Many countries, the USA included, subsidize all forms of transportation: road, air, canal, and rail. The problem with subsidizing things is that you remove individual choice from the equation. Individuals matter because individuals are the ones who have to use these services. The trouble with evading the price system is that prices work very well to direct resources to those things that people really want. Not pseudo-want, when they say "Oh, yes, people (that is, other people) should use public transit more." Not pseudo-want, when they lobby their legislators. Spending money is the most honest sentiment a person can express, because they had to give up a part of their life to get that money.
Roads, airports, canals, and railroads: none of them shoulld be subsidized. Users should pay the entire cost of their carriage. Why? Because those four technologies are each over a hundred years old. If all forms of transportation are subsidized, then the competition (such as the RUF and many others) can only succeed by getting subsidized. And yet politicians are very bad at choosing new technologies. Most of them don't work out, and politicians are chary of failure.
posted at: 14:47 | path: /economics | permanent link to this entry