Cars, Public Transportation, and Their Effect on The Economy

By: Manthan Madan

Public transportation is for everyone and is most commonly found in densely populated areas. The subways in New York and California are examples of public transport, whereas cars are examples of private transport. Both cars and public transportation have advantages and disadvantages for the economy. While both can boost GDP, personal spending, and the economy overall, they also require significant upfront costs, and infrastructure can potentially hurt the economy. Public transportation can lead to a better GDP and can positively affect the economy based on previous usage. National Geographic, an organization known for informing its audience with facts, argues that “the construction of roads, canals, and railways in the 19th century accelerated the rise of the massive United States economy” and “laid the foundation of a bustling nationwide economy of commercial agriculture and industry” (National Geographic). Since public transportation benefited the economy in the past, it could also benefit the economy right now by assisting with the advancement of industrial workplaces. Therefore, public transportation can benefit the economy based on its prior impacts. Additionally, public transportation can benefit people's health. The United States Department of Transportation (USDOT) argues that “Investments in public transportation have potential traffic safety, air quality, active transportation, and accessibility benefits, thus improving associated personal health outcomes” (USDOT). People would be more likely to use public transit if it offered so many benefits to them personally. Since there would be all these health advantages, people wouldn't have to spend as much on medical expenses like hospital visits because there wouldn't be as many of them. As a result, health care expenses would decrease, which would make public transportation beneficial to the economy. Additionally, if individuals are aware of this, they will choose to use public transportation more frequently rather than driving themselves. As a result, more money would circulate from public transportation, which would improve the economy's GDP. To support this even further, Sean Ross, who is the founder and manager of Free Lances Ltd., which focuses on academic writings about the market, states that 'when more money is in the market, there is more money circulation, in turn leading to a better economic GDP’ (Sean Ross). Therefore, public transportation can both benefit people's health and boost the economy's GDP. This is important since public transportation can provide various benefits to the economy.

However, public transportation also harms the US economy with the high costs of implementing it. The Intelligent Transportation Systems office under the Department of Transportation gives the following costs for “implementing buses (a form of public transportation): System Cost Capital costs: $2.64 million or approximately $32,500 per bus for a fleet of 75 buses. O&M Cost: Approximately $1.25 million per year (1995 dollars)” (USDOP). According to the CPI inflation calculator, 1.25 million USD in 1995 is equal to 2.56 million USD in the current year, and this is just for bringing 75 buses into the state of Michigan. The number would skyrocket if we took into account the entire country, and the expense would result in significantly larger federal debt that would take a very long time to pay off. Another problem is that outdated infrastructure can result in workers producing less money. Another issue would be how the lack of modern infrastructure can lead to lower economic output from workers. Paul Skoutelas, a researcher in economics, says that “Aging public transit infrastructure in America leads to lost time in travel and makes a region’s economy less productive. It slows down workers’ economic output, which directly impacts business revenue in our economy. Such a lack of productivity causes a decrease of $180 billion in America’s GNP [gross national product]” (Politico). Therefore, the infrastructure of public transportation would also need to be modernized since the current one harms economic output from workers, which will also cost a great deal of money. However, both of these issues could be easily covered. The United States Department of Transportation explains that “The Bipartisan Infrastructure Law, as enacted in the Infrastructure Investment and Jobs Act, authorizes up to $108 billion for public transportation – the largest federal investment in public transportation in the nation’s history” (USDOP). Since this was only recently announced in July 2023, it is extremely likely that money will still be available to develop better infrastructure and transportation. Because of this, the harms of public transportation to the economy are not as dire as they may seem, but they can still have an effect based on how they are dealt with.

Not only does public transportation have an effect on the economy, but cars do too. Like public transportation, cars can also benefit the economic GDP of America. There are two different ways this is done: the price of cars and the price of gas. Mathilde Carlier, a transportation and logistics researcher, explains that “In the United States, the average selling price for a new light vehicle came to around 46,290 U.S. dollars in 2022. New light vehicles were about 9.2 percent more expensive in 2022 than in 2021” (Mathilde Carlier). Since the price of cars is increasing, every time someone buys a car, more money is in circulation. As Paul Skoutelas mentioned previously, 'when more money is in the market, there is more money circulation, in turn leading to a better economic GDP’ (Sean Ross). Gas prices also benefit the GDP. Patti Domm, a financial journalist at CNBC with three decades of market and business experience, claims that, that. households are spending the equivalent of $5,000 a year on gasoline” and, “That is up from about $2,800 a year ago and $3,800 as recently as March'' (Patti Domm). Like car prices, gas prices can also boost the economic GDP due to the high price. Therefore, while car and gas prices may be high and cost more than customers expect, they also boost the economic GDP because of these high prices.

However, car transportation has its harms to the economy as well. As the NHTSA (National Highway Traffic Safety Administration), a government organization, states about car crashes, “Lost workplace productivity costs totaled $75.5 billion, which equaled 22 percent of the total costs. Lost household productivity totaled $30.8 billion, representing 9 percent of the total economic costs.” Furthermore, Ajay Kumar, an expert consultant in resource management, presents the argument that “low productivity indicates that resources are not utilizing their skills and competencies to their maximum potential which increases company’s resourcing costs” and so “a decline in productivity stunts the GDP or the economic output in comparison to the number of people” (Saviom). If car crashes can cause a loss of productivity, and a loss of productivity essentially means that the GDP is stunted, then the NHTSA and Ajay Kumar agree that car crashes can harm the economy. Furthermore, Adam Rameriz, a writer on legal issues for over 20 years, provides a staggering statistic: ‘a total of 5,250,837 collisions happened in 2020’ (Forbes). 2020 was during the pandemic, meaning there wasn’t much driving, so if the number is taken into account of what happens right now, it skyrockets. Therefore, car transportation can harm the economy because of the loss of productivity due to car crashes, which are very common.

Therefore, public transportation can boost industrial buildings and the economy's GDP but is constrained by its outdated infrastructure and high implementation costs. These can, however, be quickly covered. On the other hand, because of the money spent on gas and personal automobiles, cars help the economy's GDP, but car accidents reduce productivity. The economic implications of both sides of the argument between private vehicles and public transit should be taken into account in the debate over which of the two is better.