Craig Ladwig -- my former boss and now with the Indiana Policy Review -- on how government is not like a business
A May 16 story about a fare hike and route cuts for bus riders reminds us that governments do not operate like businesses.
When a business is faced with falling demand and surplus supply, it cuts prices, increases services or sells out to a competitor. When governments are faced with the same situation, they raise prices, cut services and tighten their monopoly. Worse, they then claim to have made a difficult but business-like decision.
The irony is that this particular belt-tighteing is coming at a time of growing demand because of high gas prices. But the buses provide a service that isn'tcost-effective, and it's losing a subsidy. That means it "loses money," and the more people ride, the more money it will lose.
It's not a bad thing that the bus user fees -- the price of a ticket -- help mitigate the costs to general taxpayers. But it tends to make the discussion go in the wrong direction. We get obsessed over whether the service makes or lose money in a way we don't for other public services. We don't ask the right questions: Is this a valuable -- or even necessary -- public service? If so, at what level and at what cost? If not, why do we even have it?
If we decide something is a needed public service, we should have it, whether it "loses money" or not. Police and fire protection aren't exactly money-makers. Some things we can be more sure of as needed, such as street paving and sewer service. Some are easy to call optional, like a city civil rights office or an economic development department. Public transit is one in the middle and ripe for debate. Most people don't need it, but some really do. It's an amenity the absence of which might or might not be significant for people or companies thinking of coming here.