Parking Economics 101, brought to you by Uber

I just love this Gary Buiso piece in the New York Post because it further exposes the sense of entitlement of our city’s driving class. As if it weren’t enough to have the opportunity to park private property on public land for zilch, some residents of the Upper West Side want to restrict who can take advantage of this flaw in our planning policy.

“Why is this ugly piece of junk here?” demanded area activist Gretchen Berger, referring to the rusted RV that has been stationed at Riverside Drive and 74th Street.

All hail this “activist”, self-declared arbiter of what is visually acceptable in New York City. You know, I happen to think all cars are ugly. Can we get rid of them? Or if I were to consider Ms. Berger’s face an “eyesore”, could I petition the new mayor to have it forcibly removed?

Here’s a lesson straight from Econ 101:

When, at the price ruling, demand exceeds supply, the price tends to rise.

In other words, if there are more people willing to pay for a good than there are quantities of that good available, you’ll have a shortage, and the price should go up.

But the price is fixed in many cases at zero, even though a 26′x10′ parking spot would fetch around $1,125 per month were it inside an apartment building. That doesn’t stop people from complaining that others are competing for the same undervalued space:

“I don’t think it should be here,” added Mario Parisi, 86. “We’re all waiting to park. Sitting there all the time is not a good idea — it’s a monster.” [emphasis mine]

*   *   *

Perhaps Mr. Parisi will appreciate the tack taken by Uber this weekend. Several riders accused the car-hailing outfit of jacking prices during Saturday’s snowstorm:

But in Boston, blogger Jessica Gioglio — who bills herself as “The Savvy Bostonian” — shelled out $91 for a 3.18-mile, 16-minute trip from Beantown’s Back Bay to Central Square.

Posting a screenshot of her e-mail receipt, she called the fare “price-gouging” and said, “I’m really disappointed in u guys.”

I know I shouldn’t be throwing stones, given the “weekly” in my blog’s title might as well be “semiannual” at this point, but: savvy this Bostonian ain’t.

Price tends to the level at which demand is equal to supply.

That adjective is squarely in Uber’s court. With what appears to be a monopoly on this market (does anyone use Lyft or Hailo?), it doesn’t have to worry about disgruntled clients going elsewhere, so it can charge whatever will maximize its profits.

That, as any Econ 101 text will tell you, is where demand and supply meet. Uber can charge those obscene amounts because enough people like Jessica Gioglio will pay them.

The higher rates “get more cars on the road quickly when demand outstrips supply, helping to guarantee that New Yorkers can get a ride when and where they want,”[Uber spokeswoman Nairi Hourdajian] said.

“As soon as demand falls or supply increases sufficiently, prices return to normal.”

Bingo. Say what you will about the need for regulation, but for the time being, Uber knows what it’s doing with its easily-changed prices. As does San Francisco, with its demand-responsive pricing for parking.

The lesson to our urban planners and politicians is obvious: figure out where supply equals demand, and charge the appropriate price for the privilege to park a car on public streets. People will pay it. Sure, they’ll throw a hissy fit because something free is being taken away, and I’ll have big crocodile tears for them.

Why? Well, the nominal fee our state charges for automobile registration – and the pittance from the far-too-low gasoline tax – requires our government to dip into other funds to make up the difference for infrastructure-improvements. These are funds that could go to better schools, or better public transit, or better … well, pretty much anything that benefits the people as a whole instead of individual car-owners. Not to mention that the air will become much cleaner (fewer people circling the block endlessly) and streets will be safer (fewer vehicles on the road).

This calls to mind perhaps the one thing even the poorest of economics students will never forget – the story of King Tanstaafl, whose name was turned into an acronym to explain a central tenet of the science:

There ain’t no such thing as a free lunch.

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4 Responses to Parking Economics 101, brought to you by Uber

  1. I don’t call it parking. I look for a free place to store my private property. That way I am not so upset if it is not in front of my house or it take me a few minutes to do it.

  2. eveostay says:

    Is the Post getting more sympathetic to livable streets?

    The kicker is patently absurd (as you point out). “I don’t think he should park for free there because I want to park for free there.”

    Nice piece, thanks.

  3. TOM says:

    But he has emptied a bed in homeless shelter. Enough of him spread about and we might be able to close a shelter on the UWS. It’s called out-sourcing.

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