Congestion is an external cost of travel that occurs because drivers do not (usually) pay for the time costs their transportation choices impose on others. The result is a misallocation of scarce resources, including both motorists' time and the capital invested in road capacity. For several decades, the prospect of an urban rail system has been held up to the electorate as the key to overcoming congestion, ensuring mobility, and improving air quality. Unfortunately, an examination of system performance reveals is none of these. We should not expect it to be. The most important Los Angeles responses to congestion have been economic responses, not policy responses. Los Angeles' development is more recent than other large US cities. Rapid growth occurred during a period in which the incentives for co-location of activities were relatively weaker than the incentives driving the land markets in older cities. At the same time, growth occurred during a period of rising income and growing demand for access to transportation services. The market for land in Los Angeles was able to respond to congestion costs by decentralizing employment do a degree unique among the largest US cities. Consequently, the Los Angeles Central Business District (CBD) is of low economic importance relative to the CBDs of other large US cities. This makes Los Angeles perhaps the nation's weakest candidate for a downtown-focused transportation system such as rail (US Department of Commerce 1983; Pushkarev, Zupan, and Cumella 1982).
Some scholars argue that land use in the United States is more a creature of policy making than market responses. For example, Goldberg and Mercer (1986) identify a number of differences between Canadian and US cities, suggesting policy explanations for the elevated densities in Canada. Gordon and Richardson (1996, 1997) explain that the land markets in Canadian cities are behaving just like the land markets in US cities, but are subject to a time lag. The same argument applies to land uses in older US cities relative to the Los Angeles benchmark. Los Angeles may not be so much an outlier as it is a leading indicator.
The Los Angeles rail plan is essentially a failed experiment in transit provision. Expanding the rail system will only increase the cost of the failure, even if the rail system operates at capacity. The plan is harmful to existing transit options. The Los Angeles rail system has been steadily diminishing public transportation services in a city that should be much more respectful of the gap between the transit-optional haves and the transit-dependent have-nots. Transportation planning in Los Angeles requires an approach that recognizes the region's existing investment in congestion mitigation, i.e., an approach that emphasizes existing trends toward decentralization, not an approach predicated on the objective of defeating the market for urban land.
The Los Angeles County Metropolitan Transportation Authority's (LACMTA) commitment to the region's rail plan has placed it in a political conundrum. The MTA knows the system is a failure and that further investment in rail is harmful, yet the rail plan has been such a high profile project for so long that the prospect of abandoning the project is a source of political terror. Alternatives are available, and MTA has the legal latitude to pursue them. At minimum, the MTA should proceed aggressively to meet its obligations under Judge Hatter's consent decree to the court and to the Bus Riders Union. The consent decree provides the best sort of institutional latitude for doing the right thing without publicly reversing itself.
The transportation advantages provided by exclusive rights of way are squandered if use of these guideways is restricted to rail cars. The MTA can build busways instead, facilities with greater flexibility, lower costs, and higher capacities than rail lines (Rubin and Moore II 1997). If the agency stops rail construction, it can afford to place buses in service on the elevated Harbor transitway. Further, there are ways to leverage the current investment in the Los Angeles rail system that are likely to be both economically and politically sensible. Existing rail rights of way can be retrofitted for use as exclusive busways. Seattle is providing excellent service in its downtown bus tunnel. Los Angeles can do as well, even better. Buses can be granted priority access to city streets along the Blue Line right of way and elsewhere.
The MTA or many of its services might be privatized to improve efficiency. If the fare box is the only source of revenue available, then configuring service to capture fares becomes the order of the day. Alternatively, entrepreneurs can be allowed to enter the transit market and compete with the MTA, allowing the Authority to remain a public entity, but forcing it to accept the discipline imposed by the market decisions. Los Angeles' existing, planned, and potential investments in HOV and HOT lanes would provide important opportunities for private transit, if such enterprises were legal.