Leaving the EU - Transportation
When it comes to alternatives to automobile transportation, Americans on both sides of the debate are mistaken. (The second to last, we think, in our series on transitioning back to the US.)
Our Necessary Evil
We bought a car. For seventeen years in Sweden, we got along splendidly without one. We biked to work. We walked to the store, or took one of the quiet bio-fueled buses to the city center. We rode the trains to other cities. If we were out past the hour that services shut down, we paid for a cab or an Uber.
Not having a car — the payments, the repairs, the insurance, and the taxes — more than made up for the occasional costs of public transport. If we sacrificed the spontaneity that car ownership offers, the frequency and punctuality of the buses required only a moment’s forethought to up and go wherever we pleased. When we traveled somewhere that a car was needed (such as our home leave to the United States), we rented one at the airport or train station. The high daily cost of renting a car a few weeks each year was far cheaper than the ongoing costs of owning it.
But now that we’re back in the land of the free and the home of the drive-thru, car-lessness is a luxury we can’t afford. We paid cash for a used vehicle, nothing fancy, but comfortable enough to ride out the holiday gridlock, the fender benders, the road rage and the sweltering asphalt canyons formed by miles of sound barriers paneled along America’s suburban neighborhoods.
For shorter distances, we still walk, to the amusement of the neighbors, down the busy boulevards and across several blacktop parking lots to the supermarket, buying no more than we can carry home by hand. Our new hometown at least has narrow strips marked off for bicycles on the side of the highway — an encouraging development in some American cities, but well short of the systemic infrastructure of Northern and Western Europe, which integrates bicycle and pedestrian traffic as equal parts of the urban transit network, and not as afterthoughts to automotive travel.
Why Alternative Transportation Allegedly Won’t Work
Whenever someone longingly observes that Europe, or Japan, possesses a functioning, civilized web of public transit, walkable streets, and bike paths, the American nativist is quick to dismiss such commie talk Res Judicata: There’s clearly no profitability in running rail lines through the barely inhabited expanses that separate America’s cities. Exhibit A is the persistent financial anemia of Amtrak; Exhibit B: the multi-billion-dollar bureaucratic circus known as the California High-Speed Rail project.
This insulation from economic reality is just as glaring at the local municipal level. When New York City attempted to expand its network with the Second Avenue Subway, it cost a staggering $2.5 billion per mile—making it the most expensive transit project in world history, utterly incapable of ever paying for itself through passenger fares. Across the country, legacy networks like the San Francisco Bay Area’s BART and Atlanta’s MARTA have similarly devolved into permanent fiscal swamps. Plagued by collapsing farebox recovery rates, bloated operating overhead, and routing that caters to political optics rather than actual commercial density, these systems hose billions in local tax subsidies just to keep their half-empty trains running. With good reason, inner-city buses and subways in the US, with few exceptions, are written off as a permanent tax drain—shabby, unsafe, and ridden only by those who can't afford better.
Walking is for the treadmill, at the gym, that you drive to. Cyclists are soy-boy a**holes just begging for the victim status conferred by the next accident they cause.
And whatever might be said in favor of the fresh air and community that the non-automotive commuter enjoys, sidewalks and bike paths are the camel’s nose in the tent. Before long, we’ll be imprisoned in 15-minute cities and expected to be happy with owning nothing.
It’s not surprising mass transit caught on in Europe. Bewitched by socialism, the Europeans harbor a herd-like suspicion of the naked individualism required by the open road. As for the Japanese, their excellent public transportation system can be forgiven on account of the sheer density of their population.
But this is America, where the market has spoken in favor of the automobile!
Far be it from us to question how free people choose to get from point A to point B. Indeed, while there are aspects of the fifteen-minute city we find appealing, we’d be the first to storm the barriers if the Climate-Nazis in central planning tried to corral us into one of them for our own good.
The problem with the argument over mass transit and walkable cities in the United States, however, is that both sides assume they aren’t possible without massive subsidization and eminent domain confiscations by the state. While it is hard to imagine there isn’t at least some role for a government whose representatives negotiate the many conflicts of interests that any large, inter-community project is bound to beget, the idea that it can only be accomplished through the brute force of politics — damn the costs — ignores the private innovations and commercial logic that have made it successful in other parts of the world as well as in the early days of American urban development.
Indeed, we can never know for certain what contemporary urban and inter-regional transport would look like had we not diverged from the original path, but we do know that the path that was ultimately taken was hardly a laissez faire phenomenon, and in fact required substantial government intervention that continues to this day.
The Forgotten Free Market in American Mass Transit
American streetcar and interurban networks in the late nineteenth and early twentieth centuries operated on the premise of free enterprise. In dense, walking-dependent cities, the volume of riders at the standard “nickel fare” brought in substantial revenues. At the end of their lines, transit companies built the first amusement parks, or “trolley parks,” which helped sustain passenger demand over the weekend. In smaller towns, land companies built trolley systems that were used as loss-leaders to open up cheap properties on the urban periphery.
