That's optimistic.

Photographer: Mandel Ngan/AFP/Getty Images

D.C. Ponders the Fate of Its Streetcars

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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In my eight years in Washington, I have come to love its fabled streetcar project. I say "fabled" because as of this writing, we do not actually have any streetcars. No, wait, that's wrong. We totally have streetcars. What we do not have are streetcars that actually ferry passengers hither and yon, rather than sitting in storage or going on endless test runs that all too frequently end in flames. The project has been hilariously mismanaged from start to (never-never) finish, though it would be a lot more hilarious if we hadn't spent millions upon millions of taxpayer dollars on it.

Nonetheless, I am sad to hear that my fair city may terminate its streetcar service. We've got the tracks, we've got the cars, we've got a whole lot of new buildings along H Street that were counting on its existence, so we might as well just run the silly thing. Particularly since failing to do so has implications for future development.

Last summer, I tried to explain why cities seem to like streetcars so much, despite obvious drawbacks such as the inflexibility of the routes. There are some arguments in favor of the cars -- they ride more smoothly, produce less exhaust, and some people argue that they're less likely to induce motion sickness. But I pointed out that there may be a bigger benefit for cities trying to spur development: the inflexibility of the routes.

If you're trying to spur development with transportation, then inflexibility is a feature, rather than a bug: It allows you to make a credible commitment to serving an area over a long time period. A city can always promise to run a bus line, of course ... but the city and the developers both know that the city can move that bus somewhere else if the development takes longer than expected to materialize, leaving the developer with a giant, expensive building that's hard to get to. Streetcars are also an easily visible signal to potential businesses and residents -- you can see the tracks right there, rather than having to hunt for information about local bus service.

Effectively, streetcars harness the sunk cost fallacy for a little bit of good: Developers know that the government will be reluctant to give upon on a project once it has already spent a lot of money, so they feel more comfortable betting on transit-oriented development.

Now, killing the D.C. streetcar is probably not going to mean that development on H Street stalls out. On the other hand, if the government proves willing to pull out at such a late date, future developers might think twice about building in response to government transit promises. In an area that desperately needs more housing, that's not such a good thing.

To be sure, against that, you have to offset the annual operating cost of the streetcar line, which is estimated to be around $5 million. Also, to be sure, you have to offset against those costs the passengers a streetcar would carry and, um, the fact that streetcars are cute.

Regardless of the cost-benefit analysis, I'd mourn a bit if it were killed. It may be a boondoggle, but darn it, it's our boondoggle. Lovers of our fair city, in all its incompetent splendor, should be sad to see this bit of D.C. history fall into the dead past.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Brooke Sample at bsample1@bloomberg.net