That is, rather than the growth of transit outlays explaining the growth in the economy, it is the growth in the economy that explains the growth in transit outlays. It is ludicrous to hypothesize that spending on trains and buses that have carried a dwindling share of urban travelers has played a significant role in the post-World War II growth of the U.S. economy. A more reasonable hypothesis is that the robust economic growth over the last 50 years has provided the means for both federal and local governments to indulge their transit fantasies. Growth of income, sales, and property values during this timeframe provided targets for the imposition of taxes with which to subsidize money-losing ventures in public transit. Far from being a source of economic prosperity, public transit has survived as a parasite, living off the wealth generated by more productive segments of the society.
Opportunity cost is a term used by economists to account for the alternative uses of resources.
Money spent on public transit can be shown to employ workers in the construction of rail lines, the driving of buses, etc. This first round of spending furthers subsequent rounds as these directly employed workers spend their wages at supermarkets, department stores, etc. This sounds pretty good until it is compared with the outcomes that might have been achieved if the funds poured into profitless public transit had been used in some other ways. Impacts on the U.S. Economy of Alternative Investments. The important point is the relative magnitudes of the impacts of each alternative.