Dr. North, economist, lecturer, author, currently is an associate of Chalcedon, an educational organization dedicated to Christian research and writing. His latest book is An Introduction to Christian Economics, Craig Press, 1973.
"You can’t get something for nothing," is about as safe a slogan as one could invent. Sometimes we get what turns out to be nothing for something, although we hadn’t originally planned it that way. But sometimes "nothing" turns out to be something, and all kinds of problems appear if we fail to put a price tag on it.
One of these "nothings" is space. People want to get a piece of nothing in order to put something into it. This is a far greater problem in productive capitalistic societies than it is in underdeveloped nations. We have so many items around that we need space to house them. So the price of "nothing" — empty space — goes up.
One place where this space problem occurs is on the Hollywood Freeway at 5 p.m. Another is the Long Island Expressway, or as it is also known, the world’s longest parking lot. Lots of drivers try to insert their cars into the available freeway space. And the "freer" the freeway, the worse the jam. Men are told that it costs them nothing extra to use the available space on the freeways; they find subsequently that there is greater demand for "nothing" than supply at zero price at 5 p.m. Even on the Eastern toll roads, the same problem occurs, since it always costs the same, day or night, to use the available space. There is no incentive to allocate the space economically. It costs three cents (or whatever) per mile at 5 p.m. or 7 p.m.
Parking space is another problem. Private firms have plenty of incentive to purchase space downtown and allocate it according to the most efficient uses. It costs more to park in the heavily used business districts than in a suburban area. Men therefore have an incentive to plan wisely. If they want to pay less, they can go to work earlier, park farther away, and walk the extra distance, or ride the bus.
No Man’s Lane
But some sections of a business district may be outside the private sphere’s ability to allocate space rationally. I refer to the curb lanes of the city’s streets. These are the property of the city government, not private citizens. There was a time in the past when the doctrine of "free" space led to the same sort of difficulties that the doctrine of "freeways" creates today. It was only when urban communities took a lesson from the free market that the problems diminished. Arnold Shapiro describes what happened:
Parking a car downtown in most cities in 1935 made grown men cry —and curse. Practically all the spaces were occupied by the cars of store owners, their employees and several other all-day parking hogs. The shoppers fought over whatever was left and chaos prevailed.
In Oklahoma City, the Chamber of Commerce turned for help to newspaper editor Carl McGee, who had achieved fame in the 1920′s for uncovering the Teapot Dome scandal. He solved his city’s parking problem by inventing one of America’s most helpful but irksome gadgets: the parking meter.
On a July morning in 1935, Oklahoma City drivers were confronted with 174 of McGee’s Park-O-Meters. As an experiment, these four-foot high mechanical cops were placed on one side of a few downtown streets. The contrast spelled success. On the unmetered sides, there continued to be confusion — cars jammed together and pushed in front of fire hydrants, fenders bent, and traffic stopped by motorists backing into cramped parking spaces.
On the metered sides, there was order and room for every car to be parked. The price tag for this luxury? Five cents for an hour. [Which was plenty in 1935 Oklahoma City, Shapiro fails to mention.] When merchants on the unmetered sides realized that the meters helped business by keeping the flow of customers moving, they requested meters in front of their stores.]
Prices set by governments are only vague estimates. Other considerations besides profit must be considered, such as the political reaction to increased meter costs. The public streets are a monopoly, so it is not possible to measure economic value of the spaces directly, since outside agencies are not allowed to enter the market to buy up the spaces. Thus, even at best, the meters are inefficient space-allocators. But when compared to the effects of "free goods" for one and all, there is no question which approach allocates more rationally.
Didn’t the merchants in Oklahoma City realize that by parking their own cars on the streets they would reduce local business? Probably they did, or at least some individuals did. But if any one man does find other spaces for his car and his employees’ cars, he only leaves a "free" space for the merchant across the street. It is very hard to organize all the local merchants, impose sanctions, and then keep out all-day nonshoppers (e.g., movie viewers) from taking the available spaces. But the simple addition of an allocating device, the parking meter, reduced the disorder.
A Pricing Problem
Today we are returning to the pre-1935 parking problem. Meter fares are probably too cheap in some areas. The allocation action is provided primarily by the inconvenience of having to return to the meter to deposit a fresh coin. Other devices must be added, such as chalk-marking of tires (in those regions that only allow one hour of parking, even with the nickel meter). Even the "no parking" signs, however, are really little more than expensive parking spaces: a $5 or $10 fine is imposed, which in downtown New York City may be cheaper than a local parking lot, especially if the city planners impose ceilings to the legal parking fees in private lots, or establish "quality oriented" guild monopolies among the operators of the lots.²
If "nothing" is really something, but political authorities insist on charging nothing for it, there will be endless confusion, disruption, and waste. The fallacy of "nothing" for nothing is just another case of something for nothing. To avoid paying money for something valuable, we wind up paying plenty —in frayed nerves, bent bumpers, missed appointments, and so forth. In a culture that already drains us emotionally and physiologically, it seems far cheaper to pay enough money to get the things we need. It might even be a form of preventive medicine.
¹ Shapiro, "Meter Maids Show Their Mettle," Westways (October, 1973).
² See Henry Manne’s classic description, "The Parable of the Parking Lots," The Public Interest, No. 23 (Spring, 1971).
Gary North
Dr. North is president of The Institute for Christian Economics in Tyler, Texas. He was FEE’s director of seminars in the early 1970s and has served as a member of the board of trustees.