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Thursday, November 5, 2009

Drive, Drive, Drive for Prosperity!

Posted By on Thu, Nov 5, 2009 at 12:16 AM

The pronouncements of Dr. Randall Podenza, an economist associated with the right-wing Cascade Policy Institute, usually leave me scratching my head. But his latest one had me wanting to ram it into a wall.

Podenza’s thesis boils down to this: More driving = more prosperity. As reported on the Oregon Catalyst blog, Podenza’s study “finds that ‘VMT [Vehicle Miles Traveled] is a large and statistically significant driver of GDP [Gross Domestic Product]’ and cautions that artificial attempts to limit driving through taxation or regulation will cause a significant decrease in economic output.”

CPI President John A. Charles Jr. declared: “If Oregon politicians believe in job creation and increased household income – as almost all claim they do – then they also have to be in favor of increased automobile driving and a better highway system. Reconciling the conflict between the positive effects of driving and our state’s anti-driving policies will be one of the central challenges for decision-makers in the near future.”

Does driving contribute to the GDP? Sure it does. But it’s important to understand what the GDP is. It’s a measure that includes all goods and services produced by the economy – without regard to whether they’re positive or negative, beneficial or harmful. Building a new prison adds to the GDP just the same as building a new high school.

The cost of buying, maintaining and repairing cars goes into the GDP. The cost of gasoline goes into the GDP. The cost of building and repairing highways goes into the GDP. The cost of paying police to patrol those highways goes into the GDP. The cost of medical care for those injured on those highways goes into the GDP. The cost of paying paramedics to pick up the bloody remains of those who are less lucky goes into the GDP.

So, yes, as driving increases, GDP increases. But not all of that increase is a good thing. And if people switch from cars to other modes of transportation, that will contribute to the GDP too. It will cost money – a lot of it – to build, operate and maintain the rail lines and bus lines they use.

It’s not hard to imagine Randall Podenza’s counterpart in the 1880s doing a study proving that increased use of horses contributed positively to GDP growth, and that the trend toward those newfangled “horseless carriages” was a menace to the national economy.


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