Of course, when there was no more money to be made in suburban land speculation, these companies could no longer afford the loss on streetcars and abandoned the transit business. The over-leveraged among them went bankrupt. But the brighter side of a collapsing enterprise is that debts are cleared and assets are sold for pennies on the dollar to the highest bidder. With tracks laid and a fleet of functioning trolleys already in the inventory, a risk-taker less burdened by debt could take his turn at putting those assets to use more profitably than his predecessors. In other words, the disappearance of the land speculators that sponsored small-town streetcars is not in itself a sufficient explanation for the disappearance of small-town streetcars.
Indeed, the transit operations abandoned by real estate developers were often taken over by utility companies, although they, too, did not profit directly from passenger fares. Rather, in the era before grid-scale energy storage, they continued running them at a loss in order to maintain a high base load of electricity. Compared to the residential demand for electricity, which peaked in the evening and almost vanished in the morning, streetcar systems demanded a constant and high volume of supply, which justified capital expenditure on newer, larger, more efficient turbines, which lowered the cost per kilowatt per hour. Thus, passenger fares were still subsidized by the electric company’s non-passenger customers, but residents and businesses were still getting more electricity for cheaper than they could without the streetcar’s demand for base load (Naturally, less expensive electricity inspired new demand from newly invented home appliances and office machinery).
By contrast, the regional and continental railway systems —with one monumental free-market exception — were built on an orgy of land speculation and graft that make Amtrak and California’s high speed rail project look like models of fiscal restraint. Paid by the mile, the so-called “robber barons” laid lines that meandered through the longest routes possible, and deliberately went out of their way to find mountains and other obstacles that paid a higher rate per mile than easier, flatter terrain. Land grants that in aggregate comprised an area larger than the state of Texas were supposed to be sold to settlers to help pay for the tracks, but instead were collateralized for the railroad’s own bond-issuing schemes. Communities that refused to buy the bonds or otherwise pay for the privilege of future freight service were ruthlessly bypassed in favored phantom towns that were hastily erected on company property. Legislators and government officials at every level accepted company stock to look the other way.
Although credited in the editorial pages for “wedding the Atlantic to the Pacific,” the political entrepreneurs directing the railroad projects had a limitless and shameless capacity for bilking the government that more than justifies today’s skeptic of mass transit in America.
The magnificent exception was James J. Hill’s Great Northern Railway, built across the wilderness from St. Paul to Seattle without a penny of state subsidies or a single acre of government-granted land. In true capitalist fashion, Hill acquired vast tracts at bargain prices following the bankruptcies of his state-subsidized predecessors, who couldn’t turn a profit even when given the lands for free. Because Hill was risking his own capital, he scouted the lowest mountain passes to save coal and actively cultivated a sustainable economic community of immigrant farmers at each stage before pushing his tracks forward to the next. This approach left his company solvent when the rest of the industry collapsed in the Panic of 1893. He proved that free-market rail transit could work in America, provided real economic discipline was allowed to dictate the routes.
International Models: How the Rest of the World Moves
Hill’s strategy was similar to that of the private corporations that currently run the highly profitable and flawlessly punctual rail lines in Japan, and likewise without continuous government bailouts. In 1966, the state-owned Japanese National Railways (JNR) revolutionized rail transport with its high speed Shinkansen (bullet train), but it could not sustain its success amid crippling worker strikes, its notoriously bureaucratic treatment of customers, and the need to service unprofitable rural outposts with more voters than paying customers. And given its stark contrast with the privately run Hankyu and Tokyo lines which surpassed it by any metric: comfort, cleanliness, punctuality and hospitality, the intractably-indebted JNR was broken up geographically and privatized in 1987.
The new regional companies that took over from JNR followed the same path as Japan’s preexisting private lines, and in fact that James Hill had taken many decades earlier with the Great Northern. They recognized, much like the operators of early twentieth-century American streetcars, that the real commercial fortune was not to be found in the transportation, per se, but in building the markets for their trains to service. By transforming their urban terminals into massive high-density retail hubs, office towers, and hotels, the newly privatized rail companies captured the immense land value generated by their own passengers.
To three of the rural companies, the government gave a one-time endowment, prohibiting them from touching the principal for everyday operations. Instead of annually subsidizing the money-losing rural routes, the companies were forced to survive on their own investment yields and aggressive commercial diversification. State intervention in Japan was not non-existent, but it was designed to transition infrastructure into self-sufficiency rather than insulating it from reality and perpetuating rail transport as a perennial drain on the public purse.
