There and Back Again: a tale of government intereference in the growth of transportation infrastructure.

Reflections from driving 500 miles today from NYC to Cleveland:

Look at what has become of our nation. A brief overview of the evolution of transportation in this nation reveals a fundamentally government-driven economic reorganization that has lead to a culture of car dependence in the United States. We started out in a very strong tradition of liassez-faire capitalism, unlike the world has ever seen before or since. Evolved from colonies that had minimal government interference from the beginning. The government controlled less than 5% of national income until the Civil War. Land incentives were given as among the first direct industry subsidies to create the very greatest, awe inspiring, railway network around the whole nation, threading it together into one defensible whole.

Next you had these oil barons, and various industry tycoons, get together in a business venture to buy out mass transit systems, and provide their own fleet of oil-powered, firestone equipped, GM produced buses.
http://en.wikipedia.org/wiki/Great_American_streetcar_scandal
Their little stunt was thwarted by the Sherman anti-trust act. Though those actions were an alleged attempt to corner the cities' commuting routes on behave of the oil and automotive industries, it was not a direct move toward car culture, it was merely a gas and bus mass transit alternative to light rail.

With so much cheap oil, and such advancements in car production, they became the heaviest and largest industries. Entire cities, like Detroit and Anchorage, were spontaneous ordered into magnificent industry shanty towns. Just when it started tapering off during the great depression, they were suddenly being subsidized again by massive demand for oil and automobiles for military use. What was World War 1, but not an orgy of heavy industries' over production in a meat grinder, that had to destroy in order to continue growing? I would not be surprised if there were oil and car manufacturers, not to mention weapons industry, that had some influence over FDR. But the end result is the same, major subsidy and artificial market creation.

Finally, but 10 years after the last time industry was sucking at nipples of government for some fluids from the tax payers, President Dwight D. Eisenhower initiates the step that propels us into whole new zeitgeist of car culture. By signing 1956's Interstate Highway Act, construction of the biggest and most ambitious road network the world has ever seen had begun. Today, there is nearly half a trillion dollars directly tied up with automobiles in our country. Our economy runs on it. Subsidizing automakers and roads has caused a massive distortion in the evolution of our transportation infrastructure, not to mention violating fairness principles by favoring one industry over another. There has long been friction between the rail/steel and the oil/automobile alliances; always competing to see who gets a bigger share of the transit market. From my analysis, the rail roads were the clear winners for nearly a century, while oil industry mostly grew on kerosene. Automobile makers were in favor of using ethanol as a very clean and plentiful fuel -- however they were convinced to partner up with the oil companies because they had so many stockpiles of gasoline that they were just pouring into rivers like the Hudson. Car prices were dropping so fast, they started to compete against rail again, but during wars, they got a huge boost from the government. Eisenhower then subsidized cars in a totally new and unique way. It would be the equivalent of it building a huge rail network across the whole nation. But clearly the rail system was incredibly efficient, very profitable, and barons were treated like aristocrats (hence the title of baron). That privately constructed transnational rail system is clear vindication that the market is able to very effectively self organize to meet the needs of public transportation. But Eisenhower saw a new vision of tanks rolling down highways, or using them as air strips. And either by misguided national defense motives, influence of industry tycoons, or sincere love of cars, he bankrupted the entire national railway system by injecting a 425 billion dollar investment into car infrastructure in today's money.


As a result, industry reorganized. Parking lots began appearing everywhere. Sidewalks were disappearing, some cities were no longer walkable. Strip malls, fast food, drive throughs, big box stores, spawl. So what's the final verdict? Right behind the US government in size, the largest corporations are:

http://money.cnn.com/magazines/fortune/global500/2009/

And the winners are: Oil, Automobiles, and Walmart. Imagine what it would look like if there was twice as much capital in the hands of the market (assuming the government consumed a pre-level civil war share of the income), with rails competing naturally with automobiles? In the turn of the century, without the subsidy, automobile corporations, like the rail industry, would have to build and maintained their own roads. They would have to come up with $425 billion to invest into infrastructure for their product. Meanwhile, trains were growing faster because they controlled more market share. Bottom line is, I think our national transportation system would be immeasurably more diverse, robust, and innovative were it not for government interference. Instead of a car culture, we would have a healthy mix of efficient transportation systems complimenting each other. If the rails could be so successful under third world standards, as America was at that time, imagine what could have been done in the 20th century, and what yet could be done in the 21st.

And of course we're much worse off. The negative externalities from car obsession of dead and disabled, property damage, pollution, loss of productivity due to traffic, waste, suburban sprawl, are not justified by the benefits; freedom of travel, flexibility, convenience, privacy. It is hard to argue that cars have enabled more people greater freedom, and cheaper housing- because it is difficult, if impossible, to adjust for the opportunity costs of car ownership (living father away from resources, losing time in traffic/parking, costs of car maintenance/gas/tolls, attaining driving skills and vehicle registration/inspection, increase safety risk, productive time lost during driving) - especially since there are various subsidies which make it more feasible, such as suburban/rural electrification and utility subsidy, making it cheaper to live farther, oil subsidies, road and infrastructure subsidies, eminent domain for mall and parking lot construction, automaker subsidies, and recently programs like "cash for clunkers". Ultimately, if negative externalities are internalized into liabilities against the manufacturers and roads are not maintained by the state, cars might not have the insane economic advantage over rail.

So in summary, the fed takes 1/2 a trillion productive capital out of the economy and creates a whole new inefficient transportation network, and in the process destroys the efficient old system.