The toll on business

Lawrence Solomon
National Post
March 6, 2003

Toronto Mayor Mel Lastman spoke for many when he voiced his fear of tolling city roads, as London, England, so daringly did to eliminate traffic congestion three weeks ago. “Please tell me how much business we’re going to lose in the evenings particularly with people not coming to Toronto to restaurants,” he asked. “If you pay to come into Toronto, and a toll to get out of here, you might as well go to a restaurant in your own neighbourhood.”

To Mr. Lastman, tolling Toronto roads would chart a path to ruin. Without customers, local businesses would leave the city. Toronto “might as well roll up the sidewalks.”

Mr. Lastman is wrong for two fundamental reasons and two narrow ones. The fundamental reasons: He doesn’t understand what makes people come and what makes businesses go. The narrow ones: He doesn’t understand how London’s tolling system works, or that London’s experience indicates that less congested cities would even more easily be able to eliminate congestion.

London’s mayor eliminated traffic jams in its heavily congested core by charging drivers £5 a day (about $12) to enter or leave it weekdays between 7:00 a.m. and 6:30 p.m. Although, this unprecedented feat has earned him near universal praise – from big business to automobile associations to environmentalists – the £5 charge, in fact, worked too well. Instead of an expected 10% to 15% decline in traffic – all that would have been needed to make London traffic flow freely – the £5 charge convinced 20% of drivers to leave their vehicles behind.

The streets of London, it is now clear, could have been decongested with a lower toll, perhaps £4 or £3. In less heavily congested Toronto, which needs to deter far fewer vehicles from its roads to eliminate congestion, the charge would be smaller still, perhaps $3 or $2, or about the same as a bus ticket. Looked at another way, very few people would be deterred by such a small levy from driving into Toronto, and that is a good thing: Very few people need to be deterred in order to eliminate congestion. Once the few are deterred, the great majority would obtain carefree driving conditions for the price of car fare.

Some people, to avoid the toll, will refuse to come into Toronto, costing the city “customers,” as Mr. Lastman puts it. But they will be very few. Most who decide to avoid the toll would do so by coming into Toronto by taxi, by public transit, by walking, by bicycle, by scooter, by sharing a ride, or by changing their schedules to travel in off-peak hours – this is how people are avoiding the tolls in London. Meanwhile, other people who had been deterred from entering the city at all – not by price but by congested roads – would now be new customers. On balance, Toronto would have more customers, not fewer, once the city’s transportation systems become efficient.

Mr. Lastman fears that tolls will discourage people from travelling, and encourage them to do more of their business in their own neighbourhood. In this, he is right. He is wrong in not realizing the larger, more profound effect of Toronto tolls: They will encourage more people to choose Toronto neighbourhoods as their own. After all, apart from changing their travel hours, or coming in by public transit, commuters have another way to avoid tolls to enter Toronto: They can simply move into the city.

In Canada and around the world, people have been flocking to major cities because of the quality of life that only large population centres can offer – restaurants, parks, theatre districts, shopping, museums and art galleries. In Toronto as in many other large centres, about half the commuting now goes in the reverse direction – from city to the suburb – because many people insist on living in cities, even when the jobs are elsewhere. The jobs are elsewhere chiefly for one reason: Big-city mayors have taxed them away.

In Toronto, because municipal taxes have often accounted for more than half the rent paid by local businesses, many businesses pulled up stakes and moved outside the city’s boundaries. Their employees sometimes followed them. From outside the city limits, the businesses then tried to service their city clientele, losing less in extra transportation costs than they gained in taxes. New businesses, likewise, set up outside the city to avoid ruinous municipal taxes.

With tolls negating the tax advantages that businesses obtain from moving away, many businesses would now profit from a city location, close to their customers, and move back. Tolls could convince businesses to move to the city another way, too: By using toll revenue to reduce unfair business taxes, cities could bring back more businesses still. With more businesses, and more residents, contributing to the city’s tax base, average taxes would decline for all. Then we’d see a new kind of traffic jam, as businesses, their employees, and their customers, rushed to relocate in cities.

