Devolution of Transportation: Reducing Big-Government Involvement in Transportation Decision Making

The current systems of pricing, decision making, and funding give too much authority to higher levels of government––particularly the federal government, but also to government in general. The vast majority of passenger and goods movements involve short distances. This is inconsistent with the scale of government involvement in the decisions and funding processes that dominate the transportation sector. Transportation pricing and funding mechanisms used today are a legacy of out-of-date motivations and constraints. Today’s mechanisms do not create a nexus between those who need transportation services and the financing of those services. Instead, funding flows through processes that involve pooling of revenues, subsidies and cross- subsidies, and non-economic allocation processes to investment and operations spending. The result is that the mostly localized needs of passengers and shippers are not efficiently served. The misallocations and distortions are most marked in the case of highway-based transportation and urban transit. This results in congested and over-used highways and transit systems that provide high-cost service with little accountability to passenger trip preferences. The issues are less pressing in the case of air and water transport. However, we question the need for public ownership of airports and seaports. Other countries have successfully privatized both ports and air traffic control systems. Pipelines, like the rail network before them, face sufficient competition to benefit from the near-complete deregulation and devolution of decision rail has enjoyed for over 30 years. The success of rail deregulation is a powerful illustration of the benefits of devolution to the private sector.

Click here to read the full publication →