The US Northwest gets a raw deal when it comes to the economics of driving. We import from outside the region virtually every car we drive, not to mention nearly every gallon of fossil fuel we burn. So, the lion’s share of the money we spend on driving goes elsewhere. (Our newly updated energy counter illustrates this point with dramatic flair.)
Interestingly, a new report from a Portland economist makes the same point somewhat differently:
Because Portland-Vancouver drivers log 20 percent fewer miles a day than most U.S. urban dwellers and spend less on cars and gasoline as a result, the region’s economy saves $2.6 billion a year, or about 3 percent of the area’s annual economic output…
By habit, I’m a bit skeptical of reports like this one that allege huge economic impacts from complicated and interconnected features of an economy. (You see this all the time with economic impact assessments of sports stadiums and so on.) And I should also mention that I haven’t chewed through the methodology behind this report. But while I won’t vouch for the precise dollar figure, the fundamental insight is surely right:
And most of that money, which otherwise would go to far-flung car makers and oil companies, appears to go instead to housing, entertainment and food in the Portland-area economy.
“It stimulates local businesses rather than rewarding Exxon or Toyota,” says the five-page report titled “Portland’s Green Dividend”
What’s the lesson here? I think it’s this: the money we spend to facilitate driving—whether on roads or “free” parking or what have you—is just a down payment. The real price is much higher, and we pay it over many decades to support industries in other regions.
sf
That’s a huge expense, but basic economic theory would say it is irrelevant that it goes outside of the northwest. The recipients of this money spend it on other things, including products produced in the northwest.
Eric de Place
That’s only sort of true. There’s no particular reason to believe that all trade (whether international or inter-regional) is revenue neutral for everyone in the marketplace. There is no guarantee, for example, that if the NW sends dollars to Saudi Arabia, then the Saudis will turn around and “repay” us by buying the same dollar amount of apples or MS Windows or whatever. There are plenty of real-world examples of a net outflow of wealth from one place to another—witness the US’s current account deficit, which is largely due to an ongoing trade imbalance.