Thursday, June 23, 2005

QWERTY's Evil Twin

Paul David and Brian Arthur call your offices. You want path dependence?

In an almost perfect display of Public Choice Economics in action, the city of Seattle has decided to lock in people not even born yet to an inferior transportation system:

With Seattle's monorail headed for a contract signing next month, state Treasurer Mike Murphy yesterday urged local officials to shut the project down.

Murphy is worried because the Seattle Monorail Project's financing plan — which includes 40-year bonds, deferred interest payments and some high-interest "junk bonds" — would require $11.4 billion in taxes through the year 2053 to fund a $2.1 billion elevated train system.

"I'm hoping good sense will prevail at the monorail board and they will stop dead in their tracks," Murphy said in an interview.

He explained: "The average guy can't afford a Ferrari, because he can't afford it. There should be somebody at the monorail saying we can't afford this thing. The numbers keep getting bigger and bigger. To finance something at 5-½ times the construction value is totally ludicrous."

Joel Horn, monorail executive director, says the true burden is much lighter than the numbers suggest, because as a result of inflation, a dollar four decades from now will be worth a dime in today's money.

The agency must push interest costs onto future generations because of continuing shortages in a citywide car-tab tax to build the line.

"The benefits of the monorail will go on for over 100 years," Horn said.

Meanwhile, the search for market based lock-in has failed to turn up even one legitimate example.

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