Inroads-Understanding Transportation

If we are going to be investing billions of dollars in transportation, it would probably help to understand how transportation works.

According to Wikipedia, transportation is the act of moving something from one location to another. While this may be mind-numbingly basic, what's really sad is our understanding of transportation doesn't extend much further.

Traffic engineers like to equate the movement of people with the flow of fluids; many conservative-minded people equate movement of vehicles with economic activity. While both of these analogies seem plausible, they are both fundamentally flawed. People do not behave like inanimate particles and can chose from a variety of travel options. Economic activity is not generated during travel, but at the destinations.

In economic terms, the act of moving oneself is fundamentally a wealth destroying activity. Transportation has direct costs (gas) and opportunity costs (time), while the benefits are only achieved at the destination. Economic activity cannot be equated with vehicle movement since there is no benefit to traveling more if the destinations are the same. No wealth is generated by just having people move around in circles.

Why do people get around the way they do? Like anything else, people seek to minimize their costs while maximizing the benefits. People wish to reach destinations (work, school, grocery store) while minimizing their costs of transportation (gas, fares, time, energy).

The cost of transportation can be viewed as three separate costs:

• Direct Costs
• Time
• Inconvenience

Direct costs are the actual costs of transportation. For cars, these would the cost of the vehicle, gas, maintenance, insurance and licensing.

Time is an opportunity cost. The thought it is that the time spent traveling could be better spent doing something else. The cost of time is a very important factor and explains why people may choose nominally more expensive transport modes (driving vs. walking).

Inconvenience is a cost associated with personal preference. For example, some people may not like standing up while taking a bus or enjoy driving. For them, there is an extra cost associated with these modes.

What does this all mean? Well, contrary to many conservatively minded people, you cannot equate additional vehicle movements with additional economic activity. The way you help the economy is by minimizing the total transportation costs, thereby reducing the amount of resources spent on transportation and allowing it to be used for other purposes.

Inroads - A Focus on Transportation

In the coming weeks, The Ecolomist will be doing a feature Inroads that will examine transportation and infrastructure policies. In light of recent economic turmoil, many governments plan on investing billions of (taxpayer) dollars in infrastructure projects. It is critical that if any money should be spent, that it is spent wisely.


Inroads will get to the nature of transportation, react to new developments, discuss policies and ultimately propose solutions.

Stay tuned!

A Little Housekeeping

The Ecolomist will discuss a wide range of economic and environmental topics (and by the environment I mean not just nature, but the human environment as well).

That is why I think it is important that readers understand the mindset behind this blog and the solutions it proposes.

The Ecolomist adheres to these key principles:

Free Markets are the best

In contrast to the logic of many environmentalists, free markets and ecosystems are actually quite similar. Both are competitive, seemingly chaotic systems governed by a set of basic laws, and both enable an amazing level of diversity and innovation, whether it be niches or niche markets. The Ecolomist believes that systems of 'orderly chaos' like free markets inherently work the best.

Distortions in Free Markets, not Free Markets are the problem.

Well, if free markets are so great, why are there so many problems? Why are rainforests being cut down at an alarming rate? Why are cities rapidly sprawling and destroying habitat and farmland?

The Ecolomist believes that these problems are not the fault of free markets, but of distortions in free markets. These distortions are caused by subsidies, over-regulation and uncharged externalities. For instance, agricultural subsidies are one of the main contributors to deforestation of the Amazon.

Bumpers, not Barriers

Wait- you might be thinking "Isn't there a contradiction here? You say overregulation is a problem, yet you also say you need to regulation in free markets."

The Ecolomist believes that the regulation should guide the market instead of controlling it. Regulations should act as bumpers, not barriers. 'Barrier policies' try to control the market. Unfortunately tehy provide markets little flexibility and encourage people to find ways around them. Vehicle use restrictions in Mexico City didn't discourage driving as intended; people bought or used different cars for different days of the week.

'Bumper' policies on the other hand, guide self-interests by discouraging them from veering off course and hurting other interests, such as environmental or long-term interests. An example of a bumper policy would be making polluting industries pay for the damages they impose of society.

Economic and environmental policies should designed carefully with these principles in mind. If not, there can be severe unintended consequences.

What is the Ecolomist?

Hi, my name is Lee Haber and I'm a McGill university student. I started this blog because I found myself thinking and discussing more and more about ways to solve today's most challenging problems, specifically ones that had to do with the economy and the environment. "The Ecolomist" (Ecology+Economist) is my way of sharing and discussing ideas about how economic principles can (and should) be applied to further both humanity and nature.