In Sweden, the state plays a larger role but still relies on a highly competitive bidding process for servicing its defined routes. The rails and roads are maintained by the government, but which government depends on the scale and type of transit. For the national rail lines, high-speed tracks, and major highways that connect different cities, the physical infrastructure is owned and maintained by the central government’s Swedish Transport Administration. Infrastructure for city streets, local bus lanes, pedestrian walkways, and urban bicycle path networks is owned and maintained by the local municipality. But the rail cars and buses are owned and operated privately, and strict, blind-bidding for contracts takes place regularly.
Not every country with a public transport system has the same degree of market discipline and efficiency. Germany, for example, operates its national railway system, Deutsche Bahn, as a state-owned monolith that has become a global byword for chronic delays, bureaucratic bloat, and decaying infrastructure. Because the German government has insulated the company from true market competition, the system suffers from the exact same institutional rot that plagued Japan’s JNR before 1987. Technically, Deutsche Bahn was “privatized “ as a joint-stock company, but with 100% of the shares in government hands, and lacking the blind-bidding competition of Sweden or the real-estate driven profit motive of Japan, Germany’s network has devolved into a fiscal black hole where political directives override economic logic, resulting in a railroad plagued by record delays and multi-billion-euro bailouts.
China bypassed the market entirely to construct both the world’s largest high-speed rail network and a staggering 110,000-mile expressway system in just a few decades. The Chinese have managed to do what neither Amtrak, the California High-Speed Rail Authority, nor most of America’s nineteenth-century rail barons could do: build a remarkably efficient mass transit system with state funding. Yet the long-term economic repercussions of Beijing’s rail monopoly remain entirely unknown. After all, the state-owned Japanese National Railways was also once a modern marvel and the envy of the world before it slid into the bureaucratic quicksand. The opportunities missed and the unforeseen costs to be paid have yet to be revealed.
No system of mass transit was developed without at least some state involvement. Even the Great Northern Railroad benefited second-hand when it cheaply acquired lands and assets from distressed companies that failed despite the support of generous grants and subsidies. But clearly, we have examples from both past and present that refute the notion that trains and trolleys and better buses are impossible without the socialists’ expropriation and allocation of resources. If anything, with the exception of China, which is too recent to judge, our examples suggest that the lighter the hand of the state, the more successful the market’s invisible hand in bringing about this public good.
State Intervention on Behalf of the US Road System
The gaping irony of America’s current paucity of public transit offerings is, in fact, that its automobile supremacy owes much to the intrusion of government policies. The first car produced affordably for the common man, Henry Ford’s Model T, appeared on American roads only a few years before the country’s entry into World War I, an inflationary event of a severity not seen since the Civil War over fifty years prior. But the city governments that had granted franchises to trolley companies refused to allow those companies to raise the “nickel fare” to accommodate their rising operating costs. To make matters worse, continuing the nineteenth century mandates that they pay for paving the roads between and around their tracks was essentially providing a subsidy for the automobiles that used those roads. Starved of revenue and forced to maintain the roadway for their competitors, the streetcar companies couldn't afford to modernize or maintain their fleets, making them ripe for bankruptcy and dismantling.
Whereas the so-called “private railroads” failed with free land and government subsidies, the automobile manufacturers never had the responsibility for maintaining the transportation infrastructure. They merely made vehicles and sold them to the consumer, while the entire “track network” on which their cars ran was built, owned and maintained by the taxpayer. In 1956, subsidization went national when the Federal-Aid Highway Act inaugurated the largest public works program in American history, capitalizing on Cold War anxieties to build the “National System of Interstate and Defense Highways.” Of total government spending on roadworks, 20% to 25% now comes from Washington, almost all of it earmarked for capital spending on initial construction or expansion of interstate corridors.
As state governments have come to depend on this largesse, the strings attached have included the federal government’s right to micromanage speed limits, the minimum drinking age, and the wages of road crews — even the temporary operations of roadside taco trucks during the COVID-19 pandemic. Funding the lucrative capital expenditures while leaving states and municipalities on the hook for the permanent cost of maintenance, the federal government has effectively turned state transportation departments into administrative branches of Washington in a top-down, subsidized highway system that has made driving seem cheap by foisting its massive infrastructure expenses onto the general public.
When local governments attempt to expand or alter this subsidized infrastructure, the absence of market discipline is glaring. Boston’s notorious 'Big Dig,' which simply buried a few miles of downtown highway, ballooned into a staggering $14 billion taxpayer nightmare—proving that whether the state is laying tracks or laying pavement, insulation from economic reality virtually guarantees a permanent drain on the public purse.
The Hidden Tax of Zoning and Parking
Meanwhile, socializing America’s roadworks is only half of the economic equation. Automobiles traditionally spend the vast majority of their time in park, which means a system that caters to individual car transportation requires an unprecedented amount of parking space. Even when municipalities do not directly build or fund parking infrastructure, local zoning codes legally compel private businesses to dedicate vast portions of real estate and construction budgets to mandated parking areas. Because these enterprises cannot realistically recoup their costs through parking fees alone, the expense is subtly clawed back via higher prices on everyday goods and services—effectively forcing everyone, driver and pedestrian alike, to underwrite the cost of customer automobile parking.