Lawrence Solomon is executive director of Urban Renaissance Institute and a director of PEMA, a non-profit with a patent pending on toll road technology. E-mail: LawrenceSolomon@nextcity.com.
Background sources

Related articles:
Toll roads v. the Canadian Accident Association
London’s green streets
Toll skeptics be damned: London’s rolling
The take from tolls
Don’t tax, toll: Presentation to the Canadian Home Builders’ Association
London unjammed
Don’t tax, toll
Toll today’s roads, don’t build more
How the free road lobby led us astray
Toll road commentary
Road safety
How to cut highways’ human toll

Posted in Cities, Regulation, Toll roads, Transportation | Leave a comment

Environmentalists rule

Lawrence Solomon
National Post
March 1, 2003

To the chagrin of many conservatives, environmentalists as a group have more credibility than business executives, government officials, politicians, journalists and – apart from scientists – just about everyone else that public opinion pollsters compare them to.

This great confidence that the public shows in environmentalists, a confidence that spans more than a decade and covers all manner of environmental issues, stems overwhelmingly from one factor.

Environmentalists have generally been right in identifying serious environmental problems, often spectacularly so.

Nuclear power provides one of the clearest examples of environmentalists making clear-eyed analyses while everyone else was blinded by a business or a technological euphoria. Throughout the 1950s and the 1960s, and well into the 1970s, nuclear power had been virtually unquestioned as the fuel of the future. Then some environmentalists began questioning the government’s wild projections of growth in electricity demand – planners asserted the power system would need to double every decade, indefinitely. These environmentalists also questioned the industry’s claims that nuclear electricity would be “too cheap to meter,” that nuclear accidents couldn’t occur, that radiation was benign and that there were no alternatives to nuclear power. Most people, however, weren’t alert to the looming disaster. Scientists, business executives, governments, journalists, even oil industry executives and the majority of environmentalists who didn’t work on nuclear issues, swallowed the industry’s outlandish claims. Nuclear power’s approval ratings remained well above 90%.

Today, only a minority – mostly among die-hard conservatives and nuclear industry employees – remains deluded. The environmental and economic wreckage of the nuclear industry – The Wall Street Journal, in the 1980s, called its financial collapse the biggest in corporate history – continues to be felt in every jurisdiction that foolishly embraced the atom.

In other energy debates, environmentalists were right, and almost everyone else was wrong, in recognizing that conservation and energy efficiency could quickly and cost-effectively counter the OPEC oil crises of the 1970s. Environmentalists were similarly ahead of almost everyone else in recognizing that big dams could no longer be economically built, but that co-generation and other small-scale power technologies, if allowed to compete, would replace not only nuclear power but many of the dirty coal and oil generating plants that the power monopolies favoured.

The extraordinary track record of environmentalists can also be seen in pitched battles in other fields. Cities that listened to environmentalists and cancelled expressways slated to destroy urban neighbourhoods now count their blessings, while those that struggle with the many unanticipated consequences of expressways count their costs. Cities that preserved their heritage buildings and older neighbourhoods were rewarded with properties that appreciated and contributed to their tax base; cities that converted built-up blocks into parking lots, expecting new developments to spring up, are still waiting.

Environmentalists correctly warned of the loss of the cod and other fisheries, while most blithely accepted rosy projections by government and industry experts. Environmentalists correctly criticize pollution from large-scale farming operations, and embarrass large-scale farmers for their dependence on subsidies, while conservatives pooh-pooh the costs of farm pollution to neighbours and are oblivious to the large-farm sector’s utter dependence on subsidies.

Environmentalists aren’t always right. Their record is spotty in condemning this or that chemical, and particular groups, or particular people, have remarkable losing streaks: the Worldwatch Institute’s Lester Brown on global famines, for example, or biologist Paul Ehrlich on the population explosion. Neither can the many environmental groups funded by governments and unions, such as the Canadian Environmental Law Association, be relied upon for independent thinking. Neither can groups capitalizing on environmental concerns to push separate agendas, such as nationalists like the Council of Canadians.

But Greenpeace, the new international network of Waterkeepers and other environmental groups that rely on small donations, unlike many of their corporate-funded conservative critics, tend to be on the right side of history. Because these environmental groups need public support for their very survival, they have become expert at tailoring their message to the public at large, helping them win the contest in the marketplace of ideas over narrowly funded critics. At a defining moment in the history of nuclear power – the day Margaret Thatcher privatized the electricity industry – Greenpeace UK, Friends of the Earth UK, and other broadly based UK environmental groups were clinking champagne glasses. They knew that Thatcher, by allowing competition and cutting the industry off from open-ended government support, had signed the industry’s death warrant.

