South By North Strategies, Ltd.

Lessons in Congestion Pricing

Metropolitan areas across the globe are struggling with issues of traffic congestion and are experimenting with various “carrots” and “sticks” intended to persuade commuters to make better use of mass transit systems.

One, albeit controversial, strategy used in some large metros (including New York City) is congestion pricing. Simply put, congestion pricing is a charge levied on motorists who drive an automobile into congested areas at certain peak travel times.

In a recent policy brief, the German Marshall Fund of the United States analyzes the adoption of successful congestion pricing schemes in London and Stockholm and the failure of such a system in Manchester (U.K.) and identifies lessons from Europe that are relevant to American metro areas.

According to the brief, perhaps the most important factor needed to engender public support of transportation policies like congestion pricing is “vision.” Says the author:

The underlying story in both London and Stockholm, however, is the role of “vision” in advancing large-scale change. In using the term “vision,” I am not referring to a single document or plan with a mission statement and lofty goals. Rather, I have come to see a vision as something much bigger. It is an underlying consensus that is shared between leaders and the public. It is widely understood, even if it is not always articulated. And in some way, a vision must be “visual.”

Editor’s Note

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Subprime Student Loans

The economic dislocations caused by the recession have led thousands of working-age adults to pursue higher education. Many students have enrolled in for-profit proprietary schools, and to afford the high tuition costs, many have turned too — or a have been steered towards — private student loans.

In the current issue of The Washington Monthly writer Stephen Burd describes the factors that sparked the surge in private borrowing and explains why this trend is harmful for working-class and low-income students. Argues Burd:

In the last decade alone, it [private loan borrowing] has grown an astounding 674 percent at colleges overall, when adjusted for inflation. The growth has been most dramatic at for-profit colleges, where the percentage of students taking out private loans jumped from 16 percent to 43 percent between 2004 and 2008, according to Department of Education data.
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The spike in private loan borrowing is dismal news for students. Unlike traditional student loans, which have low, fixed interest rates, private educational loans generally have uncapped variable rates that can climb as high as 20 percent—on par with the most predatory credit cards. Private loans also come with much less flexible repayment options. Borrowers can’t defer payments if they suffer economic hardship, for instance, and the size of their payment is not tied to income, as it sometimes is in the federal program. Private loans also lack basic consumer protections available to federal loan borrowers. With a traditional federal student loan, for example, if a borrower dies or becomes permanently disabled, the debt is forgiven, meaning they or their kin are no longer responsible for paying it off. The same goes if the school unexpectedly shuts down before a student graduates. But none of this is true of private loans. Also, because it is so difficult to discharge private student loans in bankruptcy, when students take them out to attend schools that provide no meaningful training or skills they can find themselves trapped in a spiral of debt that they have little prospect of escaping.

Community Colleges and Upward Mobility

Americans long have viewed higher education as an engine of upward economic mobility. Typically, discussions of higher education revolve around the outcomes associated with attending four-year institutions and pay scant attention to the benefits of two-year schools.

To correct that shortcoming, the Economic Mobility Project of the Pew Charitable Trusts recently conducted a study of the educational and employment outcomes of 84,000 student in Florida who were in the 12th grade in 2000. Specifically, the study looked at students who enrolled in college transfer and technical education programs offered at two-year colleges.

Concludes the study:

Community colleges already make major contributions to economic mobility by enabling students to transfer to four-year colleges, and by teaching work-enhancing skills. The primary beneficiaries of the transfer function are low-income students who perform well in high school and college. The primary beneficiaries of the career-enhancing function are low-income students who did not perform especially well in high school, but take a wide range of high-return courses while attending community college,especially courses in health care.
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The largest factor limiting the ability of community colleges to raise the earnings of their students through the transfer function is students’ poor academic preparation in high school and the difficulty of quickly boosting their performance through developmental programs. The Florida cohort analysis clearly demonstrates that students need to have a B or better high school grade point average to have a reasonable chance of attaining AA degrees, transferring to four-year colleges, and attaining BA degrees. But lack of supportive services also appears to be of considerable importance, especially in explaining why more high-performing low-income students do not transfer to four-year colleges. The Florida study also shows that among A and B+ students, those from low-income families are 5 percentage points less likely to attend college and 1 percentage point less likely to attain AA degrees, but over 11 percentage points less likely to transfer to four-year colleges and attain BA degrees.

Public Understanding of the Economy

The ongoing recession has demonstrated the importance of public policy to the structure and operation of the American economy. Yet most Americans don’t fully understand the pivotal role that intentional policy choices in shaping economic outcomes and driving prosperity.

Over the past three years, the public policy organizations Demos and Topos have engaged in an intensive study of the American public’s understanding of  the economy and the role that government action plays in the daily functioning of the economy. In a recent research brief, the organizations laid out some key findings:

The story that Americans currently tell themselves about the economy reflects a uniquely American perspective, and creates tremendous challenges for advocates seeking to change economic policy. This story sends the message that economic conditions are subject to natural fluctuations much like the weather. The only influence we have on the economy is as private, success-driven individuals who either work hard and get ahead, or don’t and fall behind. In this story, government action is a last resort and is used only to protect the deserving and to police bad actors, and even then it risks creating dependency and stifling business productivity.
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While the research undertaken by Topos on behalf of Dēmos has uncovered deep-seated public perspectives about the economy that hinder productive engagement in economic policy, it has also identified the core elements needed to reshape public discourse and understanding. Those who would support a more active role for government in a whole range of economic policies will need to carefully avoid the traps that trigger unproductive thinking while consciously and deliberately evoking a new perspective.