That there is a shortage of parking spaces at the Loyola University New Orleans main campus will come as no surprise to any student, staff, or faculty member of this institution of higher learning. We have all driven right up to the top floors of both parking buildings only to emerge, still behind the wheel, rendering us late, yet again, for classes, meetings, parties, lectures, etc. This is more than just slightly inconvenient. It is wasteful, infuriating, and detracts from an otherwise excellent campus experience. The only people who do not suffer from this challenge are upper administrators who have reserved spots and who, paradoxically, are responsible for this very problem in the first place.
What is to be done? Well, economics tells us that there are two and only two solutions to a shortage: supply and demand. First consider the former.
What is the present supply situation? There are only some 1500 parking spots for roughly 4000 students and almost another 1000 faculty and staff. Yes there is of course street parking, but with that consideration added to the mix the total availability is still far from adequate.
What is the supply-side solution? It is simple. Add a floor or two or three or seventeen (I’m kidding only about the latter; well, half kidding) to both parking garages. There is only one problem with that solution, apart, of course, from the cost: it will take time. And, during the construction period, there will be less parking than at present, not more. Building during the summer when the campus is all but empty will solve the temporary reduced availability problem (if all of the work can be done during this period, which is doubtful), but will put off the day when the new capacity comes on stream.
What about demand? The solution from this quarter is also simple: reduce demand. How so? Raise the price of parking permits until demand equals the pathetically small available supply, relative to the much larger demand. Why does demand exceed supply at present? As any econ major can tell you, it is because price is below the equilibrium point at which supply and demand are equal.
When implemented, a price rise will incentivize car-pooling. Some people will revert to bicycles and leave their automobiles at home, reserved for longer trips, perhaps. Others will use mass transit (they are not trolleys, they are street cars!). Some groups of people may even utilize cabs or Uber services.
Voila, in one fell swoop, the problem will be solved. And if a slight price increase does not work, the price will need to be pegged even higher until the problem is addressed. No more going up to the top of one parking garage, down to the bottom, then up to the next one, wasting valuable time without finding any parking spots. (The way to save time under present ineffective institutional arrangements, not involving either supply or demand, is to post electronic signs indicating how many empty spaces are available on each floor; airlines do this, so can we).
Students must attend classes, study, and do homework. Professors must teach classes, prepare and mark exams, and publish or perish. They cannot do these things if they are unsuccessfully chasing a will-o’-the-wisp—an empty parking space.
Price rises will of course go against the grain of many people. They think parking permit prices should be lowered, not raised. But that is the way mean old economics works, like it or not. Artificially low prices create shortages. To eliminate that state of affairs, prices must be raised.
Walter Edward Block is an American economist and anarcho-capitalist theorist who holds the Harold E. Wirth Eminent Scholar Endowed Chair in Economics at the J. A. Butt School of Business at Loyola University New Orleans. He is a member of the FEE Faculty Network.
This article was originally published on FEE.org. Read the original article.