NYT cites Alon Levy on subway construction costs
From the New York Times : “The approximate average cost of [subway] projects — both in the U.S. and abroad — has been less than $500 million per track mile, the study concluded.
‘There was one glaring exception,’ Mr. Schleicher said. ‘New York.’
That exception has not gone unnoticed. The independent online journalist Alon Levy first noted the [New York City] M.T.A’s high construction costs, and 28 City Council members urged officials to research the issue in October.”
IMO, there are a few key take-aways from this, beyond just Alon Levy being awesome (which he is) or NYC civil engineering contracts being epically corrupt (which they are): There is no remotely efficient market in information. Even pieces of information which (as in this case) might affect tens of billions in spending / are critical to the core functions of major governments, can be first uncovered by clever hobbyists in their spare time from thousands of miles away. (Heck, I’ve researched at least two issues — both covered by many national media outlets — where the best publicly available source was anonymous YouTube comments.) In terms of comparative advantage, being better-informed is a much easier “edge” to get than being rich or famous or politically influential. This is even more true, I think, when the information in question has political implications.
Going together with #1, there is no remotely efficient market in the distribution of information. The Alon Levy blog post linked to here is over six years old. There’s no real reason this article couldn’t have been written many years ago; a series of breakdowns in June just happened to spur more interest in the subways this fall. So even critical information can easily be left ignored; correspondingly, that something has been ignored for many years doesn’t mean that it isn’t critical, or that it won’t be on the front page of the New York Times the next day. I’m far from an expert, but if anyone wants to widely distribute key information, one technique I’ve had a bit of success with is going “up the chain”. Eg., someone discussing an issue on national TV might be getting their ideas from a second person, who got them from a third person, and so on; eventually, there might be someone in that chain who reads your emails. Hiring a PR firm can also work, although of course that’s much more expensive.
Without a free market, costs are not fixed. In the market for cars, for example, the price of a car is relatively close to the marginal cost of producing a car. So if you buy a car, and the sticker price of the car is $25,000, someone somewhere must come up with $25,000. If one is clever or unethical, one might get someone else to pay the cost for you, but the cost is still fundamentally the same. However, in a case like this, price has no relationship to the marginal cost of production, and so it can freely swing upward or downward. Hence, talking about the “cost of college” (for example) doesn’t really make sense as a phrase, because there is no underlying fixed number. The act of paying for it, by eg. providing more student loan options, might itself increase the cost, like cutting heads off the Lernaean Hydra.
It’s much easier to cause a large change than to profit from it personally. If tomorrow, everyone in New York unanimously decided that having super expensive subways was dumb and reformed their public procurement system, I doubt Alon Levy would make any large amount of money off of that. He couldn’t run for office, not being a US citizen, nor would he get some high-ranking job in the MTA (which I expect promotes based on seniority). At least in some sense, I expect that many larger goals are actually easier to achieve than goals which are purely selfish.