The British Labour Party has what it thinks is a great idea: renationalize British rail operations. These were semi-privatized in the 1990s, leading to a huge increase in rail ridership–especially relative to passenger rail on the continent, where ridership is stagnant.
The Labour Party is following that quaint old socialist idea that profits are a waste and that government takeover would allow those wasted profits to be diverted into reduced fares and better services. They claim that nationalizing “would mean hundreds of millions currently lost in private profit would be available to fully fund a bold offer on rail fares.”
If this were true, then Amtrak, the New York Metropolitan Transit Authority, and pre-priviatization BritRail would all have generated plenty of revenues to fund their operations and maintenance. But they didn’t and don’t; instead, they require huge subsidies and even then offer poor service due to unfunded maintenance backlogs.
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Profits serve the important purpose of giving people and companies incentives to provide the services that consumers want. In contrast, when government run things, the needs of consumers are soon obscured by demands from public employee unions, manufacturers, and other suppliers to the government agency. The mission of providing transportation is soon replaced by such multiple missions as providing jobs, boosting economic development, and protecting the environment. The result is that profitable operations become money-losing operations and the needs of consumers are forgotten as unions and suppliers capture most of the revenue.
The Labour Party is making the same mistake with regard to housing, proposing rent control as the solution to Britain’s unaffordable housing market. In fact, by reducing the incentive to build new rental housing, rent controls will only make housing even less affordable. The real problem with British housing is not greedy landlords but restrictive land-use regulations. But politicians are more concerned about getting elected today than the negative impacts of their policies tomorrow.
“Profits serve the important purpose of giving people and companies incentives to provide the services that consumers want. In contrast, when government run things, the needs of consumers are soon obscured by demands from public employee unions, manufacturers, and other suppliers to the government agency.”
See also, schools.
It is funny to read the liberal view of “profits”. They think anybody who works for a “profit” is not credible, and that the world would be so much better if companies didn’t earn a “profit”.
Among other things, they should go visit a communist “no profit” store…. http://youtu.be/ENG7PEvByOE
Profits may go to private persons – horrors!
Those getting a large government salary and benefits are not treated as profiting from “profits”. But they take even more money away from those being serviced-or, in
their case, not being serviced.
And if you run a large non-profit getting huge government grants and tax-exemptions, you get to make huge “non-profitless” profits.
Regardless of what some of my more extreme opponents here may believe, I know very few transit advocates who are also flaming socialists or commies, except perhaps for a handful in Bezerkeley and San Francisco I don’t know personally.
Actually, the biggest commie alleged transit supporters are the Bus Riders Union in Los Angeles run by the Labor Community Strategy Center, run by Eric Mann, a nefarious individual hated universally by Southern California transit advocates who believe themselves to be serious (I think they are).
The fascinating thing about Eric Mann and his group are they were allies with the Reason Foundation over the issue of improving LAMTA bus service; Mann et al probably savored the greater number of union jobs provided by buses compared to rail (with supposed benefits to bus riders, which I question given Mann et al’s questionable credentials), while Reason is a major cheerleader for buses and against rail, even in cases where rail was the better choice, and the choice made by LA County voters.
The Labour Party is following that quaint old socialist idea that profits are a waste and that government takeover would allow those wasted profits to be diverted into reduced fares and better services.
Double facepalm. I assume this means that they use a discount rate of zero for publicly financed projects. Consistency is important, right?
Mann et al probably savored the greater number of union jobs provided by buses compared to rail (with supposed benefits to bus riders, which I question given Mann et al’s questionable credentials), while Reason is a major cheerleader for buses and against rail, even in cases where rail was the better choice, and the choice made by LA County voters.
You are questioning the benefits provided by relieving overcrowded buses in L.A.? You must hate the poor or something. Rail was clearly not the better choice in this case, and in fact the funds from the Prop A sales tax that eventually financed rail construction was used to lower LACMTA fares between 1980 and 1985 prior to Red Line construction. It is no coincidence that once these funds were diverted to the subway fares increased and ridership tanked.
The benefits from the consent decree were short-lived however, and once the legal requirements expired the MTA went back to plowing the funds into light rail construction. Oh well, L.A. deserves what it gets. Even if the outcome isn’t ‘equitable’.