Today in the Minneapolis Star Tribune, Steve Elkin opined that; Those services where labor productivity is inelastic tend to migrate to the public sector. Also in the article he stated; Earlier this year, a freshman member of the Minnesota Legislature was heard to remark: “When will our transit system ever become profitable?” The answer to this question is, of course, “never” — at least as long as transit vehicles require operators. Why? Because public transportation suffers from “Baumol’s Cost Disease.” You can see more about this “Disease” in the article at http://www.startribune.com/opinion/otherviews/126430633.html.

Later in the article he said; It took one driver to operate a 40-passenger bus back when public transportation was profitable in, say, 1930, and it still requires one driver
to operate a 40-passenger bus today. From the perspective of labor productivity
alone, bus drivers are no more productive today than they were 80 years ago.

What Mr. Elkin did not say is that when Public Transportation was profitable those
that used the service “Paid What It Cost” to run the system and today those that use Public Transportation do not pay what it costs and depend on those that do not use Public Transportation to subsidize their usage.   So, in my opinion, when Mr. Elkin says that; Those services where labor productivity is inelastic tend to migrate to the public sector, what it really means is that when those that use a service are unwilling or unable to pay the cost of the service it migrates to the public sector.  Another way to define the Public Transportation issue is; the reason that it is less expensive to utilize public transportation than to drive your car is that those that elected to drive their car are subsidizing your public transportation ride.  If you want to see a transportation system that is efficient and paid for by those that use it, go to Disney World.  Some would argue that there is no fee, and per se they are right, however the cost of that transportation is built into the access fees, hotel rates and the like and belive me you pay for it.

I have no problem with those that use a service paying the cost of providing the service.  An example is the National Parks.  There the usage fees should, and may well, cover the cost of providing the access – not the entire cost of maintaining the facility.  Some will defend this subsidization of services as the “Public Good”, whatever that means.  I suspect that the Public in Public Good refers to those that benefit not the Public in general.  To the extent that we can transition to a better balance of those that utilize services paying the cost of the service the more quickly we can get a handle on many of our government’s, federal, state and local, costs and the ultimate tax bill.