I'll bet that 99% of Spend Matters readers have played Monopoly. In fact, it was likely our first introduction to capitalism and economics. Remember the "Free Parking" square, where a player could catch a break from having to invest, or pay rent or a fine? As it turns out, this square was a very poor introduction to a serious economic issue.
Tyler Cowen, Professor of Economics at George Mason University, recently reviewed The High Cost of Free Parking in The NYT, a 733-page book by Donald C. Shoup who claims that "...99 percent of all automobile trips in the United States end in a free parking space, rather than a parking space with a market price." Cowen calls the work "a classic tale of how subsidies, use restrictions, and price controls can steer an economy in wrong directions." It's also a classic depiction of how we came to presume that just because we don't directly pay for a good or service, we falsely construe that it is somehow free. "We end up overusing land for cars -- and overusing cars too ... the law is allocating this land rather than letting market prices adjudicate whether we need more parking..." according to Cowen.
Those of us who live in densely populated cities are more conscious of the real cost of parking. "Yet [according to Cowen] even New York is reluctant to enact the full social cost of the automobile into policy ... and on-street parking is priced artificially low ... Manhattan streets are full of cars cruising around, looking for cheaper on-street parking, rather than pulling into a lot. The waste includes drivers' lost time and the costs of running those engines." Cowen quotes Shoup's argument "that many American parking spaces have a higher economic value than the cars sitting in them ... after including construction and land costs, he measures the value of a Los Angeles parking space at over $31,000 -- much more than the worth of many cars ... If we don't give away cars, why give away parking spaces?"
The upshot of Shoup's work could well become a meaningful catalyst to finally crack the conundrum of how to move Americans away from viewing their cars as a fifth appendage -- increasing utility of public transportation, reducing fuel consumption and environmental pollution. Just like in Monopoly, Free Parking was only free to the occupant -- it was subsidized by the other players in lost revenue. And given the current monetary shortfalls that plague local governments, allowing the market to price parking is a concept whose time has come.