Charles Wheelan, Ph.D. The Naked Economist

What are some of the great frustrations of the modern world? Automated customer service, airport security, people who talk on cell phones in public places, grocery carts that won't go straight, and traffic congestion. I've got no ideas for the first four, but I can fix the last one -- or at least make it better.

Why is traffic congestion so bad? Because, even after the recent run up in gas prices, driving is too cheap, particularly at peak hours.

Try this thought exercise: Imagine that we operated our public golf courses like we operate our public roads. We would charge all taxpayers to help build and operate the course, regardless of how often they play golf -- or even if they don't play at all. Then we would charge very little to play and, most important, all golfers could tee off whenever they showed up. Would it be a little too crowded at 9:00 a.m. on Saturday when 127 golfers tried to tee up their drivers? You bet. We'd soon be reading about "golf rage," which would be particularly dangerous given all the swinging clubs.

The way we operate our roads violates the same basic lesson of economics: If you underprice something relative to its true cost, people will use too much of it. Red Lobster learned this the hard way not long ago with its "endless crab promotion." For $20, customers could eat crab until they were full or the restaurant closed, whichever came first.

Red Lobster lost money. The president was fired. In a conference call with analysts -- I'm not making this up -- the chairman and the new president discussed whether it was the third or the fourth helping of crab that made the promotion financially ruinous.

True, driving in the U.S. is not free. A small proportion of roads have tolls. We have a federal gas tax of 18.4 cents a gallon; many states also have gas taxes and other auto-related taxes. But driving is still darn cheap relative to its true social cost.

The federal gas tax is not indexed to inflation; it's actually fallen steadily in real terms over the past decade. Our state and federal gas taxes make up roughly a quarter of the price of a gallon of gasoline; in Europe, that figure is closer to 75 percent. So while we were horrified to watch gas prices march steadily towards $3.00 a gallon earlier this year, the Brits, French, and Germans were paying about twice as much.

I'm no fan of taxes. But our gas taxes and other "user fees" do not even cover the full cost of road construction and maintenance, let alone the congestion costs that autos impose on other drivers, or the environmental impact of driving. And here is a question you can answer privately to yourself: Do you think we would be more or less friendly with the Saudis -- one of the more repressive places on earth by any objective standard and home of 15 of the 19 September 11th hijackers -- if they were still mostly nomadic herdsmen?

Our whole transportation system looks too much like the Red Lobster endless crab promotion. It's not just that we choose to drive a lot. We make residential and other lifestyle decisions based on an artificially low cost of driving. When someone buys a big-ass house 62 miles from work and nowhere near public transit, they just assume that they can commute every day on a free or cheap road at 8:30 a.m. The reality is that for society at large, that 124-mile round trip commute is anything but free or cheap.

Technology has delivered us at least a partial answer. We can raise the cost of driving at certain times of day -- and we don't have to do it by throwing extra change in the toll bucket. Instead, we can now drive by and have the toll deducted electronically from a device mounted on the dash. This isn't just faster; it makes it possible to implement what economists and traffic engineers call "congestion pricing."

If you raise the price of something, people use less of it. So congestion pricing has predictable effects: It will move some drivers to off-peak hours, when tolls are lower; it will encourage carpooling and public transit; and in the long run, it will encourage people to live in places where they have to drive less (and perhaps inspire businesses to make smarter location decisions).

And remember, if we raise additional revenue by making it more expensive to drive, there is no reason we can't cut taxes on something else that we would like to encourage -- like working.

The future of transportation will look a lot like the I-15 FastTrak in San Diego. This expressway has free lanes and HOT (High-Occupancy/Toll) lanes that run parallel. Here's the twist: The price of the HOT lanes fluctuates between $.50 and $4.00 depending on traffic conditions. Carpools use the HOT lanes free at all times.

Your toll for the HOT lanes guarantees a "free flowing" speed of travel. If the HOT lanes begin to get congested, the toll will rise immediately, prompting more drivers to choose the free lanes rather than the HOT lanes. (The toll at any given time is advertised on electronic signs on the side of the road.)

There is a drawback to congestion pricing: The HOT lanes are sometimes referred to as "Lexus lanes" because those with deep pockets care less about $4 than those who are counting their pennies. But don't assume automatically that congestion pricing is bad for people lower on the economic ladder. If a plumber's assistant earning $14 an hour shows up for work half an hour late, he gets docked $7. Or, he can get there on time by using the HOT lanes--with a maximum toll of $4.00. Do the math.

And low-level employees get fined for picking up their kids late from daycare or fired for repeatedly being 15 minutes late. CEOs don't.

Is raising the cost of driving popular? Not so much. I've been called a communist for suggesting that Americans should have to pay more to get in their cars. This is a curious epithet given that the communists had exactly the opposite problem: They never let the price system work. When prices were not allowed to rise, the result was long queues for items that had been underpriced. Sounds a lot like I-90 going into Chicago on a Tuesday morning, doesn't it?