Many London commuters whine that the Tube is too crowded and too expensive and most of the candidates for London Mayor are trying to tap into this sentiment*;
Boris - "We pay the highest fares in Europe and we deserve value for money",
Sian - "The cost of travel is one of the main reasons London is such an expensive place to live ... I would focus on making day-to-day travel more affordable for ordinary Londoners",
Brian- "Tubes charge first class fares for third class travel. Despite record investment, they are still overcrowded, overheated and unreliable".
Ken, who is apparently only narrowly behind in the race, has been Mayor for eight years, and has had plenty of time to put his grand plans into effect. And to be fair, he did bitterly oppose the hugely expensive PFI nonsense.
So none of them have a clue about economics, do they?
1. The Tube is running at full capacity, so in the medium term you cannot increase quantity supplied.
2. Reduced prices would mean an increase in quantity demanded, i.e. even more people would want to use the Tube, so it'd become even more crowded at peak times (if that's physically possible).
3. Somebody has to pay for the cost of running it. None of them have said which taxes they'd increase to cover the shortfall. The least-worst way of funding public transport infrastructure is via Land Value Tax, but that's a bit beyond the Mayor's remit, methinks.
4. The 'high' cost of Tube travel (actually, season tickets are very cheap) does not increase the 'cost of living'. If the Tooth Fairy paid for the Tube to be totally free, then London would be a more attractive place to live and people would have more money to spend on ... rents and housing. So rents and house prices would go up (scroll down to The Error of Public Tollways), and the total cost of living would stay much the same.
* Even Gerard is not immune to this, although he's the only one who'd scrap the Congestion Charge - more people in cars = less people on the Tube - hooray!
Saturday, 5 April 2008
Price and quantity demanded
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2 comments:
Interesting. What's your solution, Mark? Raise prices in the short term in order to fund increased capacity in the long term?
Ticket sales seem to make up about two-thirds of their income, one-third is grants. So really, ticket prices ought to go up by 50%, but no Mayoral candidate would dare suggest that, would they?
Increased capacity should be funded by Land Value Tax, but again, that is beyond the Mayor's remit.
The best we can hope for is operational improvements, but that's all highly technical and not really something that politicians should get involved in. All they could do is get rid of PFI and stop pandering to the train driver's union and so on. I hate it when they go on strike.
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