The Wrong Kind of Government Subsidy

Matt Yglesias notes that the city of Seattle is putting up $4 million to subsidize the operations of a downtown public parking garage. This is on top of $1.5 million the city already lent the garage last year. Apparently, when one subsidy wasn't enough to create sufficient demand for the parking spaces, a second was thought a good idea. An even worse example of this kind of government subsidization occurred in the Bronx, where the government paved over neighborhood baseball diamonds to facilitate heavily subsidized parking garages for the new Yankee stadium (even though it is smaller than the old one). Just as in Seattle, the city is going to lose a fortune on this, as very predictably not very many people want to pay $35 to park near a stadium serviced by two subway lines, a commuter railroad, and numerous cheaper parking alternatives. Why New York City taxpayers should be paying to provide parking spaces for some the wealthiest Yankee fans was always unclear. If the market can't support the expensive spaces the only thing that might be hurt is the bottom line of one of the wealthiest teams in professional sports, which can build its own parking garages if it wants. Indeed, the garage (which sits half empty even on game nights) is losing so much money that there might be a happy ending, with the useless parking garages bulldozed and the land put to a productive use instead.

Unfortunately, Matt is also right that failed subsidies for companies that are damaging to the environment -- encouraging driving versus taking public transportation -- will get a fraction of the attention that failed subsidies for companies that are attempting to help the environment have.

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