By Art Carden, Contributor, Forbes Magazine; March 30, 2019
Over the last two days, I’ve written a couple of articles about Amtrak that have elicited strong responses from readers (here’s the first, and here’s the second). I’d like to take a moment to consider the claim that subsidies for Amtrak, airports, and highways create economic development. This might be true at the very local level, but it isn’t likely to be true at the national level.
At the local level, there might be good arguments for subsidizing planes, trains, and automobiles, but if this is the case then the beneficiaries should be the ones who pay the taxes to support the infrastructure. In other words, people in Birmingham, not people in Boston, should be the ones who pay for Shuttlesworth International Airport. One could argue that as a matter of justice relatively wealthy Bostonians should be taxed to pay for airports, harbors, and train stations in Birmingham and beyond, but as a matter of economics, the incentives here are poorly aligned. As Milton Friedman has put it, people rarely spend others’ money as carefully as they spend their own, and incentives making it possible to get nice things and have others foot the bill create substantial pressure to over-invest in all these “nice things.”