The UK’s conservative think-tanks, expecting a liberated nuclear industry to flourish, also toasted Thatcher. When a privatized nuclear fleet, in the form of a company called British Energy, later offered stock to the public, they and their followers finally had the chance to invest in their darling. These true believers then lost their shirts when British Energy went bankrupt.

In contrast to environmentalists’ exemplary record at diagnosing environmental ills, their record in issuing prescriptions is abysmal. In the case of global warming, environmentalists are certainly correct in asserting that society generates economically and environmentally unjustifiable levels of emissions, and just as certainly incorrect in backing the central planning exercise that is Kyoto. Because Kyoto is so unworkable, saner approaches will be adopted, saving society from burning money along with fossil fuels. And adding another notch to the environmentalists’ string of successes.

Readers’ responses:

Letters to the Editor
National Post, Feb. 5, 2003
Lawrence Solomon is very good at describing the past. His predictions for the future are questionable. I was there with him in the 1970s questioning nuclear power – pointing to the unsustainable growth predictions for electricity and the incredible risks and costs that conservative businessmen were taking with taxpayer’s money. Unfortunately, we were right. Nuclear power has cost Ontarians $20-billion in debt. New Brunswick’s reactor cost $450-million. The federal government spent $17-billion and counting.

But as I said, his prediction for the future is wrong. Every realistic analysis of the Kyoto Protocol predicts at worst a negligible impact on Canada’s economy and there are plenty of reasons to question their bias toward the negative.

We were right in 1976 when we pasted a banner on the Bruce Reactor building that read, “Nuclear Power, Unsafe, Unnecessary and Uneconomic.” And we were right in 2002 when we said meeting the Kyoto targets will create jobs and improve air quality while protecting the climate from catastrophic change.

John Bennett, director
Atmosphere and Energy
Sierra Club of Canada, Ottawa


Mr. Solomon seems to be stuck in some kind of 1980s time warp. Let me clue him in on a few of the clearest examples of environmentalists making boo-boos in their energy forecasts.

In Sweden, which voted 23 years ago to phase out nuclear power if alternatives were available, a majority of Swedes now favour keeping nuclear power plants going, or even building new ones as electricity prices have hit record highs, according to a poll by independent pollster Sifo, published Jan. 20 of this year.

While its true that Belgium’s lower House of Parliament voted recently to close down the country’s nuclear power plants by 2025, the bill still faces a vote in the Belgian senate, expected in the coming months.

Belgium’s seven reactors provide the country with almost two-thirds of its electricity, and the move could cause an energy shortfall for decades, as no clear alternative has yet been found.

The closure will also make it impossible for Belgium to meet its commitments to reduce its greenhouse gas output under the Kyoto Protocol. A nuclear phase-out would add 20% to Belgium’s CO2 emissions, which already are on a trend higher than the ceiling foreseen under the Kyoto Protocol. In the European Union as a whole, the current use of nuclear energy avoids 312 million tonnes of CO2 per year, which is 7% of all greenhouse gases emitted in the EU or the equivalent of the CO2 emissions of some 75 million cars.

In June, Switzerland’s lower house of Parliament rejected proposals to phase out nuclear and to make new nuclear projects dependent on existence of a final high-level waste repository. Nuclear energy supplies almost 40% of the country’s electricity.

In France, the largest user of nuclear power after the United States, a report by the Economy Ministry has concluded that it sees no alternative for the time being to nuclear power as the country’s primary means of electricity production (which provides nearly 80% of the total). The report rules out replacing nuclear power with fossil fuels because it “would not allow France to meet its international commitments” to reduce greenhouse gas emissions.

It’s no wonder, then, that EU Commissioner for International Market and Taxation Frits Bolkestein said on Nov. 6, 2002, in an address to the Institute of Economic Affairs in London, that nuclear is “needed more than ever” for Europe.

So how about letting people here know a little bit about what’s really going on?

