Should mass transit be made free, to stimulate the U.S. economy?

When you work in public policy or economics, you come across policies and programs in various countries in Europe and elsewhere that are innovative and/or that have otherwise have stood the test of time.

Still, the above doesn’t mean they’ll be implemented in the U.S. That’s because the American culture and system presents its own, unique challenges and restrictions. Where else can one person — 1 U.S. Senator — stop the democratic process, thwarting the will of the majority, the will of the people?

Marketwatch.com Chief Economist Irwin Kellner mentioned one idea that’s Europe-esque — a policy that would not stand a chance during robust economic times — but one that may gain support, due to the recession.

Kellner’s ‘radical’ idea? Make mass transit free. That’s correct: free.

You’ll take the ‘A’ train

Now before you accuse Kellner of having met in Greenwich Village with Lenin and Kalinin and the rest of the Bolsheviks two months ago, here’s his argument: across the U.S., cash-strapped mass transit systems are doing what they should not be doing: raising fares at a time when riders are already being pinched by rising prices, property taxes, and transportation expenses.

The transit systems feel that have no other choice but to raise fares (and cut services), but Kellner says this is having an effect the U.S. economy least needs right now: it’s further reducing consumers’ disposable income.

Kellner’s solution: Eliminate the fares and use federal funds to make up the difference. The idea is not as outlandish as it appears: most transit fares account for 30-45% of ridership cost, with the rest made up by state and federal funds.

The benefits of Kellner’s free ride? You guessed it: increased disposable income for consumers — something adults could no doubt use, and something that’s sorely needed by the U.S. economy right now.

The plan would also have the added benefit of encouraging mass transit use (reducing traffic congestion) while lowering oil/gasoline consumption — and the federal government would generate that increased efficiency without paying to laying one new mile of subway or light rail track and/or buying one new bus.

Economic Analysis: Economist Kellner’s free mass transit idea has merit on a number of counts. Especially relevant is the stimulus impact: it would be tantamount to providing additional fiscal stimulus, instantaneously, to millions of citizens, with the federal government later reimbursing the states and localities. It would also encourage more people to keep their cars off the road and use mass transit for work (and perhaps for other activities), and decrease the nation’s carbon footprint. Kellner’s idea is worth a review.

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