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> The free market doesn't, at least theoretically, work very well for transit.

We actually have some historical record to examine in this area, though you have to look pretty far back in US history to find a time when the government wasn't directly involved in the transit business.

James J. Hill built the Great Northern railroad in the late 1800's without taking any subsidies. He competed directly with subsidized railroads in the mid- and far west, consistently delivering lower prices and superior service to his customers.

As for highways, thousands of miles were created by private for-profit companies during the first half of the 19th century before highways and railways began to be taken over by government beginning with the Lincoln administration.

The point isn't that you can't have private railroads or highways. The point is that the free market creates less than an efficient amount of transit if you put the burden of paying for that infrastructure entirely on people who travel instead of all the people who benefit thereby.

> The point is that the free market creates less than an efficient amount of transit

I understand your point, but am providing a real world example in the form of a privately run railroad that was more efficient than its subsidized competitors.

> put the burden of paying for that infrastructure entirely on people who travel instead of all the people who benefit thereby

I agree with this part of the statement, but it's false to assume the free market can't utilize this payment model.

The bulk of the railways and roads that I cited were paid for not only with user fees but investments by businesses or entrepreneurs who rightly assumed that they'd reap benefits from railways and roads being constraucted in their districts.

Needs a discussion on "efficiency." Transit can be profitable without being socially beneficial - simply cut out everything but the sure wins from your routes. The population of low-volume regions will be under-served, but your company will have a good balance sheet.

I mean "efficient" as it's generally defined: maximum productivity with minimal wasted effort or expense.

In the case of the Great Northern railroad, the efficiencies were passed on to the customer in terms of ever falling costs and an expanding network of service.

> The population of low-volume regions will be under-served

No, it's the opposite! Low-volume regions are underserved with centrally planned government transportation. The planner has limited resources that must be "democratically" administered.

In a free market, any underserved area provides an opportunity for an entrepreneur to serve that need in the market! It's an elegant system that serves the needs of the people faster with less waste.

I agree the best rebuttal to my comment is to argue about positive externalities, as you have done. I fully admit that I don't have all the answers regarding "tragedy of the commons" and that at some levels arguments about "how far we take the free market" is affected by issues that end up becoming ideological without strong evidence/arguments on either side.

However, I would argue that modern technology could go a long way towards capturing these costs in a way that's tractable, at the point of the user.

Public transit is needed most by those who cannot afford a car; placing extra penalties on areas around public transit lines will hurt the poor dis-proportionally.

Not to mention, if your city has good public transit, you should be able to get around anywhere, so I guess what you really mean is 'tax everyone,' which seems reasonable.

Public transit is needed by all who commute in dense areas (like the Bay Area). If you had everyone on the road, it would be a 24/7 parkinglot. A robust public transit option would further help to alleviate driving-only traffic.

> I think the way to go would be to have all transit be funded by a combination of user fees and tax increment districts in the areas served by transit. After all, it's not just the subway rider that benefits from the existence of a subway line, but all the businesses and residential developments near a subway stop too.

At least in Bay Area, being able to walk to public transportation (usually Bart of Caltrain: stuffwhitepeoplelike #147, "public transportation that is not a bus") has a huge rent and property value premium (with property usually being valued as a rental property). Effectively this means people who would benefit most from public transit (e.g., someone who has to commute to downtown SF -- as it's the only place hiring someone with their qualifications -- but can only afford to live in East or South Bay) can't afford to live near it.

I wonder if a progressively priced tax on rent as a way to fund public transport (designed with incentives to make renting at a lower price to families attractive) would help: it would create incentives for apartment complexes to provide more affordable family units (vs. large units designed by to be shared by roommates) and have the effect of automatically providing more funds for public transportation to dense areas with many rentals (i.e., where it's most needed).

I'd also add having states and localities fund interstates would be fair as well: there's no reason for me to force someone living in New York to fund my commute on the US-101 (the national security reason for having interstates is pretty much dead at this point; nor does allowing a missile truck to travel require widening 280 -- a local loop from I-80 -- to six lanes) and it takes away the ability of federal government to bully states into passing questionable laws with a moralistic basis (e.g., raising drinking age to 21) by threatening to withhold highway funds.

You could easily encourage more affordable housing without tax incentives, but by simply repealing zoning restrictions. Let developers build denser structures with less space per person, it would be cheaper. Also remove requirements like offsite parking minimums which also make new construction expensive.

Hmm, dense structures, no zoning codes, where have I heard that before?

Oh yeah: http://en.wikipedia.org/wiki/Tenement

To be fair, Silicon Valley's zoning codes are far too restrictive and don't serve broader public interest. For example, my city (Saratoga), prohibits multi-family dwellings in most places -- meaning affordable housing can't be built -- and sets minimum lot sizes in many zones (a way to raise prices). Palo Alto is also quite bad in this respect (particularly in the transit friendly downtown neighbourhood).

Reducing NIMBY-esque/real-estate developer driven zoning strictures doesn't imply repealing public safety/health codes.

It will actually be against my personal interest if these restrictions go away -- I happen to a own townhouse in one of few places in Saratoga where multi-family homes are allowed and big reason I did this, was to be able to convert it to a rental property (highly desirable in Saratoga -- an area known for its safety and schools -- as they're virtually non-existent) once we decide we want a bigger place. However, I'll be glade to trade a few hundred in rent income for a more dynamic and less grid-locked Silicon Valley.