Using Markets to Enhance Mobility

Donald Shoup has done some excellent work on parking issues, and I fully support his proposals for market pricing of on-street parking and eliminating minimum-parking requirements for developers. I question, however, his proposal for what to do with the revenue from on-street parking and his closing diatribe against urban sprawl.

As Dr. Shoup is fully aware, American cities are at the heart of a battle over the future of American mobility. Urban planners and others seek to greatly reduce the role of the automobile in our future. The state of Washington has even passed a law mandating a 50 percent reduction in per capita driving by 2050. Dr. Shoup’s rhetoric about the evils of urban parking and its contribution to so-called sprawl helps to incite those who are trying to reduce our mobility.

Few Americans today realize how much the automobile has revolutionized our society because we take automotive transportation for granted. If people notice cars at all, many see only bad things, such as pollution, energy consumption, and accident fatalities, while they are ignorant of the good things, such as a huge increase in worker productivities and incomes, better housing, and broad access to a wide array of consumer goods. With almost 19 out of 20 American families owning at least one car, the automobile has democratized mobility, offering freedom to nearly all people regardless of income, race, or gender.

Before Henry Ford started producing his Model Ts on a moving assembly line, most Americans had little more mobility than they had when George Washington took office as president in 1789. Intercity trains and streetcars were affordable only to the wealthy and urban middle class (white collar workers); ruralites and working-class families had no access to or could not afford mechanized travel. As a result, the average American in 1910 traveled little more than 1,000 miles a year by train or urban transit. Today, the average American travels nearly 19,000 miles a year, 85 percent of it by car.

Many of the thorny problems created by this huge increase in automobility have resulted from government ownership and control of highways and streets. This in turn happened because the automobile’s ascendancy coincided with the Progressive era. Railroads were considered evil monopolies, so most people agreed that roads and streets should be publicly owned. An elite cadre of engineers would scientifically manage the roads for safety and efficiency and pay for them out of gasoline taxes that all the states enacted as a form of highway user fee between 1919 and 1930.

While the engineers did a credible job of building and managing increasingly safe and efficient highways, inevitably there was political interference with their work. One form of interference was the push to give certain parties something for nothing, such as free on-street parking. In this case, the parking was not a subsidy to motorists as much as it was a subsidy to downtown businesses that had to compete with suburban shopping areas that (because suburban land was much less expensive than downtown land) could cheaply offer free parking.

As Dr. Shoup notes, free on-street parking led to unnecessary driving as some motorists searched for an available parking space. This in turn led cities to demand that businesses internalize this externality by imposing minimum parking requirements. Those minimum requirements were supposedly scientifically derived, but may often have been arbitrary.

It makes sense to raise on-street parking fees in congested areas to market rates. Afterward, cities can dispense with the minimum parking requirements that were only necessary because of the problems caused by free or below-market-rate on-street parking.

I have a problem, however, with Dr. Shoup’s proposal for what to do with surplus on-street parking revenues. He suggests using this revenue to subsidize “public services.” In other words, to subsidize the property owners in the vicinity of the on-street parking, giving them an advantage over property owners elsewhere. This is far from a free-market solution.

A private company offering parking would use surplus revenues from that parking to create more parking until the marginal cost of the last parking space created equaled the marginal revenue from renting out that space. That is the market solution, not subsidies to adjacent property owners.

Portland, Oregon uses revenues from on-street parking to subsidize its downtown streetcar. It then uses tax-increment financing to subsidize infrastructure, including off-street parking garages, for development along the streetcar line. The off-street parking garages attract businesses like Whole Foods—businesses that could not possibly survive based on streetcar traffic alone—to operate in the downtown area. The city receives accolades for being pro-transit when really it is subsidizing downtown property owners.

The development that takes place near the streetcar line/parking garages would have taken place somewhere in the Portland area, but the subsidies attract it to downtown instead of elsewhere where it would have cost less. This isn’t what Dr. Shoup intends when he proposes to use parking fees to subsidize development, but it is the real-world result of such a policy.

Similar perverse results are taking place in response to Dr. Shoup’s other recommendations. Instead of just eliminating minimum-parking requirements, many cities are substituting maximum-parking requirements. Their goal is to deliberately create parking shortages in order to reduce driving and low-density development, which planners call sprawl.

