while those with greater needs are left out in the cold -- and disaster is risked if the public benefit, service, facility or space is overwhelmed? Do you use a political process where insiders with power get permits that are then passed on to other insiders, while everyone else, rich and poor, is left to do without? Or should those who have use of the scarce resource have to pay, with the funds used to compensate those who do without it, so that demand equals the supply? New York City has, in fact, has a scarcity of traffic capacity in the Manhattan CBD -- and many other areas -- on weekdays, and a shortage of electrical generating capacity at peak times on hot days. Today it uses a combination of a grab by those who feel entitled or are willing to sit in traffic (by driving over free bridges or cranking the air conditioning during power shortages) and political power (on-street parking permits) to decide who gets to drive to Manhattan and use electricity on 90 degree afternoons. PLANYC2030 has a different suggestion, and I agree with it.

In the discussion of congestion pricing (peak hour pricing for electricity is as yet unnoticed but relies on the same principle), nothing is more infuriating than the assertion that such a charge is a regressive tax on the less well off. Let’s start with the definition of the three main types of public revenue. A charge, which may or may not (the transit fare does not) cover the entire cost, is something you pay when, and only if, you use a public facility of service. A tax is something you pay whether you use any public facilities or services or not, in exchange for some general community services and benefits for everyone. An insurance trust payment is money you pay now in exchange for, theoretically, a benefit at some point in the future -- like public employees’ own contributions to their pension funds.

Which is the right way to collect public revenues? A charge is generally used to fund the particular public service being charged for, but also discourages the use of whatever is being charged for unless it is absolutely necessary. You do not want to discourage something socially beneficial, such as sending one’s kids to school or getting them vaccines, with a charge. But how about something that harms the rest of the community, such as driving to Manhattan on a weekday or using power at peak times? In that case, a charge is appropriate. I would say it is necessary and morally correct.

PLANYC2030 touts the success of the congestion charge in London, a place as like New York City as anyplace in the world. But it also shows how the principle has worked right here at home. Twenty years ago, New York City was facing water and sewage treatment capacity crises -- more water was being sent down the drains than its sewage treatment plants could process, and in drought years there was risk the water would run out. Spending billions to build new reservoirs, and placing a moratorium on new development, jobs and people in the city, were seriously considered and advocated by various groups. Instead, the city started charging for water to give people an incentive to use less, and implemented a program of advice and other incentives to help them conserve. Water use fell. The shortage was erased. The sewage treatment plants now have plenty of capacity, despite an increase in both population and employment. What is being said about the congestion charge today is exactly the same as a claim that charging for water is unfair because the “struggling middle class” has lawns to water while the rich live in high-rise apartments, conveniently ignoring the millions of less well off people who live in apartments and use even less water. There were plenty of examples of the better off cynically hiding behind the less well off when water metering was implemented, just as there are today.

To understand New York City, look to developing countries with massive inequality, such as Brazil. There populist politicians trumpet extraordinarily generous public policies, such as an absolute guarantee that a necessity such as water must be free for the benefit of the poor. But guess what -- without the benefit of an income stream, the public water companies cannot afford to expand the areas that receive that free public water by installing new pipes. Public water is only available (surprise!) in politically powerful affluent and middle income areas, where it is used as if it were free, which of course it is. Meanwhile the poor majority, living in the favelas, are forced to carry their buckets to private water sellers who charge vastly more than the public water system would have to, if it in fact charged. And yet any attempt to charge for water, and thereby have the revenues needed to extend public water service to the poor, is opposed on “populist” grounds by both the “struggling middle class” that already has the benefit of free water, and the private water sellers. This happens all over the developing world.. Where in the United States is something like this most likely to happen?

Brazil is like New York in other ways, too. According to a 2004 article in the Economist on the administration of current President Lula da Silva, a true populist who grew up poor:

Brazil spends an impressive 15% of GDP on social programmes. Some of this finances a real safety net for the poor, but much of it bypasses them. Pensions for civil servants—a system that ran a deficit of 2% of GDP at the federal level alone last year, benefiting just 1m retired bureaucrats—are the most glaring example. Federal spending on education is in part a rich man's subsidy: most goes to free public universities and nearly half of that benefits the richest 10%. Even unemployment insurance underwrites only the lucky half of workers who have a formal job…‘The distribution of transfers imitates that of incomes before government intervention, reproducing existing inequalities,’ concluded a report by the finance ministry last year.

