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DISCUSSION PANEL ON ECONOMICS AND REGULATION MR. PINNES: Does the economics panel take the position that any new transportation concept, and one can use the SST as a current case in point, needs to pass a rigorous economic viability test before it can be implemented? DR. FRIEDLAENDER: We really did not address that issue. In the consideration of costs and benefits, the question is certainly relevant. As economists, we would believe that one should make a fairly stringent accounting of the costs and the benefits and see how they add up. That does not mean, if in fact the costs are greater than the benefits, that we would all necessarily say that an activity is not worth undertaking. But I think we would then say that, although the activity does not pay in terms of normal economic measures, noneconomic measures clearly enter and ask whether you, as policymakers, weigh the value of those noneconomic measures sufficiently to go ahead and undertake the activity. MR. PINNES: I think I accept everything you say, but I think the important thing is the time at which one comes in with this sort of an analysis. I think one can go back through the history of transportation and -- let me overstate the case for emphasis -- find that the first of a new system has never been economic. But one needs to go through that gate, and one needs to support the infant concept, if you will, to develop it into a good system. I think the key measure should be potential, rather than the rigorous economics of the first system. I think this is a very key point from a technology point of view. DR. FRIEDLAENDER: I think that is fair because the empirical aspect of economics is clearly based on the past and, insofar as we are myopic, we cannot always imagine what is going to happen in the future. But I think the problem with the SST is not that the economists say that it is not going to pay, but that the environmental impacts are being questioned; and that is essentially a noneconomic issue. MR. GAFFEN: I would simply like to comment that in the world of technology we inevitably overrate the potential and underestimate the cost by several orders of magnitude. MR. PINNES: I should like to check with you sometime, Stan, on the history. I would claim exactly the opposite. One classic case is when the airplane first flew -- I think they credit John Jacob Astor as the man who best predicted what was going to happen. The technical 72
people were much too conservative in their projections. And I think there are all sorts of examples of that. Take the computer system -- somebody was telling me that the first market projection for computers was that they might possibly sell four. And I would suggest that there are perhaps more than four in this room right now. DR. FRIEDLAENDER: May I interject a point on the technology issue? In discussing technology it is important to distinguish between a fundamentally new technology, like the airplane in 1920, and tech- nologies that are essentially improvements on the existing modes. Let's consider BART. BART is a very expensive system, partly because it has all sorts of technological gadgets which have not, in fact, turned out to work. But economists could pretty well say that from what we know (and it is not only economists, but also travel demand people) about travel demand, it is very unlikely that BART will ever be a paying operation, no matter how fancy those gadgets are. And it is certainly appropriate to say, that if you want to go ahead and build it for various other reasons, such as the externalities associated with the automobile, then that is fine. MR. PINNES: Would you accept -- talking about the airplane -- that the original airplane, the jet airplane, and the supersonic trans- port each represented a new transportation concept? I think one might argue that the first of each of these could be demonstrated to be noneconomic. DR. FRIEDLAENDER: Well, this is simply a matter of opinion. I really do not think that the SST and the jet aircraft are quantum jumps in new service. DR. RABINS: I think we are going somewhat afield. PROF. PIGNATARO: Actually, Dr. Friedlaender's comment about skirting the urban area prompted me to ask this question. It certainly does not apply to that panel alone. I think it applies to perhaps three of the panels. It does not appear that dramatic reversals will take place for increasing the urbanization or suburbanization of our population, nor with the insistence to respond to needs within an environment of limited resources. Added to this will be a continuing change in the socioeconomic character of the urban population, making cities even less able to support and develop transportation alternatives than they are today. And I was wondering, except for the science and technology panel, how each of those other three panels consider this question. DR. FRIEDLAENDER: That is a very good point. In some sense, we may have begged the issue in terms of transportation research, because the question really should be posed the way that you put it. Thus, given that these trends exist, we should ask, what is the implication of urban transportation for these trends, rather than the other way around. I think your point is very well taken. 73