Dr. Shoup supports this anti-driving campaign when he argues that “parking requirements (and the free parking they produce) accelerate sprawl.” I see little evidence that this is true. Instead, so-called sprawl is a result of people’s preferences to have mobility and the benefits it provides including higher incomes, better housing, and access to low-cost consumer goods and a variety of social and recreational opportunities.

Dr. Shoup’s examples of the negative effects of free parking are all taken from dense cities that are unrepresentative of most of America. New York is America’s densest city, and it is certainly absurd for it to offer free on-street parking. But Manhattan is more than 20 times denser, and New York City as a whole is nearly 10 times denser, than the average American urban area, so what happens in New York is not at all representative of the rest of America.

While New York City is very dense, its suburbs are not, so it is not the densest, or even the second or third densest, urban area in America. Instead, that title goes to Los Angeles, followed by San Francisco-Oakland and San Jose—the locations of most of Dr. Shoup’s other examples. Thanks to urban-growth boundaries that are now mandatory for California cities, whatever happens there is hardly representative of much of the rest of America.

To find out what cities would be like without minimum-parking requirements, we must turn to Texas, where counties aren’t even allowed to zone, much less impose minimum-parking requirements. This means developers are free to build for the market, not for urban planners. While cities are allowed to zone, for the most part they maintain minimal restrictions so as not to lose potential tax-paying developments to areas outside their jurisdiction. The result, as anyone who as toured Dallas, Houston, or San Antonio knows, is large amounts of low-density development supported by plenty of off-street parking, all without minimum-parking requirements (at least outside of city limits).

Personally, I would not object if market pricing of on-street parking and elimination of minimum-parking requirements led to denser development of some areas. If there is a market for such development, I am all for it. The problem is that America is suffering from an elitist backlash against low-density development, and that backlash is leading to all sorts of absurd rules such as urban-growth boundaries that create artificial land shortages, maximum-parking limits, and subsidies to high-density development. Dr. Shoup’s rhetoric, if not his actual proposals, feeds that backlash.

American urban politics are heavily influenced by a powerful anti-automobile movement that sees nothing wrong with reducing people’s mobility so that more people can “enjoy the benefits” of living Manhattan or Brooklyn lifestyles. I hope that Dr. Shoup and I can agree that the purpose of market-based pricing of parking and roads should be to enhance freedom and mobility, not to discourage it.

Also from This Issue

Lead Essay

  • Free Parking or Free Markets by Donald Shoup

    America’s supposed love affair with the automobile is more like an arranged marriage, says Donald Shoup. Car and parking policies make cities and suburbs less livable for human beings. He recommends three reforms: First, adjust parking meter prices according to supply and demand. Second, return parking revenue to local communities for civic improvement. And third, remove minimum parking requirements that lock up useful land, lengthen commute times, and contribute to urban and suburban sprawl. These policies, he argues, are good for the community, good for the environment, and represent sound, market-based urban planning.

    America’s supposed love affair with the automobile is more like an arranged marriage, says Donald Shoup. Car and parking policies make cities and suburbs less livable for human beings. He recommends three reforms: First, adjust parking meter prices according to supply and demand. Second, return parking revenue to local communities for civic improvement. And third, remove minimum parking requirements that lock up useful land, lengthen commute times, and contribute to urban and suburban sprawl. These policies, he argues, are good for the community, good for the environment, and represent sound, market-based urban planning.

Response Essays

  • Zero Price Parking and Nickel Beer by Sanford Ikeda

    Sanford Ikeda calls Shoup’s proposal “an important, and presently… politically feasible step in the right direction.” He contrasts it favorably to congestion pricing, which represents, to him, a needless added layer of regulation. He recommends several refinements to Shoup’s thesis and situates it in a larger constellation of free-market transit policies, including especially deregulated private conveyances. Moving toward these policies, Ikeda argues, should be the ultimate goal.

  • Efficient Road Pricing for Stationary Vehicles: The Case for Curb Parking Charges by Clifford Winston

    Clifford Winston offers a variety of suggestions for further research and implementation of optimal parking charges. What are the current shares of various types of parking capacity? How much of it actually is free right now? How would congestion fees on roads interact with efforts to price parking efficiently? What can new information technologies offer us in this area? Although Winston is clearly sympathetic to Shoup’s thesis, his essay points to the magnitude of work yet to be done.

The Conversation