Those who believe that the government can only provide inferior services should take a look at the National Park Service's line of premier outhouses: $420,000 for one disguised as a corn-crib, $330,000 for one with limestone capstones for its porch railing and a slate roof, and a whopping $1 million for a four-holer with state-of-the-art, solar powered composting units and a backup propane generator.
Deluxe outhouses are what you get when you combine freedom from any sort of market discipline with politicians' eagerness to please special interest groups-in this case yuppie hikers. Local governments are not immune to these problems. Here in Phoenix we have the Downtown Area Shuttle, better known as DASH. Designed to bring customers to downtown merchants, DASH is so costly that a fleet of limousines could replace the conspicuous purple buses and still save money. Even better, with current ridership, there would be plenty of room to stretch your legs and enjoy the 30-cent limo ride.
When the DASH buses hit the streets of Phoenix in late 1990, ridership exceeded expectations, surprising officials in this city seemingly devoted to the automobile. It was touted as a wildly successful "public private partnership." Despite the good press and wishful thinking, the success of DASH was about as short-lived as its status as a public private partnership.
After the initial flurry of interest in the free buses, complaints became frequent that homeless people were riding the air-conditioned buses to stay out of the heat. Instituting a 25-cent fare got rid of the "joy-riders" but it also got rid of almost half of all riders immediately. Over the years, ridership has fallen even further. Today, despite a far more robust downtown, DASH boardings are 85% lower than they were eight years ago. Still, the DASH plods along its four-mile route, with each bus built to accommodate 50 people picking up an average of 1.6 passengers per mile.
The DASH is a product of what public choice economists call "dispersed costs, concentrated benefits." If you spread the cost among a number of entities and individuals, no one has a strong incentive to look at the total bill. In the case of DASH, the Feds, the State, the County, the City and local businesses have all chipped in. While the DASH budget is a small part of the $1.6 billion Phoenix Budget, the implication of such spending is not. If other, larger programs are operated with the same disregard for efficiency and distorted incentives as the DASH, the potential waste of taxpayer dollars is staggering.