President da Silva is like a Democrat in New York, espousing (and in his case believing) egalitarian principles but trapped in a political party run by those used to working the system for themselves. Nonetheless, he has managed to implement real change, including -- in a country in the tax burden which “at nearly 40% of GDP dwarfs that of most middle-income countries and is almost high enough to finance a European-style welfare state,” managing to have everyone be able to eat three meals per day. Despite the fact that he is a quasi-socialist, the economy has boomed under his administration.

Let’s get back to the example of using price to ration scarcity that has attracted the most opposition -- the congestion charge. Some have argued that for those in certain fields, and in certain neighborhoods, driving to Manhattan is a necessity rather than a luxury, because they are beyond the subway. The history is that many who live beyond the subway moved there precisely because they did not want their homes to be accessible to the poorer, darker skinned people who used mass transit. One reason the 63rd Street tunnel became the “tunnel to nowhere” is because Southwest Queens (Maspeth, Middle Village, Glendale) residents successfully fought a new subway extended from the tunnel along the LIRR Montauk branch through Jamaica to Southeast Queens. They thought it would bring racial change.

In addition to bigotry, there has been snobbery. The Archer Avenue extension (E train to Jamaica) was built with a provision to be extended down on of the two LIRR branches to Southeast Queens. One reason some E trains have to go to Hillside Avenue instead is that MTA planners did not intend Jamaica Center to be the permanent terminal, and did not design it with capacity to turn more than 12 trains around. A decade ago, when a Southeast Queens extension was once again under discussion, then Councilwoman Juanita Watkins objected on the grounds that such a subway would bring a bad element. She wanted improved, higher class LIRR service instead. To gain the support of this community, Mayor Bloomberg downzoned it in his first term. PLANYC2030 calls for a subway extension there, and higher density to go with it. Good luck with that.

There are, in fact, many low- and moderate-cost ways that the city could improve the commute of those who choose to live beyond the subway (and away from commuter rail stops) in places such as Southwest Queens, eastern Queens, southeast Brooklyn, the far-east Bronx, and Staten Island. These build upon what most residents of these communities already do -- park and ride, take the bus to the subway, or carpool. Only the wealthiest, and those with free on-street parking passes, drive to Manhattan. Some of these suggestions are in the plan; I’ll make others later. As for repair people, delivery people, wholesalers and other who drive to and around Manhattan for business, the cost of the charge, since it would apply to everyone and thus provide no competitive advantage, would be passed on to their customers. If, that is, the cost of the charge isn’t completely offset by the savings of not being stuck in traffic.

The principle of using financial disincentives to ration scarce resources -- or, flipside, to provide some “thank you” money to those who give up their equal right to scarce resources -- could be applied elsewhere. I also advocate a modest charge (say $25 per month) to park overnight on the street (parking is also scarce public, overused public square footage) in the hope that those who do not have to have automobiles (or could get by with one instead of two) will be induced to give them up, making parking easier for everyone else. I have advocated a cash reward for parents and children who travel out of areas with a shortage of school seats to attend school in places with surplus seats, perhaps near or on the way to their parents’ place of work, as an immediate alternative to large class sizes and, perhaps, a long run alternative to more school seats.

Unlike some, I am not pleased that with various discounts the transit fare has fallen so much relative to inflation. The transit system needs the money. For pay-per-ride cards, I favor a higher charge for peak hour travel on the trains; the commuter railroads already have this. One could argue that those riding mass transit off*peak are using a resource that would otherwise be wasted, but those riding at the peak hour would do everyone a favor by traveling earlier or later. Sauce for the goose is sauce for the gander, and for autos or transit the same ideas should apply.

Words are cheap. It is when scarce resources are being allocated -- money, time, space -- that you see what the actual moral values are. So what are the values of New York?