All Commentary
Tuesday, August 9, 2016

New York’s Subway Expansion: A Disaster Only Government Could Create

Politicians can't decide a project's “worth.” Only buyers spending their own money determine whether an exchange is equitable.

Even those who love liberty often concede that the construction and maintenance of infrastructure are among government’s “legitimate” duties. As for folks who idolize the State, forget it: “But—but who would build roads and—and highways and bridges?” they quaver when confronting the idea of a stateless society.

In New York City, that infrastructure extends to another “public good”: its world-famous subways (or –infamous, if you’ve languished between stations on these noisy, crowded, dirty trains). The design and implementation of this rarely rapid transit dates from the early 1900s—and it shows.

Neither politicians nor straphangers can decide the SAS’s “worth” since only buyers spending their own money determine whether an exchange is equitable.

Then, in 2007, the City’s rulers undertook the “first major expansion of the subway system in over 50 years” with the Second Avenue Subway (SAS). “When fully completed, the line will stretch 8.5 miles along the length of Manhattan’s East Side… The line is being built in phases…,” with the first one convulsing nearly 30 blocks of Second Avenue for almost a decade now.

The Worth of a Bad Idea

Unfortunately, when government involves itself in a project, its agenda supersedes the rights of everyone affected—a multitude of folks in this case since infrastructure is, by definition, “the fundamental facilities and systems serving a country, city, or area…” Construction of “Phase 1” has destroyed businesses along its route, evicted residents from their homes, and gobbled $4.45 billion in taxes thus far. No doubt the remaining “phases” will match the first one’s havoc.

Is it worth it? The politicians who brag about providing faster commutes for the 200,000 passengers expected to ride Phase 1 each day would say yes. Those riders might agree. But they aren’t the ones tossing sleeplessly as explosions blast tunnels through Manhattan’s bedrock, nor have they watched their favorite restaurants close and their homes plummet in value.

No wonder “business owners say their sales are down 20 to 40 percent.”

Neither politicians nor straphangers can decide the SAS’s “worth” since only buyers spending their own money determine whether an exchange is equitable. New York City spends our money, and those 200,000 commuters benefit from that largesse without cost (beyond the nominal fare, now $2.75). We might better ask, “Could private enterprise—truly private, without government supervision, subsidies or involvement of any kind—have built the SAS without such trauma?” Turns out that bar’s so low that any developer, however corrupt and callous, could jump it.

The Carnage of Bureaucratic “Wisdom”

The SAS’s “long and inglorious history,” as even municipal bureaucrats call it, “spans most of the 20th century and into the 21st century with minimal progress.” Government first announced plans for the SAS in 1929—yet 87 years later, it’s still a-building after several false starts and real stops. Along the way, the City borrowed half a billion dollars in 1951, back when that sort of money still awed taxpayers (over $4.6 billion in today’s terms. Alas, by 1957, the usual political bickering and pilfering had whittled that amount by half, indefinitely delaying the SAS). And in the 1970s, the City decimated East Harlem by ripping up its streets preparatory for constructing the SAS (again to no avail: New York declared bankruptcy shortly thereafter—partly because of the $500,000,000 previously borrowed).

But the pains of construction may exceed those of postponement. New York City is a pedestrians’ paradise, with the businesses that line every block catering to and heavily dependent on them. Yet Phase 1’s construction “has shrunk ordinarily wide sidewalks into smaller, temporary walkways” often meandering 10 or 15 feet from stores that formerly sat flush with the sidewalk. Bridging the gap are narrow ramps that discourage anyone elderly or the least bit unsteady on his feet. No wonder “business owners say their sales are down 20 to 40 percent.”

Ditto for automotive traffic. “’Before the construction began, a lot of my customers drove and parked right outside, bought their shoes and clothing,’ [an owner of two stores] said. ‘But now they aren’t able to do that.’” He added that “’sales at both stores are down 20 to 30 percent.’”

Retail isn’t the only industry Phase 1 has wounded. Also bleeding profusely is New York’s favorite preoccupation: real estate.

Many residents of Second Avenue rent their apartments. Phase 1 inconveniences them while harming their landlords: “Rents are falling even further on Second Avenue … as the ongoing construction for the Second Avenue Subway has made residing there less desirable and doing business there substantially more difficult…” One landlord estimated that his rents had “decrease[d] … about 30 percent since complaints about construction began.” New York’s grotesque rent-control pits landlords and tenants against one another, but the former must turn a profit all the same, if only to pay the exorbitant real-estate taxes New York City demands. Few enterprises can survive a 30% hit.

People who own their apartments also suffer from declining values. Homeowners able to endure through completion should enjoy an increase in their basis. But others won’t. Anyone whose new job, new spouse, or retirement forced him to relocate during construction sold his condo or co-op at a loss.

Meanwhile, the City evicts renters and owners alike, some briefly and others permanently. One victim who “received a temporary relocation notice informing [him that he] will have to be out of [his apartment] for 30 to 60 days due to construction … for the … Second Avenue subway project,” wailed, “This is devastating. I don’t want to move. … I have been in this apartment for 10 years and have always paid my rent and I just can’t believe something like this could happen…”

So when statists insist that only government can build and run subways… they’re right.

If misery loves company, he’s got plenty of it. Phase 1 “seized 24 properties through eminent domain” from 2007 through 2014.

A Disaster Only Bureaucrats Could Create

A “long and sordid history,” indeed. But how could it be otherwise? The State relies on force, not persuasion and cooperation, for achieving its purposes.

Which again prompts us to ask whether private developers could build the SAS without bankrupting, annoying and depopulating whole neighborhoods. And the answer is they certainly could—but they probably wouldn’t.

Why? Because from the beginning, the subway was a “public-private partnership.” Or, as “John T. Hetrick…of the Interborough Rapid Transit Company” explained in an article for The Independent on October 20, 1904, “…the New York Subway was a business proposition” from “business men, … the lessees of the system for a term of fifty years,” with “the Finance Department of the city” having the final check on all expenditures…” since “the Subway is public property…”

These “businessmen” stepped in “after years of agitation and two unsuccessful attempts had been made to get capitalists interested in the project … [F]inanciers interested in the great railroad systems refused to undertake the project of tunneling through rock-ribbed, New York in close proximity to the foundation walls of skyscrapers downtown. Capital was afraid.” And with good reason. “Capital” realized that it must charge passengers so very much to cover this mammoth feat of engineering that the subway wasn’t feasible—and indeed, to this day, taxpayers heavily subsidize New York City’s transit. Operating subways honestly, without robbing taxpayers, would push fares so high few could afford them.

So when statists insist that only government can build and run subways… they’re right.