DISCUSSION OF URBAN LIGHT RAIL PROMPTS MUSING ON ECON 101

My colleague Sen. John Schneider (D.-St. Louis County) is the senior member of the Missouri Senate, a dedicated public servant and a truly delightful man. As the legislature convened this past Wednesday for the annual, two-day veto session, followed by a special session on flood damage, Sen Schneider rose to his feet to briefly address an unrelated topic. When John Schneider speaks, it's almost always entertaining.

Schneider's purpose: to speak on what parliamentarians call "a point of personal privilege." Subject: the new mass transit system in St. Louis, a form of light rail called Metrolink. Metrolink was built at a cost of $350 million in federal money, in what many believe to be a monument to the ability of House Majority Richard Gephardt, (D.-St. Louis), to deliver pork to his hometown. Other than providing rights-of-way and some old train tunnels, almost no local contribution was required.

Metrolink, Sen. Schneider told an attentive chamber full of his colleagues, is a huge early success. It's dramatic. Ridership is exceeding all forecasts. At roughly 30,000 daily riders (as against a forecast of 10,000 daily), the response from the public is impressive, we were told. In the first five weeks of operation, more than one million people have ridden the new light rail system.

Still, we were told, Metrolink faces a funding crisis. A cash crunch in operating funds will threaten to shut down the system no later than March, 1994. When we return for the regular session of the General Assembly in January, St. Louis legislators will be pushing for an "emergency" appropriation of approximately $10 million in operating funds to avert this "crisis."

Now we get to the interesting part. I was informed that the Metrolink fare is $1. As I stood listening carefully on the side of the senate chamber, my mind began to wander, all the way back to college economics courses.

Let's see: At a $1 fare, ridership is exploding to more than three times what proponents forecast. Is it possible that a free market is telling us something?

In fact, every student of markets knows that they are always telling us something. This is one of their indispensable functions. Prices in a free market and the response of human beings to those prices are quite literally messages. Not only are they messages, but in communicating them, markets are among the most efficient messengers we can ever hope to have in an imperfect world. Proponents of free markets know this to be one of their timeless strengths.

So what is the message here? Isn't it just possible that the bureaucrats who run Metrolink are receiving a message from the riding public? Isn't it just possible that the riding public is informing them that they have set the price of a ride too low? Isn't it just possible that they have built a form of mass transit so attractive that free human beings are willing to pay more for the service? While we're at it, how was the $1 fare price arrived at? Was it chosen arbritrarily? Who set it, and based on what information?

If I am correct in these musings, by how much should fares be increased? I don't purport to know, but why not try an increase of 20, 30, 40 or even 50 cents and see what message the market sends us? (Whom do we trust more: markets or bureaucrats?) Isn't it just possible that if we experiment with higher fares, the "crisis" might be lessened and the need for state subsidy averted, in whole or in part?

What do you think? Should I join other legislators in taxing you to fund light rail in St. Louis? Or should we listen to the message being sent by the riding public, about fares that may be too low, raise that price, and then reevaluate whether a state subsidy is needed? Let me hear from you.