Economic Facts and Fallacies

by Thomas Sowell

In addition, many complementary activities can be carried on in proximity to one other in a city, and activities with large fixed costs, such as building a water supply system or a sewage disposal system, can be carried on economically when these huge costs can be spread over a large number of people crowded into a given area. Hospitals, theaters, and cathedrals are other structures with large fixed costs which are also more likely to be affordable when these costs can be spread over a large number of people concentrated in an urban community. These advantages of a city are what attract the people who produce the crowding.

One of many urban fallacies is that highly crowded cities are a sign of “overpopulation,” when in fact it is common in some countries for more than half the nation’s population to live in a handful of cities—sometimes in just one—while there are vast areas of open and largely vacant countrysides.

Even in a modern urban and industrial society like the United States, less than five percent of the land area is developed, and forests alone cover six times as much land as all ...

Photographs of crowded slums in Third World countries may insinuate the conclusion that “overpopulation” is the cause of poverty, when in fact poverty is the reason for the crowding among people unable to afford the transportation costs of commuting or much urban living ...

Many cities were more crowded in the past, when national and world populat...

Due to faster transportation, these suburbanites now have proximity in time to the institutions and activities of a city from ever greater physical distances. Someone in Dallas, living miles away from a stadium, can get there in a car faster than someone in ancient Rome, living much closer to the Coliseum, could reach that stadium on foot.

Elites with their own horses and carriages have for centuries had greater proximity in time to urban attractions than the poorer masses have had, whether in Europe, Asia or the Western Hemisphere.

Ordinary people can in fact live much farther from an urban center today than the elite could in the past.

This was the increased use of automobiles, as mass-production methods pioneered by Henry Ford drastically reduced the cost of cars, turning them from a luxury that only a few could afford into a means of transportation affordable by millions of people of moderate incomes.

Between 1910 and 1916, for example, the cost of the standard Model T Ford was cut in half.8 As of 2007, there were approximately 600 automobiles per thousand population of driving age in Western Europe and approximately 900 per thousand in the United States.9

Among the economic consequences of cars was that workers had access to a wider area in which to seek employment and employers had a...

In Cincinnati, for example, a study found that most residents could reach 99 percent of the region’s jobs within 20 minutes by car. But they could not reach even half that number of jobs by...

A study in Portland, Oregon, found that people with no high school diploma were 80 percent more likely to have a job if they had a car, and they earned a...

That same study found that getting a car enabled such people to get a job more so than getting a high...

One of the first automobile bans was instituted in 1959 in Kalamazoo, Michigan, where there was an attempt to “revitalize” its downtown areas by closing a street to automobile traffic, in order to create a pedestrian mall to compete with suburban malls.

Over the next 30 years, U.S. and Canadian cities created roughly 200 such pedestrian malls. Many won awards from planning groups.

Yet far from revitalizing retail districts, most of the pedestrian malls killed them. Vacancy rates soared, and any pedestrians using the malls found themselves walking among boarded up shops or former department stores that had been downgraded to thrift stores or other low-rent operations...

In the following years, Main Street vacancy rates increased by 27 percent and property values declined by 48 percent... By 1990, many cities began restoring auto traffic to their pedestrian malls.11

That decades had to pass before a mistake with obvious negative consequences began to be corrected is one sign of the problems of decisions by third parties who pay no price for being wrong.

Once having committed themselves publicly to an idea, neither the city planners nor the politicians who employed them had any incentive to admit to being wrong and every incentive to ignore or verbally minimize the problems that arose, rather than jeopardize their careers by reversing decisions they had made, often with public fanfare and promises of great benefits to follow.

By contrast, people whose own money is at stake have to change course much more rapidly if they want to avoid bankruptcy.

Traffic congestion also increases air pollution and, by delaying ambulances going to and from scenes of medical emergencies, affects death rates. For cardiac arrest, for example, medical people arriving on the scene a few minutes earlier or later can be the difference between life and death. Communities around the world have tried to cope with traffic congestion in a variety of ways, with varying degrees of effectiveness.

The fact that most city streets and most highways are free to the motorists—Los Angeles’ freeways being classic examples—means that they tend to be used more extensively than they would be if motorists had to pay the costs that their travel imposed on others. These costs include not only the costs of building and maintaining these roadways but also, and perhaps even more costly, the impeding of other people’s travel by rush-hour congestion.

The annual costs in both wasted fuel and wasted time have been estimated at more than a thousand dollars per rush hour traveler in Washington, Dallas, Atlanta and San Francisco, and at more than $1,500 in Los Angeles, whose freeways are not in fact free to either the city or to individual motorists, when congestion costs are taken into account.15

Like most things that are available without an explicit charge, roads and highways tend to be used far beyond how much they would be used if the hidden costs had to b...

