Wednesday, June 15, 2016

Mass Transit

Doug:
I was thinking of all of the places that it makes sense to have a centralized, government-driven effort. It seems that Mass Transportation systems are one such area, right?

David:
No. Mass transit is like any other tool in the shop. You need the right tool for the right job. Mass transit makes sense in some areas, and is the right mode of transportation for many people in many cities. In other cities, or other areas, it is a waste of money.

Doug:
So, I think you just said "Yes, it makes sense in cities." Most people live in cities. What is your criteria for whether mass transit is wasting money? Doesn't it save a lot of money for the masses?

David:
Your question was should it be a centralized, government-driven effort. My answer is no. 

Mass transit should be operated by private companies. Amtrak is a good example of government-run mass transit that looses money because of government inefficiencies and mis-management.  Could the government make it work? Maybe, but their record is pretty dismal.


Doug:
Amtrak does a pretty good job, as far as I can see. Their job isn't to make money. If that was their goal, they'd just open a bank. But if it were a private company, it would have to be a monopoly. What would the pressure be to keep it affordable?

David:
But their job shouldn't be to lose money.

Why would it have to be a monopoly? No one forces you to use it. If mass transit is unreliable or expensive, people will use other means to commute. We've seen that play out in many cities and towns, where mass transit has failed miserably. Indianapolis is one city where mass transit (buses) has had great difficulty expanding, because it developed a reputation of being unreliable. It's better now, but bad reputations are hard to overcome. Uber is a perfect example of transportation innovation. Multiple bus companies could work in a single town, and set up various routes to better serve their customers. After all, we have multiple airlines that all serve a single city, and they aren't owned or operated by the government.

Doug:
Airplanes don't run on rails. Most airports are owned by the public, usually local, state, or federal governments. How could you share rail lines? How could buses compete? Uber isn't mass transit, just decentralized taxis. Mass transit can move a large number of people together on standard, repeated routes. That includes subways, trains, and buses.

David:
Buses don't run on rails either. And right now, almost  all of the rails in the US are privately owned and maintained. Freight lines and passenger trains share the lines, and seem to do just fine.

How do companies compete? They both offer the same service, and people choose which company they prefer. For example, you can look at bus tours for tourists in various cities. Tourists go to different locations to board their buses, and the tours basically all cover the same routes, to see the same sights. You, the consumer, get to choose which company you want to use. mass transit bus companies could operate in a similar manner.

Why should tax payers be forced to fund something they don't use or don't want?

Doug:
Lots of people do want mass transit. Can you imagine traveling in NYC without mass transit? It really is great to be able to travel all over the city for a reasonable amount of money.

David:
And, there would be a parking apocolypse  if all New Yorkers had to use their own cars.

Perhaps we need to separate the discussion into two parts. First, mass transit is a good thing, in a lot of places. Different types of mass transit work in different locations, and for specific needs. Second, who should pay for, and manage it? Remember, almost all of the rail lines in this country were laid by private companies. Some cities have laid their own subway and rail lines, and those serve their citizens very well. Airports developed slowly over decades as flight developed. Some airports were built with public money, some weren't. Large hubs are built with public money. I'm not opposed to that at all, but referendums need to be held to get public buy-in and approval for such projects. As far as who runs the transit after the initial outlays? Private companies. Interestingly, a private company running mass transit is held to much tighter controls and to much higher standards by government oversight than when government runs the programs. They don't hold themselves accountable or use the same standards.

Doug:
Mass transit isn't just a good thing, it is a great thing. It provides low-cost transportation to the masses (by definition) which makes our economy possible. And, it can help save the environment. Where I live (Philadelphia suburbs), access to mass transit is a high-priced luxury. When we were looking to buy a house, we couldn't even afford one anywhere close to the "main line" so that we could have easy access to the trains. We can get there, but it involves walking 1 mile, taking a trolley, then walking another mile. Not impossible, but also not as convenient.

But how can you let a private company manage such mass transit? It would have to be a monopoly... someone has to manage the infrastructure. I don't know what private companies you are thinking about that do a better job than the government. In my part of the world (upper east coast) there are entities that span the private/public divide, and are no better than pure government. We have the E-ZPass system, which looks to have spread as far as Indiana. There are lots of horror stories and compaints about E-ZPass. If it were left to the people making the money (public or private), every road in the US would be a toll road, and easily tracked and billed by E-ZPass.

This is very similar to the recent "net neutrality" issue. Are the wires that give you access to the internet a "common carrier"? Or are they commercially owned, such that the cable companies can charge different fees for different rates of access? So far, the government has kept access to internet resources equal to everyone. This has helped generate internet-based businesses.

