The Problem—Rational and Effective Allocation of Resources

Abstract

The determination of workable and satisfactory bases for the pricing of services poses the most complicated and critical problem in the transportation arena. The various facets of cost analysis have much to offer in resolving the problems inherent in pricing. The present pattern of government regulation of rates, handed down from the precompetitive period, needs thorough modification to establish some general standards for the greater use of cost bases for rates. An entirely different type of problem involves the persistent pressure from unions on all types of carriers to increase wage rates and fringe benefits and to make working arrangements and rules harder for the companies to bear. The lack of union responsibility toward maximizing labor productivity to minimize costs and toward adjusting services in line with changing technology and user demands is one of transportation's growing problems. The critical problems of government-provided transportation f acilities—waterways, highways, airways, and ports—involve both relationships between different types of transportation and the criteria for determining the investment in such facilities. The uncertainties in allocation of costs for particular uses and the difficulties in finding objective bases for determining user charges have contributed to leaving actual decisions on user taxes, charges, and investment in the political arena. These problems limit the rational and effective allocation of resources in the transportation field.