Path dependence

If you don’t know where you’re going, any path will get you there.

Path dependence is the idea that where we are today depends critically on where we were yesterday. Some systems are path independent, those that have a single unique equilibrium. Finding the solutions to some math problems is independent of where you start, as long as you follow a particular algorithm.

However, most systems we deal with on a daily basis have some characteristics of path dependence. Where you live might depend on what job you took, which depends on what your previous job was and where you went to school, and a different decision anywhere along the way would change today’s position.

Nowhere is this more true than transportation. On the one hand, it is obvious that certain locations were destined to be important cities because of significant natural advantages. New York has a deep harbor at the confluence of major navigable river. Chicago is at the pivot point between vast agricultural lands to the Northwest and the shortest land path to the East Coast. It was natural railroads would flow through the point on the map we now call Chicago.

On the other hand, many city sites that were selected for natural advantages in one technological era (The Romans selected London and the Dutch and English chose New York in large part for their capability as ports), remain important even after that technology becomes obsolete. With the logistics revolution and the new dominance of container shipping, London’s shipping has moved northeast to Felixstowe as large container ships cannot easily ply the Thames, while New York’s shipping has migrated to the wide open spaces of New Jersey.

The one-time advantages result in a set of complementary investments and inter-related decisions that take on a life of their own. Because of local trading advantages, commodities markets, banks, insurers, and other related organizations located nearby. A critical mass of those institutions felt no need to migrate just because their initial raison d’être vanished. While a building is under construction, temporary framing will often be used until the more permanent structure is erected. Once the final building can stand on its own, the falsework is dismantled. In a sense, everything is falsework for what comes after.

This kind of mutual complementarity happens repeatedly in transportation. Airplanes are the perfect example of mobile capital. If Amalgamated Airlines no longer wants to serve a particular city pair, the airplane can easily be redeployed elsewhere. Yet 80 years into the commercial aviation industry, airlines today serve mostly the same hubs their predecessors did on the Airmail routes of the 1930s. American Airlines is still in Dallas, United in Chicago, Delta (Northwest) in Minneapolis, and so on.

While very few decisions are completely irreversible, transportation decisions come close. Where we place a right-of-way, or an airport will explain where that facility will be decades, or even centuries from now.

A slight deviation from the efficient path to solve a short term problem today will cost travelers time for years to come. It is important to get the design right for the long term. (Undoubtedly this has social costs, see e.g. I-94 through the Rondo in Saint Paul).

But a slight deviation from the path will also change what the long term is. Build a bridge “here” rather than “there”, and then you will adjust all of the roads feeding into the bridge to meet it “here” (instead of “there”). And then land will be developed along the road to “here” to take advantage of the newly created accessibility, properties will be platted, buildings will be built, travel and trade patterns established, and other critical dependencies will come to assume that the bridge is “here”. At some point, say 50 years in the future, the bridge will need to be replaced. Even if “there” was a better location than “here” initially, after five decades of adaptation, it is quite likely that “here” is better now. The whole may have been better were a different initial decision been made, given conditions at the time. Given current realities, that path must now be foregone.

In transportation we say build it right the first time, because there won’t be a second chance. And that is true. But also remember the world will adapt to whatever we do, and we cannot let the perfect be the enemy of the good.