The Globe and Mail web site is currently running a web-exclusive article on
why and how to rebuild the Toronto transit system. The author of the article, Michael Warren, is a former general manager of the TTC.
One paragraph in this article caught my attention:
The city is asking millions of federal and provincial taxpayers who don't live here to help fix Toronto's ailing transit system. To succeed, it will have to give them value for their money.As it happens, the city is
not asking for money from taxpayers outside of Toronto. Torontonians pay federal and provincial tax too, and lots of it - we pay far more than we get back. What we're asking is that more of the money we give to other levels of government be spent in the city.
The misguided belief that other Ontario taxpayers are being asked to subsidize Toronto is one of the reasons why Toronto's infrastructure is not well funded. Ontarians who hold this belief are wondering - understandably - why they should send money to Toronto when their own communities have plenty of problems that need to be dealt with.
There's no question that Toronto is in serious trouble:
- The city is about to be forced to implement steep service cuts because it has no major source of revenue other than property taxes and transfers from other levels of government.
- Toronto is surrounded by huge tracts of suburban sprawl, which appeared during a time when urban planning was seen as interfering with free enterprise. This sprawl is oil-dependent, energy-inefficient, and impossible to provide cost-effective public transit for.
- The federal government is not interested in investing in Toronto (to put it mildly). Presumably, they'd rather spend money in places that are likely to vote Conservative.
- The provincial government doesn't want to take back any of the fiscal responsibilities downloaded onto municipalities by the Mike Harris government. An election is coming soon, and the provincial Liberals don't want to spend any more money than they have to. Also, any election-related spending would be more politically effective in suburban swing ridings.
This situation is not likely to change until Toronto's infrastructure suffers a noticeable, and paralyzing, breakdown. And, even then, things aren't likely to change unless this breakdown affects Canadians outside of Toronto.
I haven't gotten a lot further in the economics textbook I'm looking at. I'm up to Chapter 7 ("Consumers, Producers, and the Efficiency of Markets"), and that's only because I've been skimming over a lot of the more complicated graphs.
At the end of this chapter, the book offers a word of warning:
To conclude that markets are efficient, we made several assumptions about how markets work. When these assumptions do not hold, our conclusion that the market equilibrium is efficient may no longer be true.Some of these assumptions are:
- That markets are perfectly competitive - in other words, no single buyer or seller controls any market.
- That the outcome in a market matters only to the buyers and sellers in that market. (This assumption eliminates concerns such as the effect of pollution.)
The tricky question now becomes: under what circumstances are these assumptions invalid? As I see it, people who are politically left of centre tend to believe that these assumptions seldom are true. People who are right of centre tend to believe that the "invisible hand" of the marketplace normally works well. (But, then again, I'm only on Chapter 7 of the book. I'm at the "a little knowledge is a dangerous thing" stage.)