Some people changed the time of day when they drove, in order to avoid higher tolls and some whose journey began and ended outside the most congested areas with the highest tolls now drove around such areas, instead of through them, as they had before there were tolls collected. Others changed from driving to taking public transportation. Buses carried 46 percent of the commuters in Singapore before the toll system and 69 percent afterward.16

Put differently, the Stockholm experiment, like that in Singapore and elsewhere, showed that “free” roadways contribute to congestion, as most “free” things are used more extensively than when the costs of people’s behavior are conveyed to them directly through prices.

One of the persistent fallacies about urban transportation is that it is futile to build more roads because that will only encourage more drivers to add to the traffic, restoring the previous congestion. When the Miami Herald said, “The region can’t pave its way out of traffic gridlock,”18 it was expressing a very widespread view—but one which will not stand up under scrutiny.

When Houston, for example, added a hundred miles a year to its road network from 1986 to 1992, average delay per traveler at the rush hour peaks declined 21 percent.

But, when Houston drastically cut back on road building between 1993 and 2000, while its population was still growi...

19 Similarly, between 1989 and 1997, despite the fact that the San Jose region added 100,000 new jobs, the average commuting time during the rush hour declined by 50 percent because its roadway system was growing.20 In other words, building more roadways to keep pace with the growth of traffic only works when you do it. So do most things. Following the kind of reasoning used by those who say that it is futile to build more roads to cope with traffic congestion, it ...

One of the reasons so many are committed to the idea of the futility of building more streets and highways to cope with traffic congestion is that they prefer to rely on mass transit as part of a more sweeping p...

City planners, consultants and “experts” all have a vested interest in the idea that people cannot be left to live their lives as they see fit but must have their transportation and their housing patterns, among other thi...

One of the reasons for a failure to ease traffic congestion is that many see this congestion as a way to “get people out of...

Urban politicians have an additional reason to be against highways and automobiles: Both facilitate the movement of taxpayers out into the suburbs, beyond the ta...

While mass transit played a major role in the development of New York City, that is today the exception, rather than the rule. Nearly forty percent of all American mass transit commuters are in fact in New York.

Even so, only about one-fourth of New Yorkers get to work on mass transit. Chicago is the next highest, with 11 percent.

Nationwide, mass transit ridership was two million people fewer in 2000 than in 1960, even though there were more tha...

With rising levels of prosperity, more automobile ownership and increasing suburbanization, there are fewer places with the high population densities needed to make mass transit a predominant means of transportation:

The typical suburban community houses about 2,500 or 3,000 people per square mile, but transit’s share of commute trips is insignificant for tracts with fewer than 4,000 people per square mile... Generally speaking, transit’s market share doesn’t exceed 20 percent on average until densities reach five and six times the density of a typical suburban community.

Making mass transit a substitute for the automobile is a daunting task, when so many people prefer the automobile. For one thing, automobiles can deliver people directly from home to work, avoiding trips to and from the points where mass transit can be boarded, as well as transfers that are often necessary.

Moreover, just over half of all Americans do not make a beeline between home and work in their cars but make other stops23—for shopping or picking up their children, for example—and for this mass transit is no substitute for an automobile.

Nevertheless, government subsidies have been poured into mass transit. In 1964, Congress passed the Urban Mass Transportation Act, under which the federal government would provide grants...

But the number of riders declined an additional 21 percent.24 Clearly, what politicians and planners wanted was not what the riders themselves wanted. Still, third parties who pay no price for being wrong continue to favor mass transit and the larger role it provides for themselves in shaping society to reflect their vision.

Where these third parties are in government, they are in a position to implement their vision, even in spite of, and counter to, the expressed views of the public. One way has been to divert money earmarked for highways into mass transit instead.

Thus, in California, where the voters of Santa Clara County in 1990 approved a sales tax increase to build new highways, the Santa Clara Valley Transportation Authority diverted those tax revenues to mass transit. Among the results: Now the San Jose region is poised to spend more than 80 percent of its tran...

Many who condemn the automobile for pollution seem to imagine a pre-automobile society very different from the way the pre-automobile world was in fact. The streets of New York City in the nineteenth century were an example: Much of the muck followed from the still-unavoidable reliance on horses—forty thousand of them, who each working day generated some four hundred tons of manure, twenty thousand gallons of urine, and almost two hundred carcasses.

A 1972 study showed that the amount of pollution per mile traveled by horse was a hundred times the amount of pollution per mile traveled by automobile.27 Since the cars produced in later years have had reduced pollution levels, the disparity today would be even greater.

“restore more than 80 million acres of forestlands that had once been cleared for horse pasture.”

However, businesses and jobs did not leave this neighborhood for no reason. It costs considerable money to relocate operations that employ thousands of people. Moreover, in Chicago as in other cities, massive movements of businesses out of the inner city followed the urban riots which swept across the country in the 1960s.