Other nations are more reluctant to bury the overhead for parking under the price of consumer commerce. Sweden, for example, allows developers flexibility (flexibla parkeringstal) to reduce or even eliminate minimum required parking space if a project is tied to urban transit access. In Japan, overnight street parking is illegal, and you cannot even register a vehicle until you prove to the local police that you pay for a private, off-street garage space—which is exactly the kind of personal accountability one would expect from a country that famously refuses to provide public trash cans. By not treating public asphalt as free storage, these systems force the driver, rather than the general consumer, to bear much more of the real cost of owning an automobile.
Worthy of note, wherever public transit is a sustainable local option, so too is cycling and walking. Where public buses, subways and trams reduce the volume of vehicles requiring active lane space and parking, it naturally leaves room for human-powered forms of transit. To be fair, it is usually not without a nudge from political authorities. For example, across Western and Northern Europe—from the Benelux nations to France, Germany, and Austria—national planning policies tie road funding to the concurrent construction of protected bike paths and continuous sidewalks, transforming walking and cycling from marginalized urban afterthoughts into competitive, everyday choices.
The Household Costs of Automobile-Centric Policies
Government also interferes in America, but in a way that seems to have reduced the pedestrian and bicycling alternatives. Through a combination of single-use zoning restrictions and post-war credit manipulation, it has, wittingly or unwittingly, engineered a pervasive system of car-dependency. By outlawing mixed-use development at the municipal level and using Federal Housing Administration (FHA) rules to deny government-backed mortgages to dense, walkable neighborhoods, the state has arbitrarily severed where Americans live from where they work. As it has chosen to underwrite suburban sprawl while legally barring commercial hubs from residential zones, the average American has been pushed over twelve miles away from the office, and is generally required to get in the car for a grocery run or a doctor’s visit. Because the zoning mandates structurally pull a family's daily destinations in different directions, a single vehicle is rarely enough to keep a household functional. For many Americans, maintaining a fleet of private vehicles has become less a symbol of personal freedom and more of a non-negotiable household burden.
Defenders of the American model are quick to point out that U.S. drivers enjoy relatively cheap gasoline, and that our roads are largely self-funded by gas taxes acting as a direct user fee. While this is partially true—even if those highway funds increasingly rely on general tax bailouts to cover deferred maintenance—focusing on fuel prices obscures the real financial trap. The true measure of a system’s economic efficiency isn’t the cost of gas, or even transportation cost per mile. It is the total transportation burden per capita.
According to 2024 Bureau of Transportation Statistics, the average cost of owning and operating a private vehicle is roughly $0.82 per mile. But having to navigate an environment that scatters daily life across sprawling distances, Americans routinely find themselves logging a staggering number of miles just to complete basic household routines. Compare this to nations that do not treat the automobile as a default utility. Not only is the baseline cost of a monthly transit pass fundamentally cheaper than car ownership, but because of denser, mixed-use development, their citizens do not have to travel nearly as far to live their daily lives.
The American advantage of cheaper fuel is ultimately erased by the mandatory volume of travel. For the average multi-car suburban household, the infrastructural absence of alternative transit options means that upwards of 16% of a family’s income is tied up in multiple, rapidly depreciating assets that sit idle for most of their lifespans on expensive, government-mandated asphalt.
Conclusion
We started this missive lamenting that, on both sides of the debate, mass transit is viewed as an impossibility without the state significantly commandeering resources and overriding market preferences. The left half is fine with that arrangement, while the right half decries the history of economic failures that have resulted from this approach and that continue to squander tax dollars down to the present. The verdict of the latter is that mass transit is a statist institution unsuited to US soil, where the automobile stands supreme as the symbol of individual freedom.
But as we have shown, countries with enviable public transit, as well as ample, safe routes for pedestrians and cyclists, are not inherently more collectivist in their approach to transportation, nor should the virtual absence of any alternative to the automobile in America be mistaken for de facto evidence of the invisible hand at work. The state has played a significant role in both the economic failure of mass transit and the seeming economic success of the automobile.
It should by now be apparent that the last thing we would urge is the doubling down on more of the same, that is, excessive intervention by government — either for subsidizing the status quo or for mandating alternatives. We can not claim to know what the results would be if we had a more market-oriented approach to transportation and urban development, but we like to think that American travelers might discover what we learned in Sweden, that trains and bicycles are elegant, less stressful alternatives for human conveyance.
We would gladly invest the cost of our next automobile toward an enterprise with a profitable proposal that freed us from the obligation of owning one.