The Guardian leader:
In Britain, the price of rail travel is rising ahead of inflation: in a low carbon world, public transport would be so cheap that urban motorists would gladly abandon their cars.
No, that\’s not it at all. We do not want, in order to deal with climate change, to make everyone use public transport.
What we do want to do is make sure that we include the costs of climate change in our decision making process about the use of private or public transport. Our entire problem is of course that these costs are externalities, external to our current decision making process of market driven prices.
Thus we interfere, apply a Pigou Tax, so as to bring those costs into said decision making processes. After we\’ve done that, we just carry on as normal, allowing that new information incorporated into prices to change behaviour.
For example, it is possible for us to build a tram system up and down every street in the land and to charge people nothing for its use. This would certainly reduce the amoun t of urban motoring. But the taxes required to pay for such a system would be vastly greater than the damage being done by the current level of urban motoring. Thus such a universal tram system would make us poorer.
The mistake that is being made in the leader here is that they\’ve picked up one correct argument, that there is a cost to urban motoring, and ignored the other also correct argument, that there is also a cost to not urban motoring. Thus we do not want to get to a system of no urban motoring: we want to get to a system with the optimal amount of it, an optimal amount which is almost certainly greater than zero.
Just as the optimal amount of public transport is certainly greater than zero and also certainly less than 100% of all urban transport.