Jaro Franta, P.Eng., Montreal


When Malthus, more than 150 years ago, claimed that the world’s population would soon overrun its ability to feed itself, it was farm mechanization, new crop development, and better protection of food supply with chemicals and new methods of preservation that showed that he was wrong. Surprisingly, we have some extremists trying to make these population predictions come true, by reining in present-day food progress. In parts of Africa, politicians will not allow people to eat GM food we gave them, that we have been eating for years, because Greenpeace scathingly calls it Frankenfood, and implies that it is harmful. Better to force these millions to starve to death and make a point, than to allow them to eat it and thrive?

Dr. John Snow, in London in the 1850s, suggested that sewage-laden drinking water caused the regular and devastating outbreaks of cholera in London. When the water supply was changed, the disease was much reduced, to everyone’s benefit. Now we have some environmentalists who object to keeping the modern water supply free of pathogens through chlorination. Thousands died recently in Peru in a resurgence of cholera, when the politicians were temporarily influenced by Greenpeace’s misguided and ignorant attempts to ban chlorine.

We got where we are today despite the best efforts of many environmental extremists to stall us, especially over the last 40 years. Such activists do not feed nations; do not provide needed energy to society; do not provide health care or health services to anyone; but they excel at obstruction, emotional misinformation; and factual distortion. If they ever achieve their socially destructive goals we would all very soon find ourselves living in birds nests and rabbit holes, as President Reagan pointed out.

It is knowledge, openness to new ideas, wealth and technology that defeat the ignorance, superstition, fear-mongering, deception and dishonesty of environmental extremists, every time. Eventually.

Environmental issues are rarely if ever identified or even solved by environmentalists. Most do not even know that the biggest human and environmental problems are ignorance and poverty, just as always, or they would be out labouring in the Third World instead of pulling childishly pathetic stunts for the cameras while hiding behind masks. They strive to block the technology that can, and does solve most real problems, while they drain us of the wealth to continue such progress. And therein lies the even bigger tragedy. Only wealthy and advanced societies can afford to support the environmental movement or can afford to address valid social issues. Extremists sidetrack us with what they emotionally try to persuade us to believe are more important issues, and try to drain away our resources from other social programs.

John K. Sutherland, Fredericton

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Deterrence and origin of legal system: evidence from 1950 – 2000

Michael L. Smith                                                                                                          March 1/2003

This study presents evidence on deterrence incentives . . . finding that fatality rates from motor vehicle accidents and from other types of accidents vary significantly across countries classified by origin of legal system.

Posted in Automobile | Leave a comment

The take from tolls

Lawrence Solomon
National Post
February 27, 2003

Less than two weeks ago, London, England, proved that cities could easily eliminate traffic congestion. By charging vehicles £5 per day to enter central London between 7:00 a.m. and 6:30 p.m. on weekdays, the city convinced some 50,000 Londoners to change their schedules, to take public transit, to join a car pool, to work from home, to come by bicycle, to buy a scooter, to take a taxi, to walk part of the way or all of the way, or to otherwise change their behaviour. As if by magic, traffic became free flowing.

The driving public was pleased: No longer did cars crawl in traffic at average speeds of 3 mph to 4 mph. Business lobbies like the London Chamber of Commerce were pleased: London-area congestion was costing the national economy an estimated £4 billion a year. Local residents were pleased: Gone was the noise, safety hazards, and parking frustrations of a city with too many cars competing for too-little available road.

Within days of London’s spectacular success, politicians, bureaucrats and policymakers had formed a parade. In the United Kingdom, some three dozen municipal governments – Manchester, Leeds, and Edinburgh among them – signaled that they may follow suit. Outside the U.K., authorities in Amsterdam, Athens, Copenhagen, Helsinki, Rome, New York, Paris, Genoa, Brisbane, Tokyo, Tehran, Hong Kong, and Kathmandu all gave road tolls the thumbs up. Canada’s Transport Minister David Collenette prodded Montreal, Toronto and Vancouver to follow suit. “At some point, congested cities are going to have to take radical solutions,” he declared.

Governments are in gear. They see the potential in savings to the overall economy and they see the potential to clean our air and improve the public health. And they see one other potential, one they are not about to trumpet. They see the potential for the biggest government revenue grab since the income tax swept in almost a century ago.

