When governments picks winners and losers, we lose
The story of Foothill Transit’s electric bus purchase is a cautionary tale with much to teach us about government efforts to promote new technology.
Foothill Transit was an early adopter of electric buses, which the state of California has mandated by requiring transit agencies to have 100% zero-emission buses by 2040. Foothill began buying electric buses in 2010 from a South Carolina company called Proterra. Some of the money for the purchase came from the Federal Transit Administration. As a condition of the funding, the buses were required to last for 12 years.
But nobody told the buses, which gave out after seven or eight years.
At a recent meeting, Foothill Transit’s board voted to try to return 13 first-generation electric buses to the Federal Transit Administration. It will cost the local transit agency about $5 million.
Foothill Transit’s fleet of 32 electric buses has been plagued with mechanical problems. According to a report presented to the board, up to 67% of the buses were out of commission during 2019 and 2020, and it’s been difficult to get parts to repair them. One bus was a total loss in January 2020 when it caught on fire while recharging.
At one time, transit agencies purchased clean CNG buses to replace the diesel kind, but natural gas has fallen out of favor with environmental activists, who think electric buses are better for the climate.
They may not be aware that California leads all other states in electricity imports, and we’re not too particular about how that imported electricity is generated.
Foothill Transit may be a canary in the coal mine. The Los Angeles Metropolitan Transportation Authority, known as Metro, has committed to 100% electric buses by 2030. Your money has already been spent or committed to replace CNG buses on the San Fernando Valley Orange Line with 40 electric buses made by the New Flyer company.
“Battery-electric transportation is not going away; it is mandated,” said Foothill Transit board member Cory Moss, a City Council member in the City of Industry.
But just because it’s mandated, that doesn’t mean it works well. Or at all.
California is also mandating electric trucks. In June 2020, the California Air Resources Board issued a rule that requires vehicle makers to sell more electric trucks starting in 2024; the pressure then ratchets up so that all new trucks sold in the state are zero-emission by 2045.
However, it’s an emerging market, and the technology doesn’t yet exist to replace big rigs with all-electric trucks.
Does it help or hurt to have the government mandate the sale or purchase of emerging technology? Advocates of this type of policy argue that the market is failing on these climate-friendly technologies, so the government must step in and forcibly create a market.
The problem with these mandates becomes evident when you consider that the decisionmaking process of a government entity is very different than the decision-making process of the free market.
In the free market, individuals and companies looking for the next big thing will research and investigate every aspect of a new technology. All across the world, simultaneously, people are focused on finding out if the technology is viable, cost-effective and reliable, and whether there are any known problems or risks that are red flags.
In a government, people with power listen to pitches from people with influence, and then they use the force of government to take money from taxpayers and put it toward whatever choice they’ve made.
The motives and the vetting process are different, and so is the outcome.
If the world’s investors turn out to be wrong, they take the loss. If the government turns out to be wrong, taxpayers take the loss. And they’re left waiting at the bus stop.
The worst possible outcomes are caused when the government picks out certain companies or industries to subsidize. Then investors ride along if there are profits, and the taxpayers get stuck for the bill if there are losses.
The guaranteed winners in these deals are the government officials who foist them on everybody. By the time taxpayers find out that they’ve been taken, the public officials who took them have moved their carnival to the next political office.