David:
Perhaps we need to further separate the discussion into trains, planes, and automobiles (buses). Each of those entities has a different set of requirements. But when you talk about how affordable a system is, you may be discounting the fees that the government is providing that comes from taxpayers across the board, whether you use the service or not. Amtrak operates at a loss. If those people who used Amtrak paid enough to cover operating costs, it would be incredibly unaffordable. We are all paying for a very few to use the service affordably. As Obama likes to say, that isn't fair.

Doug:
Mass transit is affordable, because everyone shares in the cost, and many people benefit. It is true that if you were the only person on the bus and the bus company wasn't allowed to lose money, then that one bus ticket would cost a lot. And then you wouldn't ride the bus. And then no one would. The economies of mass transit (actually the economies of mass anything) can't be broken down into single-use fees. That doesn't scale. It has to be spread over a lot of users, over lots of uses.

David:
Lets look at another problem with mass transit, costs. Out in California, they are developing high-speed rail. Sounds very exciting. The initial plan was put to taxpayers as a referendum, with an estimated cost of $30 Billion, to be funded with bonds. The referendum was approved. Not a single rail has been laid, but the projected cost is now at $68 Billion. Some independent analysis (professors at California universities) have placed the estimates closer to $100 Billion. This report (which covers more problems with building a new rail system than our discussion encompasses) found that this information was available to the original agency planners who organized the referendum for voters. It appears they downplayed the costs, just to get the project approved. I think the idea was that, "if we get the project started, then taxpayers will just get the bill later to complete the deal". We saw the same issue appear with "The Big Dig" in Boston; The planners used the lowest estimates to sell the project, knowing they were unrealistic.  (I'd also argue the same mentality got Obamacare off the ground, but I digress.) The taxpayers are sold an unrealistic bid for the project. Government over-runs are not something to just gloss over. Here in Indy, there was a huge push over the past 6 years to build a train system. The proponents had initial plans and cost estimates laid out. Almost immediately, engineers noted that the plan estimates where grossly under-estimated, for costs, and over-estimated for ridership. The initial plans were scaled back, but the idea never really took off. Train service for Indy is a solution to a problem that doesn't exist. Buses are cheaper to operate and maintain, and can be upgraded more easily. Routes are easy to add or eliminate as well.
Once you lay rails, that route is set in stone, so to speak.

Doug:
Estimates are always wrong. Except when they aren't. Here is a story about a 17-year high speed rail line that came in on time and on budget. But how does this fact relate to centralized mass transit?

David:
The reason I bring it up is that California will never be able to recoup $100 Billion dollars. The costs of riding the train won't even provide for maintenance and operating costs. But the costs to build it is a total onus on the taxpayers. So they need to be on board and the estimates must be as accurate as possible, so voters can weigh the benefits versus the costs. In the instances, the government estimates were far, far lower than they realistically should have been. I think government prosecutors would be charging someone with "baiting and switching" if a private company had done this.

I also bring it up because I don't want my Indiana tax dollars funding a $100 Billion bullet train that is completely within the borders of California, and will only potentially be used by Californians.

To address your local needs, it sounds like an enterprising individual could start a bus service in your area to get people to the train station, or all the way to downtown locations, cheaply and affordably.

Doug:
No, that doesn't sound like a viable business plan at all! And it sounds like it would cost far too much for anyone to afford.

David:
Local bus lines serving the needs of a local area? Isn't that just what mass transit's business plan is?

We can both agree that mass transit is an important part of living in a city. We can even agree that stations, hubs, and airports will likely need to be built with taxpayer dollars. But charging taxpayers who don't use the service so that those that do get a cheaper ticket is not right.  I believe evidence shows that you will almost always get better, more efficient  service with the actual management being in private hands. At least until we get our flying cars.

Doug:
Private companies want to make as much money as possible, and charge as much as possible for any ticket. A government-run program would want to charge the least amount, to make it usable by as many people as possible, The goals of a government-run program is to serve the people that need it, and to create a better environment for all. Your sense of what is fair and good is upside down.

David:
You seem to think all private companies are evil, money grubbers. That just isn't true. I don't think government is all bad, either. But government goals do not equal government realities.  Private company goals are often mandated by reality.  Private companies need to cover costs, and they also employ large numbers of people in this country. They have multiple incentives to provide courteous and efficient service, that the government doesn't have. Why do you think people tell jokes about government inefficiency and ineptitude? Studies actually show that you're more likely to die of natural causes than be fired from a government job. If there is no threat to losing your job, for any reason, what is your motivation to go out of your way to provide better service? Apparently you think all government workers are completely altruistic and are descended from Mother Teresa, while all private workers are the children of Bernie Madoff.

Mass transit can be a good thing, but only if there are people that use it. For that to happen, it needs to be efficient, clean, reliable, and a good bargain for users. On that, we agree completely. Maybe, instead of flying cars, we can get flying buses!

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