Hybrid worse than Hummer

A lecture on how appropriate prices can change the world

Many people are concerned with the future of our planet. The big question is how can we sustainably continue keeping of billions of people on this fragile blue dot in space. The simple answer is that we can't, at least not the way we're doing it now. A number of people are working hard to solve this problem of tomorrow, not the least of which is Norman King Lewis.

If you are a green sort of person there are probably little ways you try to help the planet. Maybe you take the train to work or have bought a hybrid car. If so plug your ears, because, according to Norm, you are actually doing more damage to mother nature than the average Joe bouncing to work in his SUV.

Norm's lecture, 'Why good planning is always defeated by bad prices', centered around the theme of accountability. That which we use we should pay for, not only for the cost of producing a good, but the cost of cleaning it up too (referred to as an 'externality'). Yet, we (the western world mostly) pay hefty income taxes to allow the government to subsidize the direct costs and externalties associated with a myriad of goods and the net effect is earth killing inefficiency.

I'm just going to highlight a few of the specific points that Norm made and run through his broader attacks. But, if you want to read his presentation notes I've posted them. Norm, who's worked as an urban planner for 40 years, did not provide references for his statistics. So, everything ought be taken with a grain of salt.

So why is Norm so opposed to subsidization? It comes down to a 'split the bill' scenario: If a group of friends goes out and decides they will divy the bill evenly they are likely to spend more than a group where each person pays an appropriate share. If you are part of a 'split the bill group' and your neighbor has three drinks and the lobster, you are not likely to opt for a burger and a coke. But if you were on your own dime, suddenly a burger and a coke seems far more appetizing.

The second part of Norm's attack on subsidization is that it benefits the rich. Rich people consume more, they travel farther, eat costlier food and live in more expensive homes. All of these areas of the market are either subsidized or have prices which do not reflect the externalities (costs of cleanup) associated with them.

So the problem, says Norm, is that people are paying high income taxes so the government can subsidize wasteful spending that mostly benefits the rich.

Take for example train transit. On the red line here in L.A., 2% of the cost of transit is payed by tickets sold to the riders. The remaining 98% of the cost of running the red line comes from tax dollars. The net result of this travel subsidization is a few people benefiting from everyone's tax dollar that is going to pay the extreme costs of train travel, fuel, trains and maintenance. These costs are ultimately taxes on the environment which require the world to use more energy and materials.

The red line is not alone in its inefficiency. In L.A., the cost of taking a work commuter off the road is $53 a day for train. This high price mean more pollution. In fact, New York is the only city in America wherein a train transit system produces less greehouse gas per passenger mile than cars do! Trains have a real purpose in transit, they can move huge tonnage of tightly packed freight for relatively cheap, but in the case of passenger travel using trains is like moving a feather with a motorcycle. So much for green train travel.

So what is to be done? Norm says that prices should reflect costs. When we look at bottom line prices, a few good solutions emerge. Buses in L.A. cost $8 per day for the average rider compared with the $54 for trains. Carpooling enabled by HOV lanes does even better and bicycling better still. But you can't bike to work when you live 30 miles away and in America we live 30 miles away from work because the price of travel is inordinately cheap. If every citizen was paying the real cost of their commute each day they likely would want to live closer to their job.

Which brings us around to the issue of automobiles. Cars may not be so bad as trains, especially if you carpool, but the gas we pay for doesn't reflect the real cost of its use. The gas tax, which is on average 37 cents a gallon, couldn't possibly cover the costs of returning the carbon to the ground that these vehicles emit or the increased medical costs that come as a result to exposure to car fumes.

So lets get some hybrid cars, right. Well here's the funny thing, the total energy used in producing and using a hybrid car has been reported to be up to 1/3 higher than that of a hummer. This is because the extreme cost of battery production. But, because the price of our energy does not reflect the externality (cleaning) of producing it, these hybrid cars are being moved to market and promoted as green machines. Bah humbug!

I've been focusing on personal ground transit here, because I knew it would affect all of us, but Norms lecture pointed out similar flaws in housing prices, farm subsidization (including that biodiesel we all love), parking prices, air travel, flood insurance, health care, energy production, water use, port use, insurance rates and beef production. All of these areas boil down to the same fundamental issue, by using a centralized tax structure to 'split the bill' on these goods we are encouraging our citizens to over-consume.

I'm sure that these points make sense in the broadest ways, but there are probably one or two that you would take exception to because of personal or societal benefit. And that hits at the heart of the issue Norm is talking about, these subsidizations stay around because people depend on them. This dependence enables destructive and unsustainable lifestyles and ultimately is hurting the planet at large.

In order to overcome the subsidized tragedy that Norm is detailing we need the sound sensibilities of the will of the majority to overcome the emotional rhetoric of heavily invested minorities. This, unfortunately, is not the way that politics seems to work in a general sense. So ought we throw up our hands in dismay, destroy our hopes, and kiss our assess goodbye. Sounds like fun to me. Who wants to go surfing?

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