Teaching John Liu, comptroller-elect, a lesson in MTA economicsBy
When it comes to educating New Yorkers about the MTA’s problems, I’m all in favor of advocacy journalism. I’ve long believed the most New Yorkers who don’t actively seek out transit news are ill-informed on MTA matters because our major news outlets both in print and on TV do not adequately and thoroughly report on the MTA’s problems. So when PIX 11’s Project S.O.S. (Support Our Students) came along, I thought I would be able to applaud a major news organization’s transit advocacy efforts.
Boy, was I wrong. Instead of a true educational/journalistic endeavor, PIX’s coverage is sycophantic and just plain wrong. Instead of examining how systemic long-term funding droughts from New York City and New York state have left the MTA, the region’s economic driver, struggling to stay afloat, PIX is using its TV time to blame the MTA for its financial straits and to urge it to restore student MetroCards without coming up for ways to pay for the program or to cover the $400 million gap.
Since Project S.O.S. launched last week, PIX has featured numerous local politicians and transit advocates, and none have advocated for just and proper MTA funding. The news reporters on Channel 11 are making a sham out of advocacy journalism. The most infuriating appearance came from long-time MTA ignoramus John Liu. The current City Council member and New York City Comptroller-elect appeared last week, and if you have the patience for it, watch the video above. I’m going to parry with Liu. The italicized quotes are his; my responses follow.
“It’s a real sad situation. You never what to expect from the MTA nowadays except that they are always asking for more money and threatening to reduce service in all different ways, and this latest round is really…they have reached a new low here.”
Liu makes it sound as though the MTA is choosing to cut services for its own joy. The truth is that the MTA has no choice. They’ve been hung out to dry by Albany and cannot continue to offer the current level of services and pay the current levels of compensation owed to its employees without service cuts or a fare hike. Since Albany mandated no fare hikes in 2010 as part of the sub-par rescue package last spring, the agency is left with one option to balance its books: service cuts.
“It’s absolutely abominable. A number of people have commented this morning that the students are being used as pawns, and that’s exactly right because you know what? Not allowing the students to take free mass transit to and from school, that’s not actually going to save the MTA a single red cent. The fact of the matter is they need to continue the service, allow the students to get to and from school without interruption.”
Here, Liu begins to show a firm misunderstanding of basic economics. According to a 2007 comptroller study, students took 133.4 million free trips during the 2005-2006 school year at a total cost to the MTA of $161.5 million. Simply put, it costs more to the MTA as more people use the system. They have to ramp up the number of buses and subways available, increase the number of employees and clean up afterward.
“Part of it is that it’s a very real situation that the state cut its budget to the MTA, but it is also true that the MTA is jumping the gun here. We don’t really know exactly what the deficit they’re facing is. we don’t know how bad it is. the number keeps changing. The current crisis just came to light a few days ago, last week, and the numbers are shifting. And they’re now saying these reductions will take place months from now and a lot of this is a threat and they’re just trying to angle for more money.”
This one is simply a mess. Liu insinuates that the MTA is jumping the gun because the cuts won’t take place for another month. This is a logical fallacy. The MTA issued its budget last week because it has a legal mandate to approve a balanced budget before the end of the calendar year. It’s true the numbers might shift a bit, but careful accounting and transparency — another of Liu’s tried and tired points — requires the agency to detail why it has a $400 million gap and how it plans to close that gap. If Liu can’t understand that, I fear for the future of the comptroller’s office.
“The students are already up in arms and rightfully so. The parents, the families, they are going to be screaming bloody murder if this every goes through…and like I said before, the MTA is not going to save any money simply by getting rid of these transit passes….There’s no marginal cost to providing the students with the bus and subway service so taking them away from them isn’t going to save any money. They’re not going to be able to eliminate trains because they don’t allow students to get on.”
That, ladies and gentlemen, is a statement on economics from the next comptroller of the City of New York. That is a statement on economics from the person in charge of overseeing the city’s economy. That is a statement on economics from one who doesn’t really understand economics and should never have been elected to the comptroller’s office.
Liu seems to believe that there is no marginal cost to the MTA. He seems to believe that 133.4 million free rides don’t impact the transit agency’s bottom line. He doesn’t understand that free isn’t actually free and that subsidies are subsidizing something that carries a price tag. He doesn’t understand that, by charging, the MTA can capture added revenue, and he doesn’t understand that, by not charging, the MTA is offering up services it must pay for to those who ride at no cost to themselves.
In the end, I can’t say I’m too surprised by John Liu’s ignorance. He has served as the head of the City Council’s Transportation Committee for the past few years and has exhibited no willingness to learn about the city’s transit issues. In the end, we’re simply stuck with another person in a position of power and no idea how to exercise it. The MTA continues to founder.