Tom Keane

The Boston bike-share success story

THE HUBWAY — Boston’s bicycle share program — at first blush seemed one of those off-the-wall, goofy larks you’d find in cities like Portland, Ore., or San Francisco. The notion that meat-and-potatoes Tom Menino was behind it made me wonder whether those 18 years as Boston mayor had finally exacted their toll, especially when he started prattling on about this being the beginning of a new, green urban transportation system.

But now the bikes are heading inside for the winter and, taking stock of the last four months, the Hubway is starting to look less hare-brained and more like one of Menino’s best ideas ever.

A bike share program is, at its most basic, just what it sounds like: City-owned bikes are scattered around downtown, available for folks to use as they wish. But the implementation of that simple idea is remarkably sophisticated. Since the program started July 28, bikes have been available at 60 (solar powered!) stations. Members of the program carry around a small fob which unlocks the bike. They then ride where they wish, docking it at a nearby station when done. Apps available on smartphones tell users where stations are and - in real time - how many bikes are available. Rides under 30 minutes are free to members. Anything longer carries a small charge.

The program’s unveiling was accompanied by the usually litany of naysaying. No one would use it. Riders would get hurt. Traffic would be a mess. It was a waste of taxpayers’ money. Bikes - as happened in Paris - would be vandalized and stolen.

All wrong. The program signed up 3,620 annual members (I’m one) and attracted another 30,000 or so casual users - tourists and locals who try it for a day or two. Nicole Freedman, who heads up Boston’s bicycle efforts, says that since inception there have been about 138,000 bike rides, well above initial projections. There have been no serious injuries (Freedman speculates Hubway users tend to be more cautious riders and the bikes are themselves sturdily built, including flashing lights both fore and aft.) Automobile traffic still flows as well - or as badly - as ever.

Taxpayer money? Actually, none from the city. The total bill is $5.7 million, including the bikes and stations (which Boston now owns) as well as three years of operations. That was funded entirely by a combination of almost $4 million in state and federal grants, a large donation from New Balance, and other sponsors and advertisers. Given ridership levels, future operations likely can be paid from user fees and sponsorships.

Despite the sorry experience Parisians had with their own bike share program, fears of mischief never materialized. For one, the Hubway requires riders use a credit card, making it pretty easy to track down would-be thieves. And aside from petty problems such as stickers defacing stations and bikes, there has been no real vandalism. Maybe we’re just more civil than the French.

Still, Boston’s small program is a far cry from Menino’s grandiose vision of a full-blown transportation system. Right now the stations are mostly downtown. The critical need, the city acknowledges, is to roll out stations all over Boston as well as in neighboring Brookline, Cambridge, and Somerville. Boston still needs more and better bike lanes to accommodate the hordes it someday hopes to see on two wheels. There are operational kinks to work out too; more than once, I’ve found stations empty of bikes (or full - making it impossible to dock).

Even so, there are intriguing signs of what the Hubway might become. Commuters coming into North and South Stations now routinely hop on bikes to get to their offices. Tourists use it as a way to better see the sights without the wear of walking. And I personally have found that it changes things: I now readily go places I didn’t. Cars are expensive to park; subways take too long. The bike is quick and easy.

The only flaw to all of this is the weather. Not surprisingly, the Hubway closes for the winter, shutting down at the end of this month and reopening mid-March. That’s yet another reason to yearn for spring.

Originally published in the Boston Globe on November 26, 2011.

An economics lesson for Warren

THE VIDEO in which Elizabeth Warren, de facto Democratic nominee for the US Senate, rebuts GOP claims that taxing the rich is “class warfare,’’ continues to be a sensation. “There is nobody in this country who got rich on his own,’’ Warren tells supporters. “Nobody!’’

Her claim is that it is not entrepreneurs who create wealth. They play a role, she acknowledges, but the credit really belongs to all of us. And that becomes the rationale for why they deserve to pay a premium in taxes: We deserve a share of their wealth because we helped create it.

It’s a beguiling idea, but Warren is wrong. My taxes may have helped pay for the roads on which Steve Jobs shipped his iPads, but without Steve Jobs - no matter how many roads my taxes might have paid for - there never would have been an iPad. Indeed, the only reason I have a job that enables me to pay taxes is because of past entrepreneurs, who created the companies and the technologies that in turn created a wealthier society that in turn could provide me with a job. If Steve Jobs owed his wealth to anyone else, it was to those past entrepreneurs.

Economics got named the “dismal science’’ because some of its earliest, greatest thinkers - Thomas Robert Malthus, David Ricardo, Karl Marx - concluded that society was doomed to a stagnant existence. Although each had far different world views, each concluded there was, essentially, a finite amount of wealth. There might be bubbles up or down, but in the end, each generation would be no better off than the last. It was a gloomy prognosis, with seemingly the only battle left being who got what.

Those airtight academic arguments were confounded by the real world, however. During the Industrial Revolution, per capita wealth was plainly growing. It took economists such as Alfred Marshall and Joseph Schumpeter to explain why. The way out of the stagnation was productivity. If more could be accomplished with the same resources (or, if the same could be accomplished with fewer resources), then wealth would grow. And who made that happen? Schumpeter said it was entrepreneurs.

Schumpeter had a broad definition of entrepreneurs. They included the stereotypical lone inventors, but also were those who developed new products, processes, organizations, or ways of doing things - any sort of innovation. And, he stressed, those folks could be found not just in small start-ups, but also in the midst of large organizations. Absent entrepreneurs, he argued, economies couldn’t grow. We would be in a stationary equilibrium, where the wealth of no one would ever improve.

Of course, none of this means we shouldn’t tax wealthy entrepreneurs. But the reason we do so is not because, as Warren would claim, that they somehow owe us. Rather, we tax the rich for the same reason Willie Sutton robbed banks (“Because that’s where the money is,’’ Sutton allegedly explained). Nor does it mean that government can’t help create the conditions in which entrepreneurship flourishes. As Warren notes, those conditions include stable legal systems, safe streets, and an educated populace. But they also include flexible labor rules, open markets, a refusal to countenance protectionism, and a regulatory system that minimizes burdens on businesses - usually not high priorities for left-wing politicians.

Still, the key point is that it is not government or we the teeming masses that create wealth. It’s entrepreneurs. Warren says entrepreneurs should “pay forward’’ to the rest of us in gratitude for their success. If anything, the thanks should go the other way.

Originally published in the Boston Globe on November 12, 2011.