London estimates that the tolls to enter central London – an area of about eight square miles that comprises a mere 1.3% of Greater London’s area – will yield it between £130 million and £150 million in profit a year. That is just the beginning of the financial flow to lubricate London. Transport for London, the city’s public transit company, estimates that each pound raised from congestion charges will allow the city to borrow another 10 from banks and lending institutions.

The financial windfall doesn’t end there. The city eventually plans to toll the other 98.7% of its territory, starting with the congested areas around Heathrow airport and Canary Wharf – these would follow a May 2004 municipal election, in which London Mayor Ken Livingstone plans to run for reelection on the success of the congestion charging system. Within a decade, once satellite tolling technology becomes feasible, Livingstone plans to toll all Londoners, on all congested routes.

The U.K. government’s ambitions are no less grand. Within four years, the government expects satellites to charge all trucks using any road any time anywhere in the U.K. And it plans to extend that scheme to all private automobiles in the next decade. Later this year, in what will be a major trial, cars near Leeds will be fitted with electronic tagging devices and their trips tracked by roadside detectors.

Following the popularity of London’s daring scheme, “there is no question a national charge scheme has moved up the agenda,” states David Begg, chairman of the government’s Commission for Integrated Transport, the agency that produced Britain’s blueprint for universal tolling. The tolls in the U.K. would start at three pence (about eight cents) per mile on low-use, rural roads, and peak at £1.30 per mile travelled on heavily congested roads. The revenues that would then flow into government coffers are mind-boggling, but not nearly so mind-boggling as the widespread support that U.K.’s electronic tolling garners.

Not only is the U.K. public surprisingly receptive to tolling all vehicles, pressure groups are too. The U.K.’s trucking lobby likes it – taxes paid by the U.K.’s trucking industry will decline by the amount it pays in tolls, giving U.K. trucks an advantage over competitors that come to the U.K. from the continent. The lobby for railroads, which pay to travel their own roadbeds, think it only fair that cars and trucks play by the same rules; and the Confederation of British Industry wants to recoup some of the £18 billion a year that delays cost its members in lost time and lost business. Even the Royal Automobile Club, ever-wary of curbs on the car, tentatively endorses road tolls.

Mr. Begg’s commission, like many other champions of road tolls, argues that tolls should replace automobile taxes, gasoline taxes and other road-related charges. The public’s great fear over road tolls, of course, is that the tolls will be piled on top of taxes. “Does government ever drop old taxes when new ones come in?” the public has been asking rhetorically.

In fact, history is full of examples of dropped taxes – the U.K.’s truckers can attest to that. The most spectacular case in the last century involving the rise of the income tax. Before income taxes funded government activities, our governments financed themselves through punishing tariffs on imports – the average U.S. tariff exceeded 50% – that shut down the great potential for international trade. As the income tax rose in importance, the tariffs quickly came down to single-digits or disappeared altogether, leading to an unprecedented era of consumer choice and globalization.

The stage is set for another historic realignment in government financing. Conservatives have generally championed the replacement of taxes with user fees; liberals have generally argued that the automobile be made to pay for all the costs it foists onto society. Both camps now have their opportunity, as do the rest of us, to put their visions in place and intelligently ration our roadways – the only entirely free public utility that almost all governments still provide, but at entirely unnecessary economic and environmental costs.

Lawrence Solomon is executive director of Urban Renaissance Institute and a director of PEMA, a non-profit with a patent pending on toll road technology. E-mail: LawrenceSolomon@nextcity.com.

Related articles:
Toll roads v. the Canadian Accident Association
London’s green streets
Toll skeptics be damned: London’s rolling
The toll on business
Don’t tax, toll: Presentation to the Canadian Home Builders’ Association
London unjammed
Don’t tax, toll
Toll today’s roads, don’t build more
How the free road lobby led us astray
Toll road commentary
Road safety
How to cut highways’ human toll

Posted in Cities, Regulation, Toll roads, Transportation | Leave a comment

Congestion charging index

Transport for London
February 26 2003

Consumer guide to congestion charges and journey planning in London, England.

Click here to view webpage with the article
http://www.tfl.gov.uk/roadusers/congestioncharging/

Posted in Toll roads | Leave a comment