Monday, December 26, 2005

More on the "free" month of Westchester-subsidized bus rides

Last May, I wrote about the allegedly "free" month of Bee Line bus rides, which are hardly free. Someone has to pay for them, so if they're not charging for fares, who else but taxpayers will foot the bill? I recently received some feedback:
Hi, I just came across your blog about the "free" Bee-Line bus rides last May, and I wanted to add my two cents.

I believe the County taxpayers came out even (or maybe ahead) because of the free rides. The Bee-Line takes in about $40 million/year in fare revenue, so the 39 days of "free" rides cost the County around $4 million. The offsetting savings comes from the fact that, after fares were restored to normal levels, the Bee-Line reported no drop-off in ridership. It's VERY unlikely this would have happened without the freebies. If ridership had dropped, say, 10% after the strike, the Bee-Line (and the County taxpayers) would have lost about $4 million in revenue each and every twelve months.

Consider August ridership for example... In August 2004, the B-L reported 2,214,433 non-paratransit passengers; in August 2005 the comparable number was 2,259,490.

It's like an airline giving out free travel vouchers after overbooking and involuntarily bumping somebody. Yes, the voucher costs money, but so does a dissatisfied customer.

As to the unstruck (non-Liberty) bus routes also being free... Only three Bee-Line routes (16, 18, and 76) are run by somebody other than Liberty. Total ridership on those three routes in August 2004 was reported at only 24,586 passengers--barely a rounding error in a Bee-Line budget of at least $80 million/year.

As for extending the March Passports through June, that was only fair. The Bee-Line only operated 2 days in March (the strike started March 3) so throwing in 30 days of June was only just. People paid for 31 days of transportation in March and ended up getting 32 (2 in March and 30 in June). Is that being overly generous?

There are MANY things wrong with the Bee-Line (if you're interested, I'll send you a list!), but last May's freebies aren't one of them.
My reply (my first and then a small followup, with a minor edit):
I would agree with what you said about the county breaking even, but for a different reason. By definition, the county in aggregate should have come out even, for the same reason you exchange $1 for something you value at $1. But as I said, someone has to pay for it. So people might think the rides are free, but the money ultimate must come from our tax dollars. Someone like me hardly came out even, because I have never ridden the Bee Line, yet I pay tax dollars for it.

A recurring theme in my blog, and I do write from a libertarian standpoint, is that it's wrong to make others subsidize a service that others use. That's the one great thing that's wrong with the Bee Line. While $40 million in subsidies may not seem like a lot to a generally wealthier county like Westchester, that's $40 million that would have spread around the economy in other ways. The subsidies to the Bee Line, MTA, Amtrak and other transportation services tend to promote inefficient operations, so it's not a very good use of that money, not compared to private expenditures.

Also, while the county and Bee Line would have lost revenue, people would have spent the same money elsewhere. Faced with long-term difficulties in getting to their old jobs, people would have found other ways of commuting to work, or other jobs. Economies tend to adjust, admittedly not without pain, but all on their own, because people still need to live. Now, perhaps the only jobs they can find pay less, but an important consideration is that the county is no longer spending $40 million to make those jobs possible. Though their new wages might not be as high, they would experience the effects of $40 million flowing more efficiently.

I don't know that ridership would have dropped off without the "free" month, but that would have been a good thing. Subsidized services need a good dose of competition. In the private sector, a business that throws a temper tantrum will deservedly lose customers. While I see nothing illegal about people organizing unions and demanding contracts, I think it's stupidity on government's part to surrender the right to fire them and hire new people. I certainly have the right to tell my boss in the city that I won't come in until I get a raise, and he has the right to fire me and hire someone who'll do my job for the same money.

If an airline gives free travel vouchers to retain customers, like any other business expense, they're ultimately part of the ticket price. If a business has such poor service that it must dole out a lot of freebies, it will naturally have to charge so much that it won't get any business. On the other hand, it's an entirely different matter when the Bee Line gives free bus rides, because they're paid for by the taxpayer (especially unwilling ones who wanted no part of the business in the first place). It's also a government monopoly on that type of transportation.

Instead of free rides, people should have been offered refunds on the tickets they were unable to use, or credits toward their next pass. There was certainly a little increased ridership from people who hadn't bought tickets and wouldn't ride the buses afterward, which means more that taxpayers must pay for.

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