Self-Defeating Industries

Andrew Samwick has a great post up explaining why trucking companies should welcome a $21 congestion charge in Manhattan:

Clayton Boyce, a spokesman for the American Trucking Association, a national industry group, told The Associated Press, “It will be a real problem for operations for trucking companies and shippers, including all the retailers in Manhattan, which is substantial.”
“And all the people who get FedEx and UPS deliveries will have problems and will bear extra expense, so we definitely see problems with it,” he said.
It's time to give Mr. Boyce a refresher course in microeconomics. Start by considering what his answer might have been last week to the question, "What is the biggest problem your industry faces in providing excellent service to lower Manhattan?" Based on what I've seen on those streets, my answer would have been "congestion." So the mayor has proposed to tax the thing that has been encumbering the trucking industry, and its spokesman is complaining because his clients will need to pay the tax in proportion to the congestion they cause.
Think of it by the numbers. How many packages are on the typical FedEx truck in Manhattan? If it were 210, then the extra expense would be a dime per package. That's trivial. How does $21 compare to the total value of each truck's cargo in a given day? It has to be tiny. And look at what the FedEx truck drivers get in return--fewer passenger cars clogging up the city streets where they need to make pickups and deliveries. They waste less time and less gas. It doesn't take much abatement of that wasted time and gas to make back the $21 per truck. The trucking industry should be this proposal's biggest supporters.

Should be, yes. But won't be. I'm reminded of something Burton Richter said at the Milken conference:

Our auto industry in the US has been on a suicide course for many yars. They resist new technology. We have to push the US auto industry into doing the right thing, because I don't believe they're going to do it on their own.

Sometimes, industries do behave in a manner which fails to maximize their own profits, even when doing so would have other, ancillary benefits as well. When that happens, a bit of government regulation can go quite a long way.

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