The Interstate Orange System

I wrote a comment on Matt Yglesias' blog, but I thought the point was good enough to share here.

A commenter, doubting the existence of "induced demand" on freeways, likens highways to oranges:

I've never really understood the "traffic expands to fill supply" argument. I have driven on roads in a number of different cities in the United States. Some were faster than others. Demand does not actually increases without limit, so it is possible to have enough capacity. And proper freeway design makes an enormous difference, so there's that, too. It's like if we gave away free oranges, eventually people would get as many oranges as they wanted and we wouldn't have to give away any more. That's not how people get oranges because we've chosen to have a market for them instead. But it's not impossible to do. Even if the roads are empty, I'm not just going to drive around randomly. And my speed is limited by the speed limit, so if I'm only willing to tolerate a 60 min commute, I can only live 60 miles from work. I'm not going to drive 200 miles to and from work just to use the available roads.

The biggest cities need to manage traffic coming into the city core because building enough capacity to feed a dense grid of skyscrapers full of people would simply take up too much space. And so you need to limit access through tolls and public transit. Or if your travelling to Manhattan, bridges are damn expensive to build so we make the users pay. But there is plenty of space in most of the DFW area and no geographic restrictions such that I don't think congestion is unavoidable on most of their roads.

I take the orange argument and run with it:

The question, though, is whether we should be providing free oranges to everyone. Imagine if oranges were given out as freely as roads- every street corner has a government employee with a box of oranges, handing them out to anyone who asks. You can imagine that, suddenly, your intake of oranges is going to increase dramatically. Looking for a quick snack? Grab an orange. Making dinner tonight? Orange chicken, duck l'orange, orange slices on a salad. You're going to have fresh-squeezed orange juice every day for breakfast, aren't you? In fact, I bet in this society it would be as "required" for people to own an orange juicer and peeler as it is in our present society to own a car.

Now, to enact this policy, it's going to take spending billions on orange production, which in turn is going to crowd out a lot of other crops in agriculture (much like corn does today, but worse). And what about people who don't like oranges? Their tax dollars go to pay for the Interstate Orange System just like everyone else.

Of course, demand patterns shift. Some orange guys on some street corners are going to run out, while others are going to have so many oranges that a lot spoil. But what happens when you decide to provide a good free- be it oranges or highway infrastructure- is that you encourage overconsumption of that good. Could we build enough highways to satisfy demand? Almost certainly yes, just as we could probably farm enough oranges so that everyone in the country had as much as they wanted. Could we do so without sacrificing a lot of other priorities- good land-use planning, environmental protection, and whatever's on the land on either side of existing freeways? Nope.

By the way, Happy Earth Day! If you took the bus today, send your day or monthly pass in to RTA for